Additional Commission contribution to the Intergovernmental Conference on institutional reform - Reform of the Community courts

Additional Commission contribution to the Intergovernmental Conference on institutional reform

Reform of the Community courts

Introduction

The Commission considers that one of the foundations of the European Union is and remains the fact that it is a Community based on the rule of law. Litigants - the citizens of Europe - must be in a position to count on a court system that guarantees the fair, coherent and effective application of Community law.

In its Opinion to the Intergovernmental Conference of 26 January 2000 'Adapting the institutions to make a success of enlargement', the Commission announced that it would be preparing a specific contribution on the reform of the judicial system.

In order to prepare the ground for this reform, in May 1999 the Commission set up a working party consisting of former Members of the Court and the Court of First Instance and high-level experts with first-hand experience of the Community judiciary, whose job it was to find solutions that could be introduced at once and in the longer term. The Working Party's report was presented to the President of the Commission on 4 February last. The Commission draws on it for many of its proposals in this document.

I. The need for ambitious reform

The Court of Justice is an essential institution of the Union: its function is to 'ensure that in the interpretation and application of [the] Treaty the law is observed' (Article 220 of the EC Treaty). The Single European Act attached a Court of First Instance to the Court of Justice.

In an enlarged Union it will be necessary to safeguard the effectiveness of the Community's judicial system and the consistency of its case-law, factors which are essential if Community law is to be applied uniformly in an increasingly diverse Europe. Enlargement will entail an increase in the volume of litigation, not only in quantitative terms but also in qualitative terms as the courts of the new Member States will have to become familiar with Community law. Account will have to be taken of a variety of parameters, including the need to ensure effective judicial protection while at the same time maintaining the consistency of the case-law and compliance with it throughout the Union.

The statistics show that the Court and the CFI are having increasing difficulty in fulfilling their role in the fifteen-member Community.

This is essentially the result of the constant increase in the number of cases brought before the Community Courts (87% increase in requests for preliminary rulings in nine years [1], doubling of the number of cases before the CFI in seven years [2]) and is reflected in the undue delays before judgment is given [3] and the appreciable increase in the number of cases still to come to judgment. [4]

[1] 141 requests for preliminary rulings in 1990, 264 in 1998.

[2] 116 cases in 1992, 238 in 1998.

[3] 21 months on average for the Court, 30 months on average for the CFI.

[4] Court: 433 cases pending at end-1993, 748 cases pending at end-1998;

Only ten years after the CFI was set up, it has to be admitted that the present structures are no longer suitable and a thorough overhaul is necessary, otherwise there is a danger that the Community will no longer be truly based on the rule of law.

The time taken for cases to come to judgment in the Court of Justice and the Court of First Instance, according to statistics from the Courts themselves, reveals that the institution has reached the limits of its capacity. After enlargement, it will certainly not be in a position to cope with its expanding workload in a reasonable time-frame. The situation is preoccupying in a Community based on the rule of law, only ten years after the CFI was established and in the run-up to enlargement.

The Commission proposes that, first of all, the structure of the judiciary should be redefined, given that even now neither the Court nor the CFI can perform their roles satisfactorily. The composition and operation of the Court and the CFI should then be addressed in the light of the workload of the two courts. The Commission believes that the number of Judges should be determined first and foremost by the caseload.

II. Clarification and redistribution of the Courts' jurisdiction as part of a flexible design

The Commission believes that the present congestion in the Court of Justice and the Court of First Instance could be significantly reduced by adopting three sets of measures:

- clarification of the roles of the Court of Justice and national courts, so as to give the latter more scope in the handling of the preliminary ruling procedure;

- redistribution of powers between the Court of Justice and the Court of First Instance with regard to direct actions so as to limit the role of the Court of Justice, in its capacity as the Union's supreme judicial body, to questions which are regarded as fundamental to the Community legal order, and to give the Court of First Instance general jurisdiction in this field;

- reduction of the Court's and the CFI's volume of certain categories of special case.

a. Preliminary rulings

(i) Jurisdiction of the Court of Justice

The preliminary ruling procedure is undoubtedly the keystone of the Community's legal order. Forty years' experience have shown that it is the most effective means of securing the uniform application of Community law throughout the Union and that it is an exceptional factor for integration owing to the simple, direct dialogue which it establishes with national courts. The Commission considers that this regulating function, which is essential to the Community legal order, must therefore in principle be the exclusive responsibility of the Court of Justice.

