In 1861, Mill wondered how to hold to account Parliament, which checks the Ministers’ actions, but whose own behaviour is subject to little control. A similar logic is inherent to another branch of government: the judiciary. Legislation usually sets up a system of remedies against wrongful decisions; however, what if the court of last instance disregarded the law?
The proper mechanism of EU law answering to this question is judicial liability as per the Köbler case. Alongside the actions in Articles 258-259 TFEU and other non-EU remedies, this latter judgment enforces the duty laid down in Art.267(3) TFEU. Pursuant to the abovementioned legal framework, a Member State must compensate the injury caused by a manifest breach of the acquis on the part of a court of last instance (see also the Hochtief Solutions case, para. 41-43).
More than 20 years ago, Advocate General Léger conceded that it could be at odds with impartiality that a court, belonging to the same judicial system as a tribunal alleged to have violated EU law, would hear the case of this latter’s responsibility (see AG Léger in Köbler, para. 107-112). Indeed, were a party to bring liability proceedings and end up (re-)exhausting national remedies, the very court of last resort could be forced to judge whether it itself had infringed EU law. Nevertheless, AG Léger’s doubts had laid dormant until the case Vivacom Bulgaria (hereinafter, VB) was referred to the Court of Justice.
- The ruling
The case has a complicated procedural background, due to the particularities of the Bulgarian administrative appeals system. The proceedings concerned a VAT-tax claim issued by the national tax authority against VB. The case was first filed at the level of the Administrative Court Sofia district, with VB claiming that the national tax authority ought to have classified its transaction as a (Bulgarian VAT-exempt) supply of services carried out in Romania instead of Bulgaria. In essence, VB claimed that the tax authority has wrongfully attributed the said VAT-tax to it. The Administrative Court Sofia district disagreed and ordered for the defendant tax authority. VB appealed to the Supreme Administrative Court (SAC), making the same claim. The SAC confirmed the decision of the lower court, at which point VB made use of a specific rule in the Bulgarian Code of Administrative procedure. According to Bulgarian legislation, administrative judges have jurisdiction to hear claims for damages of judicial violation of EU law. Article 128(1)(6) of the Code of Administrative Procedure states: ‘‘All cases relating to claims for damages arising from the judicial functions of the administrative courts and of the Varhoven administrativen sad [(Supreme Administrative Court)] shall fall within the jurisdiction of the administrative courts.” Consequently, VB filed a suit before the Administrative Court of Sofia, which admitted that the SAC had committed an error of law in classifying the transaction as a supply of goods (previously classified correctly as ‘supply of services’ by the tax authority). However, that breach fell short of being a manifest one. It was not ascertained that the recipients of the services were taxable persons in Romania, thus making VAT still due in Bulgaria. This decision was then (again) appealed to the SAC, which, heeding VB’s pleadings on the compatibility of Bulgarian procedural law with impartiality qua EU law (arts 19(1)(2) TEU and 47 CFREU), requested a preliminary ruling. The referred question asked whether the EU rules of judicial impartiality (Article 19(1) TEU and Article 47 CFR) contradicted a national rule of administrative procedure under which an action for compensation for damage caused by an infringement of EU law by the Bulgarian Supreme Administrative Court, in which that court was a defendant, is to be examined by that court also at last instance.
In its ruling, the CJEU recalled that, on the condition of effective protection of individuals’ rights and absent EU rules, the Member States are competent to designate the courts for proceedings concerning State liability. Therefore, EU law does not preclude a State from bestowing jurisdiction to hear, on appeal, proceedings for failing to observe EU law on the part of the last instance court of this same judicial institution, provided that sufficient precautions to preserve its impartiality are in place (VB, para.37). Furthermore, the fact that the highest court acted as defendant or procedural substitute of the State did not endanger impartiality, unless, in analogy to mechanisms for proceedings before the CJEU for wrongdoings of the Court of Justice or the General Court, the judges sitting on the adjudicating panel had taken part in the defence of the institution (VB, paras 38-40 and 42-43).
