Broken seal leads to a fine of € 38 million for E.ON Energie AG, C-89/11 P

The European Commission suspecting E.ON Energie AG in an anti-competitive agreement sent them an inspection in Munchen, which sealed a door at the end of the day in order to continue in the morning. The seal was measuring 90 mm by 60 mm. In the morning, the white adhesive, by means of which the seal had been fixed to the substrate, remained on the latter in the form of “VOID” message about 5 mm high, distributed over the whole surface of the adhesive label. The seal became transparent, so that the “VOID” message was visible on the seal (§ 8). Thus, the European Commission presumed that the company people broke the seal in order to enter the room and destroy proofs.

However the shelf life of the seal itself had been expired, and there was no damage to the very letters of the seal. Therefore, E.ON Energie asked for a measure of inquiry to that matter, but the EU General Court denied the motion (§§ 109-110). The EU Court of Justice replies that this denial is not a subject to appeal (§ 115).

The ECJ held that the fine of € 38 million representing 0.14 % of E.ON Energie’s annual turnover could not be considered as disproportional due to the need to ensure deterrent effect. The maximum fine in the case of broking the seal could go up to 1 % of annual turnover. 

As I already wrote in previous posts, it is sad that the deterrent effect principle is never applied when the European Commission of the European Parliament themselves breach EU law and fundamental human rights.

No animal rights campaign instrumentalising the Holocaust image (at least in Germany), PETA v Germany, 43481/09

PETA Deutschland (People for the Ethical Treatment of Animals) tried to organize an advertising campaign under the head “The Holocaust on your plate” in Germany but it was banned, and the European Court of Human Rights confirms the ban. The posters had to make a photo parallel between Holocaust and the pain of animals. PETA intended to use the text “Between 1938 and 1945, 12 million human beings were killed in the Holocaust. As many animals are killed every hour in Europe for the purpose of human consumption” (§ 7).

PETA tried to explain that they do not trivialize the suffering of human beings, neither they have any anti-Semitic background. In the USA and Austria, this campaign did not meet such obstacles (§ 28).

The ECtHR replied that the ban is necessary in a democratic German society because of the German past, because they deem themselves under a special obligation towards the Jews (§ 49). The ban is proportional, since PETA remains free to find other means of drawing public attention to the issue of animal protection (§ 50).

ECtHR Grand Chamber sets aside Chamber judgment for errors in appraisal of proportionality in compensation for expropriation, Vistiņš et al v Latvia, 71243/01

Mr. Jānis Vistiņš had a land with a value of € 900 000 that was expropriated for € 850, and Mr Genādijs Perepjolkins had a land valued at € 5 million expropriated for € 13 500 (§§ 116-117) for purposes of the Riga Port expansion. The Chamber of the European Court of Human Rights found this proportional, since the expropriation price should correspond to that of the year 1940 (§ 70), but the Grand Chamber annulled this judgment on appeal and supported the applicants.

The Chamber considered that, since the applicants got this land from the heirs of the people who owned this land in 1940 (Latvia lost independence in 1940 and got it back in 1990), the increase in price of the land that took place from 1940 to 1997 (date of expropriation) was independent of any contribution of the applicants. The Grand Chamber agreed that the price may be lower than the market one, but argued that the Court cannot equate individuals who had not yet recovered their property with those who were already in possession of a valid title deed.

The Chamber thought that the price of 1940 was proportional, since the applicants owned the land only for 3 years before the expropriation, and got the title as a donation. The Grand Chamber corrected in showing that according to the contracts they got the land for certain services, which is not free of charge (§ 121).

Mr. Vistiņš received from the Riga Port € 85 000 as rent arrears for the period before expropriation, and Mr. Perepjolkins got € 593 150. This makes the expropriation price proportional according to the Chamber. According to the Grand Chamber, this is exactly what shows disproportion of the expropriation price. The rent arrears were not calculated as if they were in 1940 (§ 128).

ECJ liberates software functionality and programming language from copyrights, SAS Institute, C-406/10

The SAS Institute Inc. sued the World Programming Ltd. in the UK for infringing its copyright in analytical software. World Programming copied the manuals for the SAS System when creating the “World Programming System” (§ 27). However the Grand Chamber of the European Court of Justice found yesterday that software functionality and programming language are not literary or artistic works, and therefore not covered with copyrights.

