Monday, 16 October 2017

Metamorphosis? Article 47 EUCFR in UCTD cases

In the latest issue of the Journal of European Consumer and Market Law (EuCML), an article has been published by Anna van Duin on the role of Article 47 of the EU Charter of Fundamental Rights in cases concerning national remedies and procedures under the Unfair Contract Terms Directive.

The tale of Article 47 of the EU Charter of Fundamental Rights appears to be one of transformation and seduction. While the importance of the right to effective judicial protection is widely acknowledged, there is confusion and even controversy about its actual implications for national civil courts. This article revolves around the question how and why Article 47 may be referred to in European private law adjudication. It aims to shed light on the main characteristics and constraints of Article 47 by analysing the case law of the CJEU concerning national remedies and procedures under Directive 93/13/EEC. Four key judgments of the CJEU are discussed. So far, the CJEU seems reluctant to accept the potential of Article 47 Charter as a weighty source for interpreting national law, let alone for setting it aside or filling gaps in the enforcement and protection of EU rights at the national level. Yet Article 47 could shift the focus from the effective enforcement of EU law towards individual rights protection. As such, it may provide a valuable instrument for national civil courts in cases covering (aspects of) EU law.

A proof-version of the paper can be found here. For citation and research purposes, please refer to the final version published in EuCML.

Sunday, 15 October 2017

Judicial law-making in a changing European legal order

Workshop 'Judges in Utopia', Amsterdam 28-29 September 2017
Report by Timo Zandstra (student assistant)

Theory and practice suggest that the European judiciary increasingly takes on a more active role when deciding on cases in which different norms conflict. The courts are increasingly called upon to balance different values and to reconcile conflicting interests, such as balancing public interests in private relationships, as in Urgenda (2015) and CJEU Aziz (2013). Such delicate balancing necessarily comprises legal-political and institutional dimensions, and the court’s value-judgements as such invariably yield political implications. At present, a continuing ‘Europeanisation’ of private law extends this judicial balancing to the interplay of national and supranational rules in the multi-layered order of the EU, involving diverging ideas of justice and principles of law at the interface of EU and national private laws. Such hard cases may provoke innovative case law, sometimes attracting the label of ‘judicial activism’. How can we explain such rulings? How do we assess their democratic legitimacy? And, ultimately, what should the role of the judiciary be when reconciling conflicting interests at the interface of EU and national private laws? The workshop of 28-29 September facilitated dialogue between leading academics and legal practitioners on these questions (click here for the programme).

Contributions came from inter alia Jaap Spier and Luc Lavreysen, who argued that the judiciary should take on a more active role in solving global issues such as climate change in order to compensate political inertia. Moreover, CJEU Advocate General Maciej Szpunar elaborated on the tension between the case law of the Court and the procedural autonomy of the Member States, whilst Laura Burgers proposed a democratic legitimation of the Urgenda decision from Habermasian democratic theory. Oliver Gerstenberg, Chantal Mak, Micheal Dowdle and Dorota Leczykiewicz presented their work on the ideas of justice underlying the construction of a European polity and the potential of Fundamental Rights to serve as standards in judicial deliberations.
Furthermore, Fabrizio Cafaggi and Anna van Duin presented on the eminent role of courts in the interpretation and application of, and the development of (national) remedies and procedures based on, the fundamental right to effective legal protection – in particular under EU consumer law. Cafaggi spoke of the interaction between private and administrative enforcement; Van Duin presented on the role of article 47 ECFR in the case law of the CJEU on unfair terms. Spanish judge José Maria Fernández Seijo emphasised the search for justice in finding solutions for ‘real-life’ problems; Aida Torres Perez expanded on the narrative of judicial mobilisation in the case of housing rights in Spain. And finally, Aurelia Colombi Ciacchi expanded the debate to the level of judicial governance, expanding on different models across the EU member-states.

Just as the case law will evolve and develop, so will the questions discussed during the workshop increasingly be coming back to the national and European judiciary. The debate is blooming and, in the face of rising Euroscepticism and pan-European challenges, perhaps more relevant than ever: the shared search for justice binds the European polity - people and judiciary alike.

Friday, 22 September 2017

Opinion on Milieudefensie case in newspaper NRC

The Dutch newspaper NRC Handelsblad published an opinion article written by Laura Burgers, arguing that the judge rendered a democratically legitimate judgment in the Milieudefensie case that was already discussed at this blogpost.

See: Stop behalve luchtvervuiling ook debatvervuiling.