The Working Party shares this opinion. But it proposes that the last sentence of Article 225(1) of the EC Treaty be deleted to give the CFI exceptional jurisdiction to give preliminary rulings in very specialised areas of Community law. [5] The Working Party considers that special categories of case, including preliminary questions in such areas, should be entrusted as a whole to the CFI and that the Court of Justice, as the supreme court of the Union, should become involved where appropriate only in appeals on points of law lodged by the Commission. [6]

[5] E.g. intellectual property (trade marks, patents and industrial designs, etc.).

[6] As provided by, for instance, Article 68(3) of the Treaty.

This proposal will have to be examined in connection with any specific changes to jurisdiction that will have to be provided for in certain categories of special case, such as intellectual property proceedings.

(ii) Clarification of the roles of the Court of Justice and the national courts

To preserve the effectiveness of the preliminary ruling procedure, it is essential that the Court of Justice should be able to concentrate on genuinely new questions and give its judgments considerably sooner. To this end, the Commission believes it is necessary to amend Article 234 (ex Article 177) of the Treaty in order to clarify the distribution of jurisdiction between the Court of Justice and national courts.

1. The first amendment proposed seeks to give national courts greater responsibility as courts of ordinary law in Community matters. At present, this function is not expressly laid down in the Treaty. It can only be inferred from reading Articles 234 and 240 together. It is therefore essential to correct this omission by spelling out the introductory provision in Article 234, clearly stating that it is for the national courts in the first place to apply Community law to the cases before them and that they may consult the Court of Justice when faced with a specific problem of interpretation.

2. In similar vein, it could be worthwhile amending the second paragraph of Article 234, so as to invite national courts other than those of final instance to specify why they have doubts as to the meaning of the rule of Community law applicable in the case before them and why they feel the need to put a question to the Court of Justice. This provision could be accompanied by the requisite corollary changes to the Rules of Procedure.

3. As part of this clarification exercise, it is necessary, lastly, to insert in Article 234 the rule established in case-law whereby, in cases of doubt as to the validity of a Community act, whereby all national courts must consult the Court of Justice since the latter has the monopoly of the review of Community legality.

The Commission does not feel it would be right to give flexibility to the obligation on courts of final instance to refer preliminary questions, currently laid down in the third paragraph of Article 234, requiring them to consult the Court of Justice only if the question were sufficiently important for Community law and if, after examination by the lower courts, there were still reasonable doubts as to the reply. The Commission considers that the advantages of such flexibility as far as the Court's workload is concerned are very slight [7] and that there are real dangers for the uniform application of Community law, especially with enlargement on the horizon. It therefore thinks it is essential to stick with the current wording of the third paragraph of Article 234. Naturally, the flexibility introduced by case-law [8] would continue to apply.

[7] Since three quarters of preliminary questions are referred by the lower courts.

[8] Cilfit [1982] ECR 3415.

The Commission further wonders whether it might be worth harmonising the procedure for preliminary rulings in matters of free movement of persons (Title IV) with the ordinary procedure.

See the Annex for the draft new wording of Article 234.

b. Direct actions: a new division of jurisdiction between the Court of Justice and the Court of First Instance

The Court of Justice currently rules on direct actions brought by the Member States and the institutions, while the Court of First Instance decides on actions brought by natural and legal persons. The Court of Justice has already pointed out the areas of overlap and unwieldy procedures that this division generates and has asked that direct actions in certain fields be dealt with exclusively by the Court of First Instance.

