EU/Canada free trade and the Irish constitution: Costello v The Government of Ireland and Ors [2022] IESC 44 - Case Comment

 

 

Dr John Cotter, Lecturer in Law, Keele University, UK

Photo credit: Guiseppe Milo, via wikicommons media

 

Background

 

The EU-Canada Comprehensive Economic and Trade Agreement (CETA), signed on 30 October 2016 following five years of negotiations, was in retrospect concluded at a pivotal moment in the history of EU trade policy. Though trade policy might not have been the most salient issue in the Brexit referendum earlier that year, prominent Brexiters nevertheless sought to make hay from the EU’s torpid progress in concluding trade deals with third countries, arguing that a nimbler post-Brexit UK would be free to conclude and ratify trade agreements at a faster pace. Less than a month later, in November, Donald Trump won the US Presidential election, which would ultimately put paid to the prospect of completion of the Transatlantic Trade and Investment Partnership (TTIP). Of course, those with a reasonable grasp of EU trade law and policy knew that the signature of CETA marked only the end of the beginning; as a mixed agreement (ie both the EU and its Member States were parties), CETA would require ratification by not only Canada and the EU, but also by all EU Member States. Political opposition, as well as anticipated constitutional and other legal challenges, meant that ratification by all Member States might be a drawn-out affair and was by no means certain.

 

CETA was approved by the European Parliament on 15 February 2017 and ratified by Canada on 16 May 2017. To date, sixteen current EU Member States have notified the European Council of ratification. On 21 September 2017, in accordance with Council Decision 2017/38, most of the agreement was afforded provisional application. However, several key provisions of the agreement were excluded from provisional application. Of relevance to this blogpost, key provisions of Chapter 8 (investment) were excluded; in particular, those relating to the new Investment Court System (ICS). This ICS comprises a permanent arbitration tribunal (the Tribunal) and an Appellate Tribunal. The Tribunal, which will consist of fifteen members appointed by the EU-Canada Joint Committee established to oversee the application of CETA, will hear and determine claims by investors that a party to CETA has breached certain obligations under the agreement which has resulted in financial loss to the investor. Where a claimant investor is successful, the Tribunal may award compensation, with the parties, including of course EU Member States, being required to recognise and comply with any award without delay. However, execution of any award domestically will be governed by the laws concerning execution of judgments or awards in the state in which execution is sought. It is worth mentioning that an application for execution of a Tribunal award would not have to be brought before courts or tribunals of the defendant state; enforcement could be sought in any state which is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID).

 

As expected, CETA attracted legal challenges, with the ICS being an especial bone of contention. The most notable of these was in Opinion 1/17, in which the Court of Justice, sitting as a full Court, upheld the compatibility of CETA with EU law in the face of concerns expressed by Belgium that, among other things, the ICS might be incompatible with the autonomy of the EU legal order. In March 2022, the German Bundesverfassungsgericht upheld the constitutionality of the provisional application of CETA, though the constitutionality of the ICS in Germany remains an open question. On 11 November 2022, a majority of the Supreme Court of Ireland ruled that ratification by Ireland of CETA as matters stand would be unconstitutional.

 

Facts, arguments, and the Irish constitutional context

The constitutional challenge to CETA in Ireland was brought by Patrick Costello TD, a Green Party member of the Dáil (the lower house of Ireland’s parliament, the Oireachtas). Pursuant to Article 29.5.2˚ of Bunreacht na hÉireann (the Constitution of Ireland), any international agreement which involves a charge on public funds must be approved by the Dáil in order for that agreement to be binding on the State. Mr Costello argued, however, that CETA could not be ratified by the State without an amendment to the Constitution, which would require a referendum. It was submitted on behalf of Mr Costello that CETA involved the otherwise unconstitutional transfer of legislative and juridical power of the State over to institutions established by CETA. As regards legislative power, it was argued that CETA provided rule-making powers to the CETA Joint Committee which amounted to a power to make laws which would be binding in Ireland in contravention of Article 15.2 of the Constitution, which vests sole and exclusive law-making powers for the State in the Oireachtas.

With respect to juridical power, it was contended that the ICS established under Chapter 8 of CETA would be contrary to Article 34.1 of the Constitution, which provides that “[j]ustice shall be administered in courts established by law by judges appointed in the manner provided by this Constitution”. This juridical power within Ireland held exclusively by Irish courts would be infringed because CETA in conjunction with domestic legislative provisions in the Arbitration Act 2010 would require Irish courts to give virtually automatic effect domestically to awards made by CETA Tribunals. Mr Costello was unsuccessful before the High Court, where Butler J took the view that CETA would bind the State as a matter of international law only and that any decisions of the CETA Joint Committee could not be characterised as laws made for the State within the meaning of Article 15.2. Butler J also held that the disputes to be determined by the CETA Tribunals did not constitute the “administration of justice” within the meaning of the Constitution and therefore would not interfere with the powers of the Irish courts in that regard.

Central to this case in every sense is the concept of sovereignty. Ireland’s history and the anxieties of the framers of Bunreacht na hÉireann leap forth from the constitutional text. The preamble refers to “heroic and unremitting struggle [of our fathers] to regain the rightful independence of our Nation”. The very first article asserts the “inalienable, indefeasible, and sovereign right [of the Irish Nation] to choose its own form of Government, to determine its relations with other nations, and to develop its life, political, economic and cultural, in accordance with its own genius and traditions.” Article 5, with reference to the State, declares that Ireland is a “sovereign, independent, democratic state.” These assertions are given mechanical form in various provisions throughout the Constitution which confer the sole and exclusive law-making power for the State on the Oireachtas (Article 15.2) and the administration of justice in courts established by law (Article 34.1). Consistent with this protectionist approach to sovereignty, Article 29 also establishes that Ireland adopts a dualist approach to international law obligations. Those with pre-existing knowledge of Ireland’s history in the EU will be aware of these facts. In order for Ireland to join the then EEC in 1973, which involved the ceding of some sovereignty, and of legislative and judicial power in the State to European institutions, a referendum had to be held in 1972 to approve the requisite amendment to Article 29. In 1986, when the Irish government sought to ratify the Single European Act sans a constitutional amendment, lawyers on behalf of Raymond Crotty in Crotty v An Taoiseach were successful in convincing the Supreme Court that an international agreement involving the cession of external sovereignty would require a further amendment to the Constitution and, therefore, a referendum. Europe has had to hold its breath while awaiting the results of a number of Irish constitutional referendums since. Mr Costello was evidently hoping to add another chapter to that story.

 

Supreme Court judgments

Hogan J in his judgment opined that the appeal before the Supreme Court “may yet be regarded among the most important which this Court has been required to hear and determine in its almost 100-year history” (para. 9). The appeal also resulted in a deeply divided court, with each of the seven judges authoring substantial (and in some cases lengthy) judgments which require close examination to reveal the ratio of the case. Mercifully, the judges were able to whittle the appeal down to six issues, set out in the judgment of Dunne J (para. 13):

i)                    Whether ratification of CETA was necessitated by the obligations of membership of the EU.