Monday, 11 September 2017

Workshop 'Judges in Utopia' (Amsterdam, 28-29 September 2017)

On 28 and 29 September 2017, the workshop Judges in Utopia – Judicial Law-making in European private law will take place in Amsterdam. The workshop is co-organised by Professor Chantal Mak, Laura Burgers and Anna van Duin. Its general theme is the changing role of the (national) judiciary in European private law. The aim is to reflect on this theme with judges, academics and other experts. The workshop is invitation-only but if you would like to attend, please send us an email.

See the announcement on the UvA-website (click here) for more information and the programme.


Friday, 8 September 2017

Dutch NGO wins summary proceedings against Dutch State on air quality

A trend of European case-law on air quality
The 7th of September, the Dutch NGO Milieudefensie won summary proceedings against the Dutch State on air quality. This case fits in a true trend following from the European Union Air Quality Directive 2008/50/EC, which regulates the maximum tolerable levels of pollution in the air caused by inter alia nitrogen and particulate matter. In the UK, the NGO Clientearth has litigated on failing air policy all the way up to the CJEU and back to the UK High Court again, winning every case against the government. In France, Les amis de la terre France obtained a similar result last July before the Conseil d’État. And only one day before the Dutch judgment, the German NGO Deutsche Umwelthilfe reached a comparable outcome before the Verwaltungsgericht Stuttgart. In this blogpost, I focus on the Dutch case.

Milieudefensie’s case in the Netherlands
As reported on this blogpost, in August 2016, the Dutch NGO Milieudefensie started tort proceedings against the Dutch State because Dutch policy on air quality would be insufficient. Interestingly, this claim did not only rely on the legally binding European directive on air quality, but also on soft law WHO guidelines in a complex private law construction echoing the reasoning of the controversial Dutch Urgenda case.

To speed up the proceedings, however, this summer Milieudefensie started summary proceedings (“kort geding”) concerning only the violation of the European directive. The 7th of September 2017, the judge decided in Milieudefensie’s favour: The Dutch State must, as of now, do everything possible to comply with the European norms as soon as possible. A decision on the more ambitious WHO guidelines will follow after the substantive proceedings (“bodemprocedure”) to be held at the 14th of November 2017.

In her judgment, the judge Mrs. Groeneveld-Stubbe rejects the State’s argument that the claim would be inadmissible because it would rather be an issue for administrative law proceedings rather than private law proceedings. In Dutch law, only individual cases can lead to administrative review, whereas this dispute is about a national plan on air quality, she reasons. Private law proceedings are the only option (§4.2).

Furthermore, the judge finds that the case is sufficiently pressing to justify a judgment in summary proceedings – the earlier measures are taken to improve air quality, the earlier these measures are likely to have effect (§4.4). Neither is the case too complex for summary proceedings, because both parties agree on most of the facts (§4.5).

The air quality plan
The State recognizes that in certain areas, the critical levels demanded by EU Directive 2008/50/EC are surpassed and that required deadlines have been missed, since these were fixed in 2015 (for nitrogen) and 2011 (for particulate matter), respectively (§4.6). The judge does not agree with the State that it lacks the competences to solve local issues, because it was the State itself that choose to decentralize its duty to guarantee air quality (§4.7). Furthermore, the judge deems irrelevant the State’s observation that Dutch air quality is better than before; after all, what matters is not the comparison with earlier times, but the comparison of Dutch air quality with the quality demanded by the Directive (§4.8). 

The judge agrees with Milieudefensie that the Dutch “Nationaal Samenwerkingplan Luchtkwaliteit” (national cooperation plan on air quality) does not comply with the Directive: The Directive requires an air quality plan to keep exceedance periods ‘as short as possible’, which cannot be said with certainty of the Dutch plan (§4.11). Furthermore, the Dutch plan lacks detailed analyses of problem situations, demanded by Annex XV of the Directive (§4.12). 

For these reasons, the judge orders the State to do everything possible, within two weeks after the judgment, to make its air quality plan comply with the Directive. Which measures the air quality plan should contain, is for the Dutch State to decide (§4.13). The judge does not agree with Milieudefensie that critical levels should per se be met within 2018 – she cannot say with certainty whether this time-frame would be the ‘shortest possible’, since she does not know yet which measures the State will adopt (§4.14). 

She does however agree with Milieudefensie that the State must immediately begin to identify the locations where exceedances take place – such is necessary to come to a sound air quality plan (§4.15). Measures can only be taken after the plan is made in detail, not, as Milieudefensie asked, immediately after the identification of these locations (§4.16). 

