Copyright c All Rights Reserved.
By: Nicholas G. Karambelas, Esq.
[PUBLISHED IN DECEMBER 2003 ISSUE OF WASHINGTON LAWYER MAGAZINE]

[Vol. 18 No. 4]
The European Union In Perspective
Even though the European Union (EU) was established almost fifty years ago, most American lawyers have not had to deal with issues arising in connection with the European Union. Except for lawyers representing or counseling substantial multi-national corporations, neither the EU nor its court system have affected most Americans in any appreciable way. (END1) However, as commerce and communications have become increasingly global and as the EU grows to twenty five Member States by May 2004, American lawyers will find themselves confronting business law issues involving the EU rather than simply the laws of the Member States of the EU. (END2)
The EU is a unique organization. It is best described as a supranational organization. While it has some of the attributes of a federal system it is not a federal system because the Member States retain national sovereignty and remain actors within the international system of nations. While the EU has certain attributes of a constitutional system it is founded on a system of treaties rather than a written constitution. The EU treaties form in effect a common market system which is based on the free movement of peoples, free movement of goods, free movement of services and free movement of capital. Peoples, goods, services and capital move freely between and among Member States as if the national borders between and among the Member States do not exist. In this respect, the EU is similar to the United States in that state borders do not impede the free movement of peoples, goods, services and capital between and among the states. As of January, 2000, eleven Member States have discarded their national currencies and adopted a common currency called the Euro. Other Member States are expected to adopt the Euro over the next several years. (END3)
The headquarters or “capital” of the EU is located in Brussels, Belgium. The EU is composed of five primary institutions. The European Parliament (EP) is composed of representatives elected by the people of the Member States of the EU. The representatives in the EP do not sit according to Member State but rather according to party affiliation, i.e., the Greek socialists and French socialists sit together as do the German conservatives and Italian conservatives. In this respect the EP is similar to the U.S. Congress. The Council of the European Union is composed of representatives appointed by the governments of each Member State. The European Commission is the executive organ of the EU and primary law making organ of the EU. The Court of Auditors develops and manages the budget of the EU. The European Court of Justice (ECJ) and the Court of First Instance (CFI) compose the legal organs of the EU and are the subject of this article. (END4)

Distinguishing the ECJ from Other International Courts
The term “international courts” refers to courts that are set up by a treaty concluded by nation-states. The subject matter jurisdiction of international courts and the legal force of court judgments and the binding effect of court judgments on national courts are specified by the signatory nation-states in a treaty. The ECJ is an international court and is often confused with the following international courts.
The International Court of Justice (ICJ) was established by the United Nations in 1947. The United Nations Charter provides, inter alia, that the ICJ is the principal judicial organ of the United Nations and that all members of the United Nations are parties to the Statute of the ICJ. (END5) In substance the ICJ is a continuation of the Permanent Court of International Justice (also referred to as the World Court) which was established by the League of Nations in 1921. The ICJ has 15 judges, each of whom is elected to the ICJ by the General Assembly and the Security Council of the United Nations. Five judges are elected every 3 years so that the terms are staggered. The ICJ sits in the Hague, Netherlands. The ICJ hears disputes only between nation-states as a matter of original jurisdiction and does not hear appeals from national courts. Neither individuals nor legal entities have any recourse to the ICJ. The ICJ does not have compulsory jurisdiction. ICJ can only hear cases that the nation-states have agreed to submit to the ICJ. Under certain circumstances, the ICJ may hear unilateral cases, i.e., cases submitted by one nation-state in which the opposing nation-state does not consent to the submission of the case. The ICJ may also render advisory opinions when requested by an organ of the United Nations. The ICJ has no organic or procedural connection to any other international court. As a practical matter, the ICJ has no enforcement authority and relies on the parties to voluntarily adhere to the judgments.

