Is this the end of football’s transfer system? An immediate reaction to the Court’s ruling in Diarra (C-650/22).

 

Stephen Weatherill, Somerville College and Faculty of Law, Oxford University

Photo credit: Addesolen, via Wikimedia Commons

 

Introduction

 

‘Is this the end of football’s transfer system?’ So shrieked the media in December 1995 when the Court of Justice decided the Bosman case (C-415/93). And the same question has now hit the headlines after the Court’s ruling on 4 October 2024 in Diarra (C-650/22). The answer was ‘no’ back in 1995. And the answer is still ‘no’ today.

 

The transfer system which enmeshed Diarra and led to the litigation is exposed by the Court’s judgment on 4 October as grossly deficient and incompatible with EU law. It will need to be changed. But a system of sorts, specific to football, can survive this judgment. And it is unlikely anything will happen quickly. It took several years after the Bosman ruling for the system to be revised, and Bosman was clearer on what needed to be changed – the exclusion of out-of-contract players - than Diarra is. But there will need to be change. Most of all, the system will need to be made less restrictive and the consequences of unilateral breach of contract will need to be made more predictable.

 

The litigation

 

Diarra played for Lokomotiv Moscow. A dispute arose. The club terminated his contract for reasons related to his conduct and brought a claim for compensation before the Dispute Resolution Chamber under FIFA’s Regulations on the Status and Transfer of Players. The player counterclaimed. In the meantime he tried to find a new club. Diarra’s claim which reached the Court in Luxembourg via a reference from the cour d’appel de Mons in Belgium concerns his failure to find a new club. Under the FIFA Regulations it was possible that the dispute with his old club might, once finally resolved, have resulted in any new club being liable alongside Diarra to pay compensation to Lokomotiv Moscow under the FIFA Regulations. So, Diarra claimed, the transfer system obstructed his chances of finding new employment. This, he also claimed, was not hypothetical. His evidence included a concrete (and remarkably convenient) offer from Charleroi which was stated to be subject to that club not being liable under the FIFA Regulations – a proviso which FIFA refused to accept. So Diarra’s case was that he had been treated by FIFA in breach of EU law – that the transfer system operated as an obstacle to his free movement in violation of Article 45 TFEU and as an anti-competitive practice incompatible with Article 101 TFEU.

 

 

The structure of the ruling

 

Much of the Diarra ruling is entirely familiar and unsurprising to an EU internal market lawyer.

 

An obstacle to inter-State trade within the meaning of Article 45 TFEU (on the free movement of workers) was found. FIFA’s rules, the Court concluded, were liable to obstruct football players resident or working in their Member State of origin who wish to work instead for a new club established in the territory of another Member State by unilaterally terminating their employment contract.

 

Similarly the presence of the key ingredients of Article 101 TFEU (on competition law cartels) were quickly ticked off – FIFA falls within the concept of an undertaking or association of undertakings, its rules were a 'decision by an association of undertakings', and the matter affected trade between Member States.

 

The sports-specific elements in the ruling are also no surprise. The Court follows the model of its December 2023 ruling in the European Superleague case (Case C-333/21), which is cited on 35 different occasions, and this is plainly now the established model for the several cases concerning the regulation of sport which are pending before it. So the Court repeats its (silly and plain wrong) observation that certain specific rules such as those relating to the exclusion of foreign players from the composition of teams participating in competitions between national teams or to the setting of the ranking criteria used to select athletes participating in competitions which were adopted exclusively for reasons of a non-economic nature and relate to matters relating solely to sport as such must be regarded as being unrelated to any economic activity, and so untouched by EU law. But no harm is done because in Diarra the Court quickly dismisses the notion that the transfer system is ‘unrelated to any economic activity’, just as in the Superleague case it had correctly refused to accept that UEFA’s rules on prior approval of new competitions were extraneous to economic activity – and just as it should also appreciate that rules on the composition of national teams and ranking criteria have direct economic impact. EU law applies – the key issue is not using some spurious ‘non-economic’ label to exclude EU law but rather how EU law applies to practices with both sporting and economic motivations and effects.

 

Paragraphs 124-133 address ‘The concept of conduct having as its “object” or “effect” the harm to competition’. Nothing here will surprise anyone familiar with Superleague. If conduct is found to have an anti-competitive object, it is not necessary to examine its effect on competition; the concept of anticompetitive 'object' must be interpreted strictly; it catches only practices which reveal a sufficient degree of harm to competition for it to be possible to consider that an examination of their effects is not necessary (and some such practices are itemised); subjective intention is not decisive; one must examine the content, the economic and legal context and the aims. Familiar fare from Superleague. Moreover, and confirming the revolutionary turn taken by the Court in Superleague, a practice may be excluded from the scope of Article 101(1) where justified by the pursuit of, and necessary to achieve, legitimate objectives in the public interest – but only where the practice exerts an anti-competitive effect, not where it pursues an anti-competitive object. In the latter case only Article 101(3) may save the practice (paras 149-152). The decision in Meca-Medina (Case C-519/04P), which envisaged (in short) a public interest/ legitimate objective exclusion from the scope of Article 101(1) irrespective of whether the challenged practice was a restriction on competition by object or by effect, is banished – so much so that the case is not even cited in Diarra.

 

 

The incompatibility of the challenged transfer system with EU law

 

The flaws in the transfer system, on paper and in practice, are brutally listed by the Court. This leads it to the finding that they violate both Article 45 and Article 101.

 

The Court does not deny that FIFA has a legitimate role a regulator. In interpreting Article 45 it notes that the rules may be appropriate as a means to achieve the objective of ensuring the regularity of club football competitions and by contributing to maintaining a certain degree of stability in the membership of the football clubs likely to participate in those competitions (para 103). In similar vein, in examining Article 101, it refers to the conditions under which professional football clubs may compose the teams participating in such competitions and those in which the players themselves may take part in them (para 143). It may be legitimate for FIFA to seek to ensure the stability of the composition of the squads of players during a given season, for example by prohibiting – as the FIFA Regulations do - the unilateral termination of employment contracts during the season (para 144).

 

But the Court’s detailed assessment is damning.

 

Paragraphs 103-113 deal with compliance with the principle of proportionality in the interpretation of Article 45. The Court does not mince its words. The rules appear to go in several respects beyond, and in some cases far beyond, what is necessary to attain their objectives. They apply to players who have a relatively short career and therefore the impact with typically be great. Compensation is payable by the player in the event of unilateral termination of the employment contract 'without just cause', but that expression is not precisely defined in the Regulations. Some criteria are, as the Court (rather gleefully, I suspect) notes is admitted even in the official FIFA commentary, almost never applied in practice, whereas others (such as the specificity of sport) have no precise definition. This leads to discretionary and unpredictable implementation. Absence of the necessary legal certainty is a central problem. Other criteria, though more objective and verifiable, seem to go far beyond what is necessary. This is especially so in relation to taking into account remuneration and costs in calculating compensation due. The criteria governing compensation – the Court notes drily – seem more attuned to preserving the financial interests of clubs than to ensure the effective organisation of sporting competitions. The ‘sporting sanction’ imposed on the new club, which operates on the basis of a presumption of incitement, appears far removed from the demands of proportionality. The same is true of the impact on the player.

 

It is a sorry list of inadequacies. And it leads the Court to conclude that the proper conduct of sporting competitions cannot provide a justification. The current transfer system violates Article 45.

 

The examination conducted pursuant to Article 101 has much in common with that presented in connection with Article 45. The analysis begins at paragraph 134. The Court notes – in line with its earlier remarks in the light of Article 45 - that the rules are general and imprecise and that they are subject to discretionary implementation which is unpredictable and difficult to control. So too they appear to allow compensation to be set at a very high and dissuasive level.

 

Paragraph 138 draws on the Opinion of Advocate General Szpunar, which itself was a savage indictment of FIFA’s rules. It declares that the transfer system acts as a general and severe restriction on competition between professional football clubs in the market for recruitment of players. The system amounts to a ‘no-poaching’ agreement between clubs which results in the artificial partitioning of national and local markets, which – crucially - is to the benefit of football clubs (para 145). This acts as a general, absolute and permanent prohibition on the unilateral recruitment of players who are already engaged, which the Court treats as a clear restriction on competition between clubs (para 146).

