Thursday 1 February 2024

Saying Nothing much at all, to General Acclaim – The Windsor Framework Relaunch

 



Colin Murray, Professor of Law, Newcastle Law School

Photo credit: en:User:Dom0803, via Wikimedia Commons

The landing space in which to do a deal on the Windsor Framework and make it stick, second time round, was remarkably small. The hard work of agreeing with the EU an approach to the rules covering trade in goods involving Northern Ireland which would produce as little friction as possible between different parts of the UK whilst simultaneously safeguarding the EU Single Market had been done almost 12 months ago. This, however, had not brought an end to the Democratic Unionist Party’s (DUP’s) boycott of the Northern Ireland Assembly.

This meant that the UK Government had appease multiple parties as it tried to persuade the DUP that the special post-Brexit trading arrangements for Northern Ireland are not a threat to its place in the UK. It had to be seen to provide further concessions to the DUP to finally get the deal over the line, while simultaneously not doing anything that could be regarded as threatening to the EU single market access for Northern Ireland goods provided by the reworked Protocol. Looming over this difficult balancing act was the threat of Brexit’s most ardent supporters within Rishi Sunak’s own party, who remained anxious lest the new deal introduce an enhanced degree of alignment between UK law and EU law post Brexit (as unhelpfully splashed in the Telegraph).

It turns out that Sunak’s formula for performing such a complex feat has been to announce as little as possible as loudly as possible (a masterclass in the Yes, Prime Minister, “radical tie for sober announcement” approach to policy). The new Command Paper is more than twice as long as the Windsor Framework Command Paper of February 2023 and proclaims just how much it matters (derivatives of “important” appear more than 50 times in the text, buttressed by nearly 30 uses of forms of “significant”). In appreciation of how well a ship building metaphor plays in Northern Ireland, commitments are “copper fastened” fully five times in the text.  

Announcing the new package in Parliament, the Northern Ireland Secretary declared that the Conservative Party was “the party of the Union”. You could be forgiven for thinking at this point that he had not read the document, for it is repeatedly damning of the Conservatives’ record in office. The Command Paper laments that failing to respond to Unionist concerns during negotiations over Brexit had “undermined economic and political stability in Northern Ireland” (para 16) and lamented that “The decision of the then Government to drop UK Internal Market Act clauses that would have protected NI-GB trade meant that unfettered access was placed in legal jeopardy” (para 27). If only Rishi Sunak could find out who was Chancellor of the Exchequer at the time of that decision.

Such is the DUP’s fury over the undermining of their position by the Conservatives, however, that the efforts to address these concerns are a necessary part of the package, notwithstanding the deflection of blame onto “the then Government”. What is perhaps more surprising are some of the tonal slips. There are repeated reference to “the sense” or “the perception” of the Union being under threat, so as to give Sunak’s government enough cover to claim to be addressing DUP concerns without ever acknowledging that it accepts them wholesale.

The most practically significant elements of the Command Paper relate to the expansion and rebranding of the “green lane” arrangements by which goods not generally believed to be at risk of onward movement into the EU as they are moved from Great Britain into Northern Ireland are subject to a minimal regime of checks based around specific risks. These risks are identified on the basis of analysis of real-time trade flow data shared with the EU.  It is important to note that these developments were to a large extent foreshadowed in the Windsor Framework, as the operation of data sharing and risk management processes became embedded. We are less than a year on from the acknowledgment that “[t]hese protections are also not static, with specific recognition in the agreement of the need to monitor, and as necessary adapt to, other changes in the future” (Windsor Framework Command Paper, 2023, para 50). That the rebranded internal market lane has been pledged to be operative “as soon as possible” speaks to the need for the EU to accept the adequacy of the processes in meeting the UK’s obligations.

Alongside these changes come an agreement with the EU, and a draft legal text, which when concluded at the next Joint Committee meeting will enable businesses operating in Northern Ireland to have full access to goods imported into the UK under the UK’s post-Brexit trade agreements. Much as hill farmers in Tyrone are unlikely to be jumping for joy at the prospect of direct competition from New Zealand lamb, this development does close off a complaint that Northern Ireland is experiencing post-Brexit trading rules in a way that is distinct from (and for some, disadvantageous to) the arrangements for the rest of the UK.

The DUP’s Gavin Robinson was eager to draw attention to this change:

“We were told that there would be no legal change to the Windsor framework or the EU text, yet—this was part of the process of ensuring trust and commitment—colleagues will have noticed the publication just yesterday of more than 60 pages of legislative changes to text on the European perspective”

It is accurate to state that Joint Committee decisions have legal status equal to Withdrawal Agreement provisions, but this is better regarded as an outworking of the Windsor Framework rather than a change to its core text. The Windsor Framework Command Paper made it clear that this development was a priority for the UK and the EU (see para 15), it is just one that has taken some months come to fruition given the complexity of the subject matter. As the new Command Paper notes, “There is always the potential for issues to emerge, and for challenges to need to be addressed. That capacity for ongoing dialogue, and for further development as may be required, is acknowledged in the Windsor Framework and its accompanying political declaration” (para 35). No one should be jumping up to say that Brexit is finally done.

One key take away, which extends from the Windsor Framework into the new Command Paper, is that the UK Government’s focus has been on trading rules and not goods production. The DUP’s Carla Lockhart put the issue directly to Chris Heaton-Harris in the Commons; “Will the Secretary of State therefore confirm whether Northern Ireland still remains under the EU’s single market laws for the production of food and agrifood?” This drew a terse response from the Secretary of State; “May I recommend that she re-reads the Windsor framework and indeed the Command Paper?” If anyone does reread the documents they will find very little relevant to goods production, and the UK Government might be better advised not to attempt to obscure the reality that their efforts have been focused on securing (dual) market access for Northern Ireland produced goods, not attempting to reset the rules governing goods production established under the Protocol.

In parts of the Paper, the UK Government become quite shrill in their insistence about the limitations to the operation of EU law in Northern Ireland after Brexit; “The important starting point is that the Windsor Framework applies only in respect of the trade in goods - the vast majority of public policy is entirely untouched by it” (para 46). It is impossible not to see this as predominantly for the consumption of its own MPs, because the discussion is couched entirely in terms of the Windsor Framework having no impact on the Rwanda policy.

This is a strange flex in the middle of a document about trade and Northern Ireland, and amounts to an attempt to deny any general significance to the “non-diminution” of rights commitment under Article 2. The problem for these claims is that the non-diminution commitment does encompass elements of EU law like the Trafficking Directive which means that different rights protections are at issue in Northern Ireland by comparison to the rest of the UK. The Command Paper, perhaps unsurprisingly, makes no mention of the fact that the Northern Ireland Human Rights Commission is currently engaged in litigation challenging the Illegal Migration Act 2023 for what it regards as breaches of Article 2.

