The European citizens’ initiative and EU competence over Greek debt ‘haircuts’

Professor Daniel Sarmiento, Professor of EU Law at the University Complutense of Madrid*

EU competence is a touchy area of EU law. It has become very complex, together with the also intricate case-law on legal bases, which, after several decades of case-law, is not always easy to follow. After the entry into force of the Lisbon Treaty, EU competence has become a major domain for EU constitutional lawyers and it deserves very careful attention. The fact that the Treaties now include a typology of EU competences and enumerate them is a sign that many future battles in EU law will be fought in this terrain.

Furthermore, cases like Pringle, Gauweiler (discussed here) or Vodafone prove that issues of competence and legal bases are not the exclusive domain of institutional litigation, but areas that can be brought to the courts by private parties too. The Court of Justice has always been sensitive to these cases and it has dealt with them with utmost care, mostly in Grand Chamber formation.

Last week a rather surprising route for EU competence litigation came under the radar. In the case of Anagnostakis (no English version available, I’m afraid), the General Court ruled on an action of annulment brought by a private party against the decision of the Commission to reject, on the grounds of lack of competence, a European citizens’ initiative (ECI). Mr. Anagnostakis, together with more than a million supporters, brought a proposal pursuant to Article 11.4 TEU (which provides for the existence of ECIs) and Regulation 211/2011 (which sets out the detail of the ECI process), demanding that the Commission introduce in EU legislation “the principle of state of necessity, according to which, when the financial and political subsistence of a State is at stake due to its duty to comply with an odious debt, the refusal of payment is necessary and justified”. According to the promoters, the legal base of the initiative was to be found in Articles 119 TFEU and 144 TFEU.

The Commission did not seem very impressed and, pursuant to Articles 4(2)(b) and (3) of Regulation 211/2011, it refused to register the proposal, based on a lack of competence.

Mr. Anagnostakis introduced an action of annulment before the General Court, attacking the Commission’s Decision for breach of Articles 122(1) and (2) TFEU, 136(1) TFEU and rules of international law.

The General Court dismissed the action, but it did not limit itself to scrutinizing the Commission’s duty to state reasons. Instead, the Court went into some detail in order to ascertain if haircuts in government debt are not only a competence of the EU, but also in conformity with EU Law. In a rather surprising format and procedural context, the General Court dealt quite openly with one of the Union’s hottest potatoes at the time: the unsustainable Greek public debt.

It is true that the judgment is quite laconic in its reasoning, but it relies several times on Pringle and Gauweiler when interpreting Articles 122 and 136 TFEU. But no matter how laconic it may be, the judgment makes an assertion that will probably not go unnoticed when the Greek public debt becomes politically toxic again. In paragraph 58 of the judgment, the General Court states that “the adoption of a legislative act authorizing a Member State to not reimburse its debt, far from being a part of the concept of economic policy guidelines in the sense of Article 136.1.(b) TFEU […] it would have the effect of substituting the free will of the contracting parties by a legislative instrument allowing for a unilateral abandonment of public debt, which is clearly not what the provision allows” (free translation).

The assertion might be formally correct in light of the limited scope of Article 136(1)(b) TFEU, but the language of the judgment is politically explosive. Even in legal terms, one wonders if Pringle was openly precluding any kind of haircut of government debt by any means. After reading the General Court’s decision in Anagnostakis, it seems that haircuts will be mission impossible in the future, despite the circumstances, the consensus among Member States (the IMF has been explicitly positive about a future Greek haircut) and, above all, the terms and scope of the haircut.

But of course, this judgment could be just a superficial decision undertaking a superficial degree of scrutiny due to the peculiar procedural context of the case. It could be argued that highly contested issues such as the EU’s competence in the area of EMU is something should be left to the Court of Justice, but not to the General Court in the circumstances of a case like Anagnostakis. The General Court might be aware of this and thus the brief and straight-forward reasoning of the decision. However, after reading the judgment several times, the more I read it the more explosive it sounds to me.

*Reblogged from the Despite our Differences blog

Barnard & Peers: chapter 5, chapter 19

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The party’s over: EU data protection law after the Schrems Safe Harbour judgment

Steve Peers

The relationship between intelligence and law enforcement agencies (and companies like Google and Facebook) and personal data is much like the relationship between children and sweets at a birthday party. Imagine you’re a parent bringing out a huge bowl full of sweets (the personal data) during the birthday party – and then telling the children (the agencies and companies) that they can’t have any. But how can you enforce this rule? If you leave the room, even for a moment, the sweets will be gone within seconds, no matter how fervently you insist that the children leave them alone while you’re out. If you stay in the room, you will face incessant and increasingly shrill demands for access to the sweets, based on every conceivable self-interested and guilt-trippy argument. If you try to hide the sweets, the children will overturn everything to find them again.

When children find their demands thwarted by a strict parent, they have a time-honoured circumvention strategy: “When Mummy says No, ask Daddy”. But in the Safe Harbour case, things have happened the other way around. Mummy (the Commission) barely even resisted the children’s demands. In fact, she said Yes hours ago, and retired to the bath with an enormous glass of wine, occasionally shouting out feeble admonitions for the children to tone down their sugar-fuelled rampage. Now Daddy (the CJEU) is home, shocked at the chaos that results from lax parenting. He has immediately stopped the supply of further sweets. But the house is full of other sugary treats, and all the children are now crying. What now?

In this post, I’ll examine the reasons why the Court put its foot down, and invalidated the Commission’s ‘Safe Harbour’ decision which allows transfers of personal data to the USA, in the recent judgment in Schrems. Then I will examine the consequences of the Court’s ruling. But I should probably admit for the record that my parenting is more like Mummy's than Daddy's in the above example. 

