104. Reliance on the conferral principle. A second decisive feature of the strategy developed by Member States in cases involving their retained powers relates to the fact that they have brought similar arguments before the Court of Justice in the various fields analyzed herein. Altogether, these arguments boil down to claiming that, since the European Union has no, or very limited, jurisdiction in these fields, European Union law should not apply to measures taken in the exercise of these national powers. This is illustrated by Tas-Hagen, a case involving the compensation of civil war victims. The United Kingdom government argued that the Treaty provisions on European Union citizenship could not apply because:
[R]eliance on Article 18(1) EC presupposes that the situation concerned relates to a matter covered by Community law and that Community law is also applicable in that respect
‘ratione materiae.’32
Member States have developed the same type of reasoning in most of the fields, such as social security,33 direct taxation,34 nationality,35 social rights,36 the compensation of civil war victims,37 or the enforcement for the recovery of debts.38 In addition, it is significant that national courts themselves happen to express doubts as to the hypothetical applicability of European Union law in fields where European Union action is excluded or inexistent, such as direct taxation:
Noting that direct taxation falls within the exclusive powers of the Member States, the national court expresses doubts as to the possibility of applying Article 48 to national legislation in this sphere. In particular, ‘… nowhere does the EEC Treaty confer express authority to harmonize the direct taxes of the Member States.’39
In addition to their similarity, Member States’ arguments are also specific to the fields involving powers retained by Member States, and are usually not used in traditional free movement cases.
Member States have designed several strategies in order to challenge the applicability of
31 M.-P. GRANGER, “Les stratégies contentieuses des Etats devant la Cour,”, above, n. 30, 87.
32 Opinion in Case C-192/05, Tas-Hagen, [2006] ECR I-10451, 28.
33 See, for instance, Case C-158/96, Kohll, [1998] ECR I-1931, 16.
34 See, for instance, Case C-204/90, Bachmann, [1992] ECR I-249, 10.
35 See, for instance, Case C-135/08, Rottmann, [2010] ECR I-1449, 37.
36 See, for instance, Case C-438/05, Viking, [2007] ECR I-0779, 39s.
37 See, for instance, the Opinion in Case C-192/05, Tas-Hagen, [2006] ECR I-10451, 28.
38 See the Opinion in Case C-224/02, Pusa, [2004] ECR I-5763, 12.
39 Opinion in Case C-279/93, Schumacker, [1995] ECR I-225, 16.
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European Union law. These strategies revolve, in one way or another, around the conferral principle.
105. Thus, unsurprisingly, Member States have based some of their arguments on Treaty provisions excluding explicitly European Union action. For instance, one of the arguments brought before the Court in Bidar, a case on higher education involving the financial support of incoming students, relied on Article 149 EC (now Article 165 TFEU), the first paragraph of which only confers complementary action to the European Union.40 Similarly, in Laval, the Danish government referred to Article 137§5 EC (now Article 153§5 TFEU), according to which Article 153 TFEU “shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs.” The same government inferred from this provision that “the Community has no power directly or indirectly to regulate” the right to take collective action.41 Likewise, in Rottmann, the Member States made reference to Declaration 2, annexed to the Maastricht Treaty, and claimed that nationality matters fell within the powers retained by Member States.42 The silence of the Treaty has also been used to infer the inapplicability of European Union law, as evidenced by the aforementioned statement of the national court in Schumacker.43 Last but not least, Member States have resorted to arguments which, although based on the conferral principle, are nonetheless of a less formalistic nature. They have asserted, on numerous occasions, that the inapplicability of European Union law flows from the impossibility to establish a connecting factor between the fundamental freedoms guaranteed by the Treaty and the material scope of the national measure at issue. This reasoning was well summarized by the Advocate General in Morgan & Bucher, another case on higher education involving the refusal by Germany to confer a study grant on resident students willing to study abroad:
Several of the written observations (…) claim that the European Union has no jurisdiction over study grants granted by the Member States. Since Community matters are not involved, the rights conferred by Article 18 EC are unconnected with the facts of the questions referred for a preliminary ruling and no reply should be given to the national court.44
40 Opinion in Case C-209/03, Bidar, [2005] ECR I-2119, 37.
41 Opinion in Case C-341/05, Laval, [2007] ECR I-11767, 48. See also Opinion in Case C-438/05, Viking, [2007]
ECR I-0779, 20 and Case C-438/05, Viking, [2007] ECR I-0779, 39.
42 Case C-135/08, Rottmann, [2010] ECR I-1449, 37.
43 Case C-279/93, Schumacker, [1995] ECR I-225.
44 Opinion in Cases C-11/06 & 12/06, Morgan & Bucher, [2007] ECR I-9161, 79 (Emphasis added).
Ch. 2. Section 1. The arguments put forward by Member States 87 This statement shows once again that, in the eyes of Member States, the applicability of European Union law, to be established, must be linked to the existence of powers held by the European Union in the field involved. In other words, they see the scope of application of European Union law as strictly corresponding to the scope of the powers of European Union law.
