Gesa
Kübek,
PhD candidate at the law faculty of the University of Passau.
On 14th February
2017, the European Court of Justice (ECJ) concluded, in Opinion
3/15, that the European Union (EU) is exclusively competent to conclude
the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who
Are Blind, Visually Impaired, or Otherwise Print Disabled (hereafter: Marrakesh Treaty). Its
decision in Opinion 3/15 mirrors, at
first sight, Advocate General (AG) Wahl’s Opinion,
which equally argued that the EU has exclusive competence to conclude the
Marrakesh Treaty. A closer look at Opinion
3/15, however, reveals that the Court opted for a much stricter
interpretation of the scope of the EU’s Common Commercial Policy (CCP) – ie the
EU’s international trade powers – than the AG. Moreover, the Court’s answer to
the question of exclusivity does not clarify the correct choice of legal basis.
The following blog
post provides an overview of the Court’s Opinion
3/15 and a short analysis thereof. The first part describes the conflict at
stake and the arguments of the parties. The second part outlines the Court’s position.
The final section discusses some of the implications of Opinion 3/15 for EU treaty-making.
The conflict at stake: Questions of exclusivity and the
choice of legal basis
In June 2013, the
World Organisation on Intellectual Property (WIPO) finalised the negotiations
of the Marrakesh Treaty, which aims to facilitate access to published work for
persons who are blind, visually impaired or otherwise print disabled (hereafter:
“beneficiary persons”). The Marrakesh Treaty stipulates two separate, but
interrelated instruments to fulfil its objectives. First, it obliges its
contracting parties to provide for an exception or limitation to the rights of
reproduction, distribution and making available to the public in order to make
format copies more readily available for beneficiary persons. Second, it
facilitates the cross-border exchange of accessible format copies.
In April 2014, the EU
Council decided
to sign the Marrakesh Treaty for the European Union based on Article 207
TFEU (the EU’s CCP power) in conjuncture with Article 114 TFEU (the EU’s internal
market power, which is the basis for harmonising copyright law within the EU,
among other things). The subsequent Commission proposal
for the conclusion of the agreement was, however, rejected by the Member States
as represented in the Council, which caused fierce institutional debate over
the choice of legal basis. According to the Commission, Arts. 207 and 114 TFEU were
correctly selected. In the alternative, the Marrakesh Treaty may be based on
the CCP alone, which the Lisbon Treaty confirms as an exclusive competence
(Art. 3 (1) (e) TFEU). In any event, the Commission argued that the rights and
obligations comprised by the Marrakesh Treaty were largely harmonized by EU
internal legislation. As a result, it asserted that exclusive EU competence can
be implied (Art. 3 (2) TFEU).
The eight intervening
Member States rejected the assumption of EU exclusivity. Instead, in their
view, the competences to conclude the Marrakesh Treaty ought to be shared,
which may result in the conclusion of a “mixed agreement” that lists both the
EU and the Member States as contracting parties. Given the persisting
institutional conflicts, the Commission asked the Court to clarify whether the
EU has the exclusive competence to conclude the Marrakesh Treaty.
As was stated
above, AG Wahl supported the Commission’s quest for exclusive EU treaty-making
powers. Somewhat surprisingly, the AG, however, determined that the Marrakesh
Treaty should be concluded on the basis of Art. 207 TFEU on the CCP and – as
contended by numerous Member States - Art. 19 (1) TFEU, the EU’s power to adopt
many non-discrimination laws. The latter provision underlines the Marrakesh Treaty’s
objective to promote non-discrimination, equal opportunity, accessibility and
participation of disabled persons in the society. Despite the implication of
exclusivity, the choice of Art. 19 (1) TFEU entails important procedural
consequences: As the provision stipulates that the adoption of EU legislation
requires unanimity in the Council, EU treaty-making under the
anti-discrimination power equally grants the Member States veto powers in the
Council (Art. 218 (8) TFEU).
The Court‘s position in Opinion 3/15
In order to answer
the preliminary question, the Court, first, examined whether the Marrakesh
Treaty, in full or in part, falls within the scope of the CCP. Thereafter, the
ECJ analysed whether exclusivity can be implied within the meaning of Art. 3
(2) TFEU.
