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The Principle of Loyalty in EU Law$

Marcus Klamert

Print publication date: 2014

Print ISBN-13: 9780199683123

Published to Oxford Scholarship Online: April 2014

DOI: 10.1093/acprof:oso/9780199683123.001.0001

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Deconstructing Loyalty

Deconstructing Loyalty

Chapter:
(p.252) 13 Deconstructing Loyalty
Source:
The Principle of Loyalty in EU Law
Author(s):

Marcus Klamert

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199683123.003.0013

Abstract and Keywords

This Chapter discusses the loyalty-based case law of the Court from a methodological perspective. It starts by exploring the key methods of interpretation employed by the Court, such as effet utile in particular. Then, arguments made in defence of alleged judicial activism of the Court, such as ‘majoritarian activism’, the incomplete nature of EU law, and the concept of tolerance of error (Fehlerkalkül) are discussed. This is followed by an examination of objective criteria for assessing legal developments by the Court, such as gap-filling and principle-based reasoning. Moreover, this Chapter discusses the relation between loyalty and the principles of effectiveness and effet utile, illustrated by the case law on direct effect, exclusive competence, and state liability. Finally, the autopoiesis in the Court’s reasoning is probed by the examples of state liability and the Pupino case.

Keywords:   judicial activism, effet utile, autopoiesis, effectiveness, state liability, Pupino case, Fehlerkalkül, gap-filling, direct effect, principle-based reasoning

1. Introduction

This is not the place to discuss the legal reasoning of the Court of Justice conclusively.1 Furthermore, no overall judgement will be cast on whether the Court is legitimate in its activities.2 However, it is necessary to provide some background for the ensuing examination of the role of loyalty in the reasoning of the Court. If we wish to analyse the Court’s use of loyalty, I would submit that it is essential to know exactly what we are discussing, and what the test is that we apply to assess the reasoning of the Court in this respect.3 This, it is submitted, is especially apposite since this study is about a principle, which, as I have shown and will continue to demonstrate, is at the very heart of this legal reasoning. In the following, thus, I will not assess the case law regarding its substantive legitimacy, but rather from the methodological perspective, looking at how the Court, based on loyalty, proceeded to construct the Union law regime as it stands today.

In Chapter 3, I have argued that loyalty is strangely underrepresented in the ‘grand’ narratives on the constitutionalization of Union law. It is suggested here that the lack of transparency and methodological rigour displayed by the Court in the use of the principles of loyalty, effet utile, and effectiveness may have contributed to this. In the following, I will thus more closely examine the relation between these three principles. The fact that there is a relation between these principles does not dispose of the need for differentiation, for reasons of methodological clarity and predictability. One might question whether this is not futile legal nitpicking. After all, supremacy and direct effect are settled matters and there appears to be little reason dissecting the Court’s judgments on them some forty years after their introduction. However, it is arguably crucial to comprehend the way legal concepts such as loyalty, effet utile, and effectiveness have been used. This is because loyalty has been a key, recurring argument in the constitutionalizing jurisprudence of the Court and cases such as ERTA continue to be at the centre of a regime that is ambiguous to this day. Moreover, loyalty and effectiveness, as I have shown, are invoked today rather more than less in case law.4

(p.253) 2. Evaluation Criteria for the Reasoning of the Court

2.1 Introduction

When the Treaty provides, now in Article 19 TEU, that the Court ‘shall ensure that in the interpretation and application of the Treaties the law is observed’, it is contested what this means precisely. The right and the duty of the Court to interpret Union law, most importantly by way of preliminary rulings proceedings, is beyond doubt, as is its competence to resolve conflicts between the Union and its Member States.5 There also seems to be agreement that the task of the Court comprises both the concretization of the law and its development.6 However, borders are blurred between the interpretation of the law, its concretization, the development of the law, and judicial activism, when the latter can be understood as a more charged synonym for the concept of judicially developing the law.7 In other words, it is difficult to determine the point where permissible development of the law becomes undesired judicial activism.8 The Court itself does not distinguish methodologically between the interpretation and the development of Union law, whether by disclosing which approach it adopts in a specific case, or by following a certain method in performing either task.9

It has thus been argued that the inherence argument in Francovich represented the ‘mere interpretation of law’.10 As I have argued earlier and will continue to show in this Chapter, Francovich in particular is a very difficult case to support such a statement.11 At the same time, it has been argued that there is a difference between interpretation on the one hand and legislation or lawmaking on the other, especially in the Anglo-American world.12 In this view, courts are confined to identifying the law that has already been (p.254) constituted before.13 The case that has been referred to in illustration of this point is Pupino, where the Court held that the duty of consistent interpretation with regard to framework decisions should not entail the duty to construe national law contra legem.14 With this, the ECJ without doubt alluded to the demarcation between justified legal development and illegitimate legal development that exists in many legal systems. However, it is difficult to see how this should reflect on the case law of the ECJ, when, as mentioned, it does not make such a distinction itself.15

In the following section, I will briefly explore several arguments that have been made in the context of justifying judicial activism by the Court. As we shall see, all of these arguments carry some flaw or have problematic ‘side-effects’. After this, I will more closely examine which methodological standards could be applied to assessing judicial activism/legal development by the Court. I will start, however, by briefly discussing the methodology of the Court and the role of effet utile in particular.

2.2 Interpretation and Telos

While the methods of interpretation employed by the Court are largely very similar to those used by national courts,16 there are important differences. Thus, the travaux préparatoires to the original Treaties were never used as a guide to interpretation, since they had never been published.17 In general, the Court of Justice places comparably little emphasis on the intentions of the legislator when interpreting the Treaties or secondary law.18 Moreover, in comparison to courts in other legal regimes, the European Court of Justice places more emphasis on a systematic and teleological interpretation.19 Connected to the latter approach to interpretation is the concept of effet utile. The principle of effet utile and its prominent role in the development of Union law, such as with direct effect and state liability, has come to epitomize the mentioned preference of the Court for an (objective) purposive approach to construction.20 The relation between (p.255) effet utile and loyalty has also given rise to criticism for alleged judicial activism targeting the invocation of the loyalty principle as an integrationist rationale.21

Effet utile refers to the Court’s practice of adopting an understanding of a specific provision of Union law, which ensures either that it has any effect at all or that it is most effective.22 It thus shows a willingness ‘to sidestep the presumptive rule of interpretation typical in international law, that treaties must be interpreted in a manner that minimizes encroachment on state sovereignty’.23 This is what an eminent former judge of the Court of Justice had to say in this context:

The Court is not guided so much by what the primary legislator has laid down as by what, in the Court’s opinion, he should have laid down. This method of interpretation comes very close to the ‘rule of reason’ in cases when no law is available…the only difference being that in the present context the Court finds a law which it can apply and uses a rule of reason only as a method of interpreting it.24

Potacs has distinguished effet utile in a narrow sense, which aims at ensuring a minimal effect of Union law, from effet utile in a broad sense, seeking to realize the maximum effect of Union law.25 In other words, we can distinguish between an approach, which construes Union law so as not to render it futile or a paradox on the one hand, and the reliance on effet utile by the Court to interpret Union rules so that they apply to their fullest effect on the other.26 A rare example of effet utile in the narrow sense can be observed in the Commission’s argument in von Colson, mentioned earlier, where it was submitted that the sanctions prescribed by the pertinent directive should not be of such a nature as to make the prohibition of discrimination at issue in von Colson ‘derisory’.27

All this, however, shows in my opinion that effet utile must be understood as an interpretatory instrument. It is meant to apply to specific Treaty provisions and to afford them a certain meaning. As I will explain later, this is a fundamentally different approach than with effectiveness and loyalty.