The new legislative protections for Northern Ireland’s place in the Union is where the document goes full Houdini. In discussing the UK Supreme Court’s Allister judgment, the Command Paper is at pains to assert that the UK Parliament is fully sovereign and has “taken back control” post Brexit (“Importantly, the Supreme Court importantly recognised the UK’s sovereignty, exercised through Parliament”, at para 51, which I guess must mean it is doubly important). But just a few pages after this reminder that nothing is “permanent or irreversible” in this Government’s account of the UK Constitution, come the supposed guarantees of Northern Ireland’s place in the Union.

The most significant of these come in the form of statutory instruments (the Windsor Framework (Constitutional Status of Northern Ireland) Regulations 2024, the Windsor Framework (Internal Market and Unfettered Access) Regulations 2024 and the Windsor Framework (Marking of Retail Goods) Regulations 2024), which, promulgated under the European Union Withdrawal Act, allow for far ranging changes to primary legislation, including the Act itself. This allows these blocks of the deal to be put in place rapidly, and Stormont restored. It also, of course, allows for the whole process to be completed with cursory parliamentary scrutiny.

The Windsor Framework (Constitutional Status of Northern Ireland) Regulations 2024 begins with an amendment to section 38 of the European Union (Withdrawal Agreement) Act 2020, asserting that the Windsor Framework operates without prejudice to the “constitutional status of Northern Ireland as part of the United Kingdom”. This is constitutional surplusage. The whole point of the legislation is to implement an international agreement, and it is therefore to be read in light of that agreement. And Article 1 of the Northern Ireland Protocol, as remixed by the Windsor Framework, affirms that it operates “without prejudice” to Northern Ireland’s constitutional status.

This Statutory Instrument then takes an interesting turn. It inserts section 38A into the 2020 Act, which purports to ban any future UK Government from ratifying any new agreement with the European Union “that would create a new regulatory border between Great Britain and Northern Ireland”. Two observations can be made of this pledge. The first is that the horse has very much bolted. The Windsor Framework provides a continuing mechanism for new and amended EU law relating to trade in goods to apply to Northern Ireland (subject to the requirements of the Stormont veto, which UK Governments can ultimately override if they disagree with a use of it). There is thus no need for any new Agreement – a process of response to change in EU law is baked into the existing arrangements and this new stricture will not apply to it. Second, anyone who seeks to put much weight on this pledge was not paying attention to the UK Government’s explanation of parliamentary sovereignty just a few pages earlier. This commitment is a gimmick, not unlike the statutory “tax lock” once promised by David Cameron.

The Statutory Instrument then sets out an amendment to section 7A of the European Union (Withdrawal) Act 2018. This is the closest that the whole process comes to a live wire, because this provision is the connective tissue which allows EU law to have legal effect within the domestic legal order insofar as it gives effect to the Withdrawal Agreement (including the Protocol). Great play has been made of this amendment as the end to the “automatic” application of EU law in Northern Ireland. But that is not what this amendment does. A large body of EU rules applies because of the Withdrawal Agreement, although the amendment of some of these rules, or the addition of new EU measures, is subject under the Windsor Framework to the operation of the Stormont Brake.

This new provision simply makes that reality explicit in the statute. This perhaps has a clarificatory function, but it suffices once again to note that this is a statute implementing an international agreement and the operation of section 7A has been assumed to operate to take account of the working of the Stormont Brake since the Brake was introduced. It is worth noting explicitly that the obligation on the law of Northern Ireland to automatically track developments in the equality directives contained within Annex 1 of the Protocol, as modified by the Windsor Framework, remains in full effect as it is not subject to the Stormont Brake.

The Statutory Instrument then amends the 2018 Act to require a ministerial acknowledgement before the Parliament of whether a Bill affects trade between Northern Ireland and the rest of the UK. This has been likened to the process under the Human Rights Act by which ministers have to make a statement on the compliance of new legislation with human rights. And there is an irony to this present government lifting and repurposing such a provision. In this instance, however, the assessment does not have to be conducted before every piece of legislation, but only where ministers think there might be an issue. Plenty of scope exists for this element to be overlooked, and it has no legal impact on the operation of a statute in which it is not included. Very soon such ministerial statements will become background noise.

The last piece of legislative reform that I will address in this piece has also been accompanied by noisy speculation; the UK Government has promised to banish from the statute book any duty to have “due regard” to the all-island economy. This is very much in the weeds of Brexit, but when Theresa May was having difficulty securing the passage of the Withdrawal Agreement legislation she was obliged to concede the Patten amendment, which became section 10 of the European Union (Withdrawal) Act 2018. This was meant to restrict any ministerial attempts to use the wide-ranging powers of delegated legislation under the Act to ignore the UK’s commitments as part of the negotiating process made in the 2017 Joint Report. Ministers had to have “due regard” to maintaining regulatory alignment which supported the “all-island economy” in their use of these powers.

This phrase is a particular bugbear of Unionism, and the Command Paper makes great play of the dangers of “the divisive and misguided political notion of the ‘all-island economy’” (para 71), but it is a stretch to say it is still playing any part in informing government policy. For one thing, new powers to implement the Protocol were created in the 2020 Act, and it is arguable that the strictures imposed on the original powers in the 2018 Act do not apply to them. Second, read in context, the commitment in paragraph 49 of the 2017 Joint Report is about the backstop. A lot of water has passed under the bridge since then; it is not relevant to interpreting the UK’s subsequent (distinct) obligations. At best, this is the cleaning up of an outdated provision on the statute book. 

For all that attention devoted to minor or inconsequential issues, a remarkable aspect of the Command Paper is the extent to which it still leaves important issues unresolved. Paragraph 121 of the Paper makes an eye-catching commitment:

“The Government can also confirm that there will be no Border Control Post at Cairnryan. While goods that do not qualify for unfettered access to the UK’s internal market - such as goods moving from Ireland via Northern Ireland - will need to comply with the formalities required of any other third country goods movements, we will develop an approach to checks and formalities on those goods that does not pose any risk to the free and unfettered movement of qualifying Northern Ireland goods.”

The commitment, however, obscures a continuing problem. The UK Government has not finalised its definition of Qualifying Northern Ireland Goods (despite talking about expanding the definition for months).

With the Border Target Operating Model now taking effect in Great Britain there remains no clarity on what the government will do to check whether goods shipments moving from Northern Ireland into Great Britain involve goods which qualify for unfettered access and those which should be checked. There is no easy answer to this issues that does not require some assessment of whether goods movements meet the criteria, but the failure to address the issue in detail in the Paper must generate suspicions that Unionists might find the approach the UK is contemplating unpalatable.

The final thirty pages of the Command Paper consists of “make weight” content, with Annex 1 addressing the history of barriers to trade which have existed since the conclusion of the Acts of Union and the creation of Northern Ireland. This content amounts to a repost to claims that the “Acts of Union are the Union” or that Article VI must somehow be “restored” or “fulfilled”. They speak to the incompleteness of the UK’s removal of barriers to trade which came with incorporating Ireland into the Union, and to the amount of times subsequent legislation has impinged upon trade.