This had been an argument advanced on behalf of the State in the alternative to the assertion that CETA could be ratified utilising normal processes under Article 29. All seven judges (O’Donnell CJ, Dunne, Hogan, Charleton, McMenamin, Power, and Baker JJ) rejected what one suspects was a rather half-hearted argument, ruling that EU membership did not necessitate ratification of CETA.

ii)                   Whether CETA amounted to a breach of Article 15.2 of the Constitution (sole and exclusive law-making power of the Oireachtas).

It had been submitted on behalf of Mr Costello that CETA would involve interference with the law-making powers of the Oireachtas for the State. In this regard, Mr Costello’s lawyers pointed to the jurisdiction of the CETA Tribunals to make awards against the State for losses suffered by an investor as a result of the operation of a provision of Irish law, arguing that the threat of such awards would create a ‘regulatory chill’ which might prey on the minds of Irish law and policy makers. The Supreme Court was divided on this question, with the majority (O’Donnell CJ, Dunne, McMenamin, Power, and Baker JJ) ruling that CETA would not amount to an interference with the law-making powers of the Oireachtas. Hogan and Charleton JJ, dissented on this point, with the former pointing in particular to the fact that CETA provides for a “form of strict liability on the part of the State in respect of legislation which is found to be contrary to CETA and insofar as it does not contain a good faith defence” (para. 14).

iii)                 Whether the creation of a CETA Tribunal amounted to the creation of a parallel jurisdiction or a subtraction from the jurisdiction of the courts in Ireland contrary to Article 34 of the Constitution (conferral of ‘administration of justice’ in courts established under the Constitution).

In essence, the issue amounted to whether one viewed the CETA Tribunal as a body which would hear and determine disputes which were purely matters of international law (not constitutionally problematic) or whether it amounted to a body which would (or could) become involved in disputes that might otherwise have been heard and determined in Irish courts (possibly constitutionally problematic). Again, the Supreme Court was divided on this issue, with the majority (O’Donnell CJ, McMenamin, Power, and Baker JJ) of the view that CETA did not involve the impermissible withdrawal of disputes from the jurisdiction of Irish courts. Dunne, Hogan, and Charleton JJ differed on this point, though the former two judges pointed to the fact that their chief constitutional objection in this regard arose from the fact that the judgment of a CETA Tribunal would be, in Hogan J’s words, “virtually automatically enforceable” in Ireland (para. 15).

iv)                 Whether the ‘automatic enforcement’ of a CETA Tribunal award by virtue of the enforcement provisions of CETA in conjunction with the provisions of the Arbitration Act 2010 is contrary to Article 34 of the Constitution.

As Ireland is a dualist state, an award granted by an international tribunal will not enjoy automatic enforcement in Irish courts unless such enforcement is provided for specifically under Irish law. In the absence of such a domestic law, therefore (unless one takes the view that the primacy of EU law or the principle of sincere cooperation under Article 4(3) TEU would require enforcement of CETA awards domestically), CETA awards would not be enforceable in Ireland. However, sections 24(1) and 25(3) of the Arbitration Act 2010 give force of law in Ireland to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) and ICSID respectively. CETA in turn provides that awards made by the CETA Tribunals are awards for the purposes of the aforementioned international law instruments, meaning that following ratification, CETA Tribunal awards would, save in very limited circumstances, be automatically enforceable in Ireland. Automatic enforcement of CETA Tribunal awards would raise a constitutional difficulty in that it would effectively confer the final decision in a dispute concerning the ‘administration of justice’ within the meaning of Article 34.1 to an international tribunal rather than the Irish courts. On this point, a majority of the Supreme Court (Dunne, Hogan, Charleton, and Baker JJ) held that the virtual automatic enforcement of CETA Tribunal awards in the State would be a violation of Article 34. The reasoning of Hogan J was particularly interesting in this regard; borrowing apparently from the jurisprudence of the German Bundesverfassungsgericht, Hogan J found that the combination of CETA and the 2010 Act would mean that the Irish courts “would have no power to refuse enforcement even where the award compromised Irish constitutional identity or constitutional values in a fundamental way or where it was inconsistent with the requirements of EU law” (my emphases).

v)                  Whether the effect of the interpretative role of the CETA Joint Committee and its role are a breach of Article 15.2 of the Constitution.

Article 25 of CETA allows the CETA Joint Committee to make interpretative decisions which are binding upon the CETA Tribunals. A question arose as to whether these interpretative decisions would constitute an interference with the sole and exclusive law-making function for the State of the Oireachtas under Article 15.2. On this issue, the majority of the Supreme Court (O’Donnell CJ, Dunne, McMenamin, and Power JJ) held that that interpretative role of the CETA Joint Committee was constitutionally permissible. Again, the dissents (Hogan, Charleton, and Baker JJ) were noteworthy. Hogan J, in particular, opined that CETA Joint Committee interpretative decisions amount to “a form of quasi-legislation” which in practice would involve a de facto amendment of CETA without the constitutionally mandated prior consent of the Dáil under Article 29.5.2˚ (para. 17).

 

vi)                 Whether an amendment to the Arbitration Act 2010 to alter the ‘automatic enforcement’ of a CETA Tribunal award would allow ratification of CETA without an amendment to the Constitution and attendant referendum.

The majority of the Supreme Court had held that ratification of CETA would be unconstitutional owing to the fact that CETA Tribunal awards would be virtually automatically enforceable arising from the interaction of CETA and the Arbitration Act 2010, which would constitute an interference with the constitutionally defined jurisdiction of the Irish courts. One might be forgiven therefore for concluding that ratification of CETA would require a constitutional amendment and a referendum. The Supreme Court, however, took it upon itself to signpost a less complicated way out of the quandary. Hogan J suggested that amendments to the Arbitration Act 2010, which would empower the Irish courts to refuse to give effect to a CETA Tribunal award (on the grounds of Irish constitutional identity or obligations under EU law), would cure the unconstitutionality identified by the majority of the Court (paras 228-237). All of the judges of the Court, save for Charleton J agreed that Hogan J’s prescription would cure the unconstitutionality (or be constitutionally permissible, in the case of those judges who saw no unconstitutionality in the first place). Charleton J’s “ultimate dissent” posited the view that the suggested amendments to the 2010 Act would be ineffectual since the primacy of EU law flowing from Ireland’s obligations to the EU under Article 29 of the Constitution would render it impossible to refuse to enforce a CETA Tribunal award on grounds such as Irish constitutional tradition (para. 62).