2.3 Defences of Judicial Activism: Majoritarianism, loi cadre, and Fehlerkalkül

The first point to recall is the fact that the Court in many cases has displayed the opposite to judicial activism, by interpreting Treaty provisions narrowly, or deferring to prerogatives (p.256) of the Member State.28 Secondly, as has been pointed out by Craig, criticism of judicial activism levelled at the Court is often not coherent both from the perspective of the literature and from the perspective of national courts, which are themselves habitually engaging in this practice.29 Moreover, it has been pointed out that the Member States have, through Treaty revisions, either explicitly or implicitly approved many Court decisions.30 However, this last argument is slightly tainted when considering the opposition from the public and partly also in the literature to the envisaged ‘codification’ of the supremacy principle in the Constitutional Treaty and its subsequent omission from the body of the Lisbon Treaty.31

In a more general mould, Poiares Maduro has argued that judicial activism practised by the Court should be understood as ‘majoritarian activism’, which would further ‘the rights and policies of the larger European political community’ against the self-interest of the individual Member States.32 This has been deemed palatable especially in the case law on ex Article 28 EC concerning national rules on the composition or presentation of products traditional in the respective Member States.33 In such cases the Court, it has been submitted, looked at whether the national preference was shared by other Member States and if this was not the case, it was struck down as a measure equivalent to a quantitative restriction.34 While this explanation may present an apposite view on common market case law, I would submit that it is less convincing for other areas of Union law. Only with regard to the common market objective, does it make sense to ‘enforce’ the preferences of the majority of the Member States, since they are unlikely to tolerate preferences of a minority of Member States mounting an obstacle to inter-Union trade.35 In contrast, in the cases establishing the principles of supremacy, direct effect, or the ERTA effect, the Court arguably did not proceed in such a manner but rather acted as the custodian of the interest of the citizens of the Member States in enjoying the legal benefits granted to them by Union law.36 While one could therefore perhaps speak of a sort of ‘democratic activism’ on the part of the Court concerning (p.257) direct effect, indirect effect, and state liability, this does not really rationalize these developments of Union law.37

A second defence emphasizes the nature of Union law as inherently incomplete, which would compel a greater role for the Court.38 In this vein, it has been argued that Article 4 (3) TEU would provide the mandate for the judicial development of norms regulating the relationship between the Union and the Member States.39 Von Bogdandy has pointed to the vagueness of what is now Article 4 (3) TEU as an appropriate basis for the resolution of conflicts in this relationship, given that their exact nature could not possibly have been foreseen when drafting the Treaty.40 However, this should only be done by the Court to the degree required to ensure the functioning of the Union.41 EU law, in this view, constitutes the legal framework which cabins the freedom of the Court to deduce obligations for Member States from Article 4 (3) TEU.42 Firstly, this defence of the competence of the Court to develop the law fails to recognize that the Court has not only invoked what is now Article 4 (3) TEU to constitutionalize EU law, but has also relied on a number of other arguments and principles to the same effect, such as effectiveness and effet utile. These are principles, which themselves are closely connected, if not synonymous, to loyalty, which gives rise to further criticism, as I will argue later. Moreover, I would submit that the functioning of the Union as the suggested yardstick for assessing the appropriateness of legal developments brought about by the jurisprudence of the Court is a very malleable one. To determine which form of rules the Union needs to ensure its proper functioning presumes an idea of the kind of Union that is desired. If judicial activism is measured against this standard, it arguably becomes a very opaque means to an ill-defined end.

The third argument related to judicial activism I want to mention is not so much a defence as a pragmatic approach of tolerance. In its Honeywell decision, the German Federal Constitutional Court granted the European Court of Justice the right ‘to tolerance of error’ with regard to judgments that pass below the threshold of ultra vires in the definition of the BVerfG.43 The original concept of tolerance of error—or better the allowance of error (in German: Fehlerkalkül)—is a much wider notion, encompassing all rules that allow ascribing to an entity those measures that do not fulfil the requirements of their coming into existence.44 As Wiederin has argued, the concept underlying most positivist legal orders since the Roman times is that errors leading to the invalidity of a legal act are limited to those violating formal requirements such as (p.258) publication or signature.45 However, in the classic understanding of Fehlerkalkül, other errors often lead not to invalidity but to the possible invalidation of the defective legal act, such as by decision of the constitutional court.46 Applying this to the present context, it would mean firstly that legally flawed (erroneous) decisions by the ECJ might be valid even when they are defective for a certain reason. Secondly, however, the BVerfG could declare them inapplicable in Germany.47 Alternatively, we might posit that there can be no concept of an allowance of error with the ECJ, because this normally entails that a higher court can decide on the validity/applicability of its judicial acts, and there is no higher court in the EU. I would therefore argue that relying on the concept of the Fehlerkalkül would be a double-edged sword for the ECJ. While accepting that decisions by the ECJ may be defective but remain valid until found non-applicable in Germany, the BVerfG might profess to allow a certain amount of judicial lawmaking on the part of the ECJ. Implicitly, however, the BVerfG with this positions itself as the final arbiter with regard to the legality of EU law.

2.4 Criteria for Assessing Legal Developments by the Court

MacCormick has proposed that the Court should start with a textual analysis, followed by systematic, consistency arguments, and finally consequentialist arguments.48 He has argued that in cases where deductive arguments cannot justify judicial decisions, courts should deploy non-deductive arguments based on the ideas of consistency, coherence, and consequences, in fashioning a rule or principle of law to resolve the case; a method that MacCormick has called consequence-based reasoning.49 The tendency of the Court and even more so of the Advocate Generals to resort to a meta-purposive, systemic style of reasoning has also been observed by Lasser.50 I would suggest that the criterion of consistency, i.e. the assessment whether a certain interpretation of the Treaties conforms to the general system of the Treaties, could also be seen in the context of an interpretation in view of the telos of the Treaties. From this perspective, the theory mentioned earlier does no more than rebrand the effet utile approach professed by the Court.

MacCormick’s approach has recently been modified by Conway by asserting the relevance of the lex specialis argument in cases where ordinary meaning does not bear fruit.51 According to Conway, this should be followed by an ‘originalist’ interpretation and a preference for dialectic reasoning.52 The general validity of these interpretative methods (p.259) is not in debate here for the narrower purposes of this book. Dialectic reasoning is certainly also to be kept in mind as a methodological value in itself. However, this proposed standard equally fails to provide a suitable foundation for analysing the foundational cases involving loyalty, which are at the centre of our analysis. Thus, it is revealing that the Court’s reasoning both in its case law on state liability and in ERTA especially cannot be brought in line with the methodological standards suggested by Conway.53

Another pertinent perspective in assessing the methodology of the Court is reasoning by analogy. While this is a perfectly normal method in civil law countries,54 with respect to EU law, not surprisingly, the difficulty lies in the details. This can already be demonstrated by looking at gap-filling in national law in a constellation that involves the Union legal order, such as with directives. I have argued elsewhere that two steps are required in this case.55 Firstly, the need for an act of gap-filling must be established, i.e. it must be demonstrated that there is a lacuna in the law. Secondly, for actually closing such a lacuna, a similar rule must be applied to the facts of the case at issue.56 With directives, I would argue that they should not be taken into consideration in the first act of establishing the existence of a lacuna. Otherwise, the flawed transposition of a directive would always entail a lacuna because the non-implemented parts of national law would be missing by the standard of the directive concerned. With the second step of the actual filling of a gap, in contrast, the directive must be considered because it forms a part of the overall legal order to be considered as the source of rules to be applied in such a case. In other words, if we were to close a gap found to exist by measure of a directive by applying the very same directive, this would bring about direct effect through the backdoor.