The reach of “commercial aspects of intellectual property
rights
To start with, the
Court recalled that according to settled case-law, an EU act falls within the
CCP “if it relates specifically to international trade in that it is
essentially intended to promote, facilitate or govern trade and has direct and
immediate effects on trade” (Daiichi Sankyo). Conversely, the mere fact that an EU act is liable to have
implications on international trade is not enough for it to be concluded under
the CCP.
In its subsequent
reasoning, the Court outlined that neither one of the aforementioned
instruments of the Marrakesh Treaty intends to promote, facilitate or govern
international trade. The Court’s Opinion is particularly striking with regard
to the import and export of format copies, as “there is no doubt that those
rules relate to the international trade of such copies” (para 87).
Nevertheless, the Court stated that the cross-border exchange specified by the
Marrakesh Treaty cannot be equated with international trade for commercial
purposes. On the one hand, the objective of the circulation and exchange of
format copies is non-commercial in nature. The Marrakesh Treaty solely uses
cross-border transactions as a mean to improve access of beneficiary persons to
accessible format copies and not to promote, govern or facilitate trade. On the
other hand, the Marrakesh Treaty’s non-commercial character results from the
fact that it does generally not stipulate trade for profit.
Indeed, the
Marrakesh Treaty provides that trade in format copies covers only authorised
entities, which operate on a non-profit basis and provide their service to
beneficiary persons alone. According to AG Wahl, the non-profit basis of trade
in format copies, is, however, irrelevant for the application of the CCP. To
that extent, the AG proposed a very broad definition of commercial aspects of
intellectual property rights (IPR), which Article 207 (1) TFEU expressly
includes within the scope of the CCP. In his view, the CCP does not exclude
from its ambit transactions or activities of a non-commercial nature as the
mere exchange of goods and services implies that they are being traded. Instead,
Art. 207 (1) TFEU excludes non-commercial aspects of IPR, i.e. issue areas that
are not strictly or directly concerned with trade in their entirety, such as
moral rights.
The Court, however,
rejected the claim that commercial aspects of IPR carve out only those rules
relating to moral rights. Such a broad interpretation would, in the eyes of the
Court, “lead to an excessive extension of the field covered by the common commercial
policy by bringing within that policy rules that have no specific link with
international trade.” (para 85) Consequently, the ECJ concluded that the
Marrakesh Treaty falls outside the ambit of the CCP.
Implied exclusivity and the “ERTA doctrine”
Subsequently, the
Court analysed whether exclusivity can nevertheless be implied via the
well-known “ERTA doctrine” (referring to the Court’s
ERTA judgment), which is codified
in Article 3 (2) TFEU. According to this doctrine, EU obtains exclusive treaty-making
powers where the conclusion of an international agreement “may affect common
rules or alter their scope”. In its ERTA line of case law, the Court has
developed a two-level test for establishing external Member State pre-emption:
First, it conducts a “comprehensive and detailed analysis” to determine whether
the provisions of the envisaged agreement are largely covered by common EU
rules (Opinion
2/91). Second, it determines whether the conclusion of the
international agreement affects the “uniform and consistent application” of
these common EU rules “and the proper functioning of the system which they
establish.” (Opinion 1/13, discussed here).
There was little
disagreement between the parties that the Marrakesh Agreement had to be implemented
within the framework of Directive
2001/29 on the harmonisation of certain aspects of copyright and related
rights in the information society. The
Court, however, pointed out that “it is clear (..) that the EU legislature
brought about only a partial harmonisation of copyright and related rights,
given that the directive is not intended to remove or to prevent differences
between national laws which do not adversely affect the functioning of the
internal market.” (para 115) Indeed, Directive 2001/29 provides, within its
harmonized legal framework, for considerable Member State discretion as regards
the implementation of exceptions and limitations to distribution for the
benefit of people with disabilities. Does such a residual Member State
competence mean that the Marrakesh Treaty is not largely covered by common EU
rules, and therefore prevent implied exclusivity?
The Court answered
this question in the negative. Directive 2001/29 subjects the Member States’
remaining competence to a number of conditions. The Member States’ discretion
can therefore only be exercised within the limits enjoined by EU law, so that
the Member States “are not free to determine, in an un-harmonised manner, the
overall boundaries of the exception or limitation for persons with a disability.”
