Sunday 13 September 2015

Final courts’ obligations to refer questions: the CJEU clarifies CILFIT

Daniel Sarmiento, Professor of EU Law at the University Complutense of Madrid*
Last week I published a post on Schipani v Italy, where I suggested that the Strasbourg court (the European Court of Human Rights) was becoming much stricter with national supreme courts’ duties to make preliminary references to the Luxembourg court (the CJEU) than the CJEU itself. I pointed at this paradox with a reference to CILFIT, hinting that this judgment had probably been a source of judicial rebelliousness and that the Court of Justice was not doing much about it.
I am very happy to say that the Court of Justice has now proved me wrong.
In a landmark judgment delivered in the case of Ferreira da Silva, that Court, for the very first time in history, stated that a supreme court had breached its duty to make a preliminary reference under article 267.3 TFEU. After many years in which CILFIT seemed to be an open invitation to national courts of last instance to do as they saw fit when deciding whether to make a reference or not, the acte claire doctrine has finally taken a bite.
I must admit that the facts of the case made it difficult for the Court to reach a different outcome. The Portuguese Supreme Court had clearly misapplied a long-standing case-law of the Court of Justice on transfers of business and acquired rights of workers, using a criteria of interpretation that had been openly rejected by the Court in the past. In this regard, the Portuguese Supreme Court had obviously not complied with the CILFIT criteria. But, as you all know, the CILFIT criteria are so broad and, at the same time, so exhaustive and difficult to comply with, that maybe all Supreme Courts of the EU have every now and then breached Article 267.3 TFEU. So why has the Court of Justice now decided to become a strict guardian of the acte claire doctrine?
The triggering factor in Ferreira Silva seems to be the fact that there had been strong contradictions between the courts of different Member States. It appears that there were also considerable contradictions in the interpretation of Directive 2001/23 (concerning the rights of workers when a business is transferred) in Portugal among first instance courts, but the Court of Justice stated that such circumstance was not enough to entail a breach of Article 267.3 TFEU. What seems to be important for the Court is the combination of national conflicting decisions and other conflicting decisions among other Member States that have resulted in preliminary references to the Court. In the Court’s own words:
“43. However, so far as the area under consideration in the present case is concerned and as is clear from paragraphs 24 to 27 of this judgment, the question as to how the concept of a ‘transfer of a business’ should be interpreted has given rise to a great deal of uncertainty on the part of many national courts and tribunals which, as a consequence, have found it necessary to make a reference to the Court of Justice. That uncertainty shows not only that there are difficulties of interpretation, but also that there is a risk of divergences in judicial decisions within the European Union.
44. It follows that, in circumstances such as those of the case before the referring court, which are characterised both by conflicting lines of case-law at national level regarding the concept of a ‘transfer of a business’ within the meaning of Directive 2001/23 and by the fact that that concept frequently gives rise to difficulties of interpretation in the various Member States, a national court or tribunal against whose decisions there is no judicial remedy under national law must comply with its obligation to make a reference to the Court, in order to avert the risk of an incorrect interpretation of EU law.”
Another interesting aspect of the case is that the main proceedings concerned an action for damages against the Portuguese State, as a result of the judgment of the Supreme Court that breached Directive 2001/23. In this regard, the Court of Justice was faced with Portuguese damages law, according to which an action for damages against the State can only be inadmissible if the decision that caused the loss or damage has not been set aside. According to the Court, this requirement makes it too difficult to claim damages and thus breaches the principle of effectiveness.
Following the precedent of Traghetti del Mediterraneo, the Court has taken the chance to strike out another burdensome procedural rule whose main task is to keep the courts safe from damages actions. But in Ferreira da Silva the Court has gone even further: it has not only challenged a Supreme Court for the way in which it has handled EU Law and its duty to make a reference, but it has also, all in one decision, removed another brick in the wall that protect national courts from intrusive (but sometimes rightful) litigants invoking EU Law.
I believe this is very good news and this judgment should be welcome by all EU lawyers. The situation in some Member States, particularly in courts of last instance handling requests to make references, had become troublesome. Every EU lawyer with experience in the bar knows this. In Ferreira da Silva it seems that the Court has finally taken measures and it has sent a clear message to its national counterparts. The facts of the case make it easy for the Court to justifiy this decision, so national judges can hardly complain for having to cope with too stringent an interpretation of Article 267.3 TFEU. The Court has made a wise move and has chosen the right case to do it.
Ferreira da Silva was not rendered by the Grand Chamber, but maybe that makes sense. After all, the Court has simply implemented its previous consolidated case-law, which had been reaffirmed many times by the Grand Chamber. And furthermore, seeing Koen Lenaerts sitting in this five-judge chamber is a sign that the judgment can be as good and solid as a Grand Chamber decision.
Barnard & Peers: chapter 10
*This post previously appeared on the Despite our Differences blog
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  1. Dear Steve. I would highly recommend comparing this case with the judgment in joined cases C-72/14 and C-197/14, X and van Dijk, delivered on the same day (by the same reporting judge). Regards.

    1. Good point. The other judgment indicates that in most cases the CJEU is still content to leave a great deal of discretion to the final national court as to whether a case is acte claire.