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). 

ECtHR established the non-pecuniary damage rates for overcrowding in prisons

In case Lopata v Russia, the European Court of Human Rights continues applying the pilot judgment Ananyev et al. v Russia, 42525/07, as regards the overcrowding (personal average surface smaller than 4 or even 3 m²) in prisons, which breaches Article 3 of the European Convention on Human Rights concerning inhuman treatment. In combining the latter judgment with judgment Idalov v Russia, 5826/03, dated 22/05/2012, one gets the following rates for overcrowding:

2000 € for 2 months in such a prison,

6000 € for 1 year,

7150 € for 1 year and 2 months,

3500 € for each full year after the first one.

Plus 2500 € for costs. By the way, the EU directives 91/630/EEC and 98/58/EC establish the minimal personal surface of 3.7 m² for pigs.

Comparing with judgment Karalevicius v Lithuania, the rates have slightly increased.

I stand for election to the Parliament of Lithuania

Therefore this blog will be frozen until October 2012.

- After getting 41 % of votes, I am back to my legal practice, as well as to blogging on European case law :)

ECHR bans advertising of UFO contactors, MRS, 16354/06

On 13/07/2012 by a majority of 9 votes to 8 the European Court of Human Rights supported the decision of Swiss authorities to ban a poster campaign of the Swiss Raelian Movement (Mouvement raëlien suisse) promoting contacts with extra-terrestials. Mr. Claude Vorilhon (Raël) who allegedly entered into a direct contact with extra-terrestrials (Elohim) from an Unidentified Flying Object in 1973 founded the Movement in 1975. It unites UFO contactors, as well as people interested in inter-galactic relations.

The prohibited 97 cm by 69 cm poster was showing extra-terrestrials’ faces, a pyramid and a flying saucer, had slogans “The Message from the Extra-Terrestrials” and “Science at last replaces religion”, as well as a reference to the website http://www.rael.org (§ 14).

The Strasbourg judicial majority supported the ban on the UFO contactors’ poster in 2 steps:

1. The Court declared that the nature of the poster is not political but rather commercial, which means that the State’s margin of appreciation is broader (§ 62). The minority of 8 judges counter-argued that the Movement did not try to sell anything but rather to spread its world vision, which means that the poster is non-commercial or philosophical. The Movement position is that this interpretation allows the State to justify a systematic refusal and oppose expression of non-majority ideas in public on a permanent basis (§ 34).
2. The ECtRH declared that such reasons as support of human cloning, geniocracy (society governed by intellectual elite), and the fact that certain members of the Movement had been accused of paedophilia, "taken together" may “reasonably entitle” the national authorities to ban the poster. Although, he majority of judges admitted that “taken separately” these 3 facts “might not be capable of justifying” the ban (§ 72). The UFO contactors argued that they had not been participating in any human cloning but simply expressing their favourable opinion about it, and that geniocracy was not a real political project but a mere utopia (§ 36). The minority of 8 judges pointed that no cases of paedophilia had been proven, and that otherwise the Movement as such would already be banned.

The Movement expressed its intent to continue the litigation before the UN HRC.

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).

UN HRC registers case Paksas v. Lithuania, 2155/2012

On 06/06/2012 the United Nations Human Rights Committee registered the case of my client Rolandas Paksas, impeached President of Lithuania, versus Lithuania. The President was impeached on 06/04/2004. On 25/05/2004 the Lithuanian Constitutional Court prohibited him to stand for elections for life. This lifelong prohibition also covers the right to be nominated Prime Minister or minister (he is twice former Prime Minister).

We partially won this case before the European Court of Human Rights on 06/01/2011, but the Strasbourg judges interpreted that the European Convention of Human Rights covers only the right to stand for parliamentary elections. Moreover, they did not find a violation of presumption of innocence and of the principle of impartiality during the national proceedings. Therefore, the former President took a decision to continue before the UN HRC.