 

This, then, is as ruthless as it is damning. As already in its treatment of Article 45 the Court portrays the transfer system in its current iteration as a means to improve the economic position of clubs at the expense of workers. Given the negligible input into its shaping allowed to workers’ representatives, this comes as little surprise. 

 

The conclusion is therefore that the system counts as a restriction of competition by object. As such, as explained at paragraphs 149-152 and as decided in Superleague, it cannot be saved by reference to the general public interest/ legitimate objective test applied to sport in Meca-Medina, although the Court cites only Superleague and Em akaunt BG (C-438/22), not Meca-Medina. That in turn means that only Article 101(3) can save FIFA’s rules. But the Court’s treatment of Article 101(3) at paragraphs 153-157 is as brusque as it is brisk. The ultimate decision belongs with the national court, but the Court gives a strong steer that the discretionary and/or disproportionate nature of the rules and their severe restriction on cross-border competition between clubs means they cannot be regarded as indispensable or necessary to achieve economic benefit, even were any such benefit shown.

 

 

The legitimate role of FIFA

 

The Court’s ruling treats the transfer system as rotten. But there is plenty in the Court’s judgment for FIFA to be pleased about.

 

The Court’s interpretation of both Article 45 and Article 101 allows for recognition of a legitimate regulatory role performed by FIFA in adopting common rules to regulate sport, and provide some detail on how far this may reach. Paragraphs 100-103, dealing with Article 45 and paragraphs 143-144, dealing with Article 101, contain a receptivity to FIFA’s regulatory aspirations on which FIFA (and other governing bodies) are likely to rely in framing defence of their practices in future.

 

The objective of ensuring the regularity of sporting competitions constitutes a legitimate objective in the public interest which may be pursued by a governing body. Making the organisation and conduct of international competitions subject to common rules intended to guarantee the homogeneity and coordination of those competitions within an overall annual or seasonal calendar is recognised as legitimate. So too the protection of the essential role played by equal opportunities and sporting merit in the conduct of competitions organised at both European and national level; and ensuring teams compete against each other under homogeneous regulatory and technical conditions.

 

These paragraphs of the judgment also reflect specifically on how these common rules shall affect players. The Court accepts that rules are needed to regulate the composition of teams participating in competitions; that there may be rules relating to the time limits for transfers of players during the competition; that there may be rules intended to ensure the maintenance of a certain degree of stability in the squads of clubs, which also entails concern for the continuity of related contracts; rules setting deadlines for player transfers in order to avoid transfers at a late stage of the season which would damage the overall integrity of the competition. Paragraph 144 seems open to prohibiting - as the current Regulations do -the unilateral termination of employment contracts during the season or even in a given year. These interventions, the Court accepts, serve as means to contribute to the pursuit of the legitimate objective of ensuring the regularity of club football competitions.

 

So this is to recognise the need for regulation of the sport generally and regulation of the place of players within it in particular. It is to recognise the place of a governing body in doing so. Presumably these activities, then, fall within the scope of the legitimate regulatory role performed by a governing body, and they are not a practice which has the object of restricting competition. This echoes Superleague. In that ruling UEFA’s detailed procedures on prior approval were condemned as non-transparent, lacking objective criteria and discriminatory – much as FIFA’s transfer system fell apart under scrutiny in Diarra. But in Superleague the Court did not direct that the market for supply of sporting competitions shall become a free-for-all. Quite the reverse. It accepted that a prior authorisation system may be used to refuse a competition which is not based on sporting merit. It seems that the object of requiring that new competitions be open and based on sporting merit is not to restrict competition but rather ‘the pursuit of legitimate objectives, such as ensuring observance of the principles, values and rules of the game underpinning professional football’ (ESL para 176, and see analyses here and here). Superleague provides opportunities for UEFA to re-define its regulatory purposes in defence of the values of the game – provided it meets the required standards of transparency, objectivity and non-discrimination. Similarly Diarra challenges FIFA to pin down with more care how and why rules governing the consequences of unilateral termination of contract are necessary to protect the integrity of sporting competition, and to devise rules that genuinely do so.

 

 

Revising the rules

 

It seems clear that FIFA’s rules on transfers must be made less restrictive and more predictable than they are now. The difference between the status of a player out of contract and a player still in contract will need to be reduced, but I do not think it will need to be eliminated.  The Court leaves room for FIFA to adopt common rules which are necessary to sustain the integrity and regularity of sporting competition. It seems clear from paragraphs 100-103, dealing with Article 45, and paragraphs 143-144, dealing with Article 101, that the Court is not condemning the very idea that sport needs common rules, operating independently of local contract and labour law, which are designed to protect the sport’s functioning and which may have an impact on a player who commits a unilateral breach of contract. The transfer window will survive, even though it plainly exerts some deterrent effect on clubs’ willingness to act in the market for players. I think it remains open to FIFA to devise a system that will maintain some degree of control over the eligibility of the player who commits a unilateral breach of contract. I think FIFA could provide that a player will not be able to quit one club and insist on being available to play for a new club immediately, even if local law permitted that. How long would the player have to wait? – well, that remains to be decided as the FIFA rules come to be revised. In this sense footballers will still not be treated in exactly the same way as plumbers, sausage-makers and University teachers – they will be subject to special rules applied within their industry in addition to applicable local contract and labour law. In some parts of the judgment, especially paragraph 145, the Court seems to assume that clubs can be adequately protected from the harm flowing from a breach of contract through the application of contract and employment law, and that may be so, but there is also the wider interest in the integrity of the sporting competition to take into account. It would be damaging to sporting integrity if the local law entitled the player immediately to take up employment with a new club. It would be especially damaging in a transnational competition if different laws applied in different states, as they doubtless would. So there must be room also for FIFA, as the transnational regulator of the sport, to address the phenomenon of unilateral breach of contract. But – how? There is a tension – when does action taken against a player who has committed a unilateral breach of contract cross the line from a (lawful) scheme designed to protect the integrity of sporting competition to an (unlawful) attempt to use regulatory power to extract advantage to the clubs at the expense of the player? FIFA’s job will be to show when and why such rules are needed given the special demands of sporting competition. None of this is easy, and it will take time, but paragraphs 100-103 and 143-144 of Diarra are a goldmine for FIFA.

 

A major objection which runs through the ruling is directed at the discretionary case-by-case evaluation of the consequences of unilateral breach of contract. The Court in Diarra notes that a system, if shown to be justified and proportionate, may be supported by sanctions but only on condition that they are set according to transparent, objective, non-discriminatory and proportionate criteria and also they shall be subject to review (para 111), which is a requirement which has close thematic links with the Court’s treatment of UEFA’s rules on prior approval in Superleague. FIFA’s rules on transfers need to be made clearer. Probably it is required that it be possible to predict in advance what would be the consequence of a unilateral breach of contract. That, though, will be tricky if the individual circumstances of each case need to be taken into account, as is suggested by the Court in paragraphs 110, 111, 112, and 137. I am not suggesting FIFA’s re-design of its rules will be easy.

 

The Diarra ruling does not require that a renegotiation of the transfer system shall involve a formal role for player unions, but a strong theme in the ruling is that FIFA has presided over a system which is of huge advantage to some stakeholders and operates to the detriment of others. The Court is not shy of commenting on how the system works very well for clubs as employers (paras 107, 145). Re-negotiation of the transfer system through a process which gives thorough and sincere respect to the voice of the workers would increase the likelihood that a revised version will be compatible with EU law. More generally the Court will have performed a great service if this ruling triggers a deeper reform of governance in sport so that all affected interests – players, even fans - enjoy a louder voice in decision-making than occurs right now. Perhaps FIFA will do this; perhaps, if not, the EU will be tempted to adopt legislation mandating improvement in the standard of governance in sport in general or football in particular. I am aware how naïve that may sound.

