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EU Commercial Law 2011Introduction

Professor, dr.jur. Vibe Ulfbeck ([email protected])Professor, dr.jur. Jens Schovsbo ([email protected])



Introducing the Course

• The EU and EU Law (1 class)• EU Commercial Law

• Trade in Goods (Prof. Ulfbeck: 4 classes)• A: General contract law• B: Sale of goods• C: Product liability• D: Carriage of goods

• Trade in Protected Goods and Rights (Prof. Schovsbo: 4 classes)

• A: Protecting IPR in the EU• B: Trade in IPR protected goods: Parallel

Importation and Exhaustion • C: Trade in Rights: Tech.-trans agreements and

refusal to license under competition law



EU



EU …..



EU: A hybrid

• Supranationalism: Power (“sovereignty”) is transferred from the national level to authorities (i.e. the EU by its institutions) above the governments of the Member States.

Distribution of votes for each Member State in the Council:Germany, France, Italy, United Kingdom 29 Spain, Poland 27 Romania14 Netherlands

13 Belgium, Czech Republic, Greece, Hungary, Portugal 12 Austria, Bulgaria, Sweden 10 Denmark, Ireland, Lithuania, Slovakia, Finland 7 Cyprus, Estonia, Latvia, Luxembourg, Slovenia 4 Malta 3 TOTAL 345

• Intergovernmentalism: Members of the national governments retain power and take legislative and executive decisions together.



As a result: Split competences

Example from transport law:

The new UN convention on carriage of goods wholly or partly by sea (2009):

- Liability rules: Each member state is competent

- Jurisdiction issues: The EU is competent



The Law of the EU: The Founding Treaties

• The Treaty establishing the European Community (Rome Treaty, effective since 1958)

• The Treaty on European Union (Maastricht Treaty, effective since 1993).

• The Lisbon Treaty (effective since December 13 2009). Amended and renamed the Rome-treaty as the Treaty on the Functioning of the European Union (TFEU)

• Streamlined voting rules (more majority voting)• Gave more power to the European Parliament• Created new positions: President of the European Council and a

High Representative of the Union for Foreign Affairs and Security Policy

• Made the Union's bill of rights, the Charter of Fundamental Rights, legally binding



Institutions of the European Union

• Council (the “legislator”)• The Council is the EU's main decision-making body. It represents the

member states, and its meetings are attended by one minister from each of the EU’s national governments.

• Presidency• The Presidency of the Council rotates every six months.

• European Commission (the “executive”)• The Commission is independent of national governments. Its job is to

represent and uphold the interests of the EU as a whole. It drafts proposals for new European legislation, which it presents to the European Parliament and the Council.

• The European Parliament • Elected by the citizens of the European Union to represent their interests.

• The Court of Justice of the European Union (Luxembourg)• the EU Court of Justice, • the General Court (ex “The Court of First Instance”) and • the Civil Service Tribunal

• Other• European Court of Auditors, European Central Bank, European Ombudsman



EU Legal Instruments• Primary legislation

• The Treaty

• Secondary legislation (Article 288)• Regulations have general application. They are binding in their entirety and

directly applicable in all Member States.• Directives are binding upon each Member State as to the result to be

achieved, but leave the choice of form and methods to the national authorities.• “Minimum”: Members can go further and protect “more”.• “Total” (“maximum”): Members cannot go further.

• Decisions are binding in their entirety upon those to whom they are addressed.

• Recommendations and opinions have no binding force.



Legal principles: Supremacy and Direct Effect

• Supremacy: Where a conflict arises between EU law and the law of a Member State, EU law takes precedence, so that the law of a Member State must be disregarded.

• Direct effect: • Vertical direct effect concerns the relationship between EU

law and national law - specifically, the state's obligation to ensure its observance and its compatibility with EU law. Therefore, citizens may rely on it in actions against the state.