The European Court of Human Rights (ECHR) is an organ of the Council of Europe (COE). COE was established shortly after the Second World War as an inter-governmental cooperative organization to essentially assure that the human rights abuses and ravages of war of the Second World War are not repeated. COE is composed of 41 European states. The COE promulgated the Convention for the Protection of Human Rights and Fundamental Freedoms (referred to as the Convention) and established the ECHR as the judicial organ to hear cases asserted under the Convention. The Convention has been referred to as an international bill of rights. The ECHR is composed of a judge from each member nation of the COE and divided into sections for hearing specific cases. The ECHR sits in Strasbourg, France. Unlike the ICJ, the ECHR has compulsory jurisdiction over its member states. Individuals and legal entities of any nationality as well as nation-states may assert cause of action in the ECHR As a condition precedent to asserting a cause of action, an individual or entity must exhaust its domestic remedies. The ECHR can award only money judgments and has no equity jurisdiction. The ECHR has no enforcement authority and relies on member states to observe their COE treaty obligation to be bound by the judgments of the ECHR. If a member state refuses to comply with a judgment of the ECHR the matter is referred to the Council of Ministers of COE. Ultimately, a member state can be expelled from COE for refusing to comply with an ECHR judgment. The ECHR has no organic or procedural connection to any other international court.
The International Criminal Court (ICC) was established by the United Nations and is governed by a Statute similar to the ICJ Statute in 2002. ICC has jurisdiction only over persons from those UN member states that have signed the Statute. The ICC hears cases involving serious crimes of concern to the international community as a whole. Such crimes include genocide and war crimes. The ICC hears cases that are referred to by the UN Security Council or the Prosecutor appointed under the Statute and only if signatory nation state in question refuses or is unwilling to prosecute the alleged crimes. The ICC can only hear cases where (i) the geographical area in which the crime is alleged to have occurred is within the territory of a signatory nation state or (ii) the person alleged to have committed the crime is a national of a signatory nation state

Establishment and Purpose of the ECJ and the CFI
The European Court of Justice (ECJ) was established n 1951 as to adjudicate controversies arising within and among members of the European Coal and Steel Community (ECSC). In 1957, after the Treaties of Rome established the European Economic Community (EEC) and European Atomic Energy Community (EURATOM), the ECJ is vested with the authority and jurisdiction to adjudicate and rule on matters involving all 3 international communities. The fundamental authority of the ECJ derives from the Treaty Establishing the European Community (EC Treaty).

The Court of First Instance (CFI) was established in 1989 to relieve the ECJ from an increasing caseload. (END6) The CFI serves as a court of original jurisdiction for certain categories of cases for which the ECJ had original jurisdiction before the CFI was established. The ECJ has appellate jurisdiction in those cases over which the CFI has original jurisdiction.
The fundamental purpose of the ECJ is to assure that the EC Treaty is interpreted and applied in a manner consistent with the provisions of the EC Treaty. (END7) For this reason the ECJ has been described as a "constitutional court," which performs a function similar to the function performed by the U.S. Supreme Court. However, unlike the U.S. Supreme Court, the ECJ does not hear appeals from the decision of the courts of Member States.

Supremacy of EU Law
EU law derives from the following sources --" primary" and "secondary" legislation. "Primary legislation" means treaties and their subsequent amendments. (END8) "Secondary legislation" means regulations, directives and decisions that are promulgated by the various EU organs. Regulations and directives are immediately binding on the Member States so that no act by the national legislature of a Member State is necessary for a regulation or directive to be binding and for it to be binding and be directly applicable to and within the Member States. This is because the Member States have agreed by treaty to concede a measure of national sovereignty to the EU on matters covered by the treaties.

The more difficult issue is the relationship between EU law and the law of Member States where they conflict with one another and the role of the ECJ with respect to that conflict. The EU lacks a written constitution like the United States Constitution. (END9) The EC Treaty does not contain a supremacy clause similar to the supremacy clause in the United States Constitution. (END10) Nevertheless, through its case law, the ECJ has developed its power and influence with the aim of promoting uniformity in EU law. The ECJ has developed the following 2 Principles to maintain uniformity within EC law:

Principle of Direct Effect
This Principle holds that certain EU law provisions either confer rights or impose obligations on individuals that national courts must recognize and enforce. The ECJ established the Principle in case law when it ruled "any unconditionally worded treaty provision, being 'self sufficient and legally complete,' did not require further intervention at the national or Community levels and therefore applied directly to individuals.", (Case 26/62 Van Gend en Loos v. Nederlandse Tariefcommissie, 1963 ECR 3).