Background

For more on the background to the Schrems case, see here; on the hearing, see Simon McGarr’s summary here; and on the Advocate-General’s opinion, see here. But I’ll summarise the basics of the case again briefly.

Max Schrems is an Austrian Facebook user who was disturbed by Edward Snowden’s revelations about mass surveillance by US intelligence agencies. Since he believed that transfers of his data to Facebook were subject to such mass surveillance, he complained to the Irish data protection authority, which regulates Facebook’s transfers of personal data from the EU to the USA.

The substantive law governing these transfers of personal data was the ‘Safe Harbour’ agreement between the EU and the USA, agreed back in 2000. This agreement was put into effect in the EU by a decision of the Commission, which was adopted pursuant to powers conferred upon the Commission by the EU’s current data protection Directive. The latter law gives the Commission the power to decide that transfers of personal data outside the EU receive an ‘adequate level of protection’ in particular countries.

The ‘Safe Harbour’ agreement was enforced by self-certification of the companies that have signed up for it (note that not all transfers to the USA fell within the scope of the Safe Harbour decision, since not all American companies signed up). Those promises were in turn meant to be enforced by the US authorities. But it was also possible (not mandatory) for the national data protection authorities which enforce EU data protection law to suspend transfers of personal data under the agreement, if the US authorities or enforcement system found a breach of the rules, or on a list of limited grounds set out in the decision.

The Irish data protection authority refused to consider Schrems’ complaint, so he challenged that decision before the Irish High Court, which doubted that this system was compatible with EU law (or indeed the Irish constitution). So that court asked the CJEU to rule on whether national data protection authorities (DPAs) should have the power to prevent data transfers in cases like these.

The judgment

The CJEU first of all answers the question which the Irish court asks about DPA jurisdiction over data transfers (the procedural point), and then goes on to rule that the Safe Harbour decision is invalid (the substantive point).

Following the Advocate-General’s view, the Court ruled that national data protection authorities have to be able to consider claims that flows of personal data to third countries are not compatible with EU data protection laws if there is an inadequate level of data protection in those countries, even if the Commission has adopted a decision (such as the Safe Harbour decision) declaring that the level of protection is adequate. Like the Advocate-General, the Court based this conclusion on the powers and independence of those authorities, read in light of the EU Charter of Fundamental Rights, which expressly refers to DPAs’ role and independence. (On the recent CJEU case law on DPA independence, see discussion here). In fact, the new EU data protection law currently under negotiation (the data protection Regulation) will likely confirm and even enhance the powers and independence of DPAs. (More on that aspect of the proposed Regulation here).

The Court then elaborates upon the ‘architecture’ of the EU’s data protection system as regards external transfers. It points out that either the Commission or Member States can decide that a third country has an ‘adequate’ level of data protection, although it focusses its analysis upon what happens if (as in this case) there is a Commission decision to this effect. In that case, national authorities (including DPAs) are bound by the Commission decision, and cannot issue a contrary ruling.

However, individuals like Max Schrems can still complain to the DPAs about alleged breaches of their data protection rights, despite the adoption of the Commission decision. If they do so, the Court implies that the validity of the Commission’s decision is therefore being called into question. While all EU acts must be subject to judicial review, the Court reiterates the usual rule that national courts can’t declare EU acts invalid, since that would fragment EU law: only the CJEU can do that. This restriction applies equally to national DPAs.

So how can a Commission decision on the adequacy of third countries’ data protection law be effectively challenged? The Court explains that DPAs must consider such claims seriously. If the DPA thinks that the claim is unfounded, the disgruntled complainant can challenge the DPA’s decision before the national courts, who must in turn refer the issue of the validity of the decision to the CJEU if they think it may be well founded. If, on the other hand, the DPA thinks the complaint is well-founded, there must be rules in national law allowing the DPA to go before the national courts in order to get the issue referred to the CJEU.

The Court then moves on to the substantive validity of the Safe Harbour decision. Although the national court didn’t ask it to examine this issue, the Court justifies its decision to do this by reference to its overall analysis of the architecture of EU data protection law, as well as the national court’s doubts about the Safe Harbour decision. Indeed, the Court is effectively putting its new architecture into use for the first time, and it’s quite an understatement to say that the national court had doubts about Safe Harbour (it had compared surveillance in the USA to that of Communist-era East Germany).

So what is an ‘adequate level of protection’ for personal data in third countries? The Court admits that the Directive is not clear on this point, so it has to interpret the rules. In the Court’s view, there must be a ‘high’ level of protection in the third country; this does not have to be ‘identical’ to the EU standard, but must be ‘substantially equivalent’ to it.  Otherwise, the objective of ensuring a high level of protection would not be met, and the EU’s internal standards for domestic data protection could easily be circumvented. Also, the means used in the third State to ensure data protection rights must be ‘effective…in practice’, although they ‘may differ’ from that in the EU. Furthermore, the assessment of adequacy must be dynamic, with regular automatic reviews and an obligation for a further review if evidence suggests that there are ‘doubts’ on this score; and the general changes in circumstances since the decision was adopted must be taken into account.

The Court then establishes that in light of the importance of privacy and data protection, and the large number of persons whose rights will be affected if data is transferred to a third country with an inadequate level of data protection, the Commission has reduced discretion, and is subject to ‘strict’ standards of judicial review. Applying this test, two provisions of the ‘Safe Harbour’ decision were invalid.