But they also speak to an opportunity lost. These realities have been known, and discussed, for years. Successive UK Governments, however, have cultivated inaccurate impressions of the workings of the extent to which the Union operated to remove barriers to trade for their own purposes. This is not a summary that the Johnson Government, which talked relentlessly of “the provisions of the Acts of Union playing a key role in keeping markets open” (Internal Market White Paper, 2020, para 63) would have produced. Instead it is a belated effort to redress that narrative. It is also a rushed effort, with large sections of it apparently lifted from Professor Henry Patterson’s account of trade between different parts of the UK since the Acts of Union published in the Belfast Newsletter earlier this week. 

No such package would be complete without reheating some existing promises. The Castlereagh Foundation was announced in the New Decade, New Approach deal (para 26) as a means “to support academic research through Universities and other partners to explore identity and the shifting patterns of social identity in Northern Ireland”. The fact that Castlereagh’s biographer, John Bew, is the great survivor amongst special advisers to recent UK Prime Ministers is surely not coincidental to this enduring fixation with a politician best remembered for being maligned by Shelley after Peterloo, for the Castlereagh Foundation is once again promised, indeed guaranteed, in Annex 2. Given the overall tenor of the Paper, perhaps the inclusion of reheated promises was inevitable, but it does flag the extent to which the UK Government’s supposed commitments to Northern Ireland fade in and out depending on the extent to which it is in crisis. What might Shelley say of the whole thing; Very smooth, yet grim.

At this juncture, this account might give the impression that these new developments are so insubstantial as to not warrant Jeffrey Donaldson’s return to power sharing. But that is only the case because all of the heavy lifting was done in the Windsor Framework’s mitigations. Where these changes are at their most substantive, they are a continuation of developments explicitly planned as part of the Windsor Framework. Where they are window dressing, and there is a large amount of window dressing, all of this could have been asserted many months ago.

The sour taste that the whole arrangement leaves is that of a lost year in Northern Ireland’s governance. A year in which politicians in Northern Ireland could have been governing in the interests of the people of Northern Ireland and helping to address the cost of living crisis. The conclusion of needs-based funding arrangements did not have to become bound up in the story of the Windsor Framework, but the parties returning to power sharing could not contemplate governing Northern Ireland effectively without something being done to address the unsustainable pressure on its finances.

The UK Government reached a workable compromise with the EU in the Windsor Framework and the new arrangements are in large part no more than outworkings of that deal. Had Sunak been less concerned with looking over his shoulder at the threat posed by his predecessors, so much more could have been done to involve the Northern Ireland parties directly in the Windsor Framework negotiations and to arrive at something that landed first time, without the need to confect this second deal.


Wednesday 31 January 2024

Would’ve, Could’ve, Should’ve: Preliminary Reflections on the EU’s New Corporate Sustainability Due Diligence Directive


 


Tara Van Ho, Senior Lecturer in Law, University of Essex

 

Photo credit: Infrogmation of New Orleans, via Wikimedia commons

 

The European Union’s Council and Parliament have agreed to a provisional text for a new directive that would require certain large corporations to undertake human rights and environmental due diligence.

 

I was reminiscing just the other day while having coffee all alone, and Lord, it took me away, back to a first-glance feeling during my first UN Forum. My hope was mixed with equal levels of scepticism about the likelihood that laws like this would be adopted let alone be effective. Over the past twelve years, the hopes and scepticism have been met in equal measure, but never more so than with this law.

 

While the final text is not yet public, a press release indicates the key expectations and components of the agreed text. MEP Axel Voss has posted the side-by-side comparator of the various drafts, including the new draft agreement. This draft confirms:

 

-          The directive will apply to large EU companies with a worldwide net turnover of €150million and 500+ employees;

-          It will eventually capture non-EU companies with €300 million net turnover generated in the EU and the Commission will publish a list of applicable non-EU companies the law;

-          Affected businesses will need to address actual and potential adverse human rights and environmental impacts in their “business chain of activities” which covers their own operations, their subsidiaries, and “the upstream business partners of the company and partially the downstream activities, such as distribution or recycling”;

-          The financial sector is (temporarily?) excluded pending a review and “a sufficient impact assessment;

-          There is a specific list of human rights and environmental protections that businesses will be expected to respect and address, and a list of obligations the breach of which will constitute “an adverse human rights impact”;

-          That list excludes from application certain ILO core conventions because not all EU member states have ratified them; 

-          Large companies will have an obligation of means to develop and implement an effective plan to mitigate their impact on climate change;

-          Those who are negatively affected (including civil society or trade unions) can bring claims for civil liability within a five-year period; and

-          At times, as a matter of last resort, businesses may need to end their business relationships where negative impacts cannot be prevented or ended.

 

This law represents progress for many in the world. If implemented in good faith, it could provide better access to remedies for victims who are negatively impacted by business operations. It should also lead to the adoption of better and greater preventative measures, avoiding the need for remediation in the first place.

 

It is the first mandatory human rights due diligence legislation to address climate change, not just environmental damage. It anticipates civil liability for businesses that breach their responsibilities. It suggests compliance with the law as a criterion for public procurement, placing the power of Member States’ purses beyond the law. The recognition that at times business relationships will need to be terminated to ensure compliance is significant and can help fill in gaps the negotiation has otherwise left unaddressed, like the issue of conflict-affected and high-risk areas (which I’ll return to later in the post).

 

I’d like to express my appreciation to the NGOs and Parliamentarians who have gotten us to this point: it is clear from the Council’s approach during negotiations that if you would’ve blinked then they would’ve looked away at the first chance. I particularly appreciate those who fought for the inclusion of international humanitarian law and specific language on conflict-affected and high-risk areas. This was needed and I was shocked by early rumours that the draft agreement excluded this issue. I’m happy those were wrong.

 

The long-awaited human rights requirements are intended to implement the 2011 United Nations Guiding Principles on Business and Human Rights (UNGPs). I remember it all too well how the EU celebrated the adoption of the UNGPs and how, together with the US and other capital-exporting states, promoted the UNGPs as the standard for businesses when addressing human rights. The EU long opposed proposals for an international treaty on business responsibility for human rights because they felt that it was unnecessary in light of the UNGPs’ existence and could distract states from implementing the UNGPs.

 

Only recently, and only because Parliament required it, the EU has joined the negotiations with all the enthusiasm of a 6-year-old child called to dinner when they’re playing with their dinosaurs (meaning: none). The new directive evidences strong disconnects from the EU’s demand that the UNGPs lead is pretty and what the EU advocates for in the binding treaty and what the directive now requires for reasons I set out below.