Although the factual verification is the duty of the referring court, the CJEU furnished further guidance. In this respect, the case laws of both the ECtHR and the CJEU require that the same judges (as in: the same persons) could not rule on whether they themselves misinterpreted or misapplied the law (VB, paras 48-49). In conclusion, given that the composition of the SAC panel ruling on the liability of the SAC was different from the composition that rendered the original criticized decision, the Court concluded that ‘no reasonable doubt … as to the independence or impartiality of the [SAC] can arise’.
- Vivacom Bulgaria and the autonomous nature of EU law
An aspect towards which the CJEU has been deferential is the competence of the Member States to establish the remedies in case of infringements of the acquis, i.e., national procedural autonomy. But, even more interestingly, VB fleshed out the relationship between national procedural autonomy and the autonomy of EU law. In accordance with established case law, ‘[pursuant to] Article 19[(1)(1)] TEU, it is for the national courts and tribunals and the [CJEU] to ensure the full application of [EU] law’.
In this regard, the first step is to acknowledge that the obligation of a Member State to make good any damage suffered relates to a right grounded, specifically, in EU law (Francovich case). Consequently, the binding competence of the ordinary courts of EU law for State liability – namely, the autonomy of EU law – implies the power of the legislatures of the Member States to regulate the remedies before ‘their’ courts, i.e. national procedural autonomy in its ‘first’ connotation. Still, former AG Bobek casts doubts on the notion of national procedural autonomy by pointing out that the enforcement of EU law is either harmonised or national law is constrained by the principles of equivalence and effectiveness, thus resulting in a residual competence of the Member States that is not truly ‘autonomous’. In VB, the principle of ‘national procedural autonomy’ was the medium through which the autonomy of EU law manifested itself. Accordingly, Art.19(1)(2) TEU, which mandates the Member States to establish effective remedies in EU law-covered fields, and the requirement of independence under Art.47(2) of the Charter, have to be balanced with Art.19(1)(1) TEU and the competence of the Member States to establish the remedies this latter provision entails (see also AG Ćapeta in VB, para. 54-55). In the case at hand, the balancing that results from the ruling of the Court favours the discretion left to the legislatures of the Member States in procedural matters.
That being said, this conclusion stands in stark contrast with the recent jurisprudence related to independence in the assessment of the quality of a ‘court or tribunal of a Member State’ under Art.267 TFEU. In this line of case law, the Court espoused a strict interpretation of the concept of ‘external’ independence from the executive power in contrast to the loose requirement of impartiality in VB. These rulings, arguably, are irrelevant for VB, for they – in addition to dealing with independence from the other powers of the State rather than ‘internal’ impartiality linked to interests of the parties to the trial – primarily distinguish between administrative and judicial functions (AG Ćapeta in VB, para. 34). Nonetheless, the recent Opinion of AG Spielmann concluded that when the tribunal is not previously established by law and, hence, the standards under Arts. 19(1) TEU and 267 TFEU incidentally overlap, this case law could have a bearing on Art.19(1) TEU. However, there is room to claim that the jurisprudence concerning Art.19(1) TEU is normally pertinent to the requirement of independence for the purposes of allowing an organ to dialogue with the Court of Justice (AG Ćapeta in NADA, para. 54-58). Such a hermeneutic osmosis could be similar to that existing between Arts 19(1) TEU and 47(1) CFR (Sąd Rejonowy w Białymstoku, paras 41-43). Notably, this interpretive contamination requires that a body that does not satisfy the requirements imposed by Art.19(1)(2) TEU, e.g. whose members may be removed by the executive or legislative power, imply the inadmissibility of a reference for a preliminary ruling lodged by that authority (NADA, para. 48-54). The logic of this rule is laid out below.