First of all, the basic decision declaring adequate data protection in the USA (in the context of Safe Harbour) was invalid. While such a decision could, in principle, be based on self-certification, this had to be accompanied by ‘effective detection and supervision mechanisms’ ensuring that infringements of fundamental rights had to be ‘identified and punished in practice’. Self-certification under the Safe Harbour rules did not apply to US public authorities; there was not a sufficient finding that the US law or commitments met EU standards; and the rules could be overridden by national security requirements set out in US law.

Data protection rules apply regardless of whether the information is sensitive, or whether there were adverse consequences for the persons concerned. The Decision had no finding concerning human rights protections as regards the national security exceptions under US law (although the CJEU acknowledged that such rules pursued a legitimate objective), or effective legal protection in that context. This was confirmed by the Commission’s review of the Safe Harbour decision, which found (a) that US authorities could access personal data transferred from the EU, and then process it for purposes incompatible with the original transfer ‘beyond what was strictly necessary and proportionate for the purposes of national security’, and (b) that there was no administrative or judicial means to ensure access to the data and its rectification or erasure.

Within the EU, interference with privacy and data protection rights requires ‘clear and precise rules’ which set out minimum safeguards, as well as strict application of derogations and limitations.  Those principles were breached where, ‘on a generalised basis’, legislation authorises ‘storage of all the personal data of all the persons whose data has been transferred’ to the US ‘without any differentiation, limitation or exception being made in light of the objective pursued’ and without any objective test limiting access of the public authorities for specific purposes. General access to the content of communications compromises the ‘essence’ of the right to privacy. On these points, the Court expressly reiterated the limits on mass surveillance set out in last year’s Digital Rights judgment (discussed here) on the validity of the EU’s data retention Directive. Furthermore, the absence of legal remedies in this regard compromises the essence of the right to judicial protection set out in the EU Charter. But the Commission made no findings to this effect.

Secondly, the restriction upon DPAs taking action to prevent data transfers in the event of an inadequate level of data protection in the USA (in the context of Safe Harbour) was also invalid. The Commission did not have the power under the data protection Directive (read in light of the Charter) to restrict DPA competence in that way. Since these two provisions were inseparable from the rest of the Safe Harbour decision, the entire Decision is invalid. The Court did not limit the effect of its ruling.

Comments

The Court’s judgment comes to the same conclusion as the Advocate-General’s opinion, but with subtle differences that I’ll examine as we go along. On the first issue, the Court’s finding that DPAs must be able to stop data flows if there is a breach of EU data protection laws in a third country, despite an adequacy Decision by the Commission, is clearly the correct result. Otherwise it would be too easy for the standards in the Directive to be undercut by means of transfers to third countries, which the Commission or national authorities might be willing to accept as a trade-off for a trade agreement or some other quid pro quo with the country concerned.

As for the Court’s discussion of the architecture of the data protection rules, the idea of the data protection authorities having to go to a national court if they agree with the complainant that the Commission’s adequacy decision is legally suspect is rather convoluted, since it’s not clear who the parties would be: it’s awkward that the Commission itself would probably not be a party.  It’s unfortunate that the Court did not consider the alternative route of the national DPA calling on the Commission to amend its decision, and bringing a ‘failure to act’ proceeding directly in the EU courts if it did not do so. In the medium term, it would be better for the future so-called ‘one-stop shop’ system under the new data protection Regulation (see discussion here) to address this issue, and provide for a centralised process of challenging the Commission directly.

It’s interesting that the CJEU finds that there can be a national decision on adequacy of data flows to third States, since there’s no express reference to this possibility in the Directive. If such a decision is adopted, or if Member States apply the various mandatory and optional exceptions from the general external data protection rules set out in Article 26 of the data protection Directive, much of the Court’s Schrems ruling would apply in the same way by analogy. In particular, national DPAs must surely have the jurisdiction to examine complaints about the validity of such decisions too. But EU law does not prohibit the DPAs from finding the national decisions invalid; the interesting question is whether it obliges national law to confer such power upon the DPAs. Arguably it does, to ensure the effectiveness of the EU rules. Any decisions on these issues could still be appealed to the national courts, which would have the option (though not the obligation, except for final courts) to ask the CJEU to interpret the EU rules.

As for the validity of the Safe Harbour Decision, the Court’s interpretation of the meaning of ‘adequate’ protection in third States should probably be sung out loud, to the tune of ‘We are the World’. The global reach of the EU’s general data protection rules was already strengthened by last year’s Google Spain judgment (discussed here); now the Court declares that even the separate regime for external transfers is very similar to the domestic regime anyway. There must be almost identical degrees of protection, although the Court does hint that modest differences are permissible: accepting the idea of self-certification, and avoiding the issue of whether third States need an independent DPA (the Advocate-General had argued that they did).

It’s a long way from the judgment in Lindqvist over a decade ago, when the Court anxiously insisted that the external regime should not be turned into a copy of the internal rules; now it’s insistent that there should be as little a gap as possible between them. With respect, the Court’s interpretation is not convincing, since the word ‘adequate’ suggests something less than ‘essentially equivalent’, and the EU Charter does not bind third States.

But having said that, the American rules on mass surveillance would violate even a far more generous interpretation of the meaning of the word ‘adequate’. It’s striking that (unlike the Advocate-General), the Court does not engage in a detailed interpretation of the grounds for limiting Charter rights, but rather states that general mass surveillance of the content of communications affects the ‘essence’ of the right to privacy. That is enough to find an unjustifiable violation of the Charter.