While this example shows the complexity of closing gaps in national laws under the impression of Union law, similar intricacies arise with the filling of gaps within the Union legal order. It has been claimed that the filling of gaps is not included in the Court’s arsenal, since it does not concern the observance of the law required by Article 19 TEU.57 In contrast to this view, it has been pointed out that the Treaties contain more lacunae (gaps) than national law, which would explain the propensity of the Court to engage in ‘judicial law-making’.58 If we look at established methods for closing gaps in national law and try to adapt them to the EU, this proves to be a difficult task.59 The main problem is where to draw the line between legitimate reasoning by analogy and judicial activism when discussing EU law. Reasoning by analogy in the civil law tradition is an instrument of interpretation, which goes a step further than purposive interpretation (p.260) in that it extends an enacted rule to cases the legislature had not foreseen.60 However, not every lacuna can be closed by such a test. The main criterion, according to the prevailing opinion in German and Austrian legal theory, is legislative intent; there is no gap if the legislator planned for the legal order to be incomplete in a certain respect.61 As already discussed, however, in Union law travaux préparatoires have played little role in the interpretation of Treaty provisions.62 Thus, if we wanted to assess the case law in this area, we would have to conclude either that there are no gaps at all because the drafters had conceived the Treaties as a frame only, or that there are gaps all over the place for the exact same reason.63 Similarly, the apparent conflict between the contra-argument mentioned earlier based on Article 19 TEU on the one hand, and the pro-argument based on general principles on the other could be resolved by considering general principles a part of Union law. In this case, there would be no gap in Union law, and the Court would observe the ‘law’ when it uses general principles to close gaps in the Treaties.64

Langenbucher has referred to the ‘principle-based’ common law variant of reasoning by analogy, whereby a general principle of law is developed on a case-by-case basis and is applied to individual cases.65 According to Langenbucher, an analogy must not violate the constitutional balance struck between the powers of the Member States and those of the Union in an EU law context, nor must it infringe fundamental rights of Union citizens.66 In her view, the ‘constitutional restriction’ for reasoning with analogy is that the Member States’ sovereignty must not be impaired.67 On this basis, Langenbucher has criticized the Brasserie judgment for extending state liability for a breach of a directive (p.261) without direct effect (as in Francovich) to a breach of a directly effective Treaty rule.68 In the latter case, she has posited, the Francovich argument, that without state liability the individual could not have enforced its rights, would not apply. I would argue that this is not a convincing line to draw on this issue. In Brasserie, the argument was that effectiveness would be promoted even more if there was an additional remedy of state liability. If state liability was an analogy and if Francovich was legitimate, Brasserie cannot be faulted because state liability there was not strictly necessary to protect private interests. If this were true, Langenbucher would also have to attack indirect effect in cases where direct effect is available.

2.5 Conclusion

Hence, the Court cannot be attacked because of its methodology on analogies or the use of general principles to close gaps per se. Attempts at suggesting a method to follow for the Court with regard to using the telos of the Treaties for interpretative purposes have not borne fruit. Moreover, adapting civil law standards for closing gaps in EU law cannot be reconciled with the fact that the intent of the legislator plays little role in EU law. Suggestions on adapting common law standards on reasoning by analogy equally fail to set up clear borders beyond the protection of national sovereignty. This means that no objective standard exists that could be applied to legal developments of EU law engineered by the Court.

However, this interim conclusion does not mean that we cannot formulate a general criticism of the reasoning of the Court in cases involving loyalty or principles related to loyalty. For this, we need as a next step to revisit some of the foundational case law and the legal principles it established.

3. Loyalty, Effectiveness, and effet utile

3.1 Introduction

In the literature, most seem to make scant difference between loyalty, effet utile, and effectiveness. Those writing on effet utile have not clearly distinguished between this rule and the principle of effectiveness.69 Conversely, those discussing effectiveness have not mentioned effet utile.70 Supremacy is a good example of this ambiguity. A recent study on effet utile has shown that parts of the German literature have seen the basis of supremacy in the principle of effectiveness;71 others have assumed a teleological interpretation of ex Article 10 EC;72 others still have considered supremacy as based on effet (p.262) utile.73 While a clear distinction between these concepts is thus shown to be missing, it seems not to have been missed much in the literature.

I would proffer that the alternating use by the Court of seemingly different legal concepts cannot simply be brushed aside as irrelevant or as a ‘mask’ for pure politics, as it has been put by Burley and Matti.74 Instead, I would argue that a legal analysis worthy of its name has to take the law at ‘face value’. We have to start with the assumption that the Court had good reasons to frame an argument in this or that wording. That judgments might spur unforeseen developments, as mentioned earlier, is not in contradiction to this. However, a caveat must apply here: At the end of such analysis, we might still arrive at the conclusion that the use of pivotal legal concepts by the Court is confusing, ambiguous, or perhaps indeed only a pseudo-rationale.

Both effectiveness and effet utile are expressions of the idea that Union law must be construed and applied as to enable it to function in the way it has been conceived. Thus, it might be said that ‘[t]‌he origins of the principle [of effectiveness] lie in the interpretative techniques of the Court which, even at an early stage, favoured a liberal construction of Treaty provisions so as to ensure their effet utile’.75 The close relation between effectiveness and effet utile is clearly visible with the Rewe strand of case law on the enforcement of directly effective Union law rights, discussed earlier. Here, it might actually make no difference from a methodological perspective whether we consider this an application of effectiveness or of effet utile. Requirements for national law ensuing from the need to enforce Union rights can be seen both as an extensive interpretation of Article 288 TFEU, or as the application of a distinct principle of effectiveness connected to the principle of supremacy. I have also shown the close relation between the Rewe case law and effectiveness on the one hand, and loyalty on the other. While loyalty is the legal basis for introducing the implementation related side of the principle of effectiveness, the case law on the enforcement related side of effectiveness is also in many respects connected to loyalty.76

However, in the following section, the use of these arguments in relation to direct effect can be distinguished from the legal reasoning employed to establish the exclusive external competences formerly implied in the Treaty and now expressly provided for in Articles 3 (2) TFEU and 216 TFEU.

3.2 Loyalty, effet utile and the Rationale for Direct Effect

As I have explained, in its case law on direct effect the Court has relied on both effet utile and loyalty. In a long line of cases the Court invoked ex Article 249 EC, effet utile, and the principle that Member States should not profit from their own omissions to rationalize the direct effect of directives.77 As mentioned, in Moormann the Court changed course to declare that direct effect is based on a combination of ex Article 249 EC and ex Article 10 EC.78 This aligned the reasoning on direct effect with that on the obligation of consistent interpretation where the Court, from the beginning of its jurisprudence, (p.263) has invoked both Article 288 TFEU and Article 4 (3) TEU, without any mention of effet utile. I submit that there is a small but noteworthy difference between the former and the latter rationale for the following reasons.

Article 288 TFEU arguably does not provide a sufficient basis directly to empower individuals, or to set aside national law. This provision only states the binding nature of the directive’s objective and the discretion of Member States in choosing the means to implement it. In contrast, effet utile caters to the idea that without a subjectivist element, Union directives would be toothless in the face of Member State inaction. Thus, Article 288 TFEU is interpreted to comprise such possibility of direct effect as an integral component of the prescription contained in it. In other words, effet utile finds direct effect to be inherent in Article 288 TFEU.

Invoking Article 4 (3) TEU together with Article 288 TFEU, in contrast, emphasizes the obligation of the Member States to step into action in order to make Union directives work effectively. Recall that loyalty addresses the Member States above all and obliges them to ensure that binding Union law, such as the objective of a directive, is fulfilled. It is proposed that here direct effect is not located within Article 288 TFEU proper.79 It is rather owed to the combined reading of Article 288 TFEU with its strong element of Member State regulatory autonomy, and Article 4 (3) TEU with its call on Member States to enforce EU law by all appropriate and available means. Hence, the argument here is, if Member States are not able or willing to honour their obligation to transpose a directive, self-executing provisions of a directive must be enforceable before national courts nonetheless.