The suggestion that the two subparagraphs of Art.19 TEU must be balanced appears to be buttressed by the Court of Justice’s conclusions when the independence of Member States’ courts is called into question amidst the assessment of the admissibility of references for preliminary rulings brought by those bodies. Specifically, these judicial organs are presumed to fulfill this criterion under Art.267 TFEU, unless a national or international court ascertained a violation of that requirement (Getin Noble Bank, paras 69, 72, recently rebutted in, inter alia, KRS). In this connection, though Getin Noble Bank is not immune from criticism in terms of human rights, VB may help explain the difference in treatment between judicial and administrative authorities. While in the case of the courts of the Member States, expressly qualified as such by national law, it is necessary to balance the two subparagraphs of Art.19(1) TEU, there is no such weighing in the case of administrative bodies. Against decisions of administrative bodies, individuals are entitled to an effective remedy before a tribunal, whereas, in the case of judicial authorities, the Member States are presumed to have offered an effective remedy.
- Conclusion
Reverting to the question in the title of this blog post, following VB – where national legislation so provides – custodes custodient ipsos custodes, without impartiality standing in their way. Such a deferential approach to national procedural autonomy, and the autonomy of EU law that underpins it, may well be described as part of a silent bargain. As acknowledged by part of the scholarship, Köbler constituted a strong de facto intrusion into the principles of national law such as res judicata. In contrast, VB might make up for that intrusion by recognising a (wide) margin of discretion in the competence to regulate State liability, which indirectly flows from the autonomy of EU law enshrined in Art.19(1)(1) TEU. On the other hand, the Court might thus make claims for State liability even less appealing (prior to VB, see AG Hogan in Randstad, para.82 and Varga), since a party might end up before judges who likely know each other personally. Moreover, VB occurs at a time when the European Commission has concerningly noticed that the representatives of judges in the Supreme Judicial Council (SJC) of Bulgaria -whose tasks include, inter alia, the promotions within the judiciary – do not constitute a majority in that organ (Rule of Law Report, p.7). Yet, VB concerned the ‘internal’ impartiality of the SAC regarding the composition of the chamber hearing responsibility cases involving that same judicial authority, and not independence from the executive or legislative power. This circumstance might also explain this low level of scrutiny. Arguably, this latter is without prejudice to a narrower review should, in the future, judges hearing liability claims face adverse consequences for merely concluding that judgments to the liking of political institutions run afoul of EU law (see W.Ż., para. 110-113 and, by analogy, Miasto Łowicz, para.58). However, it is also undeniable that the SJC, under the ‘relaxation’ of impartiality allowed by VB, could more easily control the jurisprudence concerning judicial liability than in a system where the jurisdiction to settle that responsibility is entrusted to the ordinary jurisdiction as well, i.e. by simply screening the nominations to the administrative jurisdiction.
Lacking any direct appeal from national supreme courts to the CJEU, the main issue is whether the autonomous EU legal order, as it stands, can secure individuals’ EU rights against wrongful decisions of the ‘federate’ courts of last instance. As to refusals to lodge preliminary ruling requests according to the case law of the ECtHR, such denials that remain unjustified in light of Cilfit constitute a violation of Art.6(1) ECHR (Georgiou, para. 22-23). But outsourcing the check on the conditions to raise a reference for a preliminary ruling – albeit limited to the obligation to state reasons – to a non-EU actor, in turn, raises basic concerns related to the exclusive jurisdiction of the CJEU to settle the definitive interpretation of EU law (Kornezov, pp.1330-1331). Besides, the same author also pointed out that in ‘national’ remedies (e.g., complaints to a constitutional court), the enforcement of EU law might depend on the conditions set by uneven national laws. To overcome these shortcomings, the ideal candidate actions to restore legality are infringement proceedings, including those claiming the violation of Art.267(3) TFEU that have recently come into sight (AG Wathelet in Commission v France, para. 3 and 87; Commission v UK, para. 139-155).
Francesco Gravina is a doctoral researcher at the University of St. Gallen, Switzerland.