 

Observations

 

Viewed formalistically, the Costello case is purely about the Constitution of Ireland, not CETA itself or indeed, in a direct sense anyway, EU law. There is certainly more than enough in the Supreme Court judgments to engage Irish constitutional scholars for another century. However, the judgments of the Supreme Court have much of interest to say to trade and investment lawyers, as well as EU lawyers, and it is on these points that I will focus my observations.

 

In order to assess constitutionality, the judges had to analyse the CETA agreement and in many cases make assumptions about its likely operation. In examining the possible effects of CETA on Irish legislative and juridical sovereignty, Hogan J, for instance, took what might be described as a precautionary approach in entertaining (perhaps remote) hypotheticals in which CETA Tribunal awards might result in inhibiting the formulation of legislative policy by the Oireachtas. Hogan J also identified the interpretative role of the CETA Joint Committee as potentially quasi-legislative in nature, with the possibility that this role could be used to effect de facto amendments to the text of CETA. Ironically, it may be the historic expansive interpretation of the EU Treaties by the CJEU, some of which have arguably amounted to de facto textual amendments, that have led to some fear about international or supranational institutions using interpretative powers to change the nature of an international agreement beyond what was ratified at national level. O’Donnell CJ, in contrast, seemed to take a much more sanguine approach to how international agreements like CETA operate in practice and to show concern for what an overly cautious and sovereigntist approach might have on the ability of the executive to conclude international agreements. On a related note, while Hogan J’s suggested constitutional cure was accepted by a majority, Charleton J maintained forcefully that the primacy of EU law would nullify the effect of any such amendments. In the perhaps unlikely scenario that it transpires that Charleton J is correct on this point, it could result in a situation where CETA was ratified by Ireland based on a misapprehension on the part of the majority of the Supreme Court on the nature of the CETA enforcement obligations. This is a conceivable prospective mess that might have been avoided by a preliminary reference to Luxembourg.

 

The stinging criticism by Hogan J (a former Advocate General at the Court of Justice) to the CJEU’s approach to CETA in Opinion 1/17 is also notable. Although keen to point out the differing constitutional contexts, Hogan J identified what he saw as weaknesses in the CJEU’s reasoning. Taking a position more defensive of legislative and juridical sovereignty (or autonomy) Hogan J rejected, for instance, the CJEU’s notion that only repeated awards of damages by the CETA Tribunals could impact EU or national regulatory legislation and policy making. Hogan J pointed also to the fact that the CETA Tribunals could in practice disregard CJEU jurisprudence and that there would be no remedy in EU or national law for such disregard, a matter the judge believed to be a “significant structural weakness” in the drafting of CETA.

 

Likewise of note in the judgment of Hogan J is the appearance of the idea of Irish constitutional identity and constitutional values. Seemingly drawn from the terminology of Karlsruhe, this is the first time that such phraseology has appeared in an Irish court judgment. It should be noted, however, that the use of the terms is limited to the enforceability of CETA Tribunal awards in the State. There is no suggestion that such concepts could be utilised to justify non-compliance with obligations flowing from EU membership; indeed, Hogan J made it abundantly clear that if ratification of CETA were required by obligations arising from EU membership that would have overridden any other possible constitutional objection.

 

As a final remark, the Supreme Court judgments were received with some fanfare by opponents of CETA on the day of their publication. While they are of major legal significance, they – in reality – place little in the way of legal obstacles to the ratification of CETA in Ireland.

 

 

 

‘We *aren’t* the world’: the CJEU reconciles EU law with international (investment) law

Professor Steve Peers, University of Essex

Background

In recent years, investor-state dispute settlement (ISDS) has become a political minefield. Its critics argue that ISDS is a secret court system designed to allow multinational corporations to thwart any progressive legislation approved by democratically elected governments. Its defenders argue that these claims are exaggerated, and that ISDS performs a useful function attracting investment and securing property rights.

The arguments about ISDS are worldwide, but they have increasingly arisen within the particular framework of EU law. From 2009, the Treaty of Lisbon gave the EU exclusive competence over foreign direct investment as part of its common commercial (trade) policy, alongside goods, services and trade-related aspects of intellectual property. EU trade policy developed to include negotiations for ISDS as part of trade negotiations (although pre-existing investment treaties between EU Member States and non-EU countries were grandfathered, with a process in place to regulate negotiation of such treaties in future).

However, this led to political and legal difficulties in negotiating trade agreements: the former because of public concern about ISDS in both the EU and the non-EU countries, and the latter because of uncertainty about whether the EU had sole competence to negotiate treaties with ISDS provisions, or shared it with the Member States. Shared competence means that Member States have to become parties to the treaties concerned, meaning unanimity is required to agree them and there is a process of national ratification, although in practice the EU and the non-EU countries concerned often agree to provisional application of the trade-related parts of the treaty pending such national ratification.

The legal position was clarified when the CJEU ruled in 2017 that ISDS, like 'portfolio' investment (ie non-controlling shares in companies) did not fully form part of the common commercial policy (CCP), but was rather a shared competence between the EU and its Member States. (There’s EU legislation dividing up responsibility between the EU and its Member States in the event of successful investor claims.) Otherwise the Court took a broad view of the scope of the CCP. Coupled with the political concerns about ISDS, this was an opportunity to rethink the role of ISDS in trade policy, either leaving it out of talks completely (Australia and New Zealand, along with the mandate for stripped back trade negotiations with the USA), concluding a trade agreement without insisting on an investment agreement (Japan), or separating the issues into two distinct treaties (Singapore and Vietnam). This revised approach, splitting up trade and investment on a case by case basis, was confirmed more broadly by a Commission communication of 2017 and subsequent Council conclusions in 2018.

In parallel to these developments, the EU responded to concerns about the legitimacy of ISDS by seeking to reform it into a system more palatable to Main Street, rather than Bay Street, as a centre-left Canadian politician might say. A discussion paper of 2015 sums up the Commission’s approach, in particular securing greater transparency, limiting the scope of controversial provisions of investment law, confirming the ‘right to regulate’, and transforming investment tribunals into a quasi-judicial system, with the longer-term intention of establishing a multilateral investment court. Subsequently, the Commission tabled a proposal for such court, and the Council approved a negotiation mandate to that end. (For further details of the negotiations, see here).

Many EU trade and investment policy disputes came to a head early in 2017, when there was a delay in approving the Canada-EU Free Trade Agreement (CETA) because of concerns about ISDS and other issues in one Belgian region. (There were also national constitutional court proceedings challenging CETA in France and Germany, as well as an EU General Court judgment on whether a European Citizens’ Initiative could be launched to stop its ratification). This kerfuffle, coming shortly before the CJEU ruling clarifying the scope of the EU’s common commercial policy, partly prompted the move to downgrade investment objectives in EU trade policy, as discussed above. And part of the overall settlement of the dispute over CETA was the Belgian government asking the CJEU whether the CETA ISDS rules – renegotiated in light of the reformed approach to ISDS – were compatible with EU law. 