 

In this post, I provide a list of things the EU would’ve, could’ve, and should’ve done had the Council been as serious as Parliament about implementing the UNGPs. The would’ves apply to an ideal application of the UNGPs: applying to all businesses and with a more robust and comprehensive understanding of human rights. The could’ves represent those areas in need of greater development: consulting with rightsholders abroad; and clarifying that contractual clauses are not enough. Finally, the “should’ve” is applying the law to the financial and arms sectors, a bare minimum expectation under the UNGPs, the exclusion of which should embarrass Council members for decades to come (I would have said generations but that felt a tad bit dramatic).

 

Would’ve: Applied to all businesses

 

First, the UNGPs are explicit that the responsibility to respect human rights applies to all businesses at all times including small and medium-sized enterprises (SMEs). In the Geneva treaty negotiations the EU has always walked a very thin line, insisting that the treaty, like the UNGPs, should apply to all businesses, not just transnational corporations. The initial Parliamentary proposal for a directive would’ve (largely) continued this approach and complied with the UNGPs. Yet, it was clear from the Commission’s proposal and the Council’s response that we were never going to get a UNGP-compliant directive. The Directive will now only apply to large companies (and not in the financial sector, an issue I’ll return to). The press release does not indicate an intention to expand the scope of the Directive in the future.

 

Including SMEs is admittedly difficult. In the transnational context, large European companies have long forced SMEs in places like Bangladesh and Pakistan to absorb the cost of social auditing processes while insisting on contracts that limit the legal liability of European buyers and parents. This often leads to corrupt practices for certifications or in redirecting revenue for the certification away from protections or living wages for employees. That would defeat the purpose of the law.

 

EU SMEs, on the other hand, often already have a language of human rights, practices that facilitate due diligence, and networks that can support their efforts to develop in this area. A graduated expansion coupled with clauses aimed at protecting SMEs from the abusive practices we’ve seen elsewhere could’ve provided an important example of how SMEs can be included in mandatory human rights due diligence legislation. It also would’ve strengthened the EU’s position in the Geneva-based negotiations.

 

Instead, whenever the EU pushes for an expansion of the treaty, I hope states like Pakistan and Bangladesh point out the hypocrisy.

 

Would’ve: Taken a broader approach to human and labour rights

 

The UNGPs also call for businesses to account for all human rights. In Principle 12, it states that businesses should account for, “at a minimum,” the International Bill of Human Rights (the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and the International Covenant on Economic, Social and Cultural Rights) and the ILO Core Conventions. Where relevant, businesses need to rely on other standards as well.

 

The EU’s press release suggests that the directive will only invoke treaties that are universally ratified by EU member states. That would mean most of the major UN treaties are addressed but there are some disturbing omissions, including the International Convention on the Protection of All Migrant Workers and of their Families and the ILO Core Conventions. Those are rather significant omissions given issues of modern slavery in EU food supplies, and more broadly problems with the treatment of migrant workers throughout EU corporate supply chains.

 

The list also prioritises EU commitments over relevant obligations where the law has extraterritorial impacts. There should have been a recognition that at times the Inter-American and African systems on human rights can be applicable. This recognition is important as the Inter-American and African systems have produced stronger jurisprudence on various issues, including indigenous rights and community rights than Europe (significantly stronger in the Inter-American system) while the Inter-American system also produces more progressive jurisprudence on the definition and nature of reparations, and the direct responsibility of businesses. While the African system has more limited jurisprudence, its jurisprudence on land rights and community rights is similarly more advanced than the European system’s.

 

Sometimes, I miss who I used to be when I could naively believe the absence of reference to the other human rights systems was an oversight, but I fear this strengthens the case for the laws as a form of neo-coloniality by suggesting a hierarchy of rights and systems that centres European expectations in legislation that is supposed to reflect broader standards.

 

Could’ve: Undertaken Direct Consultations with Foreign Rightsholders

 

The failure to recognise the relevance of Inter-American and African jurisprudence reflects a broader procedural failure by the Commission to consult foreign rightsholders who will be affected the law. I cannot do greater justice to this criticism than Caroline Omari Lichuma has done already in her TWAIL critique of European human rights due diligence laws.

 

While my experience suggests that many victims groups and rightsholders want mandatory laws, what they want in those mandatory laws matters just as much as the desire for a law. They had a right not just to voice their support for (or criticism of) the law but to make substantive demands for the law itself. What would the additional demands of rightsholders look like? Well, sometimes you just don't know the answer ‘til someone's on their knees and asks you for a particular legislative proposal, but a very recent study suggests that consultation might have led to different approaches to remediation, particularly for climate-related harms.

 

I often find that memories feel like weapons. In this field, we have often seen European businesses and states undertake “new” initiatives they claim are for the benefit of others without actually talking to the “others.” For example, studies suggest “social auditing” and certification schemes do not deliver on the promises European companies and social initiatives claim. This is unsurprising. Writing in the U.S., the founding father of critical race theory, Derek Bell, has explained that many “anti-racist” developments really represent interest convergence of White and Black leaders. As such, the concessions are less radical or responsive than what racialised communities would seek themselves. These additional demands, however, are often dismissed or ignored. When Dr Lichuma provided an overview of her critique at the 2022 UN Forum on Business and Human Rights, one European delegate infamously responded that Europe’s position wasn’t a matter of imperialism but of “leadership.” Real leadership, however, would reflect the results of consultations with rights-holders not just the political interests and concessions of European leaders.

 

Could’ve: Clarified that Contractual Clauses are not Enough

 

Recital 34, para 43 in the table contains an extensive discussion of the kinds of measures companies can take to comply with their human rights responsibilities. One of those is the development of contractual clauses with business partners. I worry that I've seen this film before and I didn't like the ending.

 

I’ve now mentioned twice that social auditing is a sham. There will be exceptions to this rule and I can point people to a few of my favourite exceptions, but let me reiterate what existing research indicates: social auditing is generally ineffective and often detrimental for rights-holders, providing a veneer of respectability for disrespectful practices.

 

Increasingly, it is clear that this is equally true of index listings meant to advise institutional investors on their human rights risks. Last year, the US advisory company Morningstar adopted rules aimed at exempting Israel that so fundamentally misunderstand the UNGPs that it renders all its human rights reporting questionable (short story: Morningstar concluded Israel isn’t a conflict-affected area…). More recently, index provider MSCI accepted audits from Xinjiang, China, as evidence that the car company Volkswagen was seriously addressing the issue of Uyghur forced labour. No company can adequately address the issue of Uyghur forced labour when operating in Xinjiang and (again, I cannot emphasise this enough) it is irresponsible to rely on a social audit in this context. Because these indexes set their own rules, and have no professional board standards, I can’t actually accuse them of professional malfeasance but these responses are shockingly inept.

 

Human rights due diligence is not supposed to be the same as an audit, but often businesses looking for a quick and dirty misdirection will use social audits and contractual clauses as a substitution for due diligence. I fear that if contractual clauses are allowed, due diligence will start to look more and more like social auditing and indexing and less like the robust and circular mechanism of assessment, responsiveness, and reparations than it is supposed to be.  