Moreover, the judge follows Milieudefensie in forbidding the State to take measures that are expected by the RIVM (the Dutch national institute for public health and the environment) to statistically contribute to new exceedances, since this is already required by the EU Directive and the national environmental statute (“Wet Milieubeheer”). The State tried to invoke Article 6:168 of the Dutch Civil Code, which gives the judge the possibility not to forbid torts by the State in so far as they should be allowed because of imperative societal interests. The judge does however not follow this argument, since the State did not pinpoint which measures would be of imperative societal interest.

What’s next?
Secretary of State Sharon Dijksma has reportedly announced to immediately act upon the judgement.[1] The judgement is likely to pre-empt plans of the government to raise the maximum speed on highways - unless, of course, the government comes with a plan effective enough to compensate for the extra pollution caused by faster riding traffic. Thus, the outcome of the summary proceedings can be called significant. For those interested in judicial law-making in European private law, the substantive proceedings of Milieudefensie’s claim will be truly exciting. There, the Court will decide whether the Dutch State indeed commits a general tort under the doctrine of hazardous negligence (“gevaarzetting”) by not doing even more against air pollution than required by the European Directive, endangering its citizens’ health, as argued by the NGO.  

The judgment's ECLI number is ECLI:NL:RBDHA:2017:10171

[1] Marcia Nieuwenhuis ‘Kabinet versnelt plannen tegen luchtvervuiling: 'Hoop voor longpatiënten'’ Algemeen Dagblad 7 September 2017

Thursday, 22 December 2016

Spanish 'floor clauses' (cláusulas suelo) - EU Court of Justice steps in: nullity is nullity

Repost from the blog on Recent developments in European Consumer Law:

Judgment of the EU Court of Justice in Joined Cases C-154/15, C-307/15 and C-308/15 (Gutiérrez Naranjo v. Cajasur BancoPalacios Martínez v. BBVA and Banco Popular Español v. Irles López)

Yesterday the EU Court of Justice gave its long-awaited judgment in the joined cases from Spain on the infamous 'floor clauses' (cláusulas suelo). It is a real Christmas present to Spanish consumers and house-owners: the CJEU has "overruled" national case law that limits the temporal effects of the declaration of nullity of an unfair term. Nullity is nullity. The impact of this judgment on the Spanish banking sector is huge: banks will have to pay back an estimated amount of 3.000 to 5.000 million euros (source: El País). The judgment has already been called a "formidable varapalo judicial a la banca", a tremendous judicial blow to the banks.

'Floor clauses' in mortgage loan agreements establish a minimum rate below which the variable rate of interest cannot fall. Until the Spanish Supreme Court (Tribunal Supremo) found them to be unfair in 2013 due to a lack of transparency, they were widespread. The biggest question for Spanish consumers after yesterday's judgment, which has been widely covered in Spanish media, is: how much money do we get back?

The reason why they ask this question, is the Supreme Court's decision to limit the temporal effects of its judgment to after the date of its publication, 9 May 2013, both in respect of collective actions for an injunction and individual actions by consumers claiming repayment. Only the amounts overpaid on the basis of 'floor clauses' after that date had to be paid back. One of the considerations of the Supreme Court was that retroactive (i.e. restitutory) effect of the invalidity of the clauses at issue would give rise to serious economic repercussions. Lower courts in Spain, however, doubted whether the Supreme Court's approach was compatible with Directive 93/13/EEC on unfair terms in consumer contracts. Last July, we reported on this blog that it was permissible in the opinion of the Advocate General. The CJEU has now decided otherwise, which means that Spanish consumers can also claim repayment of the amounts overpaid to the banks on the basis of 'floor clauses' during the period before 9 May 2013, from the beginning of their contract.

For the readers of this blog, the judgment may not be entirely unexpected. The CJEU refers extensively to its previous case law about the interpretation of "not binding on the consumer" under Article 6(1) of Directive 93/13. It reiterates that it is for the national court "purely and simply" to exclude the application of an unfair term (para. 57). The national court may not revise the content of unfair terms, "lest it contribute to eliminating the dissuasive effect of the straightforward non-application with regard to the consumer of those unfair terms" (para. 60). The determination of unfairness "must, in principle, have the consequence of restoring the consumer to the legal and factual situation that he would have been in if that term had not existed" (para. 61). Thus, the national court must impose the repayment of amounts that prove not to be due, which entails "a corresponding restitutory effect" (para. 62). The absence of such restitutory effect would call into question the dissuasive effect that Articles 6(1) and 7(1) of Directive 93/13 are designed to attach to a finding of unfairness.