The Belgian government’s request – submitted on the basis of Article 218 TFEU, which allows the CJEU to rule on proposed international treaties – was answered by the Court of Justice this week (Opinion 1/17).  In the meantime, in its judgment in Achmea (discussed here) the CJEU had found that investment treaties between Member States were potentially incompatible with EU law.  Those treaties were duly wound up, but it remained to be seen if the Court would have the same concerns about investment treaties with non-EU countries. More generally, the Court has always had concerns about protecting the autonomy of EU law from international courts (see, for instance, Opinion 2/13 on accession to the ECHR, discussed here). Could these concerns about autonomy possibly be reconciled with the nature of ISDS tribunals?

The judgment

First of all, the CJEU ruled that the case was admissible. Although the Court only has jurisdiction to rule under Article 218 as long as a treaty has not yet entered into force, the provisional application of the trade provisions of CETA did not stand in the way of the Court’s jurisdiction. (Indeed, it appears that the Court would have found the case admissible even if the whole of CETA, including the investment disputes section, was in force provisionally).

The Court then examined the compatibility of the CETA investment provisions with EU law from three angles: the autonomy of the EU legal order; equal treatment and effectiveness; and the right of access to an independent tribunal. In each case, the Court set out the principles and then applied them to CETA.

On the the autonomy of the EU legal order, the Court first recalled its case law that in principle, the EU could sign up to an international treaty which created an international court which could give rulings binding the EU. However, the Court also recalled that any such planned international court cannot infringe the autonomy of EU law. (In practice, the Court has usually been quick to complain that such courts do raise an autonomy problem). This autonomy is, in particular, guaranteed by the EU’s judicial system, which provides for ‘national courts and tribunals and the Court to ensure the full application of that law in all the Member States and to ensure effective judicial protection, the Court having exclusive jurisdiction to give the definitive interpretation of that law’.

For the Court, the crucial factor was that ‘the envisaged ISDS mechanism stands outside the EU judicial system’. The CETA investment court system created by CETA is not part of the domestic court system of Canada, the EU or its Member States. This did not necessarily mean that the ISDS system ‘adversely affects the autonomy of the EU legal order’, because as regards international treaties, the EU judicial system ‘does not take precedence over either the jurisdiction of the courts and tribunals of the non-Member States with which those agreements were concluded or that of the international courts or tribunals that are established by such agreements’. While those treaties form part of EU law and ‘may therefore be the subject of references for a preliminary ruling’ to the CJEU, they ‘concern no less those non-Member States and may therefore also be interpreted by the courts and tribunals of those States’. The ‘reciprocal nature’ of international treaties means that the EU can sign up to treaties creating an international court that is not bound by the interpretations of that treaty given by the courts of any of its parties.

But while EU law did not prevent the creation of such courts, it did place limits on what they could do: ‘they cannot have the power to interpret or apply provisions of EU law other than those of the CETA or to make awards that might have the effect of preventing the EU institutions from operating in accordance with the EU constitutional framework’. It was therefore necessary to address two points: (a) no power for the CETA bodies ‘to interpret or apply EU law other than the power to interpret and apply the provisions of that agreement having regard to the rules and principles of international law applicable between the Parties’; and (b) no power to impact EU law indirectly, by issuing ‘awards which have the effect of preventing the EU institutions from operating in accordance with the EU constitutional framework’.

On the first point, CETA explicitly specifies that its bodies will not have jurisdiction ‘to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of a Party’. This was different from treaties which the CJEU had criticised in the past, which would have given an international court the power to interpret EU law. In particular, it was different from an investment treaty between Member States only (which the Court criticised in Achmea), because the EU law ‘principle of mutual trust’…. ‘is not applicable in relations between the Union and a non-Member State’.

Furthermore, the Court was pleased that the CETA investment bodies could not determine the division of powers between the EU and its Member States, unlike the treaty on accession of the EU to the ECHR (on the Court’s ruling in the latter case, see my discussion here).  This distinction between the international and domestic systems was consistent with the lack of a prior role for the CJEU, or any power of the CETA bodies to send a reference for a preliminary ruling to the CJEU. It was also consistent with the lack of any national court review of an investment body decision.

On the indirect impact point, several Member States were concerned that a CETA tribunal might rely on the EU Charter ‘freedom to conduct business’ to rule on whether an EU measure is ‘fair and equitable’ under investment law, or ‘whether it constitutes indirect expropriation’, or it is ‘an unjustified restriction on the freedom to make payments and transfers of capital’ as defined in CETA. The CJEU noted that the provisions of CETA were broad and the EU could not block a decision being made against it or an obligation to pay damages, and that a challenger under the CETA investment rules could concern an EU measure ‘of general application’. There was a risk that a series of damages awards might mean that the EU decides to give up the level of protection concerned. Such an indirect impact could, in principle, be incompatible with EU law:

150    If the Union were to enter into an international agreement capable of having the consequence that the Union — or a Member State in the course of implementing EU law — has to amend or withdraw legislation because of an assessment made by a tribunal standing outside the EU judicial system of the level of protection of a public interest established, in accordance with the EU constitutional framework, by the EU institutions, it would have to be concluded that such an agreement undermines the capacity of the Union to operate autonomously within its unique constitutional framework.

In this context, the Court asserted that ‘EU legislation is adopted by the EU legislature following the democratic process defined in the…Treaties’, subject to EU ‘principles of conferral of powers, subsidiarity and proportionality’, and subject to judicial review by the CJEU ‘to ensure review of the compatibility of the level of protection of public interests established by such legislation with, inter alia, the…Treaties, the Charter and the general principles of EU law’.

However, the Court was satisfied that there were enough safeguards against this indirect impact upon EU law. One provision of CETA states that the investment rules:

…cannot be interpreted in such a way as to prevent a Party from adopting and applying measures necessary to protect public security or public morals or to maintain public order or to protect human, animal or plant life or health, subject only to the requirement that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between the Parties where like conditions prevail, or a disguised restriction on trade between the Parties.

So the CETA Tribunal ‘has no jurisdiction to declare incompatible with the CETA the level of protection of a public interest established by the EU’ in such cases. Therefore it could not ‘order the Union to pay damages’. The Court was also reassured by provisions that state that parties can ‘regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity’, and that regulation which ‘negatively affects an investment or interferes with an investor's expectations, including its expectations of profits, does not amount to a breach of an obligation under this Section’. It also relied upon the Joint Interpretative Instrument to CETA, which states that CETA ‘will … not lower [the standards and regulations of each Party] related to food safety, product safety, consumer protection, health, environment or labour protection’, that ‘imported goods, service suppliers and investors must continue to respect domestic requirements, including rules and regulations’, and that the CETA ‘preserves the ability of the European Union and its Member States and Canada to adopt and apply their own laws and regulations that regulate economic activity in the public interest’.