Principle of Primacy

The ECJ developed the Principle of Primacy to implement the Principle of Direct Effect. This Principle holds that EU law supersedes the national law of the Member States. The ECJ ruled that in creating a community like the EU, with legitimate power granted by willing limitation and transfer of sovereignty from the Member States to the community, the Member States created a body of law binding upon "both their nationals and themselves." If national legislation could prevail over EU law, the fundamental legal basis of the EU would be undermined, (Case 6/64 Costa v. ENEL, 1964 ECR 585). The ECJ further ruled that the Member States must repeal any laws that conflict with EU law and that the courts of the Member States must apply EU law as a whole, (Case 92/78 Simmenthal S.P.A. v. Commission, 1979 ECR 777).

The Jurisdiction of the ECJ
The ECJ has exclusive original subject matter jurisdiction in the following two instances:

1. Any case asserted by the European Commission (the executive organ of the EU) against any Member State which the European Commission alleges has failed to fulfill an obligation under the EC Treaty. (END11)
2. Any case asserted by a Member State against another Member State for the failure of a Member State to fulfill an obligation under the EC Treaty. The case must first be brought before the Commission which may render an opinion in the case. If the Commission either does not render an opinion within 3 months, the ECJ may hear the case without a Commission opinion. (END12)

The ECJ is empowered to levy money penalties on any Member State that fails to comply with a judgment of the ECJ. (END13) The ECJ has exclusive appellate jurisdiction over cases appealed from the CFI. The ECJ can only review matters of law and not matters of fact. (END14)

Preliminary Rulings by the ECJ
The ECJ performs another function that is not strictly a matter of jurisdiction. The ECJ may issue "preliminary rulings" on questions concerning EU law that arise in the national courts of the Member States. (END15) If the highest court of a Member State has before it a case involving a question of EU law, that court must seek a preliminary ruling on the question from the ECJ unless it can invoke either the doctrine of acte eclaire or acte clair. (END16) Under acte eclaire, the national court can avoid seeking a preliminary ruling on the grounds that the issue has already been satisfactorily adjudicated. Under acte clair, the national court can avoid seeking a preliminary ruling on the grounds that the resolution of the issue is self evident as long as the resolution is clear to the courts of other Member States and to the ECJ. (END17) Lower courts of a Member State may but are not obligated to seek “authoritative guidance” from the ECJ in the form of a preliminary ruling.

The ECJ issues preliminary rulings in cases involving (i) interpretation of the EC Treaty, (ii) the validity and interpretation of acts of any EU organ (iii) the interpretation of the statutes of any bodies established by the Council of Ministers where such statutes provide for preliminary rulings. Preliminary rulings serve the following purposes:

1. they ensure that national courts make legally "correct" decisions with respect to EU law,
2. they promote the uniform interpretation and application of EU law in the Member States, and
3. they provide valuable access to the ECJ for private individuals who cannot directly appeal to the Court, either for lack of legal standing or lack of funding.

After it receives a request for a preliminary ruling, the ECJ assesses the arguments presented, the relevant case law and treaty provisions. The ECJ then issues a ruling which is binding on the parties and which the national court must apply. For an efficient and effective performance of its legal and economic functions the EU relies heavily on the preliminary ruling procedure. Some commentators assert that the preliminary ruling procedure effectively vests in the ECJ the power of judicial review power over national courts of Member States so that the ECJ is rapidly evolving into an actual supreme court for the EU. (END18)

Jurisdiction of the CFI
Since the CFI was established in 1989, it has taken original jurisdiction of cases arising in matters in which the ECJ formerly had jurisdiction. The CFI has original jurisdiction in cases involving the following matters:

1. Reviewing the legality of acts adopted jointly by the European Parliament and the Council of Ministers, any acts of the Council of Ministers, any acts of the European Commission and any act of the European Parliament intended to legally affect third parties, (END19)
2. In a case asserted by a Member State or a EU organ where the EC Treaty is violated and none of the European Commission, European Parliament or Council of Ministers take action against such violation, (END20)
3. Actions by individuals and legal entities to contest decisions or regulations that affect them personally and actions by individuals and legal entities for the failure of an EU organ to address to any such individual or legal entity a binding act,
4. Disputes between the EU and its civil servants, (END21)
5. Actions by individuals or legal entities for damages from acts committed by the EU or its civil servants, (END22) and
6. Actions by individuals and legal entities for judgment pursuant to an arbitration clause contained in a contract with the EU. (END23)

Operation and Procedure of the ECJ and CFI
The ECJ and CFI are each composed of 15 judges and 8 advocates-general appointed by the Member States. (END24) Each of them serves a 6-year term and can be re-appointed. The judges elect a President from among them for a 3-year term whose duties are to manage the business of the court and preside over plenary sessions of the ECJ. The judges generally sit in chambers of 3, 5 or 7 judges. A Member State or an EU organ can request that the ECJ sit in a plenary session of at least 9 judges in any action to which either of them is a party. The duties of the advocates general are to provide the ECJ and CFI with a reasoned and impartial analysis of the cases so as to assist them in deciding cases. The ECJ and CFI sit in Luxembourg.

