European Commission may force national courts to enforce its decision while the legality of the decision is pending in Luxembourg, Europese Gemeenschap, C-199/11

This judgment dated 06/11/2012 is extremely interesting due to the legal strategy used by the European Commission. The Commission took a decision that certain manufacturers of elevators and escalators (Otis NV, Kone Belgium NV, Schindler NV, ThyssenKrup Liften Ascenseurs NV, General Technic-Otis Sàrl, Kone Luxembourg Sàrl, Schindler Sàrl, ThyssenKrup Ascenseurs Luxembourg Sàrl) who had worked with the EU buildings had a cartel agreement and infringed Article 101 TFEU (§ 2). The companies challenged the decision before the EU General Court, and then on appeal before the Court of Justice (§§ 21, 22, 57).

And then, instead of waiting for a judgment from the ECJ, the Commission acting as a representative of the EU brings a civil action against the companies before the Brussels Commercial Court, asking to order the payment of the provisional sum of € 7 061 688 (§ 23). The advantage of the Commission’s position before the Brussels Commercial Court is that, contrary to the EU General Court and the ECJ, it cannot depart from the line of the Commission (Article 16(1) of Regulation No 1/2003, §§ 26, 38).

The companies raised the fair trial principle under Article 47 of EU Charter of Fundamental Rights, Article 6(1) of the European Convention of Human Rights, and the principle nemo judex in sua causa (§§ 37, 39). The Grand Chamber of the ECJ gave 2 reasons for approving the role of the Commission. First, “any person can rely on a breach of Article 101 TFEU before a national court, including the European Commission (§§ 40, 44). Second, despite inability to declare the absence of the anticompetitive practice, the national court remains free to appreciate the existence of loss for the EU and a direct link between the loss and the anticompetitive agreement (§ 65). 

Freedom to redistribute software, UsedSoft, C-128/11

 
On 03/07/2012 the Grand Chamber of the European Court of Justice interpreted in case UsedSoft GmbH, C-128/11, that a software copyrights holder (Oracle International Corp.) cannot oppose redistribution of the software by a buyer of the license (§ 80).
 

The copyrights holder Oracle supported by French, Irish and Italian Governments argued that the contractual terms prohibit further transfer of the software, requiring each new user to enter into a direct contractual relationship with the copyrights holder (§§ 77 and 82). The Grand Chamber found that this view would render ineffective the exhaustion of the copyrights holder’s distribution right (§ 83). This right becomes exhausted at the moment of selling the license to the very first user.

Oracle maintained that it sells only one license and not an unlimited number. The judges replied that the original acquirer of the license must delete her copy of the software when decides to redistribute it (§ 78). Oracle argued that it is impossible to verify whether she would delete her copy. The ECJ replied that the copyrights holder remains free to search for a technical solution (§ 79).

Ombudsman: European Commission may change the interpretation of financial rules applicable to its grant receivers during the execution of contract, 286/2011/RT

A small Romanian enterprise that had received 2 grants for projects under the 7^th Framework Programme for Research and Technological Development filed a complaint against the European Commission to the European Ombudsman. The enterprise argued that the Commission had replaced the 2007 Financial Guidelines with the 2010 Financial Guidelines during the execution of the projects. The new version of the Guidelines required fulfillment of cumulative criteria for eligibility of staff costs, which led, after audit, to the necessity to recover a part of the grants (§ 25).

The Ombudsman replied that the 2010 version “simply clarified the conditions” that existed at the moment of signing the contracts (§ 34). It was stated in the 2007 version that “this Guide has been conceived as an evolving document which, it is intended, will be updated regularly (in principle every 6 months) […]” (§ 36). Thus, no maladministration was found.

ECHR strengthens European companies’ bargain power in relations with small third-world companies, Granos organicos nacionales, 19508/07

Small Peruvian company Granos organicos nationales SA exporting bananas tried to sue 2 German import companies for a breach of contract. The third-world company and its shareholders were insolvent, and applied for legal aid (§ 8). The German Courts refused to provide the aid, since the company was not from the European Economic Area (§ 9), and the ECHR found this grounded.

The Peruvian banana company argued that there is no restriction for foreign companies to profit from legal aid in Peru. In Germany, in addition to the court fees, the Peruvian company has to pay guarantee for legal costs of € 90 020 to each of the two defendant European companies, and cover its own legal costs (§ 40). The denial of legal aid would, therefore, lead the third-world counterparts into bankruptcy (§ 35). There is no precise Peruvian case law however, since issuing a civil claim costs only € 120 in Peru, which is not a problem even for an insolvent European company (§ 42). Moreover, there is no defendant’s legal costs guarantee rule in Peru.

The ECHR held that Germany doesn’t have an obligation to provide legal aid to insolvent Peruvian companies, since the Peruvian company is unable to show case law proving the right of European companies to legal aid in Peru. Therefore there is no reciprocity, and the German restriction is proportional (§ 49).

ECHR: Interim measure of providing adequate medical treatment, Tymoshenko v Ukraine

Last week (15/03/2012) the European Court of Human Rights decided to indicate interim measures to the Ukrainian Government under Article 39 of the Convention in case Tymoshenko, 49872/11. The Court ordered to provide adequate medical treatment to twice former Ukrainian Prime Minister Yulia Tymoshenko. The facts of indicating interim measures and giving this case priority clearly before a formal exhaution of domestic remedies show the successful perspective of the application.