 

The directive could and should clarify that while contractual clauses can be important they cannot transfer legal liability. 

 

Should’ve: Applied to the Financial and Arms Sectors

 

At Recital 18, para 27, and  Recital 19, para 28, we find an effective exemption from the law for the arms and financial sectors, respectively. In Recital 19, the CSDDD excludes “downstream business partners” from the scope of due diligence obligations. I knew this was true from the press release, but seeing the blatant language was surreal. I’m laughin', but the joke's not funny at all.

 

I’m going to set aside the arms sector for now (because I’m working on a lot regarding that sector right now), but the exemption for the financial sector is gross (gross being a legal term of art, just ask anyone…). The draft agreement says that “as regards regulated financial undertakings, only the upstream but not the downstream part of their chain of activities is covered by this Directive.” In other words: the bank is not responsible for breaches caused by its financing of another’s activities no matter how much the bank should have known how its financing would be used for human rights violations.

 

Out of every group you’re concerned with protecting, out of every business and industry, it is the banks you the Council thinks can’t do due diligence?

 

Really?

 

The banks that kept looted Nazi material from their rightful Jewish owners for decades?

 

The banks that repeatedly financed South Africa’s apartheid regime, saving it when it was on the brink of collapsing?

 

The banks accused of facilitating money laundering for drug lords and terrorists?

 

The ones who facilitate tax evasion? 

 

The banks that finance dam projects in indigenous lands with such disregard for human rights that many of their logos should just be “Hi, it’s me, I’m the problem. It’s me.”

 

The banks that know how to do extensive due diligence on operational impacts when it’s in their financial interests?

 

Those banks? That’s who needs protecting with this law?

 

You cannot be serious about human rights if you are not serious about tackling the responsibility of the financial sector. When it comes to the Council members who betrayed the rights-holders with this clause, I got a list of names and yours is in red, underlined, France and Austria. France was the first to indicate resistance to the application to the financial sector, but it is Austria’s recent pressure on Ukraine, in which it leveraged international assistance for the war on the removal of Austrian Raiffiesen Bank from the list of international sponsors of war, that is perhaps the worst development in this area. People need to know this, so they know where to put pressure moving forward.

 

It appears there will be an “impact assessment” to determine if the law should apply to this industry, but that will be too little and far too late.

 

It’s also wholly unnecessary.

 

There is nothing particularly special about banks or the financial industry that makes human rights due diligence hard. They just don’t want to pay for it to be done properly. That’s not surprising. No company wants to pay for it. Disney once complained about reporting requirements before we even had any human rights due diligence laws because they didn’t way to cut into CEO bonuses or shareholder profits. The desire to not spend money on human rights due diligence is not an adequate reason for allowing those complicit in the Nazi genocide or South African apartheid or Russia’s unlawful war of aggression in Ukraine to continue to evade human rights responsibilities. If anything, their focus on profits and finances over people is exactly why this law is needed.

 

Concluding note

 

So that’s it: my would’ves, could’ves, should’ve for the EU. At times, the CSDDD provides me with hope about the direction of travel for this field, but in other areas it represents a crisis of my faith.

 

 

 

PS, Taylor Swift’s birthday was on the same day as the final trilogue. As a fun Easter Egg hunt for my fellow Swifties, I’ve sprinkled her lyrics throughout this post (13 times, obviously). I’ll send a friendship bracelet to the first Swiftie who emails me a list of all the hidden gems. Please use the subject line “T-Swift Easter Egg Hunt” in your email. My email address can be found on my Essex profile.

Tuesday 30 January 2024

The Council must swiftly implement a legal framework akin to the CEOS for staff employed in CSDP missions: Reflections on the Jenkinson litigation (Case C-46/22 P)

 


Antje Kunst*

Photo credit: Jan-Tore Egge, via Wikimedia Commons

Introduction

The Court of Justice of the European Union in its judgment in Jenkinson v Council and others ( Case C-46/22 P) of 18 January 2024 dismissed the appeal brought by Mr. Jenkinson, an Irish national, which has implications for thousands of staff serving in international missions of the EU (EU missions) under the EU’s Common Foreign and Security Policy (CFSP) in third states.

Mr. Jenkinson’s defeat before the Court of Justice is not a victory for the defendants: the Council, the Commission, the European External Action Service, and Eulex Kosovo. It is clearly not in their interest that the General Court’s findings in the judgement under appeal, Case T‑602/15 RENV have been upheld. Also, it is a shame that the Court of Justice did not express any views on one of the main claims in this litigation regarding the Council’s failure to introduce a legal regime comparable to the Conditions of Employment of Other Servants of the European Union ("CEOS").

Instead, the Court of Justice held the related arguments were inadmissible or unsubstantiated, without offering any views by passing on the merits of those arguments. This is a missed opportunity, also taking into account that the General Court in Stockdale v Council and Others (including the European Union’s Special Representative in Bosnia and Herzegovina) (T‑776/20), has already made certain findings in this regard.

Applicability of Private International Law (Rome I Regulation)

Jenkinson’s claim was that the EU did not envisage that private international law, i.e., an EU Regulation on the law applicable to contractual obligations (the Rome I Regulation) would be applicable to public law contracts such as those at issue in the case. (para. 79 of the Judgment) The Court of Justice disagreed: ‘since the General Court was seised pursuant to an arbitration clause under Article 272 TFEU’, it was necessary in the absence of any choice of the parties of the applicable national substantive law for the Court to identify it (para. 88 of the Judgment).

The Court of Justice held that the General Court was correct in taking recourse to the Rome I Regulation, to do so. It did not interfere with the General Court’s determination that Irish law was the applicable national substantive law governing Mr. Jenkinson’s claim for a requalification of the series of fixed-term contracts, and that based on Irish law, Mr. Jenkinson’s claim was dismissed (see paras. 123 -163 pp. of the Judgment)

Application of various national laws to staff working for the same employer

Only towards the end of the Judgment the Court of Justice acknowledged that the application of various national laws might, in practice, result for members of Eulex Kosovo’s contract staff being treated differently as regards the rights conferred on them and the obligations imposed on them in a given situation. (para. 262 of the Judgment)

However, it followed from the contractual nature of the relationships that, in the absence of a common European regime applicable to the members of Eulex Kosovo’s staff, the substantive rules intended to supplement the contractual terms are derived from a national law which will have been identified under the rules of private international law. (para. 267 of the Judgment)

It concluded that Mr Jenkinson had failed to show that, in the circumstances of the present case, the application of different substantive rules of national law to the members of Eulex Kosovo’s international staff constituted a breach of the principle of non-discrimination. (para. 271 of the Judgment)

It is surprising that the Court of Justice, unlike the General Court, expressed concerns about that similar disputes of contract staff working in EU missions will be decided differently depending on what the identified national law prescribes but then did not draw any consequences from this.