The Commission's opinion is that this approach should be extended to all direct actions in order to give the Court of First Instance general jurisdiction in this area and to retain for the Court of Justice only those questions that are essential for the proper working of the Community and which, as such, require it to intervene in its capacity as the Union's supreme court. These would be actions against Member States for failure to fulfil their obligations, interinstitutional actions, actions filed against legislative instruments of general scope or applying to certain fields such as fundamental rights and Article 309 of the Treaty, closer cooperation, EMU, the budget, Title IV of the EC Treaty and Title IV of the Treaty on European Union. [9]

[9] Requests for opinions under Article 300 (ex 228) of the EC Treaty and requests for settlements of disputes under Article 35 of the TEU would also be kept within the exclusive powers of the Court of Justice.

The transfer of a large proportion of the direct actions to the Court of First Instance will significantly relieve the workload of the Court of Justice only if it is accompanied by a change to the current system of appeals against rulings of the Court of First Instance. The Commission's view is that appeals should in future be subject to an initial filtering procedure by the Court of Justice, in accordance with modalities to be specified in the Protocol to the Court's Statute.

The change in the division of jurisdiction regarding direct actions between the Court of Justice and the Court of First Instance can be implemented under Article 225(2) of the Treaty, though the wording should be changed. The raison d'être of this provision, which authorises the Council to determine the actions for which the Court of First Instance has jurisdiction at the request of the Court of Justice, after consulting the Commission and Parliament, lay in the fact that it was decided at that time to "attach" a Court of First Instance to the Court of Justice [10] and allow the latter, when applicable, to delegate some of its powers to the former. The intention now is to redesign the judicial system in its entirety, by dividing jurisdiction in such a way as to make the Court of Justice the genuine supreme court of the Union and to give the Court of First Instance, which would acquire autonomous status, general powers as an ordinary court. Consequently, the instrument of secondary legislation to govern the new division of jurisdiction should be adopted via an ordinary legislative procedure, after consulting the Court of Justice and the European Parliament.

[10] As stated in Article 225(1).

The Commission considers that thought should be given, lastly, as suggested by the Working Party's report, to reforming the procedure for failure to fulfil obligations, notably in cases of failure to transpose directives. The Working Party's suggestion proceeds from the observation that the bulk of the actions brought in the Court of Justice under Article 226 of the Treaty relate to such matters, and are rarely seriously contested by the Member States. It might be possible, taking Article 88 of the ECSC Treaty as a model, to have such failures recorded by a Commission Decision, against which an action for annulment could then be brought in the Court of Justice.

The question deserves thorough consideration in the light of all the factors at play, and in particular the fact that:

- such a high level of cases of failure to fulfil obligations which are not really contested, after pre-litigation proceedings, illustrates the difficulties of ensuring that Community law is respected even in simple cases;

- the administrative burden (dossier management, translations etc.) which such actions generate for the Court of Justice is disproportionate, in spite of all the procedural simplifications which may well be put in place to allow rapid settlement of this type of case;

- the Community courts, which will have to face the inevitable growth in litigation after the next enlargement, will have to concentrate on real disputes. A start could be made by relieving it, for example, of failures to transpose directives within the specified time limits. [11]

[11] NB: in 1998 actions for failure to fulfil obligations accounted for 80% of the direct actions brought before the Court of Justice (118 actions for failure to fulfil obligations out of a total of 147 direct actions).

c. Categories of special cases

(i) The extension of the application of Community law to highly specialised areas such as trade marks, designs and models, the protection of plant varieties and, in the near future, patents prompts the Working Party to conclude that in view of the large number of cases that these matters seem to generate, [12] they should not be heard by the CFI but by autonomous specialised tribunals. The CFI is already under severe pressure and would not be able to contend with a triple increase in its workload resulting from the extension of its jurisdiction to cover all direct actions as proposed above, enlargement and the influx of a mass of specialised cases.

[12] In the area of trade marks the number of cases which could be brought before the CFI is estimated at 400 a year.

In order to offer the CFI immediate relief, the Working Party proposes that it be relieved of cases relating to trade marks and of the other specific category of cases, namely those relating to staff of the Community institutions.