• Horizontal direct effect concerns the relationship between individuals (including companies). If a certain provision of EU law is horizontally directly effective, then citizens are able to rely on it in actions against each other.

• Directives are usually incapable of being horizontally directly effective. Certain provisions of the TFEU and Regulations are capable of being directly enforced horizontally.



The Court of Justice of the European Union (source: curia.europa.eu)

• Seat in Luxembourg• Consists of three courts:

• the Court of Justice (EUCJ), • the General Court (ex CFI) (created in 1988), and• the Civil Service Tribunal (created in 2004).

• Ensures that the law is observed in the interpretation and application of the Treaties.

• Reviews the legality of the acts of the institutions of the European Union,

• Ensures that the Member States comply with their obligations under Union law,

• Interprets Community law at the request of the national courts and tribunals (Art. 267 (see next slide)).

• Since their establishment, approximately 15.000 judgments have been delivered by the three courts.

• Accused of being a policy maker



The EUCJ/preliminary rulings

Article 267 • The Court of Justice shall have jurisdiction to give preliminary rulings

concerning:(a) the interpretation of this Treaty;(b) the validity and interpretation of acts of the institutions of the

Community [i.e. Regulations, Directives etc.] …;….Where such a question is raised before any court or tribunal of a Member

State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon.

Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court of Justice.

• NB: On this basis the national court decides the “real case”

• Acte clair: When the “law is clear” there’s no obligation.



Languages: Multilingualism

• REGULATION No 1 determining the languages to be used by the European Economic Community (OJ L 17, 6.10.1958, p. 385):

• Article 1: The official languages and the working languages of the institutions of the Union shall be Bulgarian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish. (i.e. 23 official languages)

• As a consequence:• Documents may be sent to EU institutions and a reply received in any of

these languages • EU regulations and other legislative documents are published in the official

and working languages• Each of the official languages of the European Union can be the language of

cases before the ECJ

• However• English, French, and German are “more equal” than the other languages

and most working documents etc. are only available in those languages



The Internal Market

PART THREE, UNION POLICIES AND INTERNAL ACTIONSTITLE I, THE INTERNAL MARKETArticle 261. The Union shall adopt measures with the aim of establishing

or ensuring the functioning of the internal market, in accordance with the relevant provisions of the Treaties.

2. The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties.

3. The Council, on a proposal from the Commission, shall determine the guidelines and conditions necessary to ensure balanced progress in all the sectors concerned.



The Four Freedoms and the Fith

The Four:1. The free movement of goods2. The free movement of capital 3. The free movement of services 4. The free movement of persons

The Fith:5. Free movement of knowledge



Free Movement of Goods

• Customs duties and taxation

• Quantitative restrictions and measures having equivalent effect

• Article 34 and article 36



Articles 34 and 36

Article 34 (ex 28 (ex ex 30))Quantitative restrictions on imports and all measures having

equivalent effect shall be prohibited between Member States

Article 36 (ex 30 (ex ex 36))The provisions of Articles 34 and 35 shall not preclude

prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.



How Arts. 34 and 36 work in practice

• Case 8-74, Procureur du Roi v Benoît and Gustave Dassonville, Judgment of the Court of 11 July 1974

• Case 120/78, (Cassis de Dijon) Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein, Judgment of the Court of 20 February 1979

• Joined cases C-267/91 and C-268/91, Bernard Keck and Daniel Mithouard, Judgment of the Court of 24 November 1993

• Case C-142/05, Åklageren v. Percy Mickelsson and Joakim Roos, Judgment of the Court of 4 June 2009



Dassonville

• The problem• whether a national provision prohibiting the import of goods

bearing a designation of origin where such goods are not accompanied by an official document issued by the government of the exporting country certifying their right to such designation constitutes a measure having an effect equivalent to a quantitative restriction within the meaning of article [34] of the Treaty

• The Rule • All trading rules enacted by member states which are capable

of hindering, directly or indirectly, actually or potentially, intra-community trade are to be considered as measures having an effect equivalent to quantitative restrictions.



