Course: Executives, Bureaucracies and Courts Instructor: Prof. Fabio Franchino The European Court of Justice, National Governements, and Legal Integration in the European Union Geoffrey Garrett, R. Daniel Keleman, Heiner Schultz

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Course Executives, Bureaucracies and Courts
Instructor Prof. Fabio FranchinoThe European
Court of Justice, National Governements, and
Legal Integration in the European UnionGeoffrey
Garrett, R. Daniel Keleman, Heiner Schultz

• Biassoni Davide
• matr. n. R07434
• Graduate School in Social, Economic and Political
  Sciences
• Ph.D. program in Political Studies

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Preliminary remarks

• the accretion of power by the European Court of
  Justice (ECJ) is the clearest manifestation of
  the transfer of sovereignty from nation-states to
  a supranational institution.
• the ECJ interprets EU treaties as if they
  represent a de facto constitution for Europe and
  exercises judicial review over laws and practises
  within member states. The ECJ has the power to
  declare extant national laws and the behaviour of
  national governments "EU-unconstitutional".
• Two interpretation of the European legal system's
  evolution
• legal autonomy approach the ECJ has been able to
  push forward its European integration agenda
  against the interests of some member states.
• political power approach national governments
  have not been passive and unwilling victims of
  European legal integration ? member governments
  (MGs) supported the ECJ activism and autonomy
  and, in turn, the judges of the ECJ are reticent
  to make decisions of which governments
  disapprove.

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Research outline

• Analysis strategic interaction between ECJ and
  national governments.
• Objectives the specifying conditions under which
  the ECJ makes decision that declare illegal
  national laws, regulations, or practises and
  exploring how MGs react to them.
• game theoretic model of the interaction between
  ECJ and MGs.
• Three hypothesis
• the greater the clarity of ECJ case law
  precedent, the lesser the likelihood that the
  Court will tailor its decisions to the
  anticipated reactions of member governments (H1).
• the greater the domestic costs of an ECJ ruling
  to a litigant member governments, the lesser the
  likelihood that the government will abide by an
  ECJ decision that adversely affects its interests
  (H2).
• the greater the activism of the ECJ and the
  larger the number of member governments adversely
  affected by it, the greater the likelihood that
  responses by litigant governments will move from
  individual noncompliance to coordinated
  retaliation (H3).

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Further remarks

• Common assumption ECJ is a strategic actor that
  is sensitive to the preferences of EU member
  governments.
• ECJ status independent and impartial interpreter
  of EU law ? ECJ has to minimize the appearance of
  succumbing to political pressures from interested
  parties.
• Three lines of cases that have been central to
  the broader process of European integration
• Bans on agricultural imports, where the ECJ
  decisions stood on the front line in the battle
  between protectionism and liberalisation.
• Equal treatment of the sexes to occupational
  pensions.
• ECJ decisions concerning state liability for the
  violation of EU law.

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The legal politics game
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The legal politics game

• noncooperative stage game
• the game is repeated indefinitely
• the first move is made by ECJ national
  law/practise is consistent with EU law? if yes
  ? status quo (Cc) conciliation if no ? if the
  member government (MG) abides by the ECJ decision
  then it has to change its national law/practise,
  else the MG has 3 types of reply
• in the second round, the Court takes into account
  the information it gained in the previous play of
  the game ? actors update their information.
• preference ordering of the ECJ Ca gt Cd gt Cc gt Cr
• preference ordering of the MG Gc gt Gr gt Ga gt Gd

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The legal politics game

• the ECJ has a clear interest in extending the
  Community law and its own authority to interpret
  it.
• Assumptions concerning MGs
• they support a powerful system of EU law in which
  the ECJ faithfully implement the governments'
  intentions as laid out in the EU treaty base.
• the more a member government benefits from the
  economic exchanges made possible by the rule of
  law in Europe, the greater is likely to be its
  respect for ECJ decisions.
• adverse decisions will always be costly for MGs ?
  the best outcome is the conciliation (status
  quo).
• General equilibria
• if the other MGs support the litigant government,
  the ECJ is not inclined to deliver an adverse
  decision, so that the outcome is the status quo
• else if they don't support the litigant MG, then
  the ECJ rules against the litigant MG which in
  turn accepts the decision.