This may be a small difference, since applying either argument the result is the same. This might also be the reason why the Court so easily jumped from one rationale to the other in its case law on direct effect, as mentioned earlier. However, I submit that, from a legitimacy perspective, it is preferable to invoke loyalty rather than effet utile, especially when it concerns the creation of such far-reaching new rights not expressly foreseen in the Treaty.

3.3 Loyalty, effet utile, Effectiveness, and the Rationale for External Exclusive Competences

In the case of the ERTA judgment, I have argued that ex Article 5 EEC was the appropriate argument to infer exclusive external powers, since this could not be derived by way of interpretation of the relevant internal competence.80 Recall that I have pointed out with regard to ERTA that there is a difference between assuming implied powers in a general vein, and the finding of exclusive external competence because of the passing of common rules.81 The statement by the Court in ERTA on the external capacity of the (then) Community does assume implied external powers to be inherent in the Treaty. However, it does not necessarily require implied exclusive external powers of the Union under certain conditions. The former can be explained by a very general argument of effet utile in light of the general scheme of the Treaty. Here, indeed, effet utile and implied powers are very closely related. The latter finding in ERTA, however, is better understood as predicated by the need to prevent a conflict between the possible international action by a Member State and existing Union measures. This conflict (p.264) theme is the explanation for invoking ex Article 5 EEC in ERTA to justify the specific finding of competence because of the passing of common rules.

Therefore, it is apposite to claim that implied powers are a special form of interpretation of a norm of competence in light of its effet utile.82 ERTA, in contrast, is a valid example of the relation between effet utile and implied powers only insofar as the general statement on the existence of implied powers in the Treaty as a matter of principle is concerned. This is also confirmed by the leading case on implied powers in Union law. In Fèdèchar, the Court held on account of the European Coal and Steel Community (ECSC):

The Court considers that without having recourse to a wide interpretation it is possible to apply a rule of interpretation generally accepted in both international and national law, according to which the rules laid down by an international treaty or a law presuppose the rules without which that treaty or law would have no meaning or could not be reasonably and usefully applied.83

The finding of exclusivity in ERTA, however, is not primarily built on the methodological edifice of effet utile. Rather, it is an example of the competence conferring power of loyalty as a tool for the prevention of conflicts.

While there is, thus, a close rapport between implied powers and effet utile, I submit that it is unnecessarily confusing to argue that implied powers, on the one hand, is a principle of construction more powerful than effet utile proper, and that, on the other hand, implied powers are the result of such interpretation.84 Put in other words: It is, if perhaps only on account of terminology, circular to claim that the method applied to construct a provision of the Treaty at the same time constitutes the result thereby reached. It is, I suggest, more transparent and more logical to consider implied powers as a distinct form of competence of the Union to act under certain conditions, and effet utile as the method employed to establish such unwritten competences.85

Arguably, an important example of the application of effet utile in the field of external relations is Opinion 1/76.86 I would submit that the 1/76 kind of exclusivity is different from ERTA. In this case, the Court finds that the internal competence must be extended to the external sphere in order not to jeopardize its effectiveness. This is inferred directly from the internal competence norm. The Court has never expressly rationalized this award of exclusive external competence in the 1/76 constellation; an omission that has been deplored in the literature.87 What seems clear is that justification in this case could not have been to preserve the unity and consistency of Union law such as with the ERTA line of case law.88 In the 1/76 constellation, it was not a situation of conflict between Union rules and national law that required a solution. There existed no Union rules that (p.265) had to be protected, in contrast to the ERTA case. This difference, however, is only apparent when the role of loyalty in ERTA is fully acknowledged, as I have argued for earlier.89 Instead, the test of necessity in the 1/76 case is rather guided by the effet utile of the internal Union objective, which requires external action in order to be effectively exercised.90 Could the Court, in the 1/76 case, have invoked loyalty instead? Without conflict, this would seem less consistent in light of the Court’s previous case law in Costa and ERTA.

While this is still not an ordinary exercise in norm interpretation, the link between a specific internal competence norm and the argument of effet utile based on it is convincing. In this case, a competence norm is interpreted to confer further competence in the external sphere by implication. This finding of the Court in Opinion 1/76 can also not be challenged on grounds of proportionality, if we consider this a yardstick for assessing the legitimacy of a reasoning based on effet utile. If an internal competence cannot be properly exercised without concluding an international agreement, which is embodied by the necessity criteria central to the tenet in this Opinion and the case law following it, there is no other choice than to assume exclusive competence for the Union.

3.4 Loyalty, Effectiveness, effet utile, and State Liability

I would argue that when state liability was initially only applied in the context of directives in Francovich, this could also have been rationalized with the effet utile of directives. However, when state liability has also been made applicable to other breaches of Union law unrelated to directives, such as the breach of the common market rules in cases such as Brasserie du Pêcheur or because of national court decisions such as Köbler, this rationale is difficult to transfer. It might be argued that effectiveness here actually relates to the useful effect of the Union law regime as a whole, instead of the effect of certain of its legal instruments. This is supported by the argument of the Court in Brasserie du Pêcheur, where, as mentioned, the Court referred to effectiveness and the obligation to cooperate as ‘principles inherent in the Community legal order which form the basis for State liability’.91 In addition, the fact that state liability in the EU had its precursor in the ECSC points in the same direction.

However, such an all-encompassing view of effet utile would undermine my earlier claim for effet utile to be a rule of interpretation. Even where effet utile had been used in the process of constitutionalization, such as with direct effect and with Opinion 1/76 on exclusivity, it had always referred back to a certain provision of Union law. With state liability, it is not possible to argue that way. Suggestions on regulating the liability of the Member States by amending ex Article 228 EC on the liability of the EU had not been adopted.92 Moreover, the Court did not refer to any specific provision of the Treaty in support of its argument, but it plainly asserted the existence of principles inherent in the Treaty mandating such development. Thus, I would claim that the Court applied effectiveness not as a rule of construction, but as a principle of Union law, possessing a (p.266) gap-filling function in Union law. Conversely, I would submit that a rule of interpretation such as effet utile could not have created and cannot create a novel institute of Union law such as state liability.93

3.5 Conclusion

Figure 13.1, by way of summary, illustrates the prototypical relation between loyalty/Article 4 (3) TEU, supremacy, effectiveness, implied powers, and effet utile. I thus do not claim that this follows necessarily from case law, but it helps in distinguishing concepts that arguably are in need of distinction.

The central position of loyalty reflects it as being the explicit or implicit, single or auxiliary basis for all the other principles and concepts mentioned earlier. However, this relation cannot simply be presented in a clearly hierarchical form, but is more complex, including the application of loyalty in conjunction with other principles and the partial correlation between loyalty and, for instance, effectiveness. Thus, loyalty shares the ‘creationist’, ‘constructivist’ side with the principle of effectiveness, illustrated by the fact that both have been invoked as the foundations of state liability. In contrast, in its predominant function of ensuring the effective judicial protection of individuals and the

Deconstructing Loyalty

Figure 13.1 The Centrality of Loyalty for the Construction of the Union

(p.267) enforcement of Union law rights, effectiveness is rather comparable to effet utile. In contrast again to loyalty, effet utile has no inherent constructivist nature. It is a rule of interpretation, which is applied in a non-methodical manner in many foundational judgments. Implied powers are the result of such interpretation, as shown by the Court in Opinion 1/76.