Twice former Prime Minister was in perfect health until arrest on 05/08/2011. On 15/08/2011 she fell ill. In October Tymoshenko lost capacity of walking. According to her defense, she was poisonned.

The charismatic female Prime Minister was found guilty in an illegal order for the signing of a contract concerning gas imports from Russia in 2009 that produced a damage of $ 189.5 million to the State company Naftogaz, and imprisonned for 7 years with a 3 year ban on holding public office by the Kiev Appellate Court on 23/12/2011. The defence of Tymoshenko maintains that the judicial attack was provoked by elimination of the intermediary Swiss company RosUkrEnergo from the Ukrainian-Russian gaz agreements.

In observing the legal strategy of Yulia Tymoshenko, one may observe however a number of mistakes similar to the case of Khodorkovsky.

ECJ: contractual clause prohibiting Internet trade is illegal, Pierre Fabre, C-439/09

Pierre Fabre Dermo-Cosmétique SAS manufactures and markets cosmetics and personal care products under brands Avène, Galénic, Ducray and Klorane. Their general contractual clause imposed an obligation on distributors was that the products have to be sold in a “physical space” in the presence of a person with a diploma in pharmacy, which de facto excluded internet trade (§§ 13-14).

Pierre Fabre tried to justify the clause with an intention to provide a personalized advice in order to ensure “cosmetovigilance” (§§ 17, 25), avoiding the risks of counterfeiting and free-riding between authorized pharmacies (§ 23), need to maintain the prestigious image of the products (§ 45). The French Competition Authority decided that the real aim of the clause is to prevent selling the goods to non-authorised distributors, to reduce considerably the ability of an authorized distributor to sell the contractual products to consumers outside its contractual territory, and to restrict competition (§§ 19, 38). Pierre Fabre got a fine of € 17 000.

The ECJ adjudicated that the reasons given by Pierre Fabre did not have a legitimate aim for restricting competition (§§ 44, 46).

Permanent Court of Arbitration downgrades international organisations in contractual relations, Polis Fondi, 2010-8

Polis fondi immobiliari di Banche popolare SGR.p.A. won an arbitration case against UN agency International Fund for Agricultural Development. The UN agency was refusing to pay the rent of € 265 734.47 for its Roma headquarters, since the Italian Government approved for reimburse only 80% of this sum. Therefore, according to the UN agency, the rent amount was modified under the Headquarters Agreement concluded between the UN agency and the Government - especially from the perspective of good faith principles. The UN agency argued that the Polis fondi had to be aware of the latter Agreement.

However the Permanent Court of Arbitration found that this would be "an exceptionally onerous burden on private parties" requiring "an unreasonable level of familiarity regarding the intricacies of international organizations as subject of private law".

From time to time the ECtHR compares internal case law

In Bulfracht Ltd. v Croatia, 53261/08, the ECtHR decided to compare the case law of the Croatian Constitutional Court on the calculation of claim value threshold to cross in order to be able to appeal on points of law (§ 39). This is the domain that is traditionally protected by the spirit of non-interpreting national law.

The Bulgarian ship’s operator Bulfracht Ltd. tried to sue the Croatian shipping broker company J.A. as a guarantor for the Cypriot company TWS who had ordered carriage of goods from Ukraine to Taiwan but had not paid the agreed USD 515 099.20 (§ 6). The threshold for appealing to the Croatian Supreme Court was HRK 500 000. In that case the Croatian Constitutional Court decided that exchanging USD into Yugoslavian dinars, and then to Croatian kuna (HRK) was the correct practice. Due to this manner of currency exchange the threshold was not met. However later the Constitutional Court adopted another Ruling stating that USD shall be exchanged directly into HRK.

Nevertheless, I’m not sure that such a comparison might become a permanent practice of the ECtHR.

Towards a client-friendly judicial deadline policy, and fair trial in corporate law, TATRY Poprad, 7261/06

7 judges chamber of the European Court of Human Rights unanimously decided to correct the deadline policy of the Slovak Constitutional Court in case TATRY Poprad s.r.o. v Slovakia, 7261/06. The mistake of that Constitutional Court was that:

* first, it held that the company had to appeal to the Appeals on Points of Law Chamber of the Supreme Court before coming to the Constitutional Court with a complaint against the Appellate Chamber of the Supreme Court;
* second, after the declaration of inadmissibility by the Appeals on Points of Law Chamber, the Constitutional Court refused to accept the action, since the company had missed the judicial deadline to be calculated from the first judgment of the Supreme Court (§ 44).

However what is interesting even more for me is the fact that Strasbourg declared applicability of the right to court to the proceedings before the Constitutional Court (§ 37). For instance, in impeachment judgment Paksas v Lithuania of 06/01/2011 the interpretation was contrary.

The essence of the TATRY Poprad s.r.o. was that this company completed its construction works about 2 months after the date agreed in the contract, and according to the terms of contract lost 20 % of the agreed price. The construction company argued that its director K didn't have the standing to sign the contract:

- on 26/04/1996 the Supervisory Board approved him as a director;
- on 12/04/1996 the General Meeting took an unknown decision on his appointment (positive according to the Supreme Court, and negative according to the company;
- on 22/04/1996 he signed the contract as a "director";
- on 28/05/1996 his name as the name of "director" was communicated to the Register of Comapanies.