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ECJ precedents

• a clear tension the desire not to make judgments
  that adversely affect the interests of MGs and
  the importance of legal consistency.
• cost of inconsistency for EJC are a function of
  the clarity of existing precedent.
• H1 the greater the clarity of EU treaties, case
  precedent, and legal norms in support of an
  adverse judgment, the greater the likelihood that
  the ECJ will rule against a litigant government.
• The preference ordering of the ECJ should be
  modified to take into account the clarity of
  legal precedent in a specific case. What if the
  ECJ has to take an adverse decision on the basis
  of a case law precedent?
• Adverse decision could become a dominant strategy
  (Cr gt Cc), no matter the reaction of the litigant
  government and also the other EU governments ?
  the EJC declare a given law/practise to be
  illegal and the best outcome (Gc) for the member
  government is no longer feasible.
• Clarity of precedent it is ultimately an
  empirical question.

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The litigant government

• Governments will more likely abide by an ECJ
  adverse decision when the interests adversely
  affected by the decision are not damaged in a
  great extent.
• H2 The greater the domestic costs of an ECJ
  ruling to a litigant government, the lesser the
  likelihood that the government will abide by an
  adverse decision.
• if the government is sufficiently concerned about
  the domestic costs of an adverse decision, then
  Gd gt Ga ? in this case the litigant government
  has a dominant strategy in not accepting the ECJ
  decision, no matter the other governments would
  do. 

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Other member governments

• The most effective way that MGs can restrict ECJ
  activism is to revise EU treaties but the
  threshold to such constitutional revision is very
  high unanimity ratifications. An easier path
  is to passage of new EU legislation (directives,
  regulations, decisions, secondary legislation) to
  counteract the effects of ECJ decisions.
• When should we expect the EU governments
  collectively seek to restrain ECJ activism?
• the greater the importance of a particular case
  to more MGs, the greater the likelihood that they
  will collectively support a litigant government
  seeking to defy an adverse judgment.
• the greater the number of cases within a similar
  branch of the law that the Court adversely
  decides, the greater the likelihood of a
  collective response to constrain the ECJ.
• H3 the greater the potential costs of a case,
  the larger the number of governments potentially
  affected by it, and the large the number of
  adverse decisions the ECJ makes in similar areas
  of the law, the greater the likelihood that the
  EU member governments will respond collectively
  to restrain EU activism. 
• The litigant MG would know that its defiance
  would be supported by its EU colleagues and so it
  will never accept an adverse decision because it
  knows it can rely on the support of the other MGs
  to pass new secondary legislation or treaty
  revisions (Gr gt Ga). As for the ECJ Cc gt Cr, it
  will not make an adverse decision.

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Three lines of cases

• a) Import bans on agricultural products
• Domestic deregulation was combined with
  reregulation at the EU level.
• 1974 the Charmasson case involved a request of
  annulment of a quota for banana imports imposed
  by the French government on Oct. 28th 1969.
• The contradictions between a free-trade article
  (Article 33) and the agricultural provisions
  (Article 38-46) gave the ECJ leeway in
  interpreting the Rome treaty. The ECJ made a bold
  pro-integration interpretation by ruling that
  national marketing organizations could not stand
  in the way of free trade after the end of the
  transition period ? the French government opposed
  this interpretation and was likely to defy the
  ECJ (consistency with H2). And also the ECJ's
  behaviour is consistent with H3 it had little
  reason to expect a collective response from the
  member governments ? treaty revision was very
  unlikely as few other products had not yet been
  incorporated into the Common Agricultural Policy
  (Cd gt Cc).
• the Potato case the U.K. Government argued that
  under special provision pertaining to its
  accession to the EU in 1973, it was entitled to
  maintain national market organizations that
  existed at that time (in spite of the Treaty of
  Rome) ? by the precedent of the Charmasson case,
  the ECJ ruled against the U.K (consistency with
  H1).

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• the Sheep Meat case the French government did
  not challenge principle encompassed in the
  Charmasson or Potato case, but just asked a
  temporal extension to maintain its national
  market organization for mutton. As the ECJ held
  that the French sheep meat regime had to be
  discontinued, France refused to comply with the
  Court's ruling ? "sheep meat war" the domestic
  costs of the Sheep Meat decision led the French
  government to defy the ECJ (consistency with H2).
• Could the ECJ make an adverse decision against
  France?
• if the ECJ violated the precedent, it would lose
  legitimacy as an impartial arbiter.
• the Court had little reason to believe that the
  other MGs would join the litigant French
  government.
• Solution a common market organization for sheep
  meat was established at the Dublin meeting of the
  Council in May 1980. French President's proposal
  to reform the ECJ was not supported by other
  member governments.