The qualification of effet utile as a method of interpretation makes it ill-suited to constituting the basis of distinct legal obligations of Member States or rights of Union citizens. Loyalty is similar to effet utile since both principles are concerned with the goal of making Union law work in a very general sense. Recall that under Article 4 (3) TEU the Member States shall facilitate the attainment of the Union’s objectives and refrain from any measure which could jeopardize this goal. This, in theory, makes loyalty more than the parameter of interpretation that is effet utile. By its wording and its position in the Treaty, it is the basis for distinct obligations and, thus, has a ‘legal life of its own’. The main, distinct function of loyalty is as a conflict resolution rule, such as in ERTA. This it has in common with supremacy, of which it is also one important legal basis. However, while supremacy has the sole effect of setting aside national law in the case of a conflict, loyalty has a much broader conflict related function in Union law, as I have explained in the Part on Cohesion.

In the following section, I will now come to the only critique that in my opinion can validly be raised with regard to the reasoning of the Court on methodological grounds.

4. Loyalty and Self-referential Reasoning

4.1 Introduction

The Court has often been criticized for its reduced and minimalistic style, which has been claimed to be the result of the absence of dissent and a reluctance to commit itself on specific issues when not directly necessary for the decision.94 The ambiguity on matters of substance that this has led to may explain why the members of the Court were taken by surprise at what has been read into some of the Court’s judgments.95 It has been observed in this context that AGs routinely address what has been termed ‘micro purposes’ to promote a specific Treaty provision’s effet utile.96 More often, however, they resort to ‘meta purposes’, i.e. purposes, values, or policies underlying the EU’s legal structure as a whole, such as the effectiveness of Union law or the legal protection of individual rights.97 It has been argued that because the Union legal order was a ‘skeleton’ in special need of the closing of gaps and the Treaty lacked any rules on how this should be done properly, this would make a strong case for a more flexible reasoning with general principles.98 Tridimas has also presented principles as the solution to the ‘skeleton’ (p.268) problem because with their help one might ‘resolve the case by deducing from the existing rules a rule which is in conformity with the underlying premises on which the legal system is based’.99 This, however, has been criticized as a ploy of judicial lawmaking instead of ‘legislative law-making’.100 Hartley, a reliable critic of the Court, has had the following to say in this respect:

The European Court, on the other hand, has utilized general principles of law to cloak the nakedness of judicial law-making: the idea is that, if a ruling can be shown to be derived from a principle of sufficient generality as to command common assent, a firm legal foundation for the judgement will be provided.101

I will show in the following that it is not the use of legal principles by the Court as such which can be faulted. One might well discuss the establishment of general principles of Union law as an act of gap-filling. In this view, the Treaty is incomplete and this gap is filled by general principles such as fundamental rights. However, it is a different matter if the Court considers the Treaty incomplete by the standard set by general principles. In this case, general principles are not invoked to close a gap in Union law, but are employed to find a lacuna in the first place.102 This would also not be a problem from the methodological perspective when we consider general principles a part of the Union legal order, and thus a suitable point of reference for the establishment of a gap. There is, however, a methodological blemish if these two ways to use general principles, or even one specific general principle, are mashed together. Thus, it must be deemed as unduly self-referential if a general principle is invoked to find a gap, and then is invoked to close the same gap just found. Similarly, there is a problem with legal logic when a certain general principle is referred to in order to establish another general principle, and when both are consequently applied as if they were distinct from each other.

In the following sections, I will demonstrate why the use of loyalty as the basis for a strongly autopoietic legal reasoning is a major problem by discussing state liability and the Pupino case. Before I do this, let us briefly examine what has been submitted in defence of the specific style of reasoning displayed by the Court.

4.2 The Defence of ‘Formal Reasoning’

Poiares Maduro has presented the Court’s style in a more positive light by claiming that the judicial practice of not explicating the choice between two or more possible interpretations of the Treaty would uphold ‘an image of neutrality and impartiality’.103 Even if we consider formal reasoning a deliberately chosen approach by the Court and not (p.269) rather the expression of the lowest possible judicial denominator, there are some serious problems with this approach.104 Firstly, Conway has insisted correctly that justification is central to legal reasoning.105 Dialectic reasoning as the studied consideration of alternative possible interpretations requires that discretion is made explicit.106 Thus, already the lack of alternatives disclosed in the Court’s judgments may per se fault the outcome of some cases. Moreover, I would submit that this style makes it easier for the Court to present decisions as logical from a legal perspective, when they are in fact conscious choices to meet a certain ‘legal-political’ objective, such as to protect the autonomy of the Union legal order or to ensure the effectiveness of its instruments. Over the years, this may have had the desired side effect of creating the retrospective impression of the inevitability of the development of EU law.107 As it has been put by Temple Lang, ‘Article 10 is the legal basis for a number of fundamental ‘constitutional’ principles of Community law that are now so well established…that nobody looks for their legal basis any longer’.108 Indeed, the more we tend to accept the inevitability and quasi-automatism of the development of Union law in this foundational period, the less it matters precisely by which rationale the Court came to its findings. Moreover, it may also disguise a lack of proper methodology or any consistency in employing legal concepts and principles such as loyalty and those principles related to it, as I will explain further later.

Such lack of substantive reasoning is especially deplorable in cases that can be qualified as judicial development of the law, or even as examples of judicial activism.109 In performing the exercise of balancing the interest in the functioning of the Union and the uniform and effective application of its legal regime on the one hand, with the interest of the Member States in retaining their regulatory freedom on the other, the Court is not always rationalizing its findings beyond the ‘formal reasoning’ mentioned earlier.110 Take the Mangold case, which has met with strong, sometimes even angry, opposition, especially in Germany, whose national law was found non-applicable as a result.111 In this case, the Court held that ‘the principle of non-discrimination on grounds of age (p.270) must…be regarded as a general principle of Community law’, since it exists ‘in various international instruments and in the constitutional traditions common to the Member States’.112 The Court reasoned the existence of this general principle in two sentences, thereby brushing aside the denial of (full) horizontal direct effect of Union directives, one of the only matters on which it has so far displayed judicial self-restraint. It might have been possible to show that a prohibition of discrimination on grounds of old age was not alien to most Member States, is now included in the Charter of Fundamental Rights, and that the substance of the judgment was thus well grounded.113 However, the Court, sitting in Grand Chamber, chose to substitute reasoning for affirmation.114 This has prompted the warning that cases such as Mangold and the Court’s ‘unwillingness or inability’ to explain satisfactorily how new developments can be reconciled with established case law ‘have made severe legal uncertainty one of the defining characteristics of the modern era’.115

Hence, what is called formal reasoning tends to conceal methodological deficiencies, while presenting the outcome in a case as the only logical and legally conceivable option. In other words, a line should be drawn between the competence of the Court to develop the law and the way this is actually done. With loyalty, this is, however, only the starting point. In the following section, we will see how the issues we have discussed, viz. reasoning with general principles, telos, and terseness, all come together when we look at the way the Court has employed the principle of loyalty in the foundational case law.

4.3 Deconstructing State Liability

Recall that, initially, the Court founded state liability on effectiveness in Francovich. This rationale has been questioned even by generally friendly voices in the literature.116 In later case law, we have observed the same phenomenon with state liability that I have already noted with regard to the jurisprudence on supremacy: The Court at some point no longer legitimized the invocation of the principle of effectiveness by referring to the Treaty. Instead, it simply stated the existence of the pertinent principle without mentioning its legal basis. It is not far-fetched to assume that the fact that the emphasis shifted slightly to the Article 4 (3) TEU rationale in cases following Francovich can be explained as a reaction to this criticism of the doctrine.