So where does the judgment leave us in practice? Since the Court refers frequently to the primary law rules in the Charter, there’s no real chance to escape what it says by signing new treaties (even the planned TTIP or TiSA), by adopting new decisions, or by amending the data protection Directive. In particular, the Safe Harbour decision is invalid, and the Commission could only replace it with a decision that meets the standards set out in this judgment. While the Court refers at some points to the inadequacy or non-existence of the Commission’s findings in the Decision, it’s hard to believe that a new Decision which purports to claim that the American system now meets the Court’s standards would be valid if the Commission were not telling the truth (or if circumstances subsequently changed).

What standards does the US have to meet? The Court reiterates even more clearly that mass surveillance is inherently a problem, regardless of the safeguards in place to limit its abuse. Indeed, as noted already, the Court ruled that mass surveillance of the content of communications breaches the essence of the right to privacy and so cannot be justified at all. (Surveillance of content which is targeted on suspected criminal activities or security threats is clearly justifiable, however). In addition to a ban on mass surveillance, there must also be detailed safeguards in place. The US might soon be reluctantly willing to address the latter, but it will be even more unwilling to address the former.

Are there other routes which could guarantee that external transfers to the USA take place, at least until the US law is changed? In principle, yes, since (as noted above) there are derogations from the general rule that transfers can only take place to countries with an ‘adequate’ level of data protection. A first set of derogations is mandatory (though Member States can have exceptions in ‘domestic law governing particular cases’): where the data subject gives ‘consent unambiguously’; where the transfer is necessary to perform a contract with (or in the interest of) the data subject, or for pre-contractual relations; where it’s ‘necessary or legally required on important public interest grounds’, or related to legal claims; where it’s ‘necessary to protect the vital interests of the data subject’; or where it’s made from a public register. A second derogation is optional: a Member State may authorise transfers where the controller offers sufficient safeguards, possibly in the form of contractual clauses. The use of the latter derogation can be controlled by the Commission.

It’s hard to see how the second derogation can be relevant, in light of the Court’s concerns about the sufficiency of safeguards under the current law. US access to the data is not necessary in relation to a contract, to protect the data subject, or related to legal claims.  An imaginative lawyer might argue that a search engine (though not a social network) is a modern form of public register; but the record of an individual’s use of a search engine is not.

This leaves us with consent and public interest grounds. Undoubtedly (as the CJEU accepted) national security interests are legitimate, but in the context of defining adequacy, they do not justify mass surveillance or insufficient safeguards. Would the Court’s ruling in Schrems still apply fully to the derogation regarding inadequate protection? Or would it apply in a modified way, or not at all?

As for consent, the CJEU ruled last year in a very different context (credibility assessment in LGBT asylum claims) that the rights to privacy and dignity could not be waived in certain situations (see discussion here). Is that also true to some extent in the context of data protection? And what does unambiguous consent mean exactly? Most people believe they are consenting only to (selected) people seeing what they post on Facebook, and are dimly aware that Facebook might do something with their data to earn money. They may be more aware of mass surveillance since the Snowden revelations; some don’t care, but some (like Max Schrems) would like to use Facebook without such surveillance. Would people have to consent separately to mass surveillance? In that case, would Facebook have to be accessible for those who did not want to sign that separate form? Or could a ‘spy on me’ clause be added at the end of a long (and unread) consent form?  Consent is a crucial issue also in the context of the purely domestic EU data protection rules.

The Court’s ruling has addressed some important points, but leaves an enormous number of issues open. It’s clear that it will take a long time to clear up the mess left from this particular poorly supervised party.  

Barnard and Peers: chapter 9

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An insubstantial pageant fading: a vision of EU citizenship under the AG’s Opinion in C-308/14 Commission v UK

Charlotte O'Brien, Senior Lecturer, York Law School

The political message being sent by irate governments to ‘back off’ from national welfare systems’ assumed prerogative to discriminate between home nationals and EU nationals is being received and applied with alacrity by the Court of Justice. The current direction of travel resiles from earlier progressive visions of EU citizenship, and in C-140/12 Brey, C-333/13 Dano and C-67/14 Alimanovic we see that which was once ‘destined to be [our] fundamental status’ receding ever further from view. Advocate General Cruz Villalón’s Opinion in Commission v UK continues the retreat, arguing that the Commission’s action challenging the UK right to reside test for family benefits should be dismissed. The result may, in the current environment, be unsurprising. But getting there with existing legal tools is problematic.

The Opinion contains a number of uncomfortable contortions to give undue deference to the national rules, and avoid tackling the underlying conflict of rules and approaches. It represents quite startling judicial activism in embroidering the legislation with unwritten limitations as to personal scope, tinkering with the subject matter, and asserting an unwritten licence to discriminate whenever something smells like a welfare benefit. The effect is as though the Court’s new teleological guiding principle should be that the legislature would have wanted at all costs to avoid offending the UK government.

The UK right to reside (RTR) test prevents any EU national who does not meet the criteria in Art 7 Directive 2004/38 from receiving Child Benefit or Child Tax Credit, both of which were accepted as being ‘family benefits’, so ‘pure social security’ (rather than special non-contributory benefits in Brey, Dano and Alimanovic) under Regulation 883/2004. The Commission challenged the test’s lawfulness on two grounds – that it imported extra conditions into the ‘habitual residence’ test, to undermine the effects of Regulation 883/2004, and that it is discriminatory since it only applies to non-UK citizens. The AG’s Opinion is remarkable, in its ability to reject both without engaging with either. This analysis deals with four key issues arising from the Opinion: (i) stitching, splicing and embroidering Reg 883/2004; (ii) the ‘inherent’, ‘inevitable’ and ex ante discrimination fudge; (iii) the parallel reality in which the UK does not presume unlawful residence; and (iv) the failure to notice that the UK automatically refuses social assistance to those reliant on ‘sufficient resources’.