Cassis de Dijon/1

• The problem:• The compatibility with community law of a provision of the

German rules relating to the marketing of alcoholic beverages fixing a minimum alcoholic strength for various categories of alcoholic products.

• The Rule:• Obstacles to movement within the community resulting from

disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision , the protection of public health , the fairness of commercial transactions and the defence of the consumer.



Proportionality

13. … the fixing of limits in relation to the alcohol content of beverages may lead to the standardization of products placed on the market and of their designations , in the interests of a greater transparency of commercial transactions and offers for sale to the public .

However , this line of argument cannot be taken so far as to regard the mandatory fixing of minimum alcohol contents as being an essential guarantee of the fairness of commercial transactions , since it is a simple matter to ensure that suitable information is conveyed to the purchaser by requiring the display of an indication of origin and of the alcohol content on the packaging of products .



Cassis de Dijon

14. It therefore appears that the unilateral requirement imposed by the rules of a member state of a minimum alcohol content for the purposes of the sale of alcoholic beverages constitutes an obstacle to trade which is incompatible with the provisions of article [34] of the Treaty.



Keck and Mithouard

The problem:Is the prohibition in France of resale at a loss compatible with the principles of the free movement of goods?



Keck and Mithouard/the answer

(16) … contrary to what has previously been decided, the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment, so long as those provisions apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States.

(17) Provided that those conditions are fulfilled, the application of such rules to the sale of products from another Member State meeting the requirements laid down by that State is not by nature such as to prevent their access to the market or to impede access any more than it impedes the access of domestic products. Such rules therefore fall outside the scope of Article [34] of the Treaty.



Percy Mickelsson

The question:”Are Directive 94/25 [relating to the safety characteristics of recreational craft] or, as the case may be, Articles 28 EC and 30 EC to be interpreted as meaning that they preclude national regulations, such as those at issue in the main proceedings, which prohibit the use of personal watercraft on waters other than designated waterways?”

The answer:The Directive and the TFEU do not preclude such national regulations, provided that:

– the competent national authorities are required to adopt the implementing measures provided for in order to designate waters other than general navigable waterways on which personal watercraft may be used;

– those authorities have actually made use of the power conferred on them in that regard and designated the waters which satisfy the conditions laid down in the national regulations, and

– such measures have been adopted within a reasonable period after the entry into force of those regulations.

It is for the national court to ascertain whether those conditions have been satisfied in the main proceedings.



Status

• The legal effects of the cases:• Product related restrictions: Cassis de Dijon applies, i.e.

prohibited by Art. 34 and only legal if permitted by Art. 36.• Rules relating to selling arrangements: Allowed by Art. 34 unless

they are discriminatory• Rules relating to the use of products: Allowed if proportionate

• The Policy implications of the cases• Members are prevented from imposing certaing restrictions

relating to either products or selling arrangements. Such restrictions must be removed. This effect is known as ”negative harmonization”.

• At the same time Members are allowed to keep some restrictions (i.e. those which are not caught by Art. 34 or are allowed by Art. 36). This means that national rules may vary. To further intra community trade such rules need to be harmonised. This is known as ”positive harmonization”.



Summing up: Harmonization

• The First Step: Negative Harmonization• Driven by the ECJ which was policing barriers to intra community

trade in order to remove obstacles to the Free Movement of Goods. The result of this is deregulation (i.e. the abolition of national rules).

• The Second Step: Positive Harmonization• Harmonizes barriers which cannot be removed (because they

serve legitimate purposes) in order to create a ”level playing field”. This process is driven by legislation (notably directives).

• ”EU Commercial Law” is driven both by positive and negative harmonization elements:

• Treaty rules remain important but mainly as setting the outer limits

• Huge amount of legislation• Values become important

• Ex.: Consumer protection has become a goal in itself (TFEU, Title XV)).