Effectiveness in Francovich acquired an independent function that no longer seemed to require a reference to the Treaty as authority. This underpins the observation by Ross that ‘[t]‌his particular technique has a self-legitimating aspect, since the seemingly stable (p.271) and entrenched nature of effectiveness can compensate or camouflage the novelty of the development which it is invoked to justify’.117 Indeed, if the principle of effectiveness is presented as a legal given, the Court saves one argumentative step in deducing a new institute of law such as state liability. Put differently, with effectiveness being taken for granted, the Court could more easily carry that thought to a higher level. Loyalty, invoked in Brasserie du Pêcheur in the present context as an additional rationale for state liability, shares the constitutionalizing function with this application of effectiveness. What distinguishes loyalty from effectiveness is that the latter is not about conflicts between Union measures and national measures, such as the principle of state liability is not about the prevention or resolution of conflicts, but about nullification.

Recall that effectiveness had been derived neither by induction nor by deduction from the Treaty, but it was presented as being rooted in loyalty in cases such as Rewe. Therefore, when the Court stated in Brasserie du Pêcheur that effectiveness and loyalty are the basis of state liability, it makes three principles of Union law out of one. It could be argued that loyalty gave birth to effectiveness, and that effectiveness gave birth to state liability. If we only consider the Francovich constellation, where state liability was invoked to prop up the effect of directives, in particular where direct effect is wanting, we might furthermore note that loyalty has also been one of the foundations of the direct effect of directives. Finally, only in subsequent cases such as Factortame did the Court refine and put flesh on the principle of state liability.118 Thus, we might even say that at the time of Francovich one ambiguous and undefined principle, viz. effectiveness, begot another principle of Union law of a similarly opaque nature, viz. state liability.119

This remarkable, double circularity of reasoning that is centred on loyalty is summarized in the following diagram (Figure 13.2):

Deconstructing Loyalty

Figure 13.2 Loyalty and Self-reference in Justifying State Liability

(p.272) 4.4 Deconstructing Pupino

In Pupino, considerations of effectiveness played a multifaceted role. Firstly, the Court invoked effet utile to affirm its jurisdiction to hear the case, responding to arguments by some Member States that the reference jurisdiction under ex Article 35 TEU (Nice version) was not as broad as that under ex Article 234 EC.120 Secondly, the Court countered the claim that the Nice Treaty contained no provision equivalent to ex Article 10 EC by arguing that it would be difficult for the Union to carry out its task effectively if the principle of loyal cooperation were not also binding in the area of police and judicial cooperation in criminal matters.121 With this, as already discussed, the Court exported an obligation incumbent on Member States concerning directives in the former first pillar to framework decisions under the former third pillar.122 Let us take a closer look at how precisely the Court arrived at this conclusion.

Recall that the obligation to interpret national law in light of directives had been based on loyalty and on Article 288 TFEU.123 In von Colson, the Court mentioned the binding objective of a directive that would require Member States to take all measures necessary ‘to ensure the fulfilment of that obligation’.124 Hence, the central argument of the Court in justifying indirect effect was contingent on the specific nature of (Union) directives. If this is compared with the reasoning in Pupino, we should note that the Court in this case did not make the connection between the objectives of framework decisions and loyalty. The key to the finding in Pupino was the admissibility of exporting ex Article 10 EC to the former third pillar. Hence, the core of the rationale in von Colson, i.e. the connection between the objective of the legal instrument and loyalty, was not reflected in Pupino and seems to have been taken as a given. This abridged presentation of indirect effect can be seen as a forebear of the statement in Pfeiffer on the inherent nature of indirect effect.125

What the Court added in Pupino is a reliance on the effectiveness principle (‘It would be difficult for the Union to carry out its task effectively if the principle of loyal cooperation…’). Loyalty was extended to the former third pillar because otherwise the tasks of the Union under this pillar could not be carried out effectively. Put differently, the argument of the Court went as follows: Since effectiveness is inherent in the whole of Union law, loyalty must apply within the former third pillar, and indirect effect must thus apply to framework decisions as well. Arguably, it would have been the same if the Court had claimed that loyalty is inherent in the entirety of Union law. However, this might have come too close to stating that indirect effect itself is an obligation inherent in the whole of Union law. While this was the reasoning later in Pfeiffer, as mentioned, such an argumentative short cut in Pupino would probably have met with even greater protestations than the reasoning actually proffered.

(p.273)

Deconstructing Loyalty

Figure 13.3 Loyalty and Self-reference in Pupino

I would claim that, in fact, effectiveness did not have any additional, specific explanatory merit in this case, for the following reason. If effectiveness was applicable in the former third pillar and effectiveness was based on loyalty, as argued earlier, this means that loyalty must have been applicable in the former third pillar. What then was the reason for the argumentative detour via effectiveness? I would suggest that effectiveness in Pupino provided a strong and nearly irrefutable rationale, which could be presented as being distinct from both loyalty and indirect effect. With this, criticism that such a strong principle of Union law as loyalty was simply exported to another pillar could be avoided. The reliance on effectiveness has therefore adroitly been described as disingenuous by Ross in the present context.126

Moreover, if we again consider the connection between loyalty and effectiveness, the reasoning of the Court in Pupino is revealed as highly self-referential. The above illustration (Figure 13.3) summarizes this peculiar line of arguments.

5. Conclusion

What is now provided in Article 4 (3) TEU has spawned several other essential principles of Union law of decreasing scope and/or force. I have shown that loyalty works on two levels: First, it creates legal institutes such as direct effect or indirect effect. In a next argumentative step, it props up the enforcement of these instruments under the title of the principle of effectiveness, which, however, is itself closely related to loyalty. We might say that consequently Member States ‘suffer’ doubly by virtue of a single Treaty provision.127

(p.274) The relation of effet utile, effectiveness, but also of supremacy, thus, reminds us a bit of the Russian doll model. The Court, as we have seen, metaphorically either piles loyalty based arguments upon each other, such as in the case law on state liability, or various permutations of loyalty are coalesced to provide a seemingly compelling chain of reasoning such as in the Pupino case. Loyalty resembles a methodological perpetuum mobile in its self-referential usage by the Court. I would suggest that, for want of any other methodological standards that could be applied to feats of judicial lawmaking by the Court, it is this practice that is the most critical and the most questionable, at least when referring to the matters of interest in this study.

Notes:

(1) See, to name just a few examples from the extensive literature on this, J. Anweiler, Die Auslegungsmethoden des Gerichtshofs der Europäischen Gemeinschaften (Frankfurt et al.: Lang, 1997); A. Bredimas, Methods of Interpretation and Community Law (Amsterdam: North Holland, 1978); G. de Búrca and J.H.H. Weiler (eds), The European Court of Justice (Oxford: Oxford Univ. Press, 2001); M. Potacs, Auslegung im öffentlichen Recht (Baden-Baden: Nomos, 1994); J. Bengoetxea, The Legal Reasoning of the European Court of Justice (Oxford: Clarendon Press, 1993); G. Conway, The Limits of Legal Reasoning and the European Court of Justice (Cambridge: Cambridge Univ. Press, 2012).

(2) For such recent undertaking, see P.P. Craig, ‘The ECJ and Ultra Vires Action: A Conceptual Analysis’, Common Market Law Review, 48 (2011), 395–437.

(3) See S. Weatherill, ‘Activism and Restraint in the European Court of Justice’, in P. Capps, M. Evans, and S. Konstadinidis (eds), Asserting Jurisdiction: International and European Legal Perspectives (Oxford and Portland, Oregon: Hart Publishing, 2003), 255, 258 (fn 7): ‘The question of how to measure due restraint in interpretation is central yet elusive. Criticism of the Court in this vein demands that attention be paid to devising a theory of legal reasoning and interpretation.’

(4) See Chapter 6.

(5) A. von Bogdandy, ‘Rechtsfortbildung mit Art. 5 EG-Vertrag’, in A. Randelzhofer, R. Scholz and R. Wilke (eds), Gedächtnisschrift für Eberhard Grabitz (Munich: Beck, 1995), 17, 24. See also K.-D. Borchardt, ‘Richterrecht durch den Gerichtshof der Europäischen Gemeinschaften’, in A. Randelzhofer, R. Scholz and D. Wilke (eds), Gedächtnisschrift für Eberhard Grabitz (Munich: Beck, 1995), 29.