(i) stitching, splicing and embroidering Regulation 883/2004

The AG is at some pains to determine whether the ‘right to reside’ test is part of the habitual residence test (HRT), or a separate test added on, suggesting that it is only if it is presented as the former, does the Commission have a case. As the UK government ‘distanced’ itself during proceedings from the combined test approach, and argued that it was a separate test of lawful residence, so the AG commented that the Commission’s case was ‘weakening over the course of the dispute’. Indeed, on the basis that the test was ‘independent’ of the HRT, the AG argued that the first ground should be dismissed. This is perplexing. It seems to be a matter of regulatory semantics whether the RTR is part of the HRT, or is applied as well as the HRT, if the effect – to undermine Regulation 883/2004 – is the same.

For the record, the conclusion that they are separate tests is unconvincing anyway. For all benefits with an official ‘habitual residence test’ the regulations provide that a claimant cannot be habitually resident unless she has the right to reside in the CTA (Income Support (General) Regulations 1987, reg 21AA; Jobseeker Allowance Regulations 1996, reg 85A; Employment and Support Allowance Regulations 2008, reg 70(2); State Pension Credit Regulations, reg 2; see DWP, DMG, 072771). For CB and CTC the terminology is slightly different – the words ‘habitually resident’ are not used, but a person must be treated as being in the UK. And to be treated as being in the UK, you have to have a right to reside (Child Benefit Regulations 2006, Reg 23(4)(a); Tax Credits (Residence) Regulations 2003, Reg. 3(5); CBTM10010 - Residence and immigration: residence – introduction).

However, whether we treat the RTR as part of habitual residence, or as an extra test, the effect in both cases is to add conditions onto the circumstances in which a person is treated as meeting the ‘residence’ criteria of Regulation 883/2004. That Regulation offers a clear, exhaustive list for allocating ‘competence’ of Member States for benefits, providing a residual category for the economically inactive, at Art 11(3)(e) in which the Member State of residence is competent. Once competence has been established, that State is then responsible for the payment of family benefits, subject to the non-discrimination provision.

The scheme of the Regulation is intentionally broader than that of Directive 2004/38 – applying a different personal scope for a start (covering all those who ‘are or have been subject to the legislation of one or more Member States’), and covering pensioners, those between jobs, those who might fall outside of the Dir 2004/38 Article 7(3) retention provisions – essentially, those who should be covered by social security provisions. To apply the right to reside test is to hack down the rationae personae of the Regulation to emulate that of Directive 2004/38 – an approach not endorsed, implied or merited in the Regulation. The AG’s assertion that law should not exist in ‘separate compartments’ as justification for splicing the instruments together and embroidering an extra condition into the Regulation rather too easily ignores the different purposes and scopes of the instruments. Similarly, the different material issues – the restriction of social assistance now embodied in Directive 2004/38, versus award of social security, are inappropriately assimilated. The AG notes, apparently approvingly, the UK’s assertion that ‘the two benefits at issue in the present case have some characteristics of social assistance’. This goes unexamined, and helps form the context in which the different nature of social security, and different subject matter of the Regulation, is effectively ignored. In sum, we have an approach in which if a benefit is a ‘bit like’ social assistance, and a legal instrument is in roughly the same area as Directive 2004/38, then unwritten restrictions kick in.

In the specific case of family benefits, the Regulation’s residual category should provide a guarantee that families do not fall through the cracks and find themselves disentitled to any family benefits, since many Child Benefits are tied to residence. This also serves the ‘bonus’ purpose of protecting children, who are not the agents of migration, and who the legislature and the Court have hitherto taken pains to protect from suffering the penalties of their parents’ choices and/or misfortunes – either out of an interest in child welfare, or as an instrumental way of avoiding disincentives (risks to their children’s welfare) for workers to migrate.

Here it is worth emphasising that when we speak of falling through the cracks, we mostly speak of people who have been working (rather than those who have never worked). The right to reside test results in a strict bifurcation between those ‘working’ and those not. The rules on retention of worker status are stringent and exclusionary, so that people can be working and contributing for many years and still fall over welfare cliff edges. Regulation 883/2004 should offer some protection to their pre-school children in such cases, even where Directive 2004/38 is (according to emerging case law) rather harsher to the parents.

However, in the AG’s approach we can see the Directive, having already been transformed from an instrument to promote free movement into a instrument to prevent benefit tourism (Dano); being promoted to the status of a fundamental principle of limitation, to be (retrospectively) mainstreamed into other (higher) legislative instruments – exerting restrictions that are not there written.

(ii) the ‘inherent’, ‘inevitable’ and ex ante discrimination fudge;

The AG avoided dealing with the question of whether the RTR test discriminates contrary to Regulation 883/2004, by finding that the RTR prevented the Regulation from being applicable at all – apparently treating ex ante discrimination as de facto lawful. This conceptual approach is deeply problematic – can Member States really avoid the non-discrimination obligations contained in legislation by applying discriminatory gateways to access that legislation?

As noted above, once competence of a Member State has been established for the purposes of Regulation 883/2004, it is then – according to that instrument, bound by non-discrimination duties (Article 4). However, under the proposed approach, there will be people for whom no Member State has competence, because competence is to be determined according to a set of restrictions in a completely different instrument which apply a different concept to a different set of people for a different set of benefits. And if they are in this way found not be within any State’s competence, the question of discrimination is avoided.