 

Diarra summarised? Sport is special. Just look at paragraphs 100-103 and 143-144. But sport is not as special as special as the governing body claims, and the particular practices at stake have been found to violate EU law, and will require reform in the shadow of EU law. In that Diarra is in perfect alignment with Bosman and Superleague.

Setting Gender-Based Asylum Straight: The Court of Justice’s Landing Point

 

 

Salvo Nicolosi and Türkan Ertuna Lagrand, University of Utrecht

Photo credit: USAID, via Wikimedia Commons

 

Just a couple of weeks after the Taliban regime in Afghanistan announced a new decree prohibiting women from being heard when speaking outside their homes, on 4 October, the Court of Justice of the European Union (CJEU) delivered its judgment in the joined cases of AH and FN (C‑608/22 and C‑609/22). The ruling constitutes the landing point of a recent stream of case law through which the Court has developed a gender-sensitive approach to refugee protection. In this regard, it is worth recalling that in WS (C-621/21), the Court recognised that women in a country can be considered ‘a particular social group’, while in K, L (C-646/21), it emphasised the importance of gender equality in defining such group. In AH and FN, instead, the Court addressed the issue of whether women subjected to a series of restrictive, state-imposed or state-supported measures, solely based on their gender, could be granted refugee status without the need for an individual assessment of their personal circumstances.

This case law is of particular importance not only because, as recently highlighted by scholars, judgments of the Court of Justice addressing gender-related elements of asylum cases are scarce, but also for the impact that the progressive stance of the Court could have on national authorities and more broadly the development of international refugee law with reference to gender-based asylum claims. After a brief account of the facts of the case, this short blog post reviews the Court’s reasoning in an attempt to explain to what extent the Court has expanded substantially and procedurally the scope of international protection for women who are victims of systematic discrimination in their country of origin. 

The Factual and Procedural Background

AH and FN are two Afghan nationals who have applied for international protection in Austria. The Federal Office for Immigration and Asylum refused to recognise their refugee status, but granted the applicants subsidiary protection on the ground that they would face economic and social difficulties if they returned to Afghanistan. The applicants unsuccessfully appealed to the Federal Administrative Court of Austria, claiming first that they had adopted Western values and a Western-inspired lifestyle, and second, that after the Taliban regime came to power in 2021, women in Afghanistan have faced widespread persecution. Accordingly, the applicants appealed before the High Administrative Court arguing once more that the situation of women under the Taliban regime alone justified the recognition of refugee status. The High Administrative Court thus decided to refer two questions to the CJEU. The first question concerned the substantial aspect of whether the accumulation of the measures taken by the Taliban regime in respect of women is sufficiently serious to be classified as an ‘act of persecution’ within the meaning of Article 9(1)(b) of the Qualification Directive 2011/95. The second question, more procedurally, concerned whether an Afghan woman may be granted refugee status without an individual assessment of her situation being carried out, despite the fact that Article 4(3) of the Qualification Directive underlines that ‘the assessment of an application for international protection is to be carried out on an individual basis.’   

The Added Value of the Court’s Reasoning

The Court’s judgment in AH and FN followed the insightful Opinion of Advocate General Richard de la Tour, which we discussed in a previous post, as well as the previous rulings, which we also discussed here and here. Based on these judicial precedents, the Court’s reasoning provides an important interpretation of EU asylum law, particularly regarding the concept of systematic discrimination, as well as the procedural requirement of individual assessment.

Systematic Discrimination

As is known, the concept of ‘discrimination’ is of paramount importance to determine the existence of persecution to seek recognition as a refugee. However, not all discrimination amounts to persecution. In this regard, the Court follows a helpful explicative approach that will offer clear guidance to national authorities while implementing the relevant EU asylum rules. In its reasoning, the Court offers a nuanced interpretation of Article 9(1) of the Qualification Directive, distinguishing between discriminatory acts that, on their own, qualify as ‘acts of persecution’ under Article 9(1)(a), and those which, when considered cumulatively, meet the threshold of ‘acts of persecution’ under Article 9(1)(b).

To this aim, the Court indicates as examples of the first category of discriminatory acts measures such as forced marriages - which the Court compares to a form of slavery prohibited under Article 4 of the ECHR - or the lack of protection against gender-based violence and domestic violence - which the Court defines as a form of inhuman and degrading treatment prohibited by Article 3 of the ECHR (paragraph 43). In the second category of discriminatory acts the Court includes measures against women that restrict access to healthcare, political life and education and the exercise of professional or sporting activity, restrict freedom of movement or infringe the freedom to choose one’s clothing (paragraph 44).

In line with the Advocate General’s Opinion, the Court affirmed that while discriminatory measures against women in this second category may not individually qualify as persecution, their combined and systematic application does. Thus, when considered collectively, these measures reach the severity necessary to be classified as acts of persecution under Article 9(1)(b). From this perspective, the Court promotes the integration into EU asylum law of the notion of systematic discrimination. This notion is particularly supported by the Court’s view that those measures, as also stressed by the Advocate General, reflect the establishment of a social structure based on a regime of segregation and oppression in which women are excluded from civil society and deprived of the right to lead a dignified daily life as guaranteed by Article 1 of the Charter of Fundamental Rights of the EU (paragraph 46).

Individual Assessment 

Regarding the individual assessment, the Court’s reasoning is especially progressive because, following the suggestion of the Advocate General, it allows a gender-sensitive interpretation of Article 3 of the Qualification Directive, according to which Member States may adopt more favourable standards, including by easing the conditions for granting refugee status (paragraph 55). From this perspective, the Court essentially showed sensitiveness about an emerging national practice resulting in the recognition of women from Afghanistan as refugees without further examination of the individual situation.

As we previously noted,  Sweden announced in December 2022 that any asylum-seeking woman or girl from Afghanistan should be recognised as a refugee. Similarly, in Denmark, as of 30 January 2023 all women and girls from Afghanistan have been granted asylum solely because of their gender, while the Finnish Immigration Service announced in early 2023 that ‘all Afghan women and girls are granted refugee status.’ Domestic practices across Europe remain, however, inconsistent. For instance, the Federal Administrative Tribunal of Switzerland recently ruled that the collective persecution of women and girls cannot be presumed solely based on gender and that Afghan women do not face collective persecution giving rise to automatic recognition of refugee status. In this context, the Court’s judgment in AH and FN plays a crucial role in harmonising domestic practices within the EU, particularly regarding the recognition of refugee status for women who are victims of systematic persecution in their country of origin.

The novelty of the Court’s ruling thus lies in the departure from a settled case law establishing, based on Article 4 of the Qualification Directive, that ‘every decision on whether to grant refugee status or subsidiary protection status must be based on an individual assessment.’ Such a departure is, nonetheless, operated by the Court through an appropriate systemic interpretation of EU asylum rules in light of international human rights law. This is confirmed by the Court’s strong reliance on the UNHCR Statement issued on 25 May 2023 in the context of these preliminary ruling proceedings, which emphasised the need for protection due to the persecutory measures imposed by the de facto authorities in Afghanistan, specifically targeting women and girls based on their gender. Additionally, the Court’s references to the Council of Europe Convention on Preventing and Combating Violence against Women and Domestic Violence (Istanbul Convention) and the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) further underscore the importance of these international treaties, which the Court recognises as ‘relevant treaties’ within the framework of Article 78(1) TFEU.

Concluding remarks

In this last episode of a series of developments towards a more gender-sensitive EU asylum law, the Court’s reasoning is particularly noteworthy for its significant broadening of protection standards under EU law. Notably, the Court emphasised that country of origin information may suffice as a basis for asylum determinations when discriminatory practices against women reach a point where they are effectively excluded from society and deprived of their right to a dignified life. In such cases, the Court considered it unnecessary to establish a specific and immediate risk of persecution for individual applicants (paragraph 57), underscoring a shift towards a more flexible and context-sensitive approach. This approach promises further progress in a wider spectrum of asylum claims where the applicant’s statements are not supported by evidence about their personal situation, which is often observed in applications based on sexual orientation and gender identity.