ECtHR: fixing structutal problems annuls previous violations of human rights, Altunay, 42936/07

Mr Mehmet Altunay acquired land of 603 m2 for agricultural purposes in Turkey in 1999 (§ 3). However in 2007 the Turkish Court of Cassation annulled the title to property: the administration made a mistake in recognising him this property, since it was a State forest. He didn’t receive any compensation and filed an application to the European Court of Human Rights. In 2009 the Turkish Court of Cassation amended its case law in recognising the right to compensation.

Mr Altunay argued that the fact of violation shall be determined at the time the respective facts took place, i.e. as it was in 2007. The Strasbourg judges dismissed the action in explaining that fixing a structural problem annuls all previous violations of human rights (§ 33), and proposed him to apply for compensation at home. The ECtHR reasoning is very practical: too many applications.

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.

ECtHR refuses to apply ECJ judgment because it was unforeseeable, Ioviţoni, 57583/10

Romania introduced a pollution tax for the first registration of a car. In this manner, if you buy a second hand car in Romania (i.e. the car has already been registered in Romania), you do not pay any pollution tax. However when you bring a second hand car from another EU State (like Germany), you must pay the pollution tax. On 07/04/2011 the European Court of Justice found in case Tatu, C-402/09, that this was indirect trade discrimination against sellers from other EU States contrary to Article 110 TFEU (§ 33).

In 2010, previously to the ECJ judgment, commercial company Holtzver SRL and others tried to get the pollution tax back, but the Romanian Appellate Courts dismissed their actions (§§ 9, 13). The victims of trade discrimination could not file a claim directly to the ECJ. Therefore, the company wished to prove the breach of property rights before the European Court of Human Rights.

The ECtHR declared the applications inadmissible, since the ECJ judgment “had not been evident” (§ 49).

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”.

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.

EU General Court: a “private investor” may accept loss

I like finding patterns of “private investor” behavior in State aid cases. This mythical creature remains unpredictable, and therefore every example of her character is extremely interesting. The EU General Court adjudicated on 02/03/2012 that in certain circumstances a State acting as a “private investor” in State aid matters can accept loss, and annulled the respective provisions of the Commission’s Decision.

The Dutch Government decided to back the ING Bank during the global financial crisis in 2008. The Government subscribed to ING securities for € 10 billion, provided guarantees for ING liabilities amounting to € 11 billion, and took other measures (§ 8). The European Commission authorized the aid, however then the ING and the Netherlands amended the terms of repayment making it more favorable for the Bank.

The Commission insisted that the new repayment conditions meant a loss between € 1.5 and 1.9 billion for the State (§ 84). The EU General Court’s answer is that the Dutch Government behaved as a “private investor”, since (§ 125):

1. The new conditions allowed the Government to be repaid earlier.
2. When the amendment occurred it obtained a greater certainty of being repaid in a “satisfactory manner”.

ECHR: inadequate protection from natural disasters breaches property rights, Kolyadenko et al., 17423/05

There was a flood in August 2001 in the Vladivostok City, Russian coast of the Sea of Japan. The level of water reached 1.20 – 1.50 meters. The ECHR held the Russian Government responsible for the violation of the property rights, and of the right to home (Аrticle 8 of the Convention) due to the destruction of houses by the flood. Failure to maintain the channel of the Pionerskaya River in a proper state of repair by public authorities influenced the damage of property (§ 213).

The Government maintained that there was no evidence that the damage to the homes and possessions could have been avoided if the channel had been cleaned up, and that it was a natural disaster in the form of exceptionally heavy rain (§ 206). The European Court took a report of the Vladivostok Administration dated 04 07 2001 as a proof of State's guilt (§ 21).

EU General Court: a divestment of subsidiary does not automatically justify State aid, T-115/09, Electrolux v Commission

The EU General Court annulled the Decision 2009/484/EC of the European Commission authorizing France to provide State aid of € 31 million to Fagor France SA operating at the electrical household appliance market. Competitors Electrolux AB and Whirlpool Europe BV sued the Commission.