- For trade marks, this would mean merging the Boards of Appeal of the Alicante Office into a single body which would be given court status and would hear in first instance actions brought against decisions of the of the Alicante Office.

- On matters relating to Community staff, it is suggested that the proposal made both by Parliament and by the Court of Justice be taken up and an "Interinstitutional Appeals Tribunal" be established whose role would be to seek reconciliation between the parties before giving a decision and which would also have the status of an independent tribunal. [13]

[13] This would mean deleting Article 236 (formerly 179) of the Treaty and amending the relevant provisions of the Staff Regulations.

Decisions given by these tribunals might be appealable, on points of law only, at the discretion of the parties to the action.

(ii) The Commission believes that a solution should be found to the whole range of special litigation, as the volume of it will become a crushing burden on the Community courts.

A number of solutions can be envisaged:

(1) An increase in the number of judges at the CFI.

Article 225(2) of the Treaty empowers the Council to determine the composition of the CFI and hence to increase the number of judges beyond that of the number of Member States. The Commission feels that it should be seen whether such a decision might not suffice to contain the CFI's workload, to begin with at least for trade mark cases. [14]

[14] A request along these lines from the Court is currently before the Council.

(2) A second solution might consist, given the special nature of these categories of litigation, of relieving the CFI of its jurisdiction at first instance in favour of autonomous specialised tribunals, as suggested by the Working Party.

If it is decided to set up such tribunals, appeals against their decisions should be confined to points of law and would first have to be filtered as mentioned above.

The Working Party suggests that the CFI [15] should hear such appeals for the following reasons:

[15] Which would then change its name.

- given its present jurisdiction, the CFI would be in a position to deal with the decisions given by these new tribunals;

- the new division of jurisdiction between the Court of Justice and the Court of First Instance is intended to relieve the Court of the need to hear a large number of specialised actions. The volume of litigation relating to intellectual property suggests that the number of cases will continue to be high despite the filtering procedure;

- the Court of Justice would act as governor of Community case-law in a more appropriate manner by hearing appeals in the interest of the law presented, without conditions as to time limits, by the Commission in its capacity as guardian of the common interest.

The Commission is more inclined to feel that the Court should in principle retain jurisdiction to hear appeals for the time being. It suggests, however, that a provision be inserted in the Treaty which will make it possible, when this becomes necessary, to transfer all litigation in these categories to autonomous specialised tribunals, which would then give judgment both in first instance and in cassation.

(3) It should be noted that if this last solution is adopted the Court of Justice will retain its jurisdiction to give preliminary rulings in litigation concerning alleged patent infringements in the national courts.

Regarding intellectual property rights under Community law, particularly with the prospect of the Community patent, consideration should be given to establishing a specialised tribunal with jurisdiction in cases concerning patent validity and infringements, in order to secure legal certainty regarding unitary documents having effect throughout the Community and to relieving the Court of Justice and the CFI of all this highly specialised litigation.

(iii) If jurisdiction to hear appeals is conferred on an autonomous specialised tribunal, the Commission believes there should still be the possibility of an appeal in the interests of the law to the Court of Justice.

III. Membership, operation and procedures of the Community courts

a. Membership and operation

If the above guidelines were followed, the Court of Justice would henceforth exercise its jurisdiction not only as a court of first and final instance for certain direct actions but would also govern the case-law by its rulings on preliminary questions and on appeals or actions in the interests of the law. [16] The Court of First Instance, which would acquire autonomous status, would have its jurisdiction extended to cover all direct actions.

[16] See footnote 9.

The number of Judges at the Court of First Instance will have to be decided in the light of its new areas of jurisdiction and so as to ensure its effectiveness. The number of Judges should not depend on the number of Member States.