The procedure in the ECJ and CFI consists of a written and an oral procedure. A direct action is commenced by a written application that is filed with the registrar and service on the parties. Any party may serve a defense, the asserting party can reply and the defending party can serve a rejoinder. Where a national court has made a referral for a preliminary ruling, the national court files a written request with the ECJ and serves the parties to the case in the national court, the Commission, each Member State and the Council.
The presentation of the case has 3 stages. In the first stage the advocate general reports its preliminary view of the case, the ECJ or CFI decides whether to hear the case in a plenary session or in chambers and sets a date for a hearing. In the second stage, the case is heard in open session and presented by lawyers admitted to practice in any Member State. Parties may present experts and witnesses but can only address the ECJ or CFI and cannot examine or cross examine. The ECJ or CFI can examine any person before it. In the third stage, the advocate general submits a comprehensive analysis of the case and a proposed judgment. The ECJ and CFI deliberate in secret and issues its judgment publically. Cases from CFI are appealed to the ECJ. There is no appeal from a judgment of the ECJ. A party may request that ECJ revise its judgment based on a material fact that was not known at the time of judgment.

ENDNOTES

1. The EU has been known by several names since it was created. The name changes have followed the evolution of the founding documents of the EU. The European Coal and Steel Community was the first EU organization that was formed. In 1958, European Economic Community (EEC) and the European Atomic Energy Community (EAEC) were formed and all 3 were joined together as the European Communities. They were also called the Common Market. Because the EEC came to predominate over the other 2 organizations, they came to be referred to as simply the EEC. In 1993, the Treaty on European Union (TEU) designated the name as the European Community or EC. However, certain organs such as the Council refer to themselves as the Council of the European Union while the Commission continues to be referred to as the Commission of the European Communities. For the purposes of this article, all organs are referred to as the EU.
2. The current Member States of the EU are Germany, France, Italy, United Kingdom, Spain, Belgium, Greece, Netherlands, Portugal, Austria, Sweden, Denmark, Ireland, Finland and Luxembourg. By May, 2004 the EU shall expand to include Cyprus, Malta, Hungary, Poland, Estonia, Latvia, Lithuania, Czech Republic, Slovakia and Slovenia. In 2007, Bulgaria and Romania will join as Member States.
3. See generally Gillingham, European Integration 1950-200: Superstate or New Market Economy (Cambridge University Press, 2003).
4. For a description of each institution see Raworth, Philip, Introduction to the Legal System of the European Union (Oceana Publications, Inc., 2001) Chapter III
5. UN Charter, Art.92
6. Council Decision 88/591
7. EC Treaty Art. 220
8. The subsequent treaties are the (I) Single European Act (1986) (ii) Treaty of Maastricht (1992) (iii) Treaty of Amsterdam (1997) and (iv) Treaty of Nice.
9. Such a constitution has been drafted and submitted to the Member States for consideration in June, 2003. It has been deemed controversial and its prospect for enactment are uncertain.
10. U.S. Const. Art.IV cl.2
11. EC Treaty Art. 226
12. EC Treaty Art. 227
13. EC Treaty Art. 228
14. EC Treaty Art. 225(1)
15. EC Treaty, Art.234
16. EC Treaty, Art.234
17. Srl CILFIT et al v. Ministry of Health, 283/81, [1982] ECR 3415
18. See generally Craig and De Burca, EU Law: Text, Cases and Materials (3rd Ed Oxford, 2003) Chapter 11
19. EC Treaty Art. 230
20. EC Treaty Art. 232
21. EC Treaty art. 236
22. EC Treaty Art. 235
23. EC Treaty Art. 238
24. EC Treaty, Art. 221-223