The Court summed up its view that the CETA bodies’ powers: ‘do not extend to permitting them to call into question the level of protection of public interest determined by the Union following a democratic process’. This was also confirmed by another provision confirming that ‘except in the rare circumstances when the impact of a measure or series of measures is so severe in light of its purpose that it appears manifestly excessive, non-discriminatory measures of a Party that are designed and applied to protect legitimate public welfare objectives, such as health, safety and the environment, do not constitute indirect expropriations’.

While the CETA Tribunal has jurisdiction to apply the broad ‘fair and equitable treatment’ test of investment law, the CJEU was satisfied that this power was limited, only applying to ‘inter alia, situations where there is abusive treatment, manifest arbitrariness and targeted discrimination’. So again, in the Court’s view ‘the required level of protection of a public interest, as established following a democratic process, is not subject to the jurisdiction conferred on the envisaged tribunals to determine whether treatment accorded by a Party to an investor or a covered investment is ‘fair and equitable’.’

More generally, the CETA tribunals ‘have no jurisdiction to call into question the choices democratically made within a Party relating to, inter alia, the level of protection of public order or public safety, the protection of public morals, the protection of health and life of humans and animals, the preservation of food safety, protection of plants and the environment, welfare at work, product safety, consumer protection or, equally, fundamental rights.’ So they did not ‘adversely affect the autonomy of the EU legal order’.

The Court then moved on to the principle of equal treatment and effectiveness. Here, the issue was whether CETA had to be compatible with Article 20 of the Charter (‘equality before the law’) and Article 21(2) of the Charter (non-discrimination on grounds of nationality). On this point, the Court first confirmed long-standing case law that treaties which the EU signed up to had to be compatible with fundamental rights. This issue could also be examined in an Article 218 proceeding, and extended to the Charter. (Indeed, see a 2017 CJEU ruling on another treaty with Canada, concerning the exchange of passenger data, discussed here).

In the Court’s view, Article 21(2) of the Charter did not apply, since it banned discrimination on grounds of nationality only as between EU citizens. However, Article 20 could apply, as its personal scope was not limited. While Article 20 does not oblige the EU to treat all non-EU countries the same (ie, the EU has no internal equivalent to the WTO’s Most Favoured Nation rule), it could apply if there is a difference of treatment within the EU of non-EU citizens on the one hand and EU citizens on the other. As for the principle of effectiveness, it only arose where a CETA Tribunal might find that a fine implementing EU competition law was a breach of the investment guarantees.

Applying these principles, the equal treatment issue was that EU citizens and companies could not invoke the investment provisions in the EU, whereas Canadian citizens and companies could. However, the Court ruled that these two groups were not comparable. The principle of effectiveness was not breached because if the EU or national competition authorities overstepped the limits of EU competition law, their decision could be struck down by the courts anyway.

Finally, as for the right of access to an independent tribunal, the principles were that Article 47 of the Charter bound the EU when entering into international treaties. In the Court’s view, the CETA bodies were very similar to courts, and bound by similar principles of independence. Although the Court was concerned about the accessibility of ISDS for small and medium-sized businesses, it was ultimately satisfied by a statement by the Commission and Council that the issue would be addressed, given that approval of CETA by the EU depended upon that commitment. On the independence of CETA bodies, the Court was satisfied that there was sufficient protection against removal of members, and the rules on payment of members would not preclude their independence. It was unproblematic that the parties could issue a binding interpretation of CETA, since this was a usual feature of international law. In any event, the EU could only agree to interpretations that were compatible with the principles set out in the Court’s opinion, and such interpretations could not have retroactive effects.

Comments

First, the Court’s confirmation that the case was admissible is useful. This means that the EU and non-EU countries can decide to apply a treaty provisionally while an Article 218 case is pending before the CJEU. However, this does risk legal complications in the event that the CJEU ultimately finds that the treaty concerned is incompatible with EU law – by analogy with the Council’s statement (no. 20 in the list of statements for the Council minutes) that if a national constitutional court or parliament objects to ratification of CETA, provisional application must be terminated.

As for the substance of the Court’s ruling, its analysis of the equal treatment and effectiveness rules was rather brief. Like the French constitutional court ruling on CETA, there was no clear explanation of why Canadian investors in the EU were in a different position than EU investors. (Possible answers are that the ISDS offers equivalent protection for EU investors in Canada, and that EU investors in the EU can rely on EU internal market law). The assessment of effectiveness takes it for granted that an ISDS body and the EU or Member States’ national courts will reach the same conclusions about the correct application of EU competition law, which is hardly a foregone conclusion. As for the independence of the ISDS system, the Court largely follows its usual approach to defining judicial independence.

The heart of the Court’s judgment is its reconciliation of the autonomy of EU law with the ISDS system. There’s an unusually strong acceptance by the Court of the EU legal system’s co-existence with international law – rather than supremacy over it. But that acceptance is conditional upon the safeguards which the Court then sets out. Here, there is a fundamental tension between the procedural aspect of the ruling (separate court system) and the substantive aspect of preserving the ‘right to regulate’. What if an ISDS body does issue a ruling that arguably infringes the capacity of the EU to decide on the appropriate level of regulation? Given that it’s essential that the ISDS system stands outside the national and EU court systems, how can the boundaries – also essential – which the Court insists must be set upon that system be enforced? The division between ISDS and national courts systems is simultaneously part of the solution and part of the problem.

In short, in British English, the key question for the Court was whether it was willing to throw a spanner into the works of the international investment system. The Court’s answer, in Canadian English, is like having a black fly in your chardonnay.

Is there a way to square this circle? The power of the CETA Joint Committee to issue interpretative rulings would arguably not go far enough to ‘fix’ the problem of an ISDS body ‘running wild’, as such rulings cannot be retroactive and Canada might not agree to them anyway. So let’s return to the courts. The Court rules out a national court review of an ISDS decision. However, it also refers to the possibility of national courts asking the CJEU questions about CETA.  Arguably, then, it’s possible to enforce the limits on ISDS bodies by a Member State or the EU refusing to pay a damages award ordered by an ISDS body, leading to a court challenge of that refusal to pay by the winning party – which is technically not a court review of the ISDS body’s decision as such. It would be similar to the well-known case of Kadi, in which the CJEU did not rule on the validity of a UN Security Council measure as such, but on the legality of its application in the EU legal order.

Is the judgment relevant to Brexit? At first sight the judgment is encouraging for those who would like to avoid any role for the CJEU as regards the UK after Brexit, given the Court’s willingness to reconcile the EU legal order with international law. However, that was not the sole factor in the Court’s reasoning, which distinguishes (rather than overturns) prior case law on the autonomy of EU law. A key part of the Court’s reasoning is that the ISDS body, unlike previous international courts which the Court objected to, does not have power to interpret EU law. The position is quite different under the Brexit withdrawal agreement (as I discuss here), and it remains to be seen if it might also be different as regards EU/UK future relationship treaties.