(6) See F.C. Mayer, ‘Art. 19 EUV’, in E. Grabitz, M. Hilf, and M. Nettesheim (eds), Das Recht der Europäischen Union (Munich: Beck, 2011), para 30. The German term for the development of the law by the judiciary is ‘Rechtsfortbildung’, which arguably has a more ponderous connotation. J. Komarek, ‘Judicial Lawmaking and Precedent in Supreme Courts: The European Court of Justice Compared to the US Supreme Court and the French Cour de Cassation’, Cambridge Yearbook of European Legal Studies, 11 (2008–2009), 399–433, has shown that both the legal system of the US and France acknowledge that judges ‘make law’ based on their respective foundational documents.

(7) Case C-155/04 Mangold [2005] ECR I-9981was a judgment of the Court that has elicited accusations of judicial overreaching in recent times. See Anonymous, Editorial Comments, ‘The Court of Justice in the Limelight: Again’, Common Market Law Review, 45 (2008), 1571–1579. Mangold also undermines the argument that the Court has, in recent times, shown greater restraint in its constitutionalizing case law. This has been claimed by F.C. Mayer, ‘Art. 220 AEUV’, in E. Grabitz, M. Hilf and M. Nettesheim (eds), Das Recht der Europäischen Union (Munich: Beck, 2011), para 76.

(8) See T. Tridimas, ‘The Court of Justice and Judicial Activism’, European Law Review, 21 (1996), 199–210, finding the term judicial activism relative and uncertain and arguing that there is no persuasive argument that the Court has exceeded its powers. See now Craig, ‘The ECJ and Ultra Vires Action’, 396–398, for a delineation of criteria for defining judicial activism.

(9) See Borchardt, ‘Richterrecht’, 37. See also, in the context of the prescriptions of the Court with regard to the duties of national courts to interpret national law in light of Union law, W.-H. Roth, ‘Die richtlinienkonforme Auslegung’, Europäisches Wirtschafts- und Steuerrecht, 9 (2005), 385–396.

(10) See Komarek, ‘Judicial Lawmaking and Precedent’, 426.

(11) Joined cases C-6/90 und C-9/90 Francovich [1991] ECR I-5357. See Chapter 6.

(12) See Conway, The Limits of Legal Reasoning, 14. On the ‘Americanization’ of EU law, see T. Öhlinger, ‘Gesetz und Richter unter dem Einfluss des Gemeinschaftsrechts: Anmerkungen zu einem Prozess der “Amerikanisierung” des europäischen Rechts’, in P. Hänni (ed.), Mensch und Staat: Festgabe für Thomas Fleiner (Freiburg: Universitätsverlag Freiburg Schweiz), 719–735.

(13) Conway, The Limits of Legal Reasoning, 14.

(14) See Chapter 6. See Case C-105/03 Criminal Proceedings Against Maria Pupino [2005] ECR I-5285, para 48.

(15) See A. Arnull, ‘Judicial Activism and the Court of Justice: How Should Academics Respond?’, Maastricht Working Papers, (2012–13), 20, noting that many of the decisions criticized as activist were not reached contra legem. See Case C-161/06 Skoma-Lux [2007] ECR I-10841, para 41 as an example where the Court seems to refer to the concept of contra legem as a limit to the effects of Art. 4 (3) TEU. However, this is not referred to as a methodological tool of interpretation, but in a more substantive manner. See also N. Grosche, Rechtsfortbildung im Unionsrecht (Tübingen: Mohr Siebeck, 2011), 188.

(16) See, for a comparison with Austrian supreme courts, Potacs, Auslegung, 297–299; cf. Mayer, ‘Art. 19 EUV’, para 53.

(17) See P.P. Craig and G. de Búrca, EU Law: Text, Cases and Materials, 5th edn. (Oxford: Oxford Univ. Press, 2011), 64. See further, on the interpretation of secondary law, Potacs, Auslegung, 136–142. It, however, seems likely that recourse to the travaux préparatoires will become more compelling now, in view of the availability of documents from the Convention on the Future of the European Union, which is relevant also for the Lisbon Treaty. See Mayer, ‘Art. 19 EUV’, para 66.

(18) But see the examples for an interpretation of secondary and also primary law in light of the intention of the Union legislator cited by M. Potacs, ‘Effet utile als Auslegungsgrundsatz’, Europarecht, (2009), 465–488, 471.

(19) See, among many others, A. Bleckmann, ‘Zu den Auslegungsmethoden des Europäischen Gerichtshofs’, Neue Juristische Wochenschrift, (1982), 1177–1182, 1178 passim; J. Bengoetxea, N. MacCormick and L. Moral Soriano, ‘Integration and Integrity in the Legal Reasoning of the European Court of Justice’, in G. de Búrca and J.H.H. Weiler (eds), The European Court of Justice (Oxford: Oxford Univ. Press, 2001), 43–85, 43 passim. For a comparison to the WTO regime, see Conway, The Limits of Legal Reasoning, 23, with further references.

(20) See Potacs, ‘Effet utile’, 469, on effet utile as a representation of teleological interpretation, and at 475–477 on the importance of effet utile with Treaty provisions pivotal for achieving the objective of the common market such as fundamental rights. See R.M. Chevallier, ‘Methods and Reasoning of the European Court in its Interpretation of Community Law’, Common Market Law Review, (1964), 21–35, 32–35, on the relevance of effet utile. See further the recent and comprehensive study by Seyr, Der effet utile in der Rechtsprechung des Europäischen Gerichtshofs (Berlin: Duncker & Humblot, 2008). See D. Edward, ‘Judicial Activism: Myth or Reality?’, in A. Campell and M. Voyatzi (eds), Legal Reasoning and Judicial Interpretation of European Law (Gosport: Trenton Publishing, 1996), 29–67, 56, on its parallels in common law.

(21) See F. Snyder, ‘The Effectiveness of European Community Law: Institutions, Processes, Tools and Techniques’, Modern Law Review, (1993), 19, 53.

(22) See Case 8/55 Fédération charbonnière de Belgique [1955/56] ECR 197; Case 34/62 Germany v Commission [1963] ECR 287; Case 246/80 Broekmeulen [1981] ECR 2311; Case 9/70 Grad [1970] ECR 825; Case 41/74 van Duyn [1974] ECR 1337; Joined cases C-143/88 & C-92/89 Süderdithmarschen [1991] ECR I-415.

(23) J.H.H. Weiler, ‘The Transformation of Europe’, The Yale Law Journal, (1991), 2403–2483, 2416.

(24) H.G. Schermers, ‘The European Court of Justice: Promoter of European Integration’, American Journal of Comparative Law, (1974), 444–464, 457.

(25) See Potacs, ‘Effet utile’, 465.

(26) See the overview of the literature on effet utile by Seyr, Der effet utile, 102–103.

(27) See Chapter 6.

(28) See Chapter 11. See Tridimas, ‘The Court of Justice and Judicial Activism’, 200–202.

(29) Craig, ‘The ECJ and Ultra Vires Action’, 400–406. On Rechtsfortbildung by the German Constitutional Court, see Grosche, Rechtsfortbildung im Unionsrecht, 48–54.

(30) cf. Craig and de Búrca, EU Law, 65

(31) See further Mayer, ‘Art. 19 EUV’, paras 36–37. This might be taken to show that Member States have not felt sufficiently at ease with one of the most central tenets of the Court on the relationship between their own legal systems and EU law to provide for it in the Treaty. Admittedly, it might also merely show that one Member State (here: the UK) can block Treaty amendments on important issues. I am grateful to Stefan Griller for pointing this out to me.