In the case of the Court of Justice, the Working Party acknowledged that the various legal orders had to be represented and that the Community courts had to work effectively. It has attempted to balance the equation by proposing that the present rule whereby there is one Judge per Member State should be maintained, subject to a strict limit on the number of Members in the plenary session (a maximum of 13 Judges) and the necessary imposition of a hierarchy led by the President of the Court, assisted by the Presidents of the Chambers. [17]

[17] A similar arrangement could be devised for the CFI to ensure that its case-law remains consistent.

An alternative way of ensuring the effectiveness and consistency of case-law would be to limit the number of Judges at the Court of Justice to 13. An increase in the Members of the Court would entail an increase in its Chambers or other formations. Such a development could jeopardise the proper performance of the Court's tasks, however.

Other alternatives could be envisaged. The Conference should conduct a general examination of this issue. In any case it will be important to ensure that the Court's judgements win the degree of acceptability which is needed for the maintenance of the Court's authority. Lastly, account should be taken of the changes which the Conference decides to make to the structure of the Community institutions as a whole.

The Commission supports the Working Party's proposal that the number of Advocates-General at the Court should be reduced. Consideration should also be given to the Working Party's suggestions on such matters as Members' term of office and the way in which Members are appointed by the Council.

Regarding the appointment of Members of the Court of Justice and the CFI, the Commission feels it would be desirable to examine the possibility for a system to be established at the Council to secure the proper degree of legal excellence, possibly going so far as to have them selected from lists of several names put forward by the Member States.

The Commission proposes that appointments of the members of the Court of Justice and the CFI be made by qualified majority vote.

b. The Rules of Procedure of the two Community courts

The Commission takes the view that the Rules of Procedure of both the Court of Justice and the CFI should be drawn up in the same way as codes/laws of procedure are adopted in the Member States. It suggests that the said Rules of Procedure should be adopted by the Council acting by a qualified majority, in response to an initiative from the Commission (having consulted the Court of Justice) and from the Court of Justice (having consulted the Commission).

The second paragraph of Article 245 should be deleted and a clear distinction should be made between those provisions which are to be kept in the Statute of the Court of Justice and those which are to remain in the Rules of Procedure.

By way of conclusion, the Commission proposes that the Conference:

- clarify the role of the Court of Justice and the national courts in order to give the latter more extensive responsibilities in the handling of preliminary rulings;

- redistribute jurisdiction between the Court of Justice and the Court of First Instance in relation to direct actions, so as to confine the role of the Court of Justice to questions considered essential to the Community legal order as the Union's supreme court, and give the CFI general jurisdiction in this respect;

- adjust the roles of the Court of Justice and the CFI in respect of certain special categories of cases;

- provide that Judges will be appointed by the Council, acting by a qualified majority, with a system for verifying nominees' legal abilities;

- consider the question of reforming the procedures for failure to discharge obligations;

- determine the membership of the Court of Justice and the CFI in the light of their caseload.

Current text of EC Treaty

ARTICLE 234

The Court of Justice shall have jurisdiction to give preliminary rulings concerning:

(a) the interpretation of this Treaty;

(b) the validity and interpretation of acts of the institutions of the Community and of the ECB;

(c) the interpretation of the statutes of bodies established by an act of the Council, where those statutes so provide.

Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon.

Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court of Justice. // Proposed new wording

ARTICLE 234

1. Subject to the provisions of this Article, the courts and tribunals of the Member States shall rule on the questions of Community law which they encounter in exercise of their national jurisdiction.

2. The Court of Justice shall have jurisdiction to give preliminary rulings concerning:

(a) the interpretation of this Treaty;

(b) the validity and interpretation of acts of the institutions of the Community and of the ECB;

(c) the interpretation of the statutes of bodies established by an act of the Council, where those statutes so provide.

3. Where such a question is raised before any national court or tribunal, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give a judgement, request the Court of Justice to give a ruling thereon. In that event, it shall specify why the validity or interpretation of the rule of Community law raises difficulties in the case before it.

4. Where any such question is raised in a case pending before a national court or tribunal against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court of Justice.

5. A national court or tribunal must consult the Court of Justice where it proposes not to apply an act of Community law on the grounds that the latter is invalid.