In sum, the Court’s case law has confirmed that women in a country can constitute a ‘particular social group’ that systematic persecution can arise from the cumulative impact of state-imposed measures infringing upon women’s fundamental rights and that, in such cases, no individual assessment of the applicant’s circumstances is required. By expanding refugee protection for women facing gender-based persecution, the Court not only offers significant guidance to national authorities but also contributes to the progressive evolution of international refugee law. Its approach underscores the need to integrate fundamental human rights principles, such as equality between women and men, as already emphasised in K, L (C-646/21), to ensure that women subjected to systematic oppression receive the protection they need.

It now remains for national authorities to apply the Court’s approach and ensure consistent protection across the EU for women fleeing the Taliban regime.

So long, no thanks to all the fash: review of Character Limit: How Elon Musk Destroyed Twitter, by Kate Conger and Ryan Mac

Professor Steve Peers, Royal Holloway University of London

Photo credit: mikemacmarketing, image via vpnsrus

 

Full disclosure first: After exactly ten and a half years, I stopped posting on X (formerly Twitter) on August 10, 2024. I could not accept the owner’s view that those encouraging race riots in Britain online should not be punished, his promotion of those who held such views, or his racist memes about the British justice system that sought to bring them to account. I was not alone: X lost 30% of its UK users in the last year, and 20% of its US users. How did the supposed ‘global public square’ end up in this position?

The answer is obviously the owner, Elon Musk; and the new book by Kate Conger and Ryan Mac, Character Limit, recounts the story in detail. They divide the book into three acts. In Act One, dominated by former boss Jack Dorsey – depicted here as a diffident dude phoning in his governance from tropical islands – the story is retold until Musk makes his bid for Twitter. Act Two recounts the process of that bid, culminating in his purchase of the company. Act Three covers the subsequent developments: the frantic cost cutting, the frenzied management style, the fast-disappearing advertisers. The book ends in late 2023, with a short epilogue from early 2024 in which the authors astutely note that Musk has replaced Trump on the platform – in effect taking his place as Twitter’s main character. Musk’s personality – a fragile, petty, vicious, paranoid, narcissistic man-child – drives the narrative of the book. Musk’s legion of fanboys are frequently referred to, largely murmuring offstage like a Greek chorus manifesting as a Simpsons meme.

The book is highly readable – compelling the reader to turn its pages in much the same way that legal academic books don’t. It’s a highly personalised retelling of events, and one can easily imagine a Netflix version of its cinematic story – with its ending scene matching Hearst’s deathbed sled revelations, or Zuckerberg’s obsessive page refreshing, with Musk’s very public suggestion that advertisers “go fuck yourself”.

There’s a detailed account of sources, but in the journalistic tradition some of them are off the record interviews. One thing this academic would have liked to have seen would have been some broader analysis of why things developed as they did: was this all an inevitable consequence of the political and social media dynamics of the last few years, or an example of the (not so) great man theory of history?

If the latter, what explains Musk’s behaviour exactly? Drug use is mentioned – in a passage appearing so heavily lawyered that it has its own sharp and useless look about it. Nevertheless, the reader will notice Musk’s obvious extreme mood swings and erratic behaviour. At first, the prospect of saving Twitter financially may be have been taken seriously: the authors usefully remind the reader that Twitter often lost money even before Musk’s takeover (it also had controversies about hate speech already, and the previous management was planning to cut staff before Musk did). But that motivation is hard to take seriously for long, as advertisers (Twitter’s main source of income) started fleeing from the outset, with no lessons learned from their exit. Rather, it seems that the main incentive was Musk’s personal obsession with Twitter, also mentioned at several points; the political objectives that many have suggested are not much explored.

Having said that, this is a very readable book, for those interested in the fate of this well-known social network over the last decade. And one striking feature for this reader is the role of the law in all this.

It’s obvious throughout that Musk cares nothing, and knows less, about the law; he shares these traits with such luminaries as Donald Trump, Boris Johnson, and Dominic Cummings. Although he has an early victory when a jury inexplicably clears him of defaming a critic of his Thai cave rescue attempt as a ‘pedo’, other litigation and regulatory struggles are a constant theme. Musk is only compelled to complete his purchase of Twitter due to litigation brought by its board (bound, as the authors frequently point out, by their fiduciary duty to shareholders) to enforce the deal Musk signed without undertaking prior due diligence. Compliance with an FTC consent order regarding privacy is an ongoing issue. Massive staff cuts lead to litigation over employment law and executive compensation. Twitter stops paying Thorn – a specialist in detecting online child abuse material. Conflict with a Brazilian judge over Twitter’s refusal to take down tweets backing Bolsonaro’s coup attempt leads to well-known consequences (although they occur after the book’s finale). Refusal to pay rent sparks legal challenges worldwide. And having cancelled the cleaners and crammed staff into less space in Twitter’s headquarters to save on office costs, the washrooms are soon overused. As cockroaches scuttle from the drains, desperate staff bring toilet paper from home or flee to nearby coffee shop loos to avoid those in Twitter offices. Cory Doctorow famously developed a thesis about the ‘enshittification’ of online businesses; he probably never expected it to be quite so literal.

I think it’s possible that future brushes with the law will concern in particular the EU’s Digital Services Act (DSA) – which, in a remarkable coincidence, was published in the EU’s Official Journal on the same day that Musk completed his takeover of Twitter. X is already the subject of the first preliminary findings of a breach of the Act on some issues, and investigations into further issues – including illegal content, the one thing that could get X suspended in the EU – are ongoing. I wonder if the risk assessments required by the Act should take specific account of the personal behaviour of the owner of a very large online platform – given Musk’s direct role in spreading disinformation and the negative effect of his posts on civic discourse, electoral process and gender-based violence. Recently, Musk threatened to give Taylor Swift a baby; but regulators gonna regulate.

A particular issue throughout the book – and an implied obligation under the DSA – is content moderation. It raises a series of inherent contradictions. Reflecting the sometimes conflicting human rights of freedom of expression and equality, the DSA requires very large online platforms to ensure free speech while considering the need to limit it. As for users, the book makes clear that content moderation repels free speech advocates while attracting opponents of hate speech; it costs money but its absence loses revenue, as advertisers are alarmed to see their ads appearing next to Nazis. But it is also clear from the book that Musk’s supposed free speech fundamentalism is hypocritical, as he bans and fires critics while acceding to censorship demands of the Indian government. As so often with authoritarians, there is an in-group which the law protects but does not bind – and an out-group which it binds but does not protect.

One final thought about the consequences of unlimited speech, returning to the reason why I stopped posting on the platform. When defending the ‘rights’ of those encouraging race riots in Britain, Musk and his fans compared those supporting limits on such speech to communists and Nazis. Let’s put this in historical context. After I flew to Vienna for a holiday after departing X, I visited the Sigmund Freud museum and was struck by the fact that his four sisters, staying behind in Vienna after he fled to London, all died in 1942-3. Their deaths were not caused by those who tried to censor Nazis, but by the Nazis themselves. And the postwar allies were not confused about this: Julius Streicher was tried, convicted and executed at Nuremberg for publishing the extremely anti-semitic Der Sturmer. Incitement played a role in the Holocaust. Words have consequences; and the real extremists are those who demand that the advocacy of hatred and violence should not be effectively limited.

Bringing a claim of compensation for harm suffered as a result of alleged psychological harassment by the Head of Mission and his Deputy before the EU Courts: Montanari v Eucap Sahel Niger (Case T-371/22)

 

 

 

Antje Kunst*

* Antje Kunst is an international lawyer and barrister of a UK based Chambers, specialised in EU and international public law, human rights and litigation. She is admitted to the Bar of England and Wales, and the Bar of Berlin, advising and representing individuals in a wide range of matters including in staff disputes with EU missions and agencies before the EU Courts. She has appeared in numerous cases before both the Court of Justice and the General Court, within the Court of Justice of the European Union.

Photo credit: European Commission, via Wikimedia Commons

 

Introduction

On 17 July 2024 in Montanari v Eucap Sahel Niger (Case T-371/22)** the General Court ruled it has jurisdiction regarding a claim for compensation brought by a former staff seconded by a member state to Eucap Sahel Niger, an EU Mission established under the Common Foreign Security Policy (CFSP). This ruling on jurisdiction is  based on an important Grand Chamber judgment H v Council et al,  Case C- 455/14 ECLI:EU:C:2016:569.