The CJEU then proceeds to consider that national (case) law may not alter the scope and, therefore, the substance of the protection guaranteed to consumers by the Directive. The Supreme Court was entitled to hold that its judgment did not affect situations in which a judgment with the force of res judicata had been given. While it is compatible with EU law to lay down reasonable time-limits for bringing proceedings, only the CJEU can decide upon a temporal limitation of the effects of a rule of EU law. National (case) law may not aversely affect the substance of the right that consumers acquire under that rule. The temporal limitation made by the Supreme Court is tantamount to depriving any consumer having concluded a mortgage loan contract before 9 May 2013 containing a 'floor clause' of the right to obtain repayment in full of the overpaid amounts. The CJEU concludes that national case law, such as that following from the Supreme Court's judgment of 9 May 2013, ensures only limited protection for consumers. Such protection is incomplete and insufficient and does not constitute either an adequate or an effective means of preventing the continued use of 'floor clauses'.

The CJEU rejects the argument brought forward by, among others, the Spanish government that the question of the effects of the finding of unfairness as regards 'floor clauses' does not fall within the scope of Directive 93/13, because that finding would afford a higher level of consumer protection than guaranteed by the Directive. The review of the substantive unfairness of a clause relating to the main subject-matter of the contract, where the consumer did not have the necessary information on the conditions and consequences of that contract before entering into it, falls within the scope of the Directive.

The CJEU brushes aside the Supreme Court's considerations in one fell swoop. It does not matter whether the 'floor clauses' were in themselves lawful, that their use had long been tolerated on the market, that the banks had complied with the regulatory requirements for information, or that there could be serious economic repercussions. The judgment was a bombshell: "Ahora mismo sale gratis disparar contra la banca" ("Right now, the banks have been made fair game"; source ABC). It is perceived as yet another setback for the Spanish banking sector. A string of preliminary references to the CJEU, starting with the well-known Aziz case, has strengthened the judicial protection of consumers against unfair contract terms. Still, yesterday's judgment comes as a surprising end to a long-running battle between Spanish consumers and the banks, supported by the government. It remains to be seen how the European judgment will be implemented at the national level; most banks do not seem eager to accept an obligation to automatically repay all their clients.

Friday, 16 September 2016

Effective consumer protection in light of Article 47 EUCFR: Opinion of AG Kokott (C-503/15 Margarit Panicello)

Yesterday, Advocate General Kokott presented her opinion in yet another case on Spanish procedural law and the effective protection of consumers against unfair contract terms (Case C-503/15, Margarit Panicello). I reproduce part of the summary I wrote for the blog 'Recent developments in Consumer Law' here, because it builds on a previous blog I have posted here

The case discussed in the present blog stands out, because of the explicit reference to Article 47 of the Charter in the request for a preliminary ruling. The 'referring court' (one of the questions at issue is whether the Secretario Judicial - court registrar - can actually be regarded as a court or tribunal for the purposes of Article 267 TFEU) has asked the EU Court of Justice whether certain procedural rules are incompatible with Article 47, in that they preclude the possibility of judicial review. In Spain, there is a special procedure (jura de cuentas) available to lawyers for the recovery of unpaid fees that are owed to them by their clients. Unpaid fees could be a sign of a soured relationship, and lawyers would rather not litigate against their clients; for them, jura de cuentas is a preferably 'evitable' (avoidable) evil. AG Kokott's opinion makes clear why it might be an 'evitable' evil in light of EU law as well.

To relieve the judiciary, the exclusive competence to deal with the jura de cuentas procedure has been transferred to the Secretarios Judiciales. The procedure is optional; lawyers can still choose to initiate court proceedings. The applicable procedural rules preclude the Secretario Judicial to examine ex officio whether the contracts between lawyers and their clients (natural persons), on the basis of which recovery of unpaid fees is claimed, contained possible unfair terms or unfair commercial practices. AG Kokott's conclusion that those rules are incompatible with Directive 93/13/EEC (on unfair terms in consumer contracts) is perhaps not very surprising, against the background of the CJEU's case law. The opinion is more interesting from the perspective of Article 47 of the Charter, which safeguards the right to effective judicial protection against violations of the rights and freedoms guaranteed by EU law. 

