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THE EUROPEAN LAW REVIEW

Table of Contents Issue 6, 2024

Issue 6 December 2024

Editorial - A Need for Unity in Times of Crisis

Common security and defence policy; Competition policy; European political co-operation; Funds; Industrial policy; International trade

The European Union’s (EU) need for a coherent industrial strategy and a new approach to competitiveness and security has been widely discussed. Recent editorials in this Review have focused on Mario Draghi’s pivotal report on the topic,1 which has generally been met with broad agreement—except, notably, on how to finance the necessary changes.

The typical fiscal divisions have quickly emerged: mere hours after the Draghi report was published, calling for increased common debt, Germany’s finance minister at the time, Christian Lindner, firmly rejected any possibility of his country agreeing to such a proposal.2 Since then, Germany’s governing coalition has collapsed, and the country is heading toward an early election.

More urgently, international developments have made the need for action even more pressing. Donald Trump’s victory in the United States (US) election on November 5 has intensified calls for the EU to reduce its defense dependency on the US. With the shift in leadership, the EU will no longer have a choice in the matter—and the change will come swiftly. Additionally, the second Trump administration’s trade policies will significantly impact the EU and its economic growth.

The central question now is whether EU Member States can find the unity needed to face these challenges, or if they will resort to a zero-sum approach, each trying to secure individual international advantages.

The European Council meeting in early November (just days after the US election) yielded little in terms of concrete action. The so-called Budapest Declaration acknowledged the growing economic and geopolitical challenges—stating that “business as usual is no longer an option”—but failed to propose meaningful solutions.3

The ongoing disagreement among Member States on how to finance investments in competitiveness and the EU’s defense capabilities remains evident. Draghi’s report proposed an additional €800 billion in annual investment, with a significant portion coming from public funds. Experts have long advocated for the creation of common safe assets, including EU defense bonds,4 to address the escalating challenges. However, no consensus on this is in sight.

Frugal Member States are deeply reluctant to take on more joint debt after NextGenerationEU. Even with potential political shifts at the national level, such as emerging discussions in Germany around revisiting the national debt brake, this reluctance is unlikely to change in the short term.

This pattern is familiar: significant, overarching change is clearly needed, but the deep divisions among Member States prevent meaningful progress. In this context, it seems likely that the EU will revert to its usual strategy of repurposing and reshuffling existing tools and resources.

The European Commission has already signaled its willingness to allow Member States to use cohesion funds for defense and security,5 a move that aligns with ongoing efforts to redefine how these funds are utilised,6 and there may still be ways to maximise the capacity of existing instruments to finance common public goods.7

These are, however, trying times. Though we have become accustomed to discussing one crisis after another in recent years, this does not diminish the urgency of the current situation. The EU faces growing geopolitical threats and an escalating climate emergency, both of which require immediate action. Time will tell how far the EU can stretch its ability to repurpose and reorganize resources before the system reaches its limits.

[AH]

1 P. Koutrakos, “Editorial: The Draghi Report and EU Defence: A Call for Action” (2024) 49 E.L. Rev. 429; A. Hinarejos, “Editorial: A European Industrial Policy and the EU’s Turning Point” (2024) 49 E.L. Rev. 317; M. Draghi, The Future of European Competitiveness (September 2024).
2 G. Faggionato and H. von der Burchard, “Germany’s Lindner Rejects Draghi’s Common Borrowing Proposal”, Politico, 9 September 2024, https://www.politico.eu/article/germanys-lindner-rejects-draghis-common-borrowing-proposal/ [Accessed November 2024].
3 European Council, “Budapest Declaration on the New European Competitiveness Deal”, Press release, 8 November 2024, https://www.consilium.europa.eu/en/press/press-releases/2024/11/08/the-budapest-declaration/ [Accessed November 2024].
4 L. Scazzieri and S. Tordoir, “European Common Debt: Is Defence Different?”, Centre for European Reform, 5 November 2024.
5 P. Tamma, “Brussels to Free Up Billions of Euros for Defence and Security from EU Budget”, Financial Times, 12 November 2024.
6 European Commission, “Ninth Report on Economic, Social and Territorial Cohesion”, 27 November 2024, pp.xxxiii–xxxix; and G. Sorgi, “EU Floats Radical Change to How it Funds Poorer Members”, Politico, 26 March 2024, https://www.politico.eu/article/european-commission-propose-change-eu-budget-money-cash/ [Accessed November 2024].
7 K.A. Janse and R. Beetsma, “Financing Europe’s Grand Ideas”, Centre for Economic Policy Research, 13 November 2024, https://cepr.org/voxeu/columns/financing-europes-grand-ideas [Accessed November 2024].