Related to the substance of the case the General Court applied by analogy provisions of the EU Staff Regulations  to the dispute. EU Staff Regulations are not applicable to EU staff seconded by a member state to an EU Mission. Applying the EU Staff Regulations in analogy was based on the principle of equal treatment. In this respect the General Court followed its own case law, as established in H v Council in Case T-271/10 RENV II ECLI:EU:T:2020:548.

There is hardly any case law by the General Court regarding actions against EU missions by seconded staff from member states. Consequently, its judgment in Montanari holds significant importance, considering also that the majority of personnel in EU missions are seconded by member states.

The Montanari case represents yet another instance where the General Court had to address multiple jurisdictional and admissibility issues, despite well-established case law on certain aspects. Nonetheless, the General Court's detailed response to the defendant's plea of lack of jurisdiction and the pleas of inadmissibility will undoubtedly be useful for future similar cases brought by seconded staff to EU missions.

The clarifications by the General Court will hopefully dissuade EU missions from raising such pleas in the future, allowing the Court to focus its judicial review on substantive matters, as it regularly does in EU civil service cases brought under Article 270 TFEU. Ultimately, this would allow the EU judiciary to deliver judgments in these types of cases more swiftly, which are EU civil service type staff disputes, resulting in faster dispute resolution for the parties and reduced litigation costs for the applicants.

The Montanari case offers valuable insights into how the General Court will address the merits of similar cases in the future, including which set of rules it will apply and how it will interpret those rules in relation to seconded staff. This may include staff’s fundamental rights under the Charter, the Code of Conduct applicable to all staff serving in EU missions, seconded or contracted, the operational plan of EU missions (‘OPLAN’) and provisions of the EU Staff Regulations (see the reference to these rules in para. 209 of the Judgment).

Further the General Court’s judgment makes clear that it will apply the case-law specific to the EU civil service having similar staff disputes to staff seconded to EU Missions (see para. 224 of the Judgment).

It is highly desirable for the General Court's judicial review process to eventually align closely with its review of cases brought by civil service litigation pursuant to Article 270 TFEU. Such alignment would ensure consistency, predictability, and fairness in the adjudication of disputes involving staff seconded by member states, thereby strengthening the legal framework governing EU missions.

The unsuccessful plea of lack of jurisdiction – no complaint relating to the secondment

Eucap Sahel Niger argued that the General Court does not have jurisdiction to hear the action because the applicant performed the duties of political adviser within the Mission as an expert seconded by the Italian Ministry of Foreign Affairs, in accordance with Article 7(2) of Council Decision 2012/392/CFSP of 16 July 2012 on the European Union CSDP mission in Niger. This provision foresees that it is for the seconding Member State to respond to any complaint relating to the secondment to an EU Mission, and for complainants to bring any action against the Member State. But the applicant’s complaint did not relate to his secondment as such – so the position was similar to that of H, the applicant in the Grand Chamber case H v Council et al, who was a former seconded member of staff of the EU Police Mission in Bosnia who was complaining about her subsequent redeployment after being seconded.

The applicant’s complaint in the case at hand was about alleged psychological harassment by the Mission’s leadership, which is a matter for the EU Courts. The problem was that for staff seconded to EU missions, there was no legal basis for the EU Courts to review staff management acts of EU missions – like Article 270 TFEU, which would otherwise apply to staff under the EU Staff Regulations.

The Grand Chamber Judgment in H v Council et al recognized that H, a prosecutor and her colleagues seconded to EU missions, faced a gap of judicial protection. The Court of Justice rightly decided to step in to close this gap to ensure a “complete system of legal remedies and procedures”. It determined that it has jurisdiction for actions by seconded staff challenging acts of EU missions pursuant to Article 263 TFEU and seeking compensation based on Article 268 and 340 TFEU from them, taking into account its role under Article 19(1) TEU to ensure that ‘the law is observed’ and the fundamental right of effective judicial protection pursuant to Article 47 of the Charter of Fundamental Rights. This guaranteed that the acts of EU missions involving seconded staff do not escape judicial review and ensuring compliance with EU law.

After 2016 no seconded staff to an EU Mission has ever brought a complaint based on the Grand Chamber’s important ruling, Mr. Montanari is the first applicant. However, the landmark ruling of the Grand Chamber has been applied by analogy in subsequent cases (e.g., SatCen v KF, Case C‑14/19 P, ECLI:EU:C:2020:492 and discussed extensively in literature as for example here and here.

In the case at hand the General Court delved into the Mission’s jurisdictional arguments but dismissed them based on the H v Council et al judgment, accepting jurisdiction pursuant to Articles 263, and 268 and 340 TFEU, ‘taking into account Article 19(1) TEU and Article 47 of the Charter’ (see paras. 40-55 of the  Judgment).

Furthermore, it dismissed the Mission’s position that the national courts, here the Italian courts, have jurisdiction.  It agreed with the applicant that his claim before the EU Court was not about his secondment by the Italian Government but about alleged misconduct by the EU mission, alleged psychological harassment by the Mission’s leadership. That is why as in H’s case national courts do not have jurisdiction.

Legal interest for annulment of rejection of request for compensation

The applicant sought under Articles 268 and 340 TFEU compensation for alleged damage resulting from psychological harassment and violations of the right to good administration and the duty to have regard to the welfare of officials.  Equally he sought the annulment of the Mission's decision rejecting his claim for compensation based on Article 263 TFEU.

The General Court clarified, based on its case law, that claims seeking annulment of the refusal of an EU body to grant compensation which a claimant also asserts under Articles 268 TFEU and 340 TFEU, must be dismissed as inadmissible. That is why the Court held that the applicant had not justified a legal interest in seeking, in addition to his claims for compensation, the annulment of the Mission's decision rejecting his claim for compensation. Accordingly, the application for annulment was dismissed as inadmissible. (paras. 58-66 of the Judgment)

Unsuccessful plea of inadmissibility that certain acts are not attributable to the Mission

Mr. Montanari alleged not only that the EU Mission took decisions in relation to him which constituted psychological harassment, but also that the Mission's Civilian Operations Commander (see explanations on his or her role here) had breached the right to good administration and the duty to have regard for the welfare of officials when dealing with his reports of psychological harassment which he had made against the Head and Deputy Head of Mission. The Mission’s response to this was that Mr. Montanari had complained of actions or inactions of the Civil Operations Commander which were not attributable to it.

The General Court rejected this and found that the applicant was right to bring his action for damages against the Mission also regarding the failings of the Civilian Operations Commander.

This is a correct finding as the Civilian Operations Commander exercises command and control of the Mission at the strategic level, and he ensures at theatre level the proper and effective implementation of the Council's decisions and those of the Political and Security Committee (PSC), see also here.

Additionally, the Code of Conduct applicable to seconded staff across EU missions establishes a specific complaint mechanism directed to the Civilian Operations Commander for allegations of misconduct against a Head of Mission and their Deputy. In this context, it can be said that the actions or inactions of the Civilian Operations Commander effectively represent the actions and inactions of the Mission itself. (see paras. 67-87 of the Judgment)

Applicability of EU Staff Regulations to disputes between secondees and EU missions

After having concluded that the claim for compensation was admissible, the General Court went on to review in an elaborate manner the merits of the claim, examining in detail the applicant’s allegations of psychological harassment and the failings of the mission in this regard. (see paras.111-321 of the Judgement)

The General Court emphasized importantly that staff seconded to EU Missions by Member States, although not governed by the EU Staff Regulations pursuant to Article 270 TFEU, are nonetheless subject to the same rules as those applicable to staff seconded by the EU institutions, i.e. the EU Staff Regulations. (para. 117 of the Judgment).  It rightly ruled that the applicant must benefit from the same level and the same rules of protection against psychological harassment.