To the extent that the AG does engage with non-discrimination duties, it is part of an imprecise discussion about the likelihood of the lawfulness of curbing benefits from non-nationals (benefit restrictions are ‘traditionally associated’ with requirements of legal residence). In drawing upon Dano and Brey, the fact that those cases dealt with benefits therein defined as social assistance is swept aside somewhat as the AG finds ‘there is nothing in those judgments to indicate that such findings apply exclusively to the social assistance benefits or the special non-contributory cash benefits with which those cases were concerned and not to other social benefits’. But there is plenty to indicate that social security benefits should be treated differently in their coverage in a different piece of legislation. It is surely very odd to suggest that the Court should list those instruments on which it was not ruling.

Recognising that the rules do treat UK nationals and non nationals differently, the Opinion makes some rhetorical points about discrimination as part of the natural ecosystem of free movement – ‘one way of looking at it is that this difference in treatment as regards the right of residence is inherent in the system and, to a certain extent, inevitable… In other words, the difference in treatment between UK nationals and nationals of other Member States stems from the very nature of the system.’ None of this does anything to address the question of the problem of direct versus indirect discrimination – the latter being rather easier to justify. It almost suggests that some degree of direct discrimination has to be accepted as a matter of pragmatism. Indeed, the characterisation of the rules as indirectly discriminating on the grounds of nationality is one of the most contentious issues in the case. Much as in C-184/99 Grzelczyk, an extra condition is imposed only upon non-nationals. Hiding behind the banner of indirect discrimination seems unconvincing if we posit a brief thought experiment. Imagine all EU national men automatically had an RTR, but all EU national women had to pass the RTR test; that could not be described as indirectly discriminating on the grounds of sex. While it could be argued that nationality is a different type of ground to sex, and so different differences are acceptable, the fact that we are dealing with direct discrimination remains. And this is not explored. The only thing that needs justification, under this analysis, is not the test, but the procedural checking, which we look at next.

(iii) the parallel reality in which the UK does not presume unlawful residence

The AG states that it cannot be inferred that the UK presumes that claimants are unlawfully resident, adding that European citizenship would preclude such a presumption, and that claimants should not systematically be required to prove they are not unlawfully resident.

However, the whole claims process in the UK does systematically require proof of claimants that they are (not un)lawfully resident. The right to reside test takes the limitations of Directive 2004/38 and makes them a priori conditions of the existence of the right to move and reside. There is no general citizenship-based right to reside that can be modified by limitations, with some discretion. The conditions come first, and must be demonstrably met, in each and every case. The UK’s assertion that ‘In cases in which there is doubt as to whether the claimant has a right of residence, an individual assessment of the claimant’s personal circumstances is carried out’ rather masks the process of assessment that decision makers are required to undertake according to the decision maker guidance on establishing whether a claimant really is or was a worker - using the UK’s own definition. That definition is flawed in itself, requiring evidence to meet a higher threshold than set in EU law, and the evidential hurdles can be considerable. Even for the most straightforward cases of worker, proof is required that earnings have been at or above the Minimum Earnings Threshold for a continuous period of at least three months. Those with variable earnings are expected to provide considerable evidence if they wish to ‘prove’ their right to reside. In cases where HMRC have reason to doubt conditions continue to be met for tax credit awards, they issue further, penetrating compliance checks, and in the UK government’s Budget Policy costings document, the government announced that the restrictions on benefits ‘will be augmented by additional HMRC compliance checks to improve detection of when EEA migrants cease to be entitled to these benefits. The checks will apply to all EEA migrant claims’. The system is set up to make the conditions constitutive of the right to free movement, effectively requiring all claimants to prove that they are not unlawfully resident, notwithstanding the apparent ‘background’ of EU citizenship, and claims are subject to systematic checking, notwithstanding Article 14(2) of Directive 2004/38.

The AG however, took the position that such checks are not systematic, but may be indirectly discriminatory, but that they were lawful, with the briefest of nods to justification – as though the mere mention of the UK’s public finances is sufficient to provoke a reverential hush, genuflection and swift retreat from the subject: 

‘without any need to pursue the argument further, I consider that the necessity of protecting the host Member State’s public finances, (75) an argument relied on by the United Kingdom, (76) is in principle sufficient justification for a Member State to check the lawfulness of residence at that point.’

No data, it seems, is required.

Nor is any engagement with the question as to whether purely economic aims are legitimate aims for the purpose of justifying discrimination or restricting a fundamental freedom – on this, see AG Sharpston’s Opinion in C-73/08 Bressol.

(iv) the failure to notice that the UK automatically refuses social assistance to those reliant on ‘sufficient resources’.

The AG rounds up the Opinion by noting that in any case, the economically inactive are not completely hung out to dry – they should have their circumstances examined to determine whether they have sufficient resources not to become a burden on the public purse. Here, the AG emphasises that mere recourse to public funds should not bar a claimant from having a right to reside based on sufficient resources, and that their case should be assessed as to whether they are an ‘excessive’ burden. This is all very well, but speaks to a rather different reality to that experienced in the UK, in which the economically inactive are automatically barred from claiming social assistance because they are automatically treated as not having sufficient resources at the point of claim. Moreover, the Upper Tribunal has suggested that ‘sufficient resources’ means sufficient to provide for the migrant’s family for five years; a migrant cannot claim to have had sufficient resources for a short period of time between jobs if those resources would not have lasted for five years.