In this respect Stephan Marquardt, Eszter Orgovan (Counsels for the EEAS in Case C-46/22) and Emmanuelle Raoult (Counsel for Eulex Kosovo in Case C-46/22) stated, albeit in their personal capacity, in a recent academic contribution on the Jenkinson case:

“Having recourse to the applicable national law … carries the risk of diverging outcomes of similar disputes, notably regarding possible claims for damages, where the conditions for such claims may differ from one legislation to the other.”

(See Stephan Marquardt, Eszter Orgovan and Emmanuelle Raoult, in The European Union's Contribution to International Peace and Security, Chapter 6: ‘The Legal and Institutional Nature of EU Civilian Crisis Management Missions in the Light of the Case Law of the Court of Justice of the European Union’).

This is a legitimate concern that the defendants have, and here, was to the detriment of Mr. Jenkinson. Had the national law of another state (e.g., another Member State, or third state) applied, the requalification claim of a series of fixed-term contracts to a permanent contract might have succeeded, and the outcome in a similar action would be different. Not only that, a claim for damages might have succeeded too.

Other similar cases pending

Different outcomes could happen in future case, including pending cases, which are currently stayed and concern similar actions involving members of the international staff of Eulex Kosovo: BL and BM v Council and Others (T‑204/19); QP and Others v Council and Others (T‑183/21); and RI and Others v Council and Others (T‑190/21). In relation to a different mission there is the case of Stockdale v Council and Others (including the European Union’s Special Representative in Bosnia and Herzegovina) (T‑776/20). Different outcomes could also occur in future similar litigation, given that it is likely not Irish law will apply in those cases. This could also lead to irreconcilable judgments.

Claim of failure to adopt a legal regime comparable to the CEOS

In his initial application stretching back to 2017, Mr. Jenkinson sought compensation on the basis that the Council, Commission, and the EEAS failed to comply with their obligations, including to recruit him under a legal regime comparable to the CEOS. 

In his appeal in Case C-46/22 Jenkinson argued that the General Court infringed Article 336 TFEU by holding that the Council had lawfully delegated to the Head of Eulex Kosovo the power to adopt the conditions of employment of international civilian staff. (Article 336 TFEU provides ‘The European Parliament and the Council shall, acting by means of regulations in accordance with the ordinary legislative procedure and after consulting the other institutions concerned, lay down the Staff Regulations of Officials of the European Union and the Conditions of Employment of other servants of the Union.’)

The infringement of Article 336 TFEU also resulted from the fact, that the conditions of employment of international civilian staff were laid down in the contracts between the Head of Eulex Kosovo and the members of that mission's staff, whereas they ought to and should have, instead, been decided by the Council. According to Mr. Jenkinson, it was for the Council to adopt conditions of employment for international civilian staff similar to those contained in the CEOS (para. 65 of the Judgment)

The Court of Justice noted that Mr. Jenkinson, before the General Court, had made submissions regarding the non-existence of a framework similar to the CEOS for hiring staff for those missions. The Court of Justice then took issue with the fact that Mr. Jenkinson had not sought a declaration from the General Court that there had been an infringement of Article 336 TFEU through the failure to adopt, on the basis of that article, a legal regime applicable to employment situations such as that of Mr Jenkinson (para. 71 of the Judgement). Arguably, he should have.

In this context, the Court of Justice rejected Mr. Jenkinson’s complaint in the appeal, that the application of the substantive national law applicable to his contractual relationship constituted an infringement of Article 336 TFEU by reason of the absence of a legal framework adopted on the basis of that article. According to the Court of Justice, because the complaint was not raised before the General Court, it was consequently found both inadmissible and unfounded (paras. 72, 73 and 90 of the Judgment).

This is significant, as any contract staff working in an EU mission in a similar future action could make submissions the Court of Justice considered were missing and seek such declarations.

Plea of Illegality regarding Joint Action 2008/124 establishing the Eulex Kosovo

The Court of Justice also rejected Mr. Jenkinson’s arguments regarding a plea of Illegality pursuant to Article 277 TFEU, specifically that Article 9 (3) and Article 10(3) of Joint Action 2008/124 infringes Article 336 TFEU (paras. 38, 46 and 47 of the Judgment). Those provisions state that Eulex Kosovo may also recruit international civilian staff, as required, on a contractual basis and that the conditions of employment and the rights and obligations of such staff are to be laid down in the contracts between Eulex Kosovo and the members of staff.

The Court of Justice referred to the General Court’s finding, that, even supposing that the appellant had in fact raised a plea of illegality against Joint Action 2008/124, on the basis of Article 277 TFEU, it had to be held that that plea was not substantiated. The Court of Justice did not interfere with the General Court’s finding.

The plea of illegality regarding Joint Action 2008/124 could be further substantiated in future litigation before the General Court in a similar action with the consequence that the Court of Justice would have to examine the alleged unlawfulness and whether there is an infringement of Article 336 TFEU.

National law vs EU staff law resolving the dispute

Mr. Jenkinson further argued that the application of national law by the General Court would be contrary to the principle of non-discrimination in that it entails three instances of unequal treatment:

-          first, Mr. Jenkinson being treated differently to the servants of the European Union whose conditions of employment are to be determined exclusively by the Council and the Parliament pursuant to Article 336 TFEU.

-          second, the servants of the European Union, such as Mr Jenkinson, and national workers governed by private law being treated the same,

-          third, international staff of different nationalities working for the same employer under the same conditions and circumstances being treated in a discriminatory manner.

 (see para.  95 of the Judgment).  

Again, this complaint was rejected by the Court of Justice as a new complaint and rejected as inadmissible as it was not raised before the General Court, and the Court of Justice did not make any findings on the substance in this regard (para. 106 of the Judgment).

Also, this very compelling discrimination argument, in particular regarding international staff working for the same employer (i.e., international staff to whom the EU Staff regulations apply and international staff to whom national law applies), could be raised by applicants in future litigation before the General Court.

Conclusion

The fact that the Court of Justice has not interfered with the General Court applying national substantive law to the dispute is highly problematic for the Council and the EEAS for the reasons set out in the above-mentioned academic publication. In the future therefore, it is wholly unpredictable how the national substantive law would govern other similar disputes for staff in EU missions. This bears considerable financial risks for the defendants. It also bears risks of future litigation in which fundamental rights concerns will be raised, in particular a breach of the principle of equal treatment and the prohibition of discrimination.

The Court of Justice refrained from ruling that the Council’s failure to adopt a legal regime for staff in the EU missions comparable to the CEOS is unlawful which would have obliged the Council to act. Notwithstanding, the ruling shows that it is no longer acceptable to keep the status quo. The financial risks associated with future similar litigation, and the related uncertainties of the outcomes under the case law of Jenkinson, should be compelling reasons for the Council, the decision-maker within the CFSP, to act.  Also, what the Council back in 2008 establishing Eulex Kosovo might not have been able to reach a consensus on might be acceptable,16 years later.