Finally, given that the new ruling concerns a reformed ISDS, how can it be enforced as regards unreformed bilateral investment treaties between EU Member States and non-EU countries (see the most recent list of such treaties here), to the extent that they do not comply with the standards set out by the Court and may apply to issues falling within the scope of EU law? Here the 2012 Regulation grandfathering pre-existing treaties, which also puts in place a process to regulate negotiation of such treaties in future, may be relevant. The review of pre-existing treaties, and control of future treaties, which that Regulation provides for may be applied taking account of the criteria in the Court’s judgment, so as to coordinate updating such treaties to ensure that they are compatible with EU law. This could be similar to the earlier process of updating bilateral aviation treaties between EU Member States and non-EU countries, in light of a series of CJEU judgments on their EU law compatibility.

It's too soon to say whether the reforms of the ISDS, as endorsed by the CJEU in its ruling, will satisfy a sufficient number of critics of the system to reduce the political opposition which ISDS has attracted in the past. Maybe the Court's judgment will turn out to be a death row pardon, two minutes too late. But it's striking that unlike many prior rulings, the CJEU does not appear intrinsically hostile to an international court, but willing in principle to find a way to accommodate it. Furthermore, the constraints the Court insists upon are not justified (as is usually the case) in terms of the Court's own institutional interests in the autonomy of EU law, but in terms of the EU's political institutions' accountability to the democratic process. To adapt the Canadian term, this is a judgment for Main Street, rather than the Kirchberg plateau. 

Barnard & Peers: chapter 24

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Transferring personal data outside the EU: Clarification from the ECJ?

Lorna Woods, Professor of Internet Law, University of Essex

Opinion 1/15 EU/Canada PNR Agreement, 26th July 2017

Facts

Canadian law required airlines, in the interests of the fight against serious crime and terrorism, to provide certain information about passengers (API/PNR data), which obligation required airlines under EU data protection regulations to transfer data to outside the EU.  The PNR data includes the names of air passengers, the dates of intended travel, the travel itinerary, and information relating to payment and baggage. The PNR data may reveal travel habits, relationships between two individuals, information on the financial situation or the dietary habits of individuals. To regularise the transfer of data, and to support police cooperation, the EU negotiated an agreement with Canada specifying the data to be transferred, the purposes for which the data could be used, as well as some processing safeguard provisions (e.g. use of sensitive data, security obligations, oversight requirements, access by passengers).  The data was permitted to be retained for five years, albeit in a depersonalised form.  Further disclosure of the data beyond Canada and the Member States was permitted in limited circumstances.  The European Parliament requested an opinion from the Court of Justice under Article 218(11) TFEU as to whether the agreement satisfied fundamental human rights standards and whether the appropriate Treaty base had been used for the agreement.

Opinion

The Court noted that the agreement fell within the EU’s constitutional framework, and must therefore comply with its constitutional principles, including (though this point was not made express), respect for fundamental human rights (whether as a general principle or by virtue of the EU Charter – the EUCFR).

After dealing with questions of admissibility, the Court addressed the question of appropriate Treaty base. It re-stated existing principles (elaborated, for example, in Case C‑263/14 Parliament v Council, judgment 14 June 2016, EU:C:2016:435) with regard to choice of Treaty base generally: the choice must rest on objective factors (including the aim and the content of that measure) which are amenable to judicial review.  In this context the Court found that the proposed agreement has two objectives: safeguarding public security; and safeguarding personal data [opinion, para 90].  The Court concluded that the two objectives were inextricably linked: while the driver for the need to PNR data was protection of public security, the transfer of data would be lawful only if data protection rules were respected [para 94].  Therefore, the agreement should be based on both Article 16(2) (data protection) and Article 87(2)(a) TFEU (police cooperation).  It held, however, that Article 82(1)(d) TFEU (judicial cooperation) could not be used, partly because judicial authorities were not included in the agreement.

Looking at the issue of data protection, the Court re-stated the question as being ‘on the compatibility of the envisaged agreement with, in particular, the right to respect for private life and the right to the protection of personal data’ [para 119].  It then commented that although both Article 16 TFEU and Article 8 EUCFR enshrine the right to data protection, in its analysis it would refer to Article 8 only, because that provision lays down in a more specific manner the conditions for data processing.  The agreement refers to the processing of data concerning identified individuals, and therefore may affect the fundamental right to respect for private life guaranteed in Article 7 EUCFR as well as the right to protection to personal data in Article 8 EUCFR. The Court re-iterated a number of principles regarding the scope of the right to private life:

‘the communication of personal data to a third party, such as a public authority, constitutes an interference with the fundamental right enshrined in Article 7 of the Charter, whatever the subsequent use of the information communicated. The same is true of the retention of personal data and access to that data with a view to its use by public authorities. In this connection, it does not matter whether the information in question relating to private life is sensitive or whether the persons concerned have been inconvenienced in any way on account of that interference’ [para 124].

The transfer of PNR data and its retention and any use constituted an interference with both Article 7 [para 125] and Article 8 EUCFR [para 126]. In assessing the seriousness of the interference, the Court flagged ‘the systematic and continuous’ nature of the PNR system, the insight into private life of individuals, the fact that the system is used as an intelligence tool and the length of time for which the data is available.

Interferences with these rights may be justified.  Nonetheless, there are constraints on any justification: Article 8(2)  of the EU Charter specifies that processing must be ‘for specified purposes and on the basis of the consent of the person concerned or some other legitimate basis laid down by law’; and, according to Article 52(1) of the EU Charter, any limitation must be provided for by law and respect the essence of those rights and freedoms. Further, limitations must be necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. 

Following WebMindLicenses (Case C‑419/14, judgment of 17 December 2015, EU:C:2015:832, para 81), the law that permits the interference should also set down the extent of that interference. Proportionality requires that any derogation from and limitation on the protection of personal data should apply only insofar as is strictly necessary. To this end and to prevent the risk of abuse, the legislation must set down ‘clear and precise rules governing the scope and application of the measure in question and imposing minimum safeguards’, specifically ‘indicat[ing] in what circumstances and under which conditions a measure providing for the processing of such data may be adopted’ [para 141], especially when automated processing is involved.

The Court considered whether there was a legitimate basis for the processing, noting that although passengers may be said to consent to the processing of PNR data, this consent related to a different purpose. The transfer of the PNR data is not conditional on the specific consent of the passengers and must therefore be grounded on some other basis, within the terms of Article 8(2) EUCFR. The Court rejected the Parliament’s submission that the meaning of ‘law’ be restricted to ‘legislative act’ internally. The Court, following the reasoning of the Advocate General, found that in this regard the international agreement was the external equivalent of the legislative act.