Articles

    Inadmissible in Luxembourg, Admissible in Strasbourg? Locus Standi of Climate Litigants before the CJEU and the ECtHR - Mariana Martins Pereira

    This article explores whether the strict conditions of individual access to the CJEU could trigger an admissibility decision by the ECtHR in climate cases. Climate litigation has reached both the CJEU and the ECtHR: the former has found that climate litigants are not "individually concerned" by EU measures to combat climate change, therefore refusing them standing. The latter has granted standing to environmental associations, while limiting access to individuals. It has also denied extraterritorial jurisdiction over the effects of emissions, and required exhaustion of domestic remedies. This article argues that in order to overcome these limitations, the ECtHR should use the lack of remedies at the EU level as an argument for asserting jurisdiction over climate cases. It argues that the case law of the ECtHR supports this idea. Moreover, the ECtHR is better placed to rule on climate cases. This article concludes that this would create a complete system of remedies in Europe.

    The Changing Tides of Extraterritoriality and the Future of the European Union’s Blocking Statute - Alexandr Svetlicinii

    The proliferation of unilateral economic sanctions, which was exacerbated by the Russia-Ukraine war, has revived the debate on the extraterritorial application of such restrictive measures, as the imposing countries have striven to avoid the circumvention, and enhance the effectiveness, of their restrictive measures. The European Union (EU) is, in principle, opposed to extraterritorial sanctions, and the EUBS prohibits European companies from complying with certain US extraterritorial sanctions. The European Commission was dissatisfied with the effectiveness of the EU blocking legislation and the negative effect of extraterritorial sanctions on EU strategic autonomy, so has pledged to recast the EUBS. This article analyses how the EUBS is deficient in counteracting US extraterritorial sanctions, and maps the contours of its potential revision. In particular, the article argues that the enforcement of the newly adopted EU Anti-Coercion Instrument could serve as a viable alternative to the blocking legislation, given the latter's overall ineffectiveness in discouraging third countries from adopting extraterritorial sanctions or protecting European companies from secondary sanctions. Furthermore, the emerging anti-circumvention measures aimed at supporting the EU's own sanctions appear to be inconsistent with the principles underlying the EUBS. Finally, the enhanced transatlantic cooperation on matters of economic sanctions and export controls renders the recasting of the EUBS counterproductive.

    EU Liability and Judicial (Un)predictability: An Appraisal of the Test for a Serious Breach of Law under Article 340(2) TFEU - Alessandro Cuomo and Phedon Nicolaides

    A liability regime should be administered in a way that induces public authorities to perform more diligently, without undesirably paralysing their proactivity. A decisive factor in striking this balance is controlling the predictability of liability itself, as determined by the conditions set out by courts for damages to be awarded. The article examines the multi-step test developed by EU courts to rule on the whether a breach of law by an EU authority is sufficiently serious under art.340(2) TFEU, from the perspective of its transparency and predictability. Analysing settled and recent case law, we find that the current test establishes selective unpredictability as to whether a serious breach will be found. EU courts weigh up opaque factors such as the legal or technical complexity of the situation to qualify a mistake as "excusable". The article foregrounds that selective unpredictability gives EU judges the strategic flexibility to limit the over-deterring effects of liability and argues that EU courts do not provide meaningful guidance on how they ultimately qualify a mistake as "excusable" under the standard of ordinary diligence. We thus propose a new standard to improve the predictability of the test, reflecting on what type of mistakes should be considered unacceptable in a liability regime designed to foster administrative diligence and proactivity.