The judges made a policy argument in writing that functionality copyrights would make it possible to monopolise ideas to the detriment of technological progress and industrial development (§ 40). The Grand Chamber referred to point 3.7 of the explanatory memorandum to the Proposal for Directive 91/250 stating that only the individual expression of the work should be protected, and leaving other authors the latitude to create even identical programs provided that they refrain from copying (§ 41).

The SAS Institute tried to use the proportionality remedy in arguing that the copyright should be protected at least to some degree having regard to the nature or extent of the copied functionality, to the skills, judgment and labour which had been expended, and to the level of detail reproduced (§ 28). However this attack was dismissed as such.

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).

ECJ upholds freezing of the Melli Bank funds, C-380/09 P

On 03/03/2008 the United Nations Security Council issued Resolution 1803 (2008) calling on “all States to exercise vigilance over [...] Bank Melli [...] in order to avoid such activities contributing to the proliferation sensitive nuclear activities, or to the development of nuclear weapon delivery systems” (§ 17). On 23/06/2008, under Common Position 2008/479/CFSP the EU Council froze the Melli Bank plc funds. The latter is owned by the Melli Bank Iran (بانک ملی ایران‎) that is owned by the Iranian Government (§ 19).

The Melli Bank raised a number of points of law before the EU General Court and, on appeal C-380/09 P, before the ECJ:

1. The Melli Bank maintained that the grammatical structure of legal acts requires giving specific and individualized reasons for freezing its funds (§§ 34-35). The UK based Melli Bank did not participate in nuclear proliferation. The ECJ replied that the fact that the EU Council has the discretion as to by whom the entity is “owned” does not mean that the EU Council also has discretion to assess whether that entity plays a part in nuclear proliferation (§ 42).
2. The Melli Bank pointed that the UN Resolution calls to “exercise vigilance” and not “freeying of funds”. Thus, the EU measure is disproportional (§ 47). The ECJ replied that the UN and the EU are “distinct legal orders” (§ 54), and that the EU freezing serves the “terms and objectives” of the UN vigilance (§ 55). Finally, it cannot be inferred from the UN Resolution that there is no need to freeze the funds (§ 57).
3. The Bank proposed that the proportional measures could be of prior authorization and supervision by an independent agent and of total prohibition of transactions with Iran. The ECJ replied that this argument was mentioned for the first time at the hearing, and therefore could not be taken into consideration (§ 59).
4. According to the Melli Bank the EU General Court changed the burden of proof by requiring the Bank to demonstrate that measures alternative to freezing would be entirely effective (§ 47). The judges reply that a “lack of evidence” does not fall to be reviewed by the ECJ (§ 59).
5. The Melli Bank argues that the competition law entitles it to make submissions to the EU institutions while consideration of the measures (§ 67), that freezing of funds is comparable to criminal penalty, and therefore there is a breach of the presumption of innocence (§ 69). The ECJ interprets that the fact of being “owned” by Iran is a sufficient ground, and it is not “necessary to carry out further review”.

What is a “reasonable compensation” for the depreciation of land? Choromidis, 54932/08

Businessmen Efklidis Choromidis and Spyros Choromidis claimed that after a partial expropriation of their land for the purpose of constructing a railway, the remaining part of their land lost value of between 50 and 90 %, but the Greek Courts fixed the compensation for depreciation at 3 % (§ 58).

The ECtHR justified this policy, since, according to the judges:

• Anyway it was an industrial area with low esthetic value (§ 65);
• Certain areas of their land anyway had not been constructible even before the construction of the railway (§ 67);
• 3 % corresponds to € 88 068.87, which a priori does not sound unreasonable (§ 68).

"No" to imprisonment of illegal immigrants, El Dridi, C-61/11 PPU

In case El Dridi, C-61/11 PPU, given the status of urgency, the ECJ declared the imprisonment of an illegal immigrant for 1 year due to failure to leave the Italian territory, a measure ordered by the national authorities, contrary to the principle of compliance with the Union law (Article 4(3) TEU, § 56), since the Directive 2008/115 subjects coercive measures to the principles of proportionality and effectiveness (§ 57).

An extremely interesting part of the judgment is § 61 where the CEJ says two things:

1) The national Courts must refuse to apply the national law contrary to the Union law.
2) A retroactive application of a more lenient penalty is a part of the constitutional traditions common to the Member States.