In short, the Court should be wary of following the AG’s lead in backing off from the apparently prohibited area of UK welfare benefits quite so hastily. The Regulation’s personal and material scope, and purpose, cannot simply be ignored or modified, nor can the Directive be transformed into an all-encompassing, higher principle, through pro-Member State judicial activism. The right to reside test adds conditions to the application of the Regulation’s provisions, and it does so in a directly discriminatory way. The Court must address these points honestly; if it is prevented from doing so by the political wind – or if it too conjures up a default forcefield around benefits regardless of type, and gives licence to ‘inevitable’ discrimination – the ramifications will tell not only upon claimants, their children, the vanishing strands of EU citizenship and the obstructed freedom to move, but also upon the Court’s credibility. 

Photo credit: www,kilburntimes.co.uk

Barnard & Peers: chapter 9

The CJEU’s Ruling in Celaj: Criminal penalties, entry bans and the Returns Directive

By Izabella Majcher, Associate Researcher at Global Detention Project and PhD candidate in International Law at the Graduate Institute of International and Development Studies is Geneva.

In its ruling in the Skerdjan Celaj case (C-290/14), rendered on 1^st October 2015, the Court of Justice of the European Union (CJEU) addressed once again the relation between immigration and criminal law and in particular the compatibility of national penal measures imposed as a punishment for irregular migration with the EU Returns Directive. In the previous cases touching upon this issue, the Court assessed whether the Directive allowed states to penalize non-compliance with a return order or irregular stay itself with imprisonment (El Dridi and Achughbabian, respectively) and with home detention (Sagor) as a criminal law penalty (as distinct from administrative law detention, which is expressly regulated by the Directive). In turn, in Celaj the Luxembourg judges were requested to consider whether a criminal law sentence of imprisonment imposed for a breach of a re-entry ban was compatible with the Returns Directive.

As defined in Article 3(6) of the Directive, an “entry ban” means an “administrative or judicial decision or act prohibiting entry into and stay on the territory of the Member States for a specified period, accompanying a return decision.”

The Case

Mr Celaj was arrested by Italian police in August 2011 for attempted robbery. In April 2012 he was issued a removal order accompanied by a three-year entry ban and left Italian territory some five months later. Subsequently Mr Celaj re-entered Italy and was apprehended by the police in February 2014. The public prosecutor then brought criminal law proceedings against him and sought a term of imprisonment of eight months for the breach of the entry-ban. The District Florence Court, before whom the proceedings were brought, decided to stay the proceedings and refer the question to the Luxembourg Court for a preliminary ruling. The referring court asked the CJEU whether the Returns Directive precludes domestic legislation penalizing re-entry in breach of an entry ban with a prison sentence up to four years. The Court found that it does not.

The Court did not follow the Opinion of Advocate General (AG) Szpunar, issued in April 2015. The AG based his Opinion on the effectiveness and the main objective of the Returns Directive, which is the return of undocumented non-EU citizens. These arguments had been developed by the Court in a line of case-law addressing the relation between domestic penal sanctions and the Directive. Indeed, in El Dridi (§ 58) the Court ruled that imprisonment as a criminal law penalty for the failure to leave the country during the voluntary departure period was not compatible with the Returns Directive. In Achughbabian (§ 45) it found that the Directive also precluded imprisonment as a criminal law penalty for irregular stay itself if ordered prior to starting removal proceedings or during such proceedings. The underlying justification of the Court’s conclusions in both cases was that a term of imprisonment as a criminal law penalty would delay the removal of the person concerned and thus jeopardize the objective pursued by the Directive (El Dridi, § 59; Achughbabian, § 45). The ruling in Sagor (§ 45) shows that not only prison sentences but even home detention during return proceedings as a criminal law penalty risks delaying deportation and thus should not be imposed. The AG thus invited the Court to follow its well-established case-law and declare that imprisonment for a breach of entry ban as a criminal law penalty is incompatible with the Directive because it would delay return of the person concerned (§ 6).

Yet, the Court ruled that the Returns Directive does not preclude domestic legislation which provides for a prison sentence as a criminal law penalty for non-EU citizens who unlawfully re-enter the country in breach of an entry ban (§25 and 33). The CJEU did reiterate that the objective of the Directive would be undermined if removal would be delayed by a criminal prosecution leading to a term of imprisonment, as ruled in El Dridi, Achughbabian, and Sagor (§ 26). However, it found that the circumstances in the Celaj case were “clearly distinct” from those in El Dridi and Achughbabian. This distinction, in the Court’s opinion, was due to the fact that, unlike Mr Celaj, the non-citizens concerned in El Dridi and Achughbabian were subject to a first return procedure (§ 28). The Court also added that, in line with the second indent of its ruling in Achughbabian, the Directive does not preclude penal sanctions as a criminal law penalty to be imposed on a migrant who has been subject to a return procedure but stays in an irregular manner in the member state (§ 29).

Comments

Were the circumstances in Celaj so “clearly distinct” from those in El Dridi and Achughbabian to justify such a different conclusion? Does it fundamentally matter that those cases dealt with a first return procedure? Every return procedure regulated by the Directive has essentially the same goal – the swift removal of the non-EU citizen concerned. It appears thus irrelevant whether return is pursued because of irregular entry or irregular re-entry.

Under Article 6(1) of the Directive member states are required to issue a return decision to every migrant in irregular situation, subject to some exceptions. As highlighted by the AG (§ 42, 49, and 50), this duty is persistent and continuous. This means that each time a non-EU citizen finds himself or herself on the State territory without permission, the authorities should start a return procedure by issuing a return decision. Thus, in line with the rules under the Directive, a non-EU citizen who has re-entered the Member State unlawfully should be liable to a new return decision rather than criminal proceedings which may postpone his or her ultimate removal. This finding is also supported by the Court’s ruling in Achughbabian (§ 45) where it held that the obligation incumbent on states to conduct removal shall be fulfilled as soon as possible and thus states should not carry out criminal proceedings involving custodial penalties not only prior to the implementation of the return decision, but also prior to the adoption of such a decision.