(para 122) Moreover, the Marrakesh Treaty – unlike Directive 2001/29 – imposes an
obligation on the contracting parties to provide for an exception or limitation.
The Member States are therefore mandated to comply with the restraints imposed
by EU law. As a result, the Court concludes that independent external Member
State action would affect common EU rules. The EU is therefore exclusively
competent to conclude the Marrakesh Treaty.
Opinion 3/15 and EU treaty-making: A short analysis
As stated in the
introduction, the Court’s finding of (implied) exclusivity does not come as a
surprise to many observers. Neither does the broad interpretation of the
“largely covered” part of the ERTA-test.
After all, the Court already confirmed in Opinion
1/03 and, more recently, in Green
Network, that considerable Member State discretion in the
implementation of EU legislation does not rule out exclusivity. Nevertheless,
as was pointed out by AG Wahl, the case law “begs the question: when is an area
sufficiently covered by EU rules to exclude Member State competences to act
externally?” (para 130 of the opinion) By inference, to what extent does the EU
have to exercise its internal competence to trigger the “ERTA effect”?
Green Network and Opinion 3/15 suggest that the Court will
place much greater emphasis on the effects of international agreements on
common EU rules, rather than on the extent of their material overlap. Even if
the EU law in place specifies residual Member State powers, and is therefore,
arguably, not largely harmonised, (adverse) affects on the EU’s internal legal
framework suffice to trigger implied exclusivity within the meaning of Art. 3
(2) TFEU. However, if the Member States may be pre-empted where an agreement is
only partially covered by EU internal legislation, may they be also pre-empted
where the EU cannot exercise its internal competence at all, provided always
that the envisaged agreement clearly affects the EU law in force? The Court is
expected to answer this question in its pending Opinion 2/15 on the conclusion of the EU-Singapore Free Trade
Agreement (discussed here).
Here, among other things, the Court is asked to determine whether the “ERTA
effect” may exceptionally be triggered by EU primary law provisions.
The Court’s
clarification of the scope of Art. 207 (1) TFEU, and in particular, “commercial
aspects of IPR”, might also have some impact on future EU treaty-making. Opinion 3/15 shows that the mere exchange
of goods or services cross-border is not enough to equate a measure with
international trade for commercial purposes. Instead, a link with trade implies
that the transaction or activity aims at fulfilling a commercial objective. By
inference, using trade as a mean to fulfil non-commercial objectives is not
enough to bring a measure within the scope of the CCP. While the Court did not entirely
exclude that “commerce” may, on a case-by-case basis, include trade on a
non-profit basis, it contrasted AG Wahl’s suggestion that Art. 207 TFEU
generally encompasses transaction or activities of a non-commercial nature. In
view of Opinion 2/15, which also
raises this issue, it may be noted that the Court did not dispute the AG’s
claim that moral rights fall outside the scope of the CCP.
When returning to
the Marrakesh Treaty, Opinion 3/15
leaves another pressing question unanswered: What is the correct legal basis for
the agreement’s conclusion? The Court only clarifies that the Council Decision
on the signature of the Marrakesh Treaty was wrongfully based on Art. 207 TFEU,
but does not further elaborate on the correct choice of legal basis. It is true
that the Commission’s preliminary question is confined to the exclusive nature
of the agreement. The choice of legal basis, nevertheless, qualifies the modus operandi of (exclusive) EU
treaty-making. In particular, the Court refrains from discussing AG Wahl’s reference
to Art. 19 (1) TFEU, and, more broadly,
the effects of the non-discrimination principle on EU external action. Whilst
clarifying the EU’s capacity to conclude the agreement alone, the choice of
legal basis – and therefore the choice of procedure – is left to the discretion
of the EU institutions. Throughout the proceedings, the Commission continued to
assert that the Marrakesh Treaty should be based on Art. 114 TFEU instead of Art.
19 TFEU. Conversely, the majority of the intervening Member States sided with
the AG. As the use of Art. 19 (1) TFEU would trigger unanimous Council voting,
and therefore Member State veto powers in the Council, institutional debate
over the conclusion of the Marrakesh Treaty might continue.
Barnard &
Peers: chapter 24
Photo credit: 1709
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