In line with its previous jurisprudence, the Court accepted that public security is an objective of public interest capable of justifying even serious interferences with Articles 7 and 8 EUCFR. It also noted that everybody has the right to security of the person (Art. 6 EUCFR), though this point was taken no further. The Court considered that PNR data revealed only limited aspects of a person’s private life, so that the essence of the right was not adversely affected [para 151]. In principle, limitation may then be possible. The Court accepted that PNR data transfer was appropriate, but not that the test of necessity was satisfied. It agreed with the Advocate General that the categories of data to be transferred were not sufficiently precise, specifically ‘available frequent flyer and benefit information (free tickets, upgrades, etc.)’, ‘all available contact information (including originator information)’ and ‘general remarks including Other Supplementary Information (OSI), Special Service Information (SSI) and Special Service Request (SSR) information’. Although the agreement required the Canadian authorities to delete any data transferred to them which fell outside these categories, this obligation did not compensate for the lack of precision regarding the scope of these categories.

The Court noted that the agreement identified a category of ‘sensitive data’; it was therefore to be presumed that sensitive data would be transferred under the agreement. The Court then reasoned:

any measure based on the premiss that one or more of the characteristics set out in Article 2(e) of the envisaged agreement may be relevant, in itself or in themselves and regardless of the individual conduct of the traveller concerned, having regard to the purpose for which PNR data is to be processed, namely combating terrorism and serious transnational crime, would infringe the rights guaranteed in Articles 7 and 8 of the Charter, read in conjunction with Article 21 thereof [para 165]

Additionally, any transfer of sensitive data would require a ‘precise and particularly solid’ reason beyond that of public security and prevention of terrorism. This justification was lacking. The transfer of sensitive data and the framework for the use of those data would be incompatible with the EU Charter [para 167].

While the agreement tried to limit the impact of automated decision-making, the Court found it problematic because of the need to have reliable models on which the automated decisions were made. These models, in the view of the Court, must produce results that identify persons under a ‘reasonable suspicion’ of participation in terrorist offences or serious transnational crime and should be non-discriminatory. Models/databases should also be kept up-to-date and accurate and subject to review for bias. Because of the error risk, all positive automated decisions should be individually checked.

In terms of the purposes for processing the data, the definition of terrorist offences and serious transnational crime were sufficiently clear. There were however other provisions, allowing case-by-case assessment.  These provisions (Article 3(5)(a) and (b) of the treaty) were found to be too vague.  By contrast, the Court determined that the authorities who would receive the data were sufficiently identified. Further, it accepted that the transfer of data of all passengers, whether or not they were identified as posing a risk or not, does not exceed what is necessary as passengers must comply with Canadian law and ‘the identification, by means of PNR data, of passengers liable to present a risk to public security forms part of border control’ [para 188].

Relying on its recent judgment in Tele2/Watson (Joined Cases C‑203/15 and C‑698/15, EU:C:2016:970), which I discussed here, the Court reiterated that there must be a connection between the data retained and the objective pursued for the duration of the time the data are held, which brought into question the use of the PNR data after passengers had disembarked in Canada.  Further, the use of the data must be restricted in accordance with those purposes. However,

where there is objective evidence from which it may be inferred that the PNR data of one or more air passengers might make an effective contribution to combating terrorist offences and serious transnational crime, the use of that data does not exceed the limits of what is strictly necessary [para 201].

Following verification of passenger data and permission to enter Canadian territory, the use of PNR data during passengers’ stay must be based on new justifying circumstances. The Court expected that this should be subject to prior review by an independent body. The Court held that the agreement did not meet the required standards.  Similar points were made, even more strongly, in relation to the use of PNR data after the passengers had left Canada. In general, this was not strictly necessary, as there would no longer be a connection between the data and the objective pursued by the PNR Agreement such as to justify the retention of their data. PNR data may be stored in Canada, however, when particular passengers present a risk of terrorism of serious transnational crime. Moreover, given the average lifespan of international serious crime networks and the duration and complexity of investigations relating to them, the Court did not hold that the retention of data for five years went beyond the limits of necessity [para 209].

The agreement allows PNR data to be disclosed by the Canadian authority to other Canadian government authorities and to government authorities of third countries. The recipient country must satisfy EU data protection standards; an international agreement between the third country and the EU or an adequacy decision would be required. There is a further, unlimited and ill-defined possibility of disclosure to individuals ‘subject to reasonable legal requirements and limitations ... with due regard for the legitimate interests of the individual concerned’. This provision did not satisfy the necessity test.

To ensure that the individuals’ rights to access their data and to have data rectified is protected, in line with Tele2/Watson, passengers must be notified of the transfer of their PNR data to Canada and of its use as soon as that information is no longer liable to jeopardise the investigations being carried out by the government authorities referred to in the envisaged agreement. In this respect, the agreement is deficient. While passengers are told that the data will be used for security checks/border control, they are not told whether their data has been used by the Canadian Competent Authority beyond use for those checks.  While the Court accepted that the agreement provided passengers with a possible remedy, the agreement was deficient in that it did not guarantee in a sufficiently clear and precise manner that the oversight of compliance would be carried out by an independent authority, as required by Article 8(3) EUCFR.

Comment

There are lots of issues in this judgment, of interest from a range of perspectives, but its length and complexity means it is not an easy read. Because of these characteristics, a blog – even a lengthy blog – could hardly do justice to all issues, especially as in some instances, it is hardly clear what the Court’s position is.

On the whole the Court follows the approach of its Advocate General, Mengozzi, on a number of points specifically referring back to his Opinion. There is, as seems increasingly to be the trend, heavy reliance on existing case law and it is notable that the Court refers repeatedly to its ruling in Tele2/Watson.  This may be a judicial attempt to suggest that Tele2/Watson was not an aberration and to reinforce its status as good law, if that were in any doubt. It also operates to create a body of surveillance law rulings that are hopefully consistent in underpinning principles and approach, and certainly some of the points in earlier case law are reiterated with regards to the importance of ex ante review by independent bodies, rights of redress and the right of individuals to know that they have been subject to surveillance.

The case is of interest not only in regards mass surveillance but more generally in relation to Article 16(2) TFEU. It is also the first time an opinion has been given on a draft agreement considering its compatibility with human rights standards as well as the appropriate Treaty base. In this respect the judgment may be a little disappointing; certainly on Article 16, the Court did not go into the same level of detail as in the AG’s opinion [AG114-AG120]. Instead it equated Article 16 TFEU to Article 8 EUCFR, and based its analysis on the latter provision.