‘By virtue of the principle of equal treatment, the General Court is required to apply to the applicant's situation, by analogy, the provisions of the Staff Regulations relating to psychological harassment and the functional protection of officials and temporary or contract staff and the case-law based on those provisions’ (Para. 125 of the Judgement)

Also for the duty to have regard for the welfare of officials  the General Court reiterated that

‘the principle of equal treatment requires application by analogy to the case of national staff seconded to a body or agency such as a Mission of certain provisions of the Staff Regulations and the case-law specific to the matter of the European Union civil service, where such staff are placed in a situation comparable to that of staff subject to the Staff Regulations and the difference in situation between the two cannot objectively justify the former not benefiting from the same level and rules of protection as the latter when carrying out their duties in the theatre of operations.’ (Para. 224 of the Judgement)

Following a thorough examination of the facts, reviewing the alleged infringements of Montanari’s rights as set out inter alia in the EU Staff Regulations and the EU Charter (e.g., related to psychological harassment), taking into account the OPLAN and the Code of Conduct in light of its settled case law on EU staff cases, the General Court partially ruled in favour of the applicant. It determined the matter as it would have done in a typical EU civil service case, awarding him €6,000 for non-material damages.

Conclusion

The Montanari Judgment serves as a critical reminder to the highest levels of the European Union (EU) Missions, including the Civilian Operations Commander that there is a court before they can, and should, be held accountable for any actions or inactions that contravene EU law. It highlights the EU judiciary's role in ensuring compliance and accountability within EU Missions.

Moreover, the Montanari Judgment opens the door for the potential judicial review of any staff misconduct by or against a seconded staff member as set out in the Code of Conduct whilst in the performance of their duties in the ‘theatre of operations’. Such case law ensures that EU Missions and their staff operate within the bounds of EU law, reinforcing the principles of transparency and accountability that are fundamental to the effective functioning of EU missions.

**Citations of findings of the General Court are unofficial translations.

 

A ‘conditional payment’ is still a payment: the Court of justice rules again on online order buttons (Case C-400/22, Conny)

 

 

Alessandra Fratini and Giorgia Lo Tauro, FratiniVergano European Lawyers

Photo credit: Namakkalshowroom, via Wikimedia Commons

 

 

Introduction

On 30 May 2024, the Court of Justice of the European Union issued its judgment in Conny (Case C-400/22), which concerned the labelling requirements for online order buttons under Article 8 of the Consumer Rights Directive (Directive 2011/83). The Court ruled that the order button, or any similar function on an online platform, must clearly indicate that by clicking on it the consumer commits to a payment obligation, even if the obligation is subject to further conditions.

The paragraphs below, after a short overview of the case-law touching upon Article 8, review the peculiarities of the Conny case and the findings of the Advocate General and the Court, and conclude on  the importance of consumer rights’ awareness in online transactions.

 

Article 8(2) and the earlier case-law

The Consumer Rights Directive aims at approximating Member States’ provisions related to contracts concluded between consumers and traders, to contribute to the proper functioning of the internal market through the achievement of a high level of consumer protection (Article 1). To this purpose, its Article 8 sets ‘formal requirements for distance contracts’, also when concluded by electronic means, that traders shall comply with.

Under Article 8(2), first subparagraph, if the contract places the consumer under an obligation to pay, the trader shall make the consumer aware ‘in a clear and prominent manner’, and directly before placing the order, of the related information (i.e., the main characteristics of the goods or services, the total price, the duration of the contract and, where applicable, the minimum duration of the consumer’s obligations), making sure that the consumer, when placing the order, is explicitly aware that such an order implies an obligation to pay. The second subparagraph clarifies that ‘[i]f placing an order entails activating a button or a similar function, the button or similar function shall be labelled in an easily legible manner only with the words ‘order with obligation to pay’ or a corresponding unambiguous formulation indicating that placing the order entails an obligation to pay the trader. If the trader has not complied with this subparagraph, the consumer shall not be bound by the contract or order’ (for ease of reading, the following references to Article 8(2) shall be read as to the second subparagraph).

Despite its intended clarity, this provision raised interpretative doubts which were submitted to the Court before Conny. In Fuhrmann-2 (Case C-560/20), the Court addressed for the first time the interpretation of the formal requirement related to the ‘order button’ laid down in Article 8(2). The case concerned the booking of hotel rooms in Germany via an online accommodation booking platform: the hotel charged a cancellation fee to a consumer who, after having clicked on the ‘I’ll reserve’ button, entered personal details of the guests and then clicked on a button labelled with the words ‘complete booking’, had not showed up on the planned day. For the purpose of determining whether a formulation displayed on the order button such as ‘complete booking’ could be considered as ‘corresponding’ to the words ‘order with obligation to pay’ according to the Consumer Rights Directive, the referring court asked the Court whether only the words appearing on that button or the overall circumstances of the booking process should be taken into account.

The Court relied on the systematic interpretation of the provision and insisted on the objectives of the Consumer Rights Directive. It first explained that the formulation ‘order with an obligation to pay’ laid down in Article 8(2) serves as an example, so that Member States are permitted to allow traders to use any other corresponding formulation of their choice, provided that it is unambiguous and entirely clear as to the creation of an obligation to pay (paras. 26-27). It went on to clarify that it is the button or similar function that must be labelled with such a formulation, so that only the words appearing on that button or similar function must be taken into account for determining whether the trader has fulfilled its obligation to ensure that the consumer explicitly acknowledges that the order implies an obligation to pay, emphasising the consumer’s attention in that respect, as required by recital 39 of the Directive (paras. 28-29). Taking the objective of the Directive into account, which is to guarantee a high level of consumer protection as regards information, the Court found that ‘it would effectively undermine that objective if, when activating a button or similar function, the consumer were required to infer from the circumstances of that process that he or she was giving a binding undertaking to pay, although the words appearing on that button or similar function are not such as to enable the consumer to identify such consequences with absolute certainty’ (para. 30).

In Sofatutor (Case C-565/22), which concerned the interpretation of the right of withdrawal (Article 9), the Court reiterated the importance of information and formal requirements for distance contracts. By clarifying that the consumer’s right to withdraw from an initially free subscription made via distance contract is guaranteed only once, the Court specified that this is only the case if the consumer, when concluding that contract, has been informed in a clear, comprehensible and explicit manner by the trader that, after that initial free period, payment will be required for the performance of services (paras. 50-51). It repeated the traders’ obligation to ensure that the consumer explicitly acknowledges that the order implies an obligation to pay (via a button or a similar function). In the absence, the consumer is not to be bound by the contract or order (para. 45).

 

The peculiar ‘condition’ of the Conny case

In Conny, the Court was called again to rule on the ‘button or a similar function’ indicating the obligation to pay the trader. Interestingly, different from the cases above, in Conny it was not the consumer but a third party, who was interested in questioning the validity of a contract concluded by the former with a trader, that had invoked consumer protection rules.

Conny is a debt recovery company governed by German law. It offers a service whereby tenants may enter into an agency contract via its website and assign their rights to reclaim any overpayments of rent (i.e., in case the maximum rent ceiling under national law is exceeded) in favour of Conny, who shall attempt to reclaim such overpayments from landlords on the tenant’s behalf. To enter into the agency contract on Conny’s website, tenants must tick a box to approve the general terms and conditions, where reference is made to the pecuniary nature of the contract (tenants must pay the company a third of the annual rent saved, where the company’s attempts to assert their rights are successful) and then click on a button to place the order. So did the tenant in this case, who also signed a form provided by Conny (‘Confirmation, power of attorney and assignment, authorisation’), which did not contain any information on obligation to pay on the tenant’s part (para. 14 of the judgment).

Conny asserted the tenant’s rights against the landlords. In the ensuing dispute, the latter claimed that Conny could not act on behalf of the tenant because the agency contract was ‘null and void’ (para. 18 of the judgment), since it did not comply with the formal requirements laid down in the national law transposing the Consumer Rights Directive (Section 312j (3) and (4) BGB, which requires the fulfilment of the trader’s obligation in order for the contract to be validly in place). In particular, the order button was not labelled with an explicit mention of the obligation to pay associated with the order.