106. The roots of Member States’ line of reasoning. This specific line of reasoning does not find its roots in cases involving powers retained by Member States. Member States have, as a matter of fact, maintained similar positions in other cases. A review of the Court of Justice case law shows that it goes back to an early ruling, Commission v. France, decided in 1969 in the field of state aid.45 This case concerned a preferential rediscount rate for exports granted by the Banque de France to French exported products alone. In two decisions, the European Commission authorized this aid, but made it conditional upon several requirements that France failed to comply with.46 The Commission subsequently launched infringement proceedings. Against this background, the French government advanced the following argument:
[T]he French Republic alleges that “the rules of the Treaty are deficient in the monetary sphere” and states that the fixing of the discount rate falls directly within monetary policy which is a matter in which the Member States alone are competent and that therefore by starting the proceedings […] the Commission acted unlawfully by arrogating to itself jurisdiction which the Treaty denies it.47
Thus, as early as 1969, a Member State was using the conferral principle with the view to challenge the applicability of European Union law. Indeed, it already linked the lack of European Union jurisdiction directly with the inapplicability of European Union law.
107. The expression of a dual understanding. Altogether, the various arguments developed by Member States reflect the same understanding of the interplay between the respective legal orders of the European Union and of the Member States. This understanding implies the need for a strict correspondence between the applicability of European Union law in a given field, and the existence of European powers in the very same field.48 This type of argument may be
45 Cases 6 & 11/69, Commission v. France, [1969] ECR 523.
46 Ibid., 1-8.
47 Ibid., 10. See also Ibid., 12: the French government defends the view that the Commission acted within a
“sphere which belongs exclusively to the jurisdiction of the Member States.”
48 See Case C-341/05, Laval, [2007] ECR I-11767, 86: “The Danish and Swedish governments submit that the right to take collective action in the context of negotiations with an employer falls outside the scope of Article 49 EC, since, pursuant to Article 137(5) EC, as amended by the Treaty of Nice, the Community has no power to
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described as “dual.” It indeed relies on the assumption that the respective spheres of jurisdiction of the European Union and of the Member States are independent from each other, and that there is and should be a strict dissociation between the two. Thus, this is tantamount to claiming that each entity – i.e. the European Union and the Member States – should be supreme only within its own spheres of powers. This reveals Member States’ view that they should enjoy absolute freedom to define and exercise their retained powers. They understand their powers as being discretionary, the exercise of which should not be constrained by the European legality principle or, in other words, should fall outside the Court of Justice own jurisdiction. The conditions of such an exercise should therefore only be subject to domestic judicial review. Accordingly, the arguments developed by Member States in cases involving their retained powers also reflect their understanding of the primacy principle.
Fundamentally, Member States argue that European Union law should trump national laws only within the spheres of European Union powers, while Member States should be supreme within the spheres of their retained powers – this entails that the European Union primacy principle should not apply to spheres where the Member States have exclusive jurisdiction.
They therefore promote a strict interpretation of the primacy principle, which coincides with the definition given by J. H. H. WEILER:
The principle of supremacy can be expressed, not as an absolute rule whereby Community (or federal) law trumps Member State law, but instead as a principle whereby each law is supreme within its sphere of competence.49
In response to these arguments, the Court of Justice has accepted that the scope of the powers of the European Union can be used as a yardstick to define the scope of application of European Union law only on very few occasions. Indeed, it has developed, for the most part, a different way of reasoning, thereby expressing a different understanding of the interplay between the respective legal orders of the European Union and of the Member States.
regulate that right.” See also D. RITLENG, “Les États membres face aux entraves,” in L’entrave dans le droit du marché intérieur, (Ed.) L. AZOULAI, (Brussels: Bruylant, 2011), 304.
49 J. H. H. WEILER,“The Transformation of Europe,” in The Constitution of Europe: Do the new Clothes have an Emperor? And other Essays on European Integration, (Cambridge: Cambridge University Press), 1999, 21.
Ch. 2. Section 2. The Court of Justice line of reasoning 89 SECTION 2.THE COURT OF JUSTICE LINE OF REASONING
108. In all the rulings analyzed herein, the Court finds that European Union law is applicable. The purpose of this Section is to assess how it proceeds to justify the applicability of European Union law in fields where the European Union has nonetheless no, or very limited, jurisdiction. To this end, I first shed light on the defining feature of the assessment of the Court of Justice in the applicability stage of cases involving powers retained by Member States.
This assessment is based on the distinction between existence and exercise of power. I then discuss the implications of such an approach, and I demonstrate that it leads to the disjunction of the scope of application of European Union law from the scope of the powers held by the European Union.