    Analysis and Reflections

    Accrued EU Law Rights Encounter Some Brexit Turbulence: Lipton v BA Cityflyer Ltd - Christopher Vajda KC

    Lipton v BA Cityflyer was the first occasion that the UK Supreme Court had the opportunity to consider the important question of the treatment of EU rights acquired a time when the UK was still a member of the EU, but which remained the subject of litigation after the UK's withdrawal from the EU. The accrued right arose out of a claim for compensation under Regulation 261/2004 in respect of a cancelled flight. The airline denied liability by invoking the defence of extraordinary circumstances. Two issues arose before the UK Supreme Court, namely what was the relevant law to be applied and whether the defence of extraordinary circumstances was made out. The Court unanimously held that the defence of extraordinary circumstances was not made out. However, the Court split on the constitutionally more important issue of what was the applicable law. Since this did not affect the outcome of the case their views on this issue were obiter. The view of the majority was that the accrued right of action is part of "retained EU law" under the European Union (Withdrawal) Act 2018. The consequence of this analysis is the Liptons could no longer rely, as a matter of right, on any CJEU judgments. By contrast, the conclusion of the minority was that the Liptons were able to rely on judgments of the CJEU delivered prior to the end of the transitional period but not thereafter. This view took a different approach to the European Union (Withdrawal) Act 2018 and was based on the Interpretation Act 1978 and the Agreement on the Withdrawal of the UK from the EU. It is suggested that the view of the minority is to be preferred, at least as regards the binding nature of CJEU judgments delivered before the end of the transitional agreement laid down in the Withdrawal Agreement. While judgments of the CJEU delivered after the end of the transitional period are not generally not binding, the position might be different in a case involving accrued EU law rights. If such judgments are not binding, it is suggested that the UKSC should establish a rebuttable presumption that such judgments should be followed. Such a presumption would provide an appropriate degree of legal certainty as well as balance between the importance of preserving accrued EU law rights and the freedom of UK courts to depart from particular judgments of the CJEU delivered after the end of the transitional period, in the absence of any opportunity to make a reference to the CJEU.

    Complex Assessments as a Trigger for Broad Discretion and Limited Judicial Review? The Concept of Technical Issues in the Case Law of the CJEU - Julia Kreuzhuber

    Beginning with the landmark cases of Gauweiler and Weiss, this paper delves into multifaceted realm of complex assessments within the jurisprudence of the CJEU. By focusing on the CJEU's understanding of the concept of technical choices, this paper contributes to a nuanced understanding of the interplay between complex assessments, discretion, and judicial review in the context of EU law. Through an in-depth analysis of selected case law and a comparison with other complex assessments in distinct policy fields, this study aims to clarify the term "technical issues", the absence of a precise definition of the CJEU further complicates these matters. This study also shows that technical issues yield different legal consequences. Ultimately, it provides an outlook on whether sustainability-related measures planned by the ECB can be classified as technical issues.

    The Rule of Law Saga Continues at the European Court of Justice: Is the Future Political?—G v MS (C-181/21 and C-269/21) - Ewa Karolina Garbarz

    G v MS is the continuation of case law, and another insight into the ECJ's approach to the 2015-2023 rule of law crisis in Poland. Polish courts referred two questions to the Court for a preliminary ruling in Joined Cases C-181/21 and C-269/21 under art.267 TFEU. The national courts considered recent changes to the judicial appointment procedure, introduced by the 2019 justice reform in Poland, to be breaching EU law; especially the second subparagraph of art.19(1) TEU, read in conjunction with art.47 of the Charter. The referred questions were ruled inadmissible by the Court, against the advice given by Advocate General Collins, as it did not find a sufficient link between the questions and the main proceedings in both cases. In the judgment, the ECJ focused its reasoning on the remit of the procedure in art.267 TFEU. Even though there is an argument to be made in favour of pragmatism and for the Court to practice what it preaches, it is impossible not to wonder whether the Court's decision not to intervene was influenced by the 2023 parliamentary election in Poland. Excessive reliance on political landscape and the Court's decision in G v MS might have adverse consequences on the state of the rule of law in the EU in the future.

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