This would be in accordance with the view expressed in an academic article, the President of the General Court, Marc van der Woude recently:

In light of the cases that have appeared before the CJEU in this area, that, “the precise scope of the protection to which employees are entitled in a community of law, still needs to be defined. Preferably, it should be aligned on the level of protection to which EU staff regularly employed by the EU institutions can already aspire.”

(See, M. van der Woude, ‘The European Union’s Engagement With Questions of Strategic Autonomy and Security: Do EU Courts Have a Role to Play?’, (2023), European Foreign Affairs Review, Volume 28, Issue 4, pp. 311–322).

 

*Antje Kunst is an international lawyer and a member of Pavocat Chambers advising and representing individuals in a wide range of matters in the field of the EU’s Common Foreign Security Policy (CFSP) and takes instructions from individuals challenging a wide range of decisions including EU employment cases to EU and UN sanctions before the EU courts and international bodies.

 

Thursday 18 January 2024

Foreign policy sanctions and criminal law harmonisation

 


Professor Steve Peers, Royal Holloway University of London

Photo credit: Pierre BlachĂ©, via Wikicommons

*This blog post draws upon and updates research for the 5th edition of EU Justice and Home Affairs Law (OUP, 2023)

Late last year, the EU Member States and the European Parliament agreed upon a Directive to harmonise criminal law as regards EU foreign policy sanctions. This followed barely a year after the EU Council adopted a decision to extend EU criminal law competence to cover those sanctions. This blog post updates a previous post that discussed both the 2022 decision on competence and the initial Commission proposal for a Directive that has now been agreed in principle.

The Decision extending competence

As noted in the previous post – and discussed in more detail there – the 2022 Decision extending EU competence was the first use of the EU’s power to extend the list of crimes which it had competence to harmonise, as set out in Article 83 of the Treaty on the Functioning of the European Union (TFEU). The previous list of crimes was: ‘terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime’.

That competence involves not only the ‘definition of criminal offences’ but also ‘sanctions’, ie the length of jail terms and/or other sanctions that can be imposed as part of the criminal law. However, these are ‘minimum rules’ – meaning that Member States can add to them as part of their criminal law.

Since the Treaty of Lisbon entered into force in 2009, the EU has adopted Directives regarding most of the ten Eurocrimes, in most cases replacing older forms of EU law adopted before the Treaty of Lisbon entered into force. The exceptions are arms trafficking, corruption, and organized crime – although there are pre-Lisbon EU laws concerning the latter two crimes, a proposal from 2023 to update the law regarding corruption, and other EU legislation concerning firearms that falls short of adopting criminal sanctions for arms trafficking. In any event, as we shall see, some arms trafficking will fall within the scope of the newly agreed EU Directive on criminal law and EU foreign policy sanctions.

The legal context: EU foreign policy sanctions

As discussed in more detail in the previous blog post, there is a body of EU law already in this field, based on the EU’s powers to adopt Decisions on foreign policy sanctions (along with other foreign policy issues) on the basis of Article 29 of the Treaty of European Union (TEU), alongside Article 215 TFEU, which provides for most of those foreign policy sanctions to be paralleled in the form of ordinary EU law (in practice, Regulations).

Although Article 215 provides for qualified majority voting of Member States in the Council, the effective rule is actually unanimity, for that is the rule which applies in the foreign policy provisions of the TEU (with marginal exceptions) to the adoption of the EU foreign policy measures which the Article 215 legislation gives effect to.  The Commission proposed a few years ago to drop unanimity here, but Member States didn’t bite. (They would have to agree unanimously to change the voting rule).

Over the years, there have been a lot of EU foreign policy sanctions and a lot of litigation – mostly direct challenges to the validity of the sanctions measures by the persons or companies (or even the States) concerned by them in the EU General Court. That Court’s judgments can be appealed to the CJEU; and national courts have occasionally asked the CJEU about the interpretation or validity of sanctions decisions too. (Although in general the CJEU has no jurisdiction over EU foreign policy measures – an exception which the Court has been slowly eroding for awhile – as an exception to the exception, the CJEU has its normal jurisdiction over foreign policy sanctions: see Article 275 TFEU).

The details of the Decision

A key point about the Decision extending EU competence is that it applies only to the breach of EU foreign policy sanctions. So the Decision does not give the EU power to harmonize criminal law as regards the breach of purely national foreign policy sanctions. The recently agreed Directive respects this distinction, applying only to EU sanctions.

However, the competence – and the recently agreed Directive – are not limited to breach of EU foreign policy sanctions relating to the Russian invasion of Ukraine, even though that invasion was the reason why the Decision and the Directive were adopted and agreed. In fact, the Commission proposal for the Decision noted that the EU has forty sanctions regimes, applying not only to countries but also ‘targeting proliferation and use of chemical weapons, cyberattacks, human rights violations and terrorism’. (For more details, see the Council website, especially its sanctions map). The anti-terrorism sanctions have been around for awhile, attracting high profile litigation such as cases involving Mr Kadi or Hamas; the human rights sanctions are fairly new, but will sometimes cross over with other sanctions – see, for instance, the sanctions against Putin’s erstwhile allies, the Wagner Group, for human rights breaches (along with links to other EU sanction measures).

In terms of the type of sanctions covered, the preamble to the Decision, as well as the recently agreed Directive, also makes clear that this is broad, applying not only to economic sanctions such as restrictions on trade or financial relations, but to bans on entry into the territory (which are also already given effect to by listing the sanctioned people in the Schengen Information System) and to arms embargoes. 

The agreed Directive

Basic rules

The recently agreed Directive has similarities to other Directives in this area – see, for instance, the Directive on harmonization of criminal law as regards terrorism. But there are also some new elements compared to other Directives; and in any event, it is the EU’s first foray into adopting criminal law relating to EU foreign policy sanctions.

It should be stressed that (as the preamble to the Decision confirms) the Directive will not make breaches of EU foreign policy sanctions criminal for the first time in most Member States. Just as with issues like terrorism and drug trafficking, these were already crimes in most national laws before EU law came along. But the details of the national laws probably differed more before the EU got involved; the point of the EU’s involvement is to harmonize the national laws somewhat. 

Member States will have to apply the Directive one year after its formal adoption (likely in spring 2024) – so by spring 2025. This is longer than the six months proposed by the Commission, but less than the two year deadline usually applicable to Member States applying Directives.  

As noted already, just like the Decision on competence, the Directive will not be limited just to sanctions against Russia, but will apply to EU foreign policy sanctions across the board.

Denmark has an opt out of EU criminal law adopted after the Treaty of Lisbon, while Ireland opted in.