Strikingly, the CJEU did not consider at all whether criminal proceedings against Mr Celaj would delay his return. This omission is hardly consistent with the Court’s well established case-law which attaches pivotal importance to the effectiveness of the procedures regulated under the Directive (El Dridi, § 55; Achughbabian, § 39; Sagor, § 32). It is easily foreseeable that after serving his prison sentence, Mr Celaj will be issued with a return decision. The term of imprisonment as a criminal law penalty will inevitably delay his return and thus jeopardize the very objective of the Returns Directive.

Likewise, the second, somehow auxiliary, argument advanced by the Luxembourg judges is not wholly convincing. True, in line with the second indent of the ruling in Achughbabian (§ 51) states may impose a criminal law prison sentence on a non-EU citizen to whom a return procedure has been applied but who stays in an irregular manner in the Member State. However, as pointed out by the AG (§ 61), to be compatible with the main part of the ruling, this conclusion should only cover situations where authorities did not succeed in returning the person concerned, who then continues to stay on the state’s territory. The second indent in the judgment in Achughbabian should thus have no bearing on Celaj where the non-EU citizen concerned left the country, thus return proceedings reached their goal. Following his irregular re-entry, he should be liable to a new return procedure.

The judgment in Celaj appears not consistent with the CJEU’s well-established jurisprudence on the interplay between domestic penal sanctions and the effectiveness of return policy as laid down in the Returns Directive. The Court relied on an apparent clear distinction between return proceedings imposed for irregular entry and subsequent re-entry in breach of an entry ban. As discussed above, the wording of the provisions of the Returns Directive, supported by the underlying objective of the Directive repetitively stressed in the Court’s previous rulings, does not warrant finding such a distinction. The “distinction” argument had been advanced by the European Commission and intervening governments during the proceedings. They stressed that the circumstances in re-entry cases are distinct because penal sanctions could be imposed to dissuade migrants from breaching re-entry bans (AG’s Opinion, § 46). So the “distinction” argument – which was central to the Court’s conclusion - relies on states’ deterrence-oriented concerns rather than considerations based on the provisions and objective of the Returns Directive. The ruling in Celaj seems thus to compromise on the effectiveness of the Directive in order to accord discretion to states to apply their domestic criminal provisions to deter and punish migrants for breaching re-entry ban.

What is the nature of the entry ban whose breach states are now explicitly allowed to punish with criminal law imprisonment? As noted above, Article 3(6) of the Directive defines an entry ban as a prohibition of re-entry to the host state (or other Member States) for a specified period of time. In Article 11(1) the Directive obliges states to impose an entry ban on a non-EU citizen who has not been granted the possibility of voluntary departure or has not complied with a return decision. Since the Directive provides for broad circumstances for refusal of a voluntary departure period (Article 7(4); see discussion of the case law on this issue here) and does not explicitly prohibit states from issuing a return decision on non-refoulement and family or private life grounds (the Directive merely allows states grant a residence permit on humanitarian or other reasons, in Article 6(4)), in practice Article 11(1) may entail that entry bans are imposed in a systematic way. This risk is amplified by the same provision as it allows states to apply a ban on re-entry also in “other cases.”

In practice, as the Evaluation on the application of the Returns Directive, commissioned by the European Commission, shows, the legislation of almost 40 percent of the countries bound by the Directive provides for an automatic application of entry bans on all return decisions. A recent European Migration Network’s study Good Practices in the return and reintegration of irregular migrants demonstrates the scale of the use of entry bans. In 2013 more than 125,000 entry bans were imposed in the EU. Compared to the total number of return decisions that year (see Eurostat), these figures evince that the member states accompany a considerable proportion of return decisions with entry bans, including Greece (almost 100 %), Poland (80 %), or Sweden (70 %). It appears thus that entry bans are systematically applied in practice.

States are free not to impose or withdraw an entry ban for humanitarian or other reasons (article 11(3)). They are however not obligated to waive the entry ban requirement in such cases - it lies within their discretion. While the Directive clarifies that entry bans shall not prejudice the right to international protection (Article 11(5)), this assertion should be translated into a clear obligation on states not to impose the ban where the protection from non-refoulement could be impaired. The severity of this entry ban is further strengthened by its length. The Directive allows a five-year duration of an entry ban (article 11(2)). The above mentioned Commission study highlights that the majority of states issue entry bans for this maximum permitted period of time. In addition, states may apply a longer ban (the time period of which is not limited by the Directive), if they judge that the person concerned represents a serious threat to public policy or national security (Article 11(2)).

Thus, potentially the majority of non-EU citizens liable to return are prohibited for prolonged periods to re-enter the host state or even the whole EU, if the entry ban has been registered in the Schengen Information System (SIS). An entry ban is thus a harsh and coercive measure, which is a deterrent in itself and potentially conflicts with migrants’ fundamental rights. It cannot be ruled out that a non-EU citizen will be obliged to re-enter, where prompted by his family links, disrupted by deportation, or changes in the situation in his country of origin. While, as noted above, states may withdraw an entry ban, they are nevertheless not obliged to do so. Imposition of a criminal law prison sentence for breach of an entry ban, as permitted in Celaj, appears thus disproportionate and unnecessary. States may use other available methods to punish this breach, such as an extension of an existing ban. More generally, criminalization of breaches of (administrative) immigration law risks creating a conflation between (non-punitive) immigration law and criminal law, with negative consequences for migrants, and an undue overburden to the criminal justice system.

Barnard & Peers: chapter 26

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