As a general point, it is evident that the Court has adopted a detailed level of review of the PNR agreement.  The outcome of the case has widely been recognised as having implications, as –for example – discussed earlier on this blog.  Certainly, as the Advocate General noted, possible impact on other PNR agreements [AG para 4] which relate to the same sorts of data shared for the same objectives.  The EDPS made this point too, in the context of the EU PNR Directive:

Since the functioning of the EU PNR and the EU-Canada schemes are similar, the answer ofthe Court mayhave a significant impact on the validity of all other PNR instruments …. [Opinion 2/15, para 18]

There are other forms of data sharing agreement, for example, SWIFT, the Umbrella Agreement,  the Privacy Shield (and other adequacy decisions) the last of which is coming under pressure in any event (DRI v Commission (T-670/16) and La Quadrature du Net and Others v Commission (T-738/16)).  Note that in this context, there is not just a question of considering the safeguards for protection of rights but also relates to Treaty base.  The Court found that Article 16 must be used and that – because there was no role for judicial authorities, still less their cooperation – the use of Article 82(1)(d) is wrong.  It has, however, been used for example in regards to other PNR agreements.  This means that that the basis for those agreements is thrown into doubt.

While the Court agreed with its Advocate General to suggest that a double Treaty base was necessary given the inextricable linkage, there is some room to question this assumption.  It could also be argued that there is a dominant purpose, as the primary purpose of the PNR agreement is to protect personal data, albeit with a different objective in view, that of public security. In the background, however, is the position of the UK, Ireland and Denmark and their respective ‘opt-outs’ in the field. While a finding of a joint Treaty base made possible the argument of the Court that:

since the decision on the conclusion of the envisaged agreement must be based on both Article 16 and Article 87 TFEU and falls, therefore, within the scope of Chapter 5 of Title V of Part Three of the FEU Treaty in so far as it must be founded on Article 87 TFEU, the Kingdom of Denmark will not be bound, in accordance with Articles 2 and 2a of Protocol No 22, by the provisions of that decision, nor, consequently, by the envisaged agreement. Furthermore, the Kingdom of Denmark will not take part in the adoption of that decision, in accordance with Article 1 of that protocol. [para 113, see also para 115]

The position would, however, have been different had the agreement be found to have been predominantly about data protection and therefore based on Article 16 TFEU alone.

Looking at the substantive issues, the Court clearly accepted the need for PNR to challenge the threat from terrorism, noting in particular that Article 6 of the Charter (the “right to liberty and security of person”) can justify the processing of personal data. While it accepted that this resulted in systemic transfer of large quantities of people, we see no comments about mass surveillance. Yet, is this not similar to the ‘general and indiscriminate’ collection and analysis rejected by the Court in Tele2/Watson [para 97], and which cannot be seen as automatically justified even in the context of the fight against terrorism [para 103 and 119]? Certainly, the EDPS took the view in its opinion on the EU PNR Directive that “the non-targeted and bulk collection and processing of data of the PNR scheme amount to a measure of general surveillance” [Opinion 1/15, para 63]. It may be that the difference is in the nature of the data; even if this is so, the Court does not make this argument. Indeed, it makes no argument but rather weakly accepts the need for the data.  On this point, it should be noted that “the usefulness of large-scale profiling on the basis of passenger data must be questioned thoroughly, based on both scientific elements and recent studies” [Art. 29 WP Opinion 7/2010, p. 4]. In this aspect, Opinion 1/15 is not as strong a stand as Tele2/Watson [c.f para 105-106]; it seems that the Court was less emphatic about significance of surveillance even than the Advocate General [AG 176].

In terms of justification, while the Court accepts that the transfer of data and its analysis may give rise to intrusion, it suggests that the essence of the right has not been affected. In this it follows the approach in the communications data cases.  It is unclear, however, what the essence of the right is; it seems that no matter how detailed a picture of an individual can be drawn from the analysis of data, the essence of the right remains intact.  If the implication is that where the essence of the right is affected then no justification for the intrusion could be made, a narrow view of essence is understandable.  This does not, however, answer the question of what the essence is and, indeed, whether the essence of the right is the same for Article 7 as for Article 8.  In this case, the Court has once again referred to both articles, without delineating the boundaries between them, but then proceeded to base its analysis mainly on Article 8.

In terms of relationship between provisions, it is also unclear what the relationship is between Art 8(2) and Art 52.  The Court bundles the requirements for these two provisions together but they serve different purposes. Article 8(2) further elaborates the scope of the right; Article 52 deals with the limitations of Charter rights.  Despite this, it seems that some of the findings will apply Article 52 in the context of other rights. For example, in considering that an international agreement constitutes law for the purposes of the EUCFR, the Court took a broader approach to meaning of ‘law’ than the Parliament had argued for.  This however seems a sensible approach, avoiding undue formality. 

One further point about the approach to interpreting exceptions to the rights and Article 52 can be made. It seems that the Court has not followed the Advocate General who had suggested that strict necessity should be understood in the light of achieving a fair balance [AG207].

 

Some specific points are worth highlighting. The Court held that sensitive data (information that reveals racial or ethnic origin, political opinions, religious or philosophical beliefs, trade-union membership, information about a person’s health or sex life) should not be transferred. It is not clear what interpretation should be given to these data, especially as regards proxies for sensitive data (e.g. food preferences may give rise to inferences about a person’s religious beliefs).

One innovation in the PNR context is the distinction the Court introduced between use of PNR data on entry, use while the traveller is in Canada, and use after the person has left, which perhaps mitigates the Court’s acceptance of undifferentiated surveillance of travellers.  The Court’s view of the acceptability of use in relation to this last category is the most stringent.  While the Court accepts the link between the processing of PNR data on arrival, after departure the Court expects that link to be proven, and absent such proof, there is no justification for the retention of data. Does this mean that on departure PNR data of persons who are not suspected of terrorism or transnational crime should be deleted at the point of their departure? Such a requirement surely gives rise to practical problems and would seem to limit the Court’s earlier acceptance of the use of general PNR data to verify/update computer models [para 198].

One of the weaknesses of the Court’s caselaw so far has been a failure to consider investigatory techniques, and whether all are equally acceptable.  Here we see the Court beginning to consider the use of automated intelligence techniques.  While the Court does not go into detail on all the issues to which predictive policing and big data might give rise, it does note that models must be accurate.  It also refers to Article 21 EUCFR (discrimination).  In that this section is phrased in general terms, it has potentially wide-reaching application, potentially even beyond the public sector.

The Court’s judgment has further implications as regards the sharing of PNR and other security data with other countries besides Canada, most notably in the context of EU/UK relations after Brexit. Negotiators now have a clearer indication of what it will take for an agreement between the EU and a non-EU state to satisfy the requirements of the Charter, in the ECJ’s view. Time will tell what impact this ruling will have on the progress of those talks.

Barnard & Peers: chapter 25

JHA4: chapter II:9

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