In the case of Finanmadrid, the referring court had made a similar reference to the Charter, but the CJEU avoided answering the question related to Article 47. In yesterday's opinion, AG Kokott explicitly adopts the reference to Article 47 of the Charter. And rightly so, because the procedural rules at issue do not only impede the (full) effectiveness of Directive 93/13/EEC, they may also constitute an intolerable interference with "the right to an effective remedy before a tribunal" enshrined in Article 47. As AG Kokott observes (para. 114), when provisions of national law fall within the scope of EU law, it must be assessed whether they are compatible with EU fundamental rights (click here for a further analysis of Case 617/10, Åkerberg Fransson). Moreover, the CJEU has held in Sánchez Morcillo (para. 35) that: 

"the obligation for the Member States to ensure the effectiveness of the rights that the parties derive from Directive 93/13 against the use of unfair clauses implies a requirement of judicial protection, also guaranteed by Article 47 of the Charter, that is binding on the national court (see, to that effect, judgment in Banif Plus Bank, C‑472/11, EU:C:2013:88, paragraph 29). That protection must be assured both as regards the designation of courts having jurisdiction to hear and determine actions based on EU law and as regards the definition of detailed procedural rules relating to such actions (see, to that effect, the judgment in Alassini and Others, C‑317/08 to C‑320/08, EU:C:2010:146, paragraph 49)."

According to AG Kokott, several elements of the jura de cuentas procedure are problematic in light of the required level of consumer protection. These elements are partly considered with respect to the question whether the request for a preliminary ruling is admissible. They are nevertheless relevant for a substantive assessment of the Spanish procedural rules (cf. paras. 104-105 and 115-117). 
  • The first element is the 'reversal of the dispute' or 'shift of initiative' to the client/consumer, who needs to oppose the claim before the proceedings become contradictory (para. 41). Only then, the case will be more closely examined on the merits (paras. 44-47). 
  • Secondly, the decision of the Secretario Judicial is non-appealable and immediately enforceable, even though it does not obtain res judiciata force (paras. 48-50 and 91). In AG Kokott's view, enforcement of the decision is equated - by the Spanish legislator! - with the enforcement of judicial decisions, just like judgments given in preliminary relief proceedings (paras. 51-60). This means that there is neither an obligation for the Secretario Judicial to ex officio examine possible unfair terms, nor an opportunity for the client/consumer to raise a defence that would suspend the enforcement proceedings. 
  • Thirdly, the jura de cuentas procedure concerns a legal dispute (paras. 83-86) and has a mandatory, binding character, even though it is optional for lawyers (paras. 87-88). 
  • Fourthly, even if an ex officio examination of unfair terms would be possible at the enforcement stage, that would not be sufficient, for reasons of both process efficiency and the effectiveness of EU law (paras. 133-136). A decision would still be given and the client/consumer would receive a demand to pay, exercising pressure. Therefore, there is a risk that payment would take place without enforcement proceedings being necessary. 
  • Fifthly, filing opposition against enforcement cannot be compared to having the opportunity to oppose the claim before a decision is given (para. 136). Such an opposition would not suspend the proceedings, and would thus pave the way to the payment of potentially unfair claims (para. 137). 
Although these elements are not listed as such by AG Kokott, they directly support her conclusion that the procedural rules at issue are contrary to Article 47 of the Charter as well as Directive 93/13/EEC (read in conjunction with Directive 2005/29/EC concerning unfair business-to-consumer commercial practices). All these elements resonate with the right to effective judicial protection, which includes - inter alia - the right to an effective, proportionate and dissuasive remedy, respect for the rights of the defence, the right to be heard and the principle of equality of arms. The opinion demonstrates that Article 47 of the Charter can provide a framework for the assessment of procedural rules that govern legal disputes falling within the scope of EU law, in this case: a dispute about a contract possibly containing unfair terms (and unfair commercial practices). If and to what extent Article 47 and the principle of effectiveness or the 'full effect' of EU law overlap, remains to be seen. In this respect, the 'referring court' makes a distinction between judicial review in general (question 1) and ex officio examination under Directive 93/13/EEC (question 2). AG Kokott does not separate the notion of judicial review and Article 47 of the Charter from the context of Directive 93/13/EEC, probably because Article 47 has an accessory character: it always requires a connecting link with a substantive provision of EU law. That does not mean that Article 47 does not have anything to contribute. AG Kokott seems to recognise this in her opinion. 

The question of admissibility has not been addressed in this blog. However, AG Kokott's views as regards the independence of the Secretario Judicial (paras. 71-81) are worth reading. It is interesting to note that the Spanish government has argued that the Secretario Judicial cannot be considered as an 'externally' independent authority, which has sparked a discussion about the transfer of quasi-judicial competences away from the judiciary and the Rule of Law (cf. para. 86). If the CJEU follows AG Kokott's conclusion that the request should be declared admissible, it will be difficult to avoid a reference to Article 47, which is an expression of "the fact that the Union is a community based on the rule of law" (see the Explanations relating to the Charter of Fundamental Rights).