Both France and the Commission agreed that it is a restructuring aid, which is necessary to avoid undue distortions of competition in the sense of points 38-40 of the Guidelines on State aid for rescuing and restructuring firms in difficulty (§ 44). Fagor France SA divested its subsidiary Brandt Components to the Austrian group ATB for € 2-5 million, lost a part of the washing machine components market, and needed an aid. Brandt Components represented turnover of € 25-45 million or 2-5 % of Fagor France turnover in 2003, and employed 250-500 employees of 5-10 % of mother company’s workforce (§ 47).

The EU General Court held that the divestment does not justify the State aid, since:

1. It took place 2,5 years before the restructuring (§ 51).
2. The Commission herself mentioned once that the sale of Brandt Components did not have a “real effect” on the washing machine market (§ 53).
3. The fact that the sale was neither a write-off nor a closure does not mean that this divestment could be considered as a compensatory measure for the restructuring aid (§ 54).

The Commission’s Decision was annulled as a manifest error of assessment (§ 5).

UN HRC moves towards annulment of the citizenship requirement for property restitution, Klein, 1847/2008

No doubt, this is the most common kind of property litigations in Eastern Europe. On 08/12/2011 the UN Human Rights Committee found a violation of Article 26 (non-discrimination) of the Covenant of Civil and Political Rights by the Czech Republic, since they had forbade foreign citizens restitution of their property lost during the Soviet era. Miroslav and Eva Klain lost their Czechoslovak citizenship in 1978 due to the naturalisation in the USA. Their Czech property was confiscated but could be restituted on the condition of obtaining the Czech nationality.


The Czech Government argued that citizenship is a "reasonable and objective" criterion (§ 4.4) but the judges replied that it is "arbitrary and discriminatory", because individuals who are equally victims of prior State confiscations find themselves in completely different situations on the mere ground of the passport.

The case is also important, since the Committee has explained (§ 7.6) that the judicial deadline to file a communication is 5 years after the final internal instance, or 3 years after another mechanism of international settlement (where applicable).

ECHR lowers the private life protection standard, von Hannover v Germany (no.2), 40660/08

On 07/02/2012 Her Royal Highness Princess Caroline von Hannover, Hereditary Princess of Monaco, and her husband lost proceedings against paparazzi before the European Court of Human Rights. The issue was raised by publishing photos of the Princess from her private skiing holiday at the resort of St. Moritz.

The most interesting for me in this case is the lowering of the private life standard. If previously the paparazzi would have to prove that the published photos “contribute to a debate of general interest”. This time we see a new wording: “contribute, at least to some degree, to a debate of general interest” (§ 118). Do you see the difference? In practical terms it means that, since the respective German press article suggested that Prince Rainier of Monaco was ill but his daughter Princess Caroline did not care about him enough and went on holidays, it “contributed, at least to some degree, to a debate of general interest”. Thus, according to the ECHR, the photos were not published for the entertainment purposes.

The Princess pointed that she did not exercise any political or official function, and therefore her private life should enjoy protection (§ 85). This was an argument leading to success in her previous case von Hannover (no.1). However this time the judges regarded her and her husband as “public figures” (§ 120).

The Princess argued that such a judgment would make the paparazzi free to abuse the notion of “general interest”, but the judges replied that they do not really care about future possibilities. Basically, let’s think about future in the future – they wrote (§ 119).

From the legal strategy perspective, the paparazzi performed well in mobilizing 5 NGOs for filing their observations (§§ 90, 92-93), which with no doubt had an influence on the judges.

The real sense of VIAGRA, T-332/10

On 25/01/2012 Pfizer Inc. from New York owning trademark VIAGRA won the case against Polish company VIAGUARA SA who tried to register its name as a community trademark for drinks.

The EU General Court held that trademarks VIAGRA and VIAGUARA have "strong similarity" (§ 42). The Polish company argued that there is a huge difference between the pharmaceutical product for stimulation of erection (class 5) and drinks (classes 32 and 33) - they are in different classes, and Pfizer Inc. never tried to move to the class of drinks (§§ 44-45).

The judges replied that the "association" between the trademarks remains "possible", since VIAGRA has a huge recognition that extends the limits of the public interested in pharmaceutical erection (§ 52). Thus the real sense of VIAGRA may cover the class of drinks.