In those circumstances, where the contract concluded at a distance entailed only a possible obligation to pay on the part of the consumer, i.e. that obligation was subject to the fulfilment of certain future conditions, the referring court had doubt as to the applicability of the formal requirements under Article 8(2) concerning the order button, and referred that question to the Court of justice. The referring court also underlined that the transposing legislation was not interpreted uniformly in national case-law (para. 22 of the judgment).

 

The Opinion of the Advocate General: ‘protective nullity’ and consumer protection at all costs

The Advocate General took into account the peculiarity of the case, including the fact that consumer protection was invoked by a third party against the validity of a contract concluded by a consumer seeking protection. In his Opinion, he noted that, in the event that the contract was considered invalid due to order button lacking any explicit mention of the obligation to pay, it was also necessary to ascertain whether the applicable national provision, according to Article 8(2) of the Directive, allowed the referring court to maintain the effects of the contract where the consumer objects to the disapplication of the disputed clause (para. 22 of the Opinion). In fact, under Section 312j(4) BGB, contracts shall be formed ‘only if’ traders fulfil the required obligation. Against this background, the Advocate General identified two legal issues to be examined in order to answer the preliminary question: (a) whether the ‘conditional payment’ case falls within Article 8(2) of the Directive; and (b) if so, the effects of the infringement of the requirement laid down therein on the signed contract, especially as regards the consumer’s will and the standing of a third party to rely on the possible invalidity (para. 24).

In addressing the first issue, the Advocate General found that both the textual and systematic interpretation and the objectives of the Directive lead to the same solution: the formal requirements of Article 8(2) also apply where the payment is subject to the fulfilment of a specific condition outside the consumer’s sphere of influence (para. 38). And this is because the contractual relationship, which is the legal condition of the obligation to pay, arises at the moment at which the consumer manifests the will, i.e. the click on the button to sign the order (para. 44). This view would also be supported by an interpretation based on the effectiveness of the provision: compliance with formal requirements even in the case of ‘conditional payment’ is the only way of ensuring sufficient information and safety in commercial relations between consumers and traders, otherwise the scope of the protection established by the Directive would be undermined (para. 45), while no extension of the text of the button in cases of conditional payments is needed to accomplish the requirement (para. 48).

As regards the second issue, i.e. the effects of the infringement of the requirement on the validity of the main contract, the Advocate General recalled that according to settled case-law of the Court ‘unfair terms must not be applied, unless the consumer objects’, otherwise this would have distortive effects vis-à-vis the purpose of the Directive (para. 52), and that the scope of Article 8 is not unconditional, but is limited by the will of the consumer (para. 53). Therefore, in the Advocate General’s opinion, since the invalidity of the term is specifically designed for consumer protection, and ‘the invalidity provided for in the consumer protection directives may be attributed to the category of ‘protective nullity’, irrespective of the exact classification under national law,’ the referring court shall take its decision in accordance with the wishes of the consumer, i.e. even maintaining the effects of the term and the contract’ (para. 55). On this point, the Advocate General addressed the question of the differences in wording between the national provision and the Directive and concluded that it is for the national court to ascertain, by considering the whole body of domestic law, whether an interpretation of national law in conformity with the wording and spirit of Directive is possible. Guided by the consumer’s wish to remain bound by the order placed on the trader’s website, the Advocate General also suggested that the referring court interpret national law in line with the possibility of maintaining the effects of the contract at issue (paras. 57-61).

The twofold analysis proposed by the Advocate General paved the way for a consumer protection-oriented interpretation of Article 8(2), while at the same time paying due attention to the effective protection of the consumer in the case pending before the national judge.

 

Judgment of the Court: a consumer protection-oriented interpretation and the relevance of the consumer’s will

In its judgment, the Court followed the Advocate General’s Opinion and confirmed the consumer protection-oriented approach when it comes to online contracts.

The Court recalled the case-law on the formulation on the order button or similar function, that shall clearly indicate the obligation to pay, and added that the formal requirement under Article 8(2) ‘does not make any distinction between payment obligations subject to conditions and those which are unconditional. On the contrary, it is apparent from that wording that the obligation to provide information laid down in that provision applies since an order placed ‘implies’ an obligation to pay. Consequently, it may be inferred therefrom that the obligation on the trader to inform the consumer arises when he or she agrees to be bound by an irrevocable obligation to pay in the event of satisfaction of a condition over which he or she has no control, even if that condition has not yet been satisfied.’ (paras. 46-47). A different interpretation would lead to the trader being required to fulfil the information obligation not while the consumer can still abandon the order, but only subsequently, when payment becomes due, therefore allowing the trader to disregard such an obligation at the very time when it may prove useful to the consumer (paras. 52-53). Therefore, the Court concluded that the obligation on traders under Article 8(2) also applies in cases of conditional payments.

In addition, on the second issue identified by the Advocate General, the Court clarified that the requirement under Article 8(2) merely provides that the consumer is not bound by the contract concerned, and this does not affect the national rules on the validity, formation or effect of a contract, according to Article 3(5) of the same Directive. Therefore, without prejudice to the interpretation given by the Court to the provisions of Article 8(2) of the Directive, the consumer in the main proceedings may decide to maintain the effects of the contract or order which was not binding, because of the failure of the trader (paras. 54-55), in so far as it, in essence, best serves the rationale of the Directive, namely consumer protection.

 

Concluding remarks

In a nutshell, the judgment restates the Directive’s aim of ensuring a high level of consumer protection in online transactions, by requiring the unambiguous acknowledgment of payment obligations by consumers for them to be bound, irrespective of the conditions which the payment is subject to.

It validates the importance of awareness of, and compliance with, EU consumer protection rules for both consumers and traders when concluding distance contracts. At the same time, it highlights the prominence of the consumer’s will, which national courts shall take into account in cases where the contract or order, because of the trader’s failure to comply, is not binding on the consumer.

 

A Dilemma of Two Communities: How the Portuguese-speaking Countries Mobility Agreement Might be Conflicting with EU Law

 

 

Ana Rita Gil*, Aylin Yildiz Noorda** & Lucas Ricardo***

 

* Professor, Law Faculty of the University of Lisbon, Portugal. Researcher at the Lisbon Public Law. Email: anaritagil@fd.ulisboa.pt.

** Postdoctoral Researcher at the Lisbon Public Law Research Centre, University of Lisbon, Portugal / Non-resident Research Fellow at the World Trade Institute (WTI) and the Oeschger Centre for Climate Change Research (OCCR), University of Bern, Switzerland. Email: aylin.yildiz@wti.org. This research has been funded by the Swiss National Science Foundation (SNSF) under grant no P500PS_210910.

*** Investment Policy Consultant at UNCTAD. Email: narciso_lucas@hotmail.com

 

Photo credit: Donatas Dabravolskas, via Wikimedia Commons

 

The recent decision of the European Commission to launch infringement procedures against Portugal concerning the provisions of the Community of Portuguese-speaking Countries (CPLP) Mobility Agreement has placed this new framework in the spotlight. Concluded by Portugal, Angola, Brazil, Cape Verde, Guinea-Bissau, Mozambique, São Tomé and Príncipe, Timor-Leste and Equatorial Guinea in 2021, the CPLP Mobility Agreement facilitates the movement of the citizens of the CPLP member states within the boundaries of ‘the same language space’. As the CPLP Executive Secretary Zacarias da Costa put it, the agreement goes ‘way beyond a set of piecemeal measures’, establishing a legal framework with a flexible and variable system suited to each state’s specificities. Notably, the Mobility Agreement aims to streamline the process for acquiring temporary residence visas and permits, with around 150,000 applications reportedly undergoing processing by the Portuguese Foreigners and Border Service (SEF). In this post, we examine the adoption, content, and implementation of the Mobility Agreement, commencing with a brief introduction to the CPLP.

 

Founding the CPLP

 

The inception of the CPLP traces back to early 1980s when the Portuguese Minister of Foreign Affairs at the time, during an official visit to Cabo Verde, endorsed decentralised tricontinental dialogues as a means to formalise the connections between Portugal and its former colonies. This initiative gained momentum in the 1990s, primarily due to the dedicated effort of the Brazilian ambassador to Portugal at the time, and resulted in the creation of the organisation in 1996. Although the CPLP was ostensibly established with benign objectives, centred on fostering cooperation across various areas rooted in a professed shared language and culture, it appeared to be the ‘political face’ of the Lusophone world. In this regard, it bears a resemblance to its French- and English-speaking counterparts, albeit neither the Organisation internationale de la Francophonie nor the Commonwealth of Nations have adopted a mobility agreement of the kind seen within the CPLP.