Definition of crimes

The agreed Directive will require Member States to criminalize nine types of breach of EU sanctions, which can be summarised as: making funds available to sanctioned persons; failing to freeze funds of sanctioned persons; enabling the entry or transit of a person covered by an entry ban deriving from EU sanctions (in effect, an immigration law offence that might overlap with the pre-existing EU law on facilitation of illegal entry and residence – itself subject to a recent proposed replacement); entering into transactions with sanctioned entities; trading in goods or services covered by EU sanctions; providing financial services despite an EU law sanction; providing other services banned by sanctions law; circumvention of sanctions; or abusing exceptions to the sanctions laws.

Member States will have an option (not in the Commission proposal) to exempt from criminalisation breaches involving sums less than €10k, although where multiple such minor breaches are linked, Member States must accumulate them so that they might reach the €10k threshold that way. (This threshold does not apply to entry bans, presumably because a financial threshold is irrelevant)

In every case, an intentional breach will have to be criminalized; and in one case (trade in arms or dual use goods subject to sanctions), ‘serious negligence’ resulting in the breach will have to be criminalized too. The Commission had proposed that ‘serious negligence’ should be criminalised in most cases.   

There is a novel clause on the position of lawyers advising those accused of sanctions breaches, which differs somewhat from the Commission’s proposal:

Nothing in paragraph 1 shall be understood as imposing an obligation on legal professionals to report information that they receive from, or obtain on, one of their clients, in the course of ascertaining the legal position of their client, or performing the task of defending or representing that client in, or concerning, judicial proceedings, including providing advice on instituting or avoiding such proceedings

There is also an exemption for goods or services provided for persons in need or humanitarian aid, although usually EU sanctions law has its own exceptions for those cases anyway.

Inchoate offences of incitement and (in most cases) attempts are also criminalized, as is aiding and abetting.

Penalties

Member States will have to provide for a maximum possible penalty of at least five years for most of the main offences (not the inchoate offences), and one year for most of the rest of the main offences – subject to a threshold of €100,000 being involved (which can again be satisfied by a linked series of offences). No financial threshold will apply in two cases: breaches of entry bans and trade in sanctioned arms or dual use goods. Furthermore, a three year maximum possible penalty applies to breaches of entry bans.

More generally, as regards the commission of any of the offences defined by the Directive, Member States will be obliged to provide for additional penalties, such as fines, withdrawal of permits, and even (a novelty for EU criminal law) a temporary ban on running for office.

Legal persons are subject to liability, too, and must be subject to penalties such as shutting down the business or withdrawal of its licences. This is a longer list than usually provided for in EU criminal law Directives. The Directive will go further than usual in specifying the amount of possible fines, including basing them on annual turnover (a method previously applied in non-criminal areas of EU law, such as competition law and the GDPR).

Criminal liability must be aggravated in certain cases (such as organized crime, breach of duty by a public official or a professional, obstruction of justice, or prior convictions in this field), and mitigated in others (where the offender ‘flips’ on his or her criminal associates).

Other provisions

Criminal jurisdiction would apply, as usual under EU criminal law Directives, to acts committed on the territory, on a ship or aircraft with a national flag, or by nationals. Member States will have an option to apply liability to habitual residents.

Unusually, there will be rules on limitation periods, ie when Member States would be out of time to bring a prosecution or enforce a sentence. In most cases the limitation period would be five years, with a possibility for derogation to at least three years where the period can be interrupted by specified acts. Previously Member States have only agreed to regulate this issue via EU law as regards fraud against the EU budget (although the agreed Directive on environmental crime contains limitation rules, and the proposal on violence against women would also address this point).

Finally, there would be links to other EU law (besides, obviously, the sanctions laws themselves). The proposal would link up with EU criminal law on money laundering and confiscation (the latter now also being amended), plus there is a novel link to the EU legislation on whistleblowers: that law must also apply to protect those in a company or organization who tip off the authorities about breaches of sanctions. Conversely, there is no proposed amendment of the law on the European Arrest Warrant – even though breach of EU foreign policy sanctions is not on the list of crimes where the dual criminality condition for extradition must be waived. However, prosecution or sentences for sanctions breaches will sometimes fall within areas where dual criminality has to be waived (like terrorism or organized crime); and the dual criminality condition is more likely to be met as a result of the harmonization Directive anyway (it may even be met already, simply by virtue of the foreign policy sanctions measures themselves). 

Comments

It is hard to assess the likely impact of the Directive, for several reasons.

First of all, it is difficult to see what impact the Directive will have in practice without more detail on what changes would be made to national law as a consequence of its adoption. As noted already, while the Directive will bring about some harmonisation, Member States already have some criminal laws on the books in this field.

Secondly, a key issue with criminal law – just as with non-criminal forms of regulation of conduct – is that its effectiveness depends upon the resources and expertise necessary to investigate and bring prosecutions. On this point, the prospect of extending competence to the European Public Prosecutor’s Office (EPPO) to include breaches of EU foreign policy sanctions was raised by the German and French justice ministers. This would be important but has not been raised again since the Directive was proposed. (Extensions of EPPO competence need unanimous agreement of Member States, although some Member States have opted out of the EPPO; the Commission’s proposal to extend its competence to terrorism has not been agreed so far).

An extension of EU competence might be seen as an EU power-grab, but it is notable that it is an exception: over fourteen years after the Lisbon Treaty came into force, it is the only such extension of competence to date. By contrast, as noted above, Member States have not yet agreed an earlier proposal to extend the list of Eurocrimes to cover hate speech and hate crimes, or agreed the proposal to drop unanimous voting for some foreign policy measures; nor have they agreed to drop unanimity in a number of other areas which the Commission proposed years ago.  

It is striking to see some novel points (for EU criminal law) in this Directive: the specific rule on lawyers; the penalty of a ban on running for office (obviously relevant because politicians might be tempted to, and be in a position to, breach the sanctions); the more detailed regulation of financial penalties a la other areas of (non-criminal) EU law; the obstruction of justice point; and the link with the whistleblowers law. It is only the second time that the EU has agreed to regulate limitation periods (although the revised environmental crime directive, also including similar provisions, was agreed essentially simultaneously).

It is also significance to see the singling out of arms trade in breach of sanctions for stricter treatment in several respects, given the EU’s reluctance to regulate this issue as a Eurocrime to date. In the context of foreign policy sanctions, it makes sense to treat the arms trade more seriously, given its more direct contribution to the death and injury which the EU sanctions aim to end.

The extension of competence is also best understood as part of the EU’s response to the Russian invasion of Ukraine – which has also prompted developments as regards the start (in principle) of accession negotiations, the use of EU defence powers, and the first-ever use of the long-dormant temporary protection Directive. By itself, the extension of EU competence and the use of those criminal law powers will not end the invasion – and, as noted already, the agreed Directive applies to other EU sanctions too. Nor does it address the criticism that that those sanctions are too little and too late. But it may make some contribution to the effective implementation of those sanctions which have been established to oppose the invasion, and in any event it sends a political message that the EU is stepping up their enforcement.