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b) Equal treatment of the sexes

• art. 119 Treaty of Rome equal pay for equal work
  --gt equal conditions for men and women.
• Controversial case age pensions ? Defrenne No.
  1, 2 Bilka with the latter one, occupational
  pensions constituted pay under Article 119
  occupational pensions constituted pay and that
  denying access to an occupational pension scheme
  to a group consisting predominantly of women
  violated Article 119.
• this would seem inconsistent with H3 because the
  Court could have expected a collective
  restraining response from the EU member
  governments. The Council, two months after Bilka,
  passed a new directive on occupational pensions.
• the Barber case the Court ruled that sex-based
  differences in pensionable ages violated Article
  119 and had to be eliminated ? its language was
  very vague and ambiguous did the ECJ make a
  vague ruling to gauge the reaction of member
  governments? Swift and strong reaction by MGs as
  they were worried by the enormous financial
  implications (H3) of the Barber decision ? treaty
  revision a new restrictive protocol attached to
  the Maastricht Treaty.

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• Important remarks
• in instances where the potential domestic
  ramifications of adverse ECJ decisions are great,
  member governments are unlikely to passively
  abide by Court decisions (consistency with H2).
• Court decisions with costly domestic
  ramifications for all member governments are
  likely to provoke collective responses to rein in
  the Court (consistency with H3).
• this is not a game of complete information
  because if it were, the Court would not have
  pushed so hard for an expansive interpretation of
  equal pay, so the Court was not able to
  anticipate the strength of government opposition.
  As precedents were vague, the Court had room to
  modify its interpretations in subsequent
  judgements to accommodate member government
  preferences (consistency with H1).

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3) State liability for the violation of EU law

• the problem of transposition of EU directives
  into national laws pre- and post-Maastricht.
• 1991 Francovich decision the ECJ ruled that
  governments must compensate individuals for the
  loss caused to them resulting from the
  nonimplementation of directives, even those
  without direct effect.
• The Court has still to establish a system of
  state liability for the violation of EU law.
• Important remarks
• The best way to ensure real member government
  compliance with directives was for individuals to
  bring cases against their governments in national
  courts for violations of their rights under EU
  law.
• Francovich ruling it concerned Italy's failure
  to implement a directive intended to ensure that
  employees received full payments of salary
  arrears if their employers became insolvent. It
  represented a radical change in the Court's
  intervention inside member states.

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• How far should state liability go? An extensive
  interpretation would lead to the establishment of
  an EU-wide system of state liability for the
  violation of EU law ? the capstone of the ECJ's
  strategy to expand its influence. How did
  governments react to this threat?
• Government Responses to Francovich. A strong
  opposition to the expansion of ECJ powers was
  lead by the British Conservatives who put forward
  a proposal establishing that a qualified majority
  in the Council should be able to overturn EJC
  decisions. On the other hand, France and Germany
  attach a positive weight to the existence of an
  effective legal system in Europe (consistency
  with H3).
• 4) Generally, the political consensus in the EU
  seems to aim at the limitation of Francovich
  ruling. 

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Toward a system of state liability for the
violation of EU law

• How should we expect the ECJ to react to this
  political environment? Given that the costs of
  Francovich to all member states are potentially
  enormous (H2, H3) and given that the exact nature
  of the precedent set in the case in unclear (H1),
  we anticipate that in the future the Court will
  voluntarily restrict the application of the state
  liability doctrine in ways desired by the bulk of
  member governments.
• British Telecommunications and Dillenkofer cases
  the ECJ followed government demands that state
  liability should be a matter of national law,
  subject to a minimum EU standard based on the
  principles governing the liability of EU
  institutions. These cases suggests that the ECJ
  is willing to tailor its state liability rulings
  in ways that the core member governments,
  especially France and Germany, wish.

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Conclusions

• ECJ-MGs relationship there is a middle ground to
  analyze it balancing between the legal autonomy
  and political power perspectives.
• the empirical analysis generates strong support
  for the three hypothesis.
• the ECJ is manifestly neither master of legal
  integration nor servant of national governments.
• this framework can be applied also in the context
  of NAFTA and WTO.