 

Initially comprising seven member states, the CPLP expanded with the admission of the newly independent state of Timor-Leste in 2002 and Equatorial Guinea in 2014. Brazil stands as the largest member state in terms of territory, population and economy, boasting the highest number of Portuguese speakers. However, projections indicate that by the close of the 21st century, the majority of Portuguese speakers will likely reside in Africa, attributed to demographic growth in Angola and Mozambique. While the list of potential future CPLP members may seem to have been exhausted, the CPLP has proactively introduced the category of an ‘observer’, enabling international organisations and interested countries to participate in CPLP summits and Council of Foreign Affairs Ministers meetings, albeit without voting rights.

 

Adopting the Mobility Agreement

 

The CPLP’s founding texts had already established the objective of ‘contributing to the strengthening of human ties, solidarity and fraternity among Peoples who have the Portuguese Language as one of the foundations of their specific identity and, in this sense, promoting measures that facilitate the movement of citizens of Member Countries within the CPLP space’. Acting on this, the CPLP member states agreed to explore possible avenues for policy development in mobility issues in the Praia Declaration in 1998. Two years later, a working group was established to facilitate intra-CPLP mobility and to ensure the equality of social and political rights among CPLP member state citizens. Several agreements followed soon after, including on common maximum requirements for short-term visa applications in 2002 and student visas in 2007. During this period, the goal to institute a Lusophone or CPLP citizenship status garnered much attention but has not reached a consensus. In the meantime, the path was laid for a mobility agreement, which was eventually signed in Luanda, Angola, on 17 July 2021, following seven sessions of text-based deliberations.

 

Facilitating Three Types of Movement

 

The Mobility Agreement does not create a free movement regime. Instead, the CPLP member states have established minimum standards to facilitate three types of movement: short stay, temporary stay, and residency. Although short stays do not necessitate prior administrative authorisation, temporary stays (with a duration not exceeding 12 months) are conditional upon such authorisation. Conversely, the streamlining of residency contemplates a novel documentation category called the ‘CPLP residence permit’, which may be granted subsequent to the authorisation of a ‘CPLP residence visa’.

 

Sitting at the heart of this framework are the applicable terms and conditions. Essentially, each state is free to choose mobility modalities and categories. This allows the states to undertake obligations gradually and with varying degrees of integration across one or more mobility modalities and/or categories of people, tailoring them to internal circumstances. Each state retains the authority to define, based on its internal legislation, the necessary documentation required to apply for the CPLP residence visa. Furthermore, none of the states are obligated to undertake commitments that are incompatible with their international commitments or regional integration agreements.

 

Implementation by Portugal

 

Portugal approved the CPLP Mobility Agreement by Resolution of the Assembly of the Republic No. 313/2021 of 9 December, implementing it by enacting Acts No. 4/2022 of 30 September, and No. 18/2022 of 25 August.

 

Accordingly, CPLP member state citizens may apply for a temporary-stay visa, work-seeker visa or a CPLP residence visa. Such requests shall be granted outright, unless the applicant is identified in the Schengen Information System as the subject of an alert for return or an alert for refusal of entry and stay. In other words, the applicants no longer need to apply for a visa in person, and are exempted from the prior decision of SEF (which has recently been replaced by AIMA).

 

Furthermore, as of March 2023, certain CPLP member state nationals have been able to apply for a temporary residence permit online. This is not an automatically granted visa, but rather a temporary residence permit granted to CPLP member state nationals who already had migration processes pending at SEF/AIMA or had visas issued by Portuguese consulates. Similarly, those with a CPLP residence visa are entitled to apply for a CPLP residence permit.

 

The decision to grant a CPLP temporary residence permit to citizens who were already staying in the territory, and who were waiting for a residence permit, was also taken with the aim to respond to the high number of pending applications made under the permanent regularisation scheme existing in Portugal. Indeed, Articles 88 and 89 of the Immigration Law establish a ‘right to regularisation’ to citizens who are illegally staying in the territory and who have a labour contract or a promissory agreement to formalize a labour contract. These legal norms attracted a high number of migrants, mainly from Brazil, that entered Portugal with the purpose of seeking job opportunities, and stayed illegally there, waiting for their regularisation. The number of pending procedures amounted to more than 120,000 and the waiting time was exceeding two years. The dissatisfaction among the immigrants’ community was growing, and the Ombudsman reported an extreme rise of complaints against SEF. With the CPLP scheme, the Government was expecting to solve this backlog, that was seriously jeopardizing the good functioning of the services and raising social discontent.

 

European Commission’s Infringement Procedure against Portugal

 

In September 2023, the Commission started an infringement procedure against Portugal. The Commission considers that the Mobility Agreement provides for a residence permit which is not compliant with the uniform format for residence permits for third-country nationals under Council Regulation 1030/2002. Furthermore, the Commission contends that both the residence permits as well as the long-stay visas issued for job-seeking purposes to nationals of the CPLP States do not allow their holders to travel within the Schengen area, in contradiction with EU law.

 

The CPLP ‘residence permit’ consists of a document which simply states that its holder has authorisation to reside in Portugal under the CPLP mobility agreement. The fact that it does not follow the EU’s residence permit format has also contributed to raise several uncertainties in the daily lives of its holders. In fact, it was common for private or even public entities not recognising the document and denying access to some rights, such as opening bank accounts or renting houses. Also, it was very frequent that holders of CPLP residence permits were denied embarkment in international flights or even returning to Portugal by foreigner airports’ officials, who were not familiarised with the document.

 

Portugal has two months to respond to the letter and address the shortcomings identified by the Commission. Portuguese Secretary of State for European Affairs, Tiago Antunes, has already denied incompatibility between the Mobility Agreement and the Schengen regime, and announced that the implementation of the agreement would continue. In the absence of ‘a satisfactory response’ by Portugal, the Commission may decide to issue a reasoned opinion, which is a formal request to comply with EU law. In case the country in question does not comply with the reasoned opinion, the Commission may decide to refer the matter to the Court of Justice of the EU.

 

Conclusion: Is CPLP Mobility Agreement one of a kind or part of a larger trend?

 

The CPLP Mobility Agreement may be seen as a distinctive framework, emanating from a political and cultural cooperation organisation rather than an integrated trade bloc. Integrated trade blocs, such as the EU, African Union (AU), Southern Common Market (MERCOSUR), and the Economic Community of West African States (ECOWAS), have established their own systems of free movement, albeit at various stages of implementation. While trade agreements designed between developed and developing nations have been observed to facilitate human mobility to a certain extent, the extent of such facilitation is typically more limited. The CPLP Mobility Agreement echoes the conventional observation that states operating at differing levels of development tend to facilitate human mobility to a more restricted degree.

 

Nonetheless, the CPLP Mobility Agreement has been observed as being unique for putting an end to an unjustifiable limit to the right to work for certain non-EU citizens in an EU country. In this sense, it can be viewed as part of a larger trend in favour of international cooperation on migration issues. This issue topped the UN agenda particularly post-2015, leading to the adoption of the legally non-binding Global Compact for Safe, Orderly and Regular Migration (GCM) in 2018. All CPLP member states have voted in favour of adopting the GCM during the historic UN General Assembly vote, with the exception of São Tomé and Príncipe and Timor-Leste which did not vote. Furthermore, three CPLP member states (Portugal, Cabo Verde and Guinea-Bissau) have submitted voluntary national reports on the implementation of the GCM. In their reports, Portugal and Guinea-Bissau make references to the CPLP Mobility Agreement as instances of successful implementation of the objective on enhancing the availability and flexibility of pathways for regular migration. Also, both states mention in their reports that they have accepted to become a ‘GCM Champion country’ and to contribute to achieving the objectives of the GCM.