(32) M. Poiares Maduro, ‘Interpreting European Law: Judicial Adjudication in a Context of Constitutional Pluralism’, European Journal of Legal Studies, (2007), 1–21, 11.

(33) M. Poiares Maduro, We the Court: The European Court of Justice and the European Economic Constitution (Oxford and Portland, Oregon: Hart Publishing, 1998), 72.

(34) Poiares Maduro, We the Court, 72. See the similar story told by M. Nettesheim, ‘Grundsatz der Wirksamkeit des Gemeinschaftsrechts’, in A. Randelzhofer, R. Scholz, and D. Wilke (eds), Gedächtnisschrift für Eberhard Grabitz (Munich: Beck, 1995), 447–468, 460, apropos the Milchkontor jurisprudence of the ECJ. See, however, the cases mentioned by R. Lang in his annotation to case DocMorris, Common Market Law Review, (2005), 189–204, 195.

(35) Even with regard to the human rights case law of the Court, where it looked at national ‘preferences’, this was not done to impose the preferences of the majority against those of one Member State.

(36) See, however, the opinion by AG Lagrange in Case 6/64 Costa v ENEL [1964] ECR 601, 604–607, who did compare the different attitudes of incorporating Community law in the States being members at this time and faults the Italian Constitutional Court for the ‘disastrous consequences’ (605) its jurisprudence might have. The Italian Constitutional Court had applied the lex posterior rule to Italian law enacted after the national law ratifying the EEC Treaty. See also Chapter 3.

(37) Whereas ‘majoritarian activism’ might be seen as legitimizing the Court by expressing the will of the majority of Member States, this works much worse when the point of reference for determining the legitimacy of the Court is a non-defined democratic standard.

(38) See T. Tridimas, The General Principles of EU Law, 2nd edn. (Oxford: Oxford Univ. Press, 2006), 17–18, with regard to general principles. Similar A. Dashwood, ‘The Limits of European Community Powers’, European Law Review, (1996), 113–128: ‘Of course, the terms of the argument are unique, because they relate to that unique construct, the constitutional order of States created by the Treaties.’

(39) Von Bogdandy, ‘Rechtsfortbildung’, 20 with references.

(40) Von Bogdandy, ‘Rechtsfortbildung’, 24.

(41) Borchardt, ‘Richterrecht’, 34.

(42) Von Bogdandy, ‘Rechtsfortbildung’, 21.

(43) Case 2 BvR 2661/06 Honeywell [2010] BVerfGE 126, 286, English version at <http://www.bverfg.de/entscheidungen/rs20100706_2bvr266106en.html>, para H8. This judgment will be discussed in detail later in this chapter. Suffice it to note at this point, however, that the BVerfG acknowledged Art. 4 (3) TEU as being the legal basis of the premature effect of the Union directive in Case C-155/04 Mangold [2005] ECR I-9981. See T. Konstadinides, ‘Constitutional Identity as a Shield and as a Sword: The European Legal Order within the Framework of National Constitutional Settlement’, Cambridge Yearbook of European Legal Studies, 13 (2010–2011), 195–218, 214–215.

(44) See E. Wiederin, ‘Die Stufenbaulehre Adolf Julius Merkls’, in S. Griller and H.-P. Rill (eds), Rechtstheorie: Rechtsbegriff – Dynamik – Auslegung (Vienna, New York: Springer, 2011), 81–134, 122.

(45) Wiederin, ‘Stufenbaulehre’, 123.

(46) See Art. 140 of the Austrian Constitution (B-VG). The Fehlerkalkül may therefore only be the legal basis for the temporary validity of the concerned act until the time it is invalidated. Clearly, there is a problem with this concept when it comes to acts of supreme (constitutional) courts themselves. See Wiederin, ‘Stufenbaulehre’, 126, fn 193.

(47) The national law consequence of invalidation would become disapplication in the EU law context. In this case, the BVerfG itself would have to face the question whether its decisions are themselves subject to a temporary or absolute Fehlerkalkül.

(48) See N. MacCormick, Legal Reasoning and Legal Theory (London: Clarendon, 1994), 128 passim.

(49) MacCormick, Legal Reasoning.

(50) See the convincing reading of the case law by M. de S.-O.-l’E. Lasser, Judicial Deliberations: A Comparative Analysis of Judicial Transparency and Legitimacy (Oxford: Oxford Univ. Press, 2009), 206–236.

(51) Conway, The Limits of Legal Reasoning, 144. Lex specialis is meant to apply the ordinary meaning of the most specific relevant legal provision or source. See 153–158.

(52) Conway, The Limits of Legal Reasoning, 144. ‘A judge should decide on the basis of the most specific legal or constitutional provision, as supplemented by originalist interpretation if ordinary meaning is not decisive, and should explain and justify the extent of choice within that framework.’ See Conway, The Limits of Legal Reasoning, 163.

(53) See Conway, The Limits of Legal Reasoning, 232–237.

(54) See T. Hartley, The Foundations of European Community Law, 5th edn. (Oxford: Oxford Univ. Press, 2003), 193, for common law.

(55) See, on the following, M. Klamert, ‘Richtlinienkonforme Auslegung und unmittelbare Wirkung von EG-Richtlinien in der Rechtsprechung der österreichischen Höchstgerichte’, Juristische Blätter, 130/3 (2008), 158–170. Three steps are involved if we consider constitutional limits to reasoning by analogy. See K. Langenbucher, ‘Argument by Analogy in European Law’, Cambridge Law Journal, 57:3 (1998), 481, 483.

(56) See Langenbucher, ‘Argument by Analogy’, 483.

(57) Mayer, ‘Art 19 E.UV’, para 31

(58) Tridimas, General Principles, 17–18; J. Bengoetxea, Legal Reasoning, 44–45.

(59) Exceptions are analogies with secondary law, where the original intent can be ascertained. See the examples given by Langenbucher, ‘Argument by Analogy’, 510–512, mainly Case 6/78 Union Francaise de Céréales [1978] ECR 1675.

(60) See Langenbucher, ‘Argument by Analogy’, 482, and on the intricacies of the act of closing the gap by, among other things, establishing the relevant tertium comparationis, 487–490. Langenbucher has called this rule-based reasoning by analogy, where a statutory norm is extended to a different case that it was not originally meant to cover.

(61) Langenbucher, ‘Argument by Analogy’, 482, with illustrations from German law. See T. Hartley, Constitutional Problems of the EU (Oxford and Portland, Oregon: Hart Publishing, 1999), 44: ‘However, a true gap exists only where there is a reason to believe that the authors of the text intended a given topic to be covered. This occurs where a provision of the text cannot be applied, or does not make sense, unless a rule is created to cover another question.’ See Hartley, Constitutional Problems, 45: ‘A gap does not, however, exist simply because a topic is not covered – even if it would be convenient if it were.’

(62) See, in this context, W. Dänzer-Vanotti, ‘Der Europäische Gerichtshof zwischen Rechtsprechung und Rechtsetzung’, in O. Due, M. Lutter, and J. Schwarze (eds), Festschrift für Ulrich Everling, Vol. I (Baden-Baden: Nomos, 1995), 205–221, 220.

(63) The argument by Conway, The Limits of Legal Reasoning, 169, that the EU is not complete as a legal system because where it does not regulate the Member States are competent to do so, is not apposite, at least not in the present context. Neither is the concept of non liquet. Take state liability, discussed later. Had the Court not come up with the principle of state liability, there would have been a decision by the Court by ordering indirect effect, and there would have been a claim for infringement. These instruments might not have been as effective for the protection of the rights of the individuals concerned, but it would not have been a non liquet.

(64) See the account by Mayer, ‘Art. 19 EUV’, para 32, on the human rights jurisprudence of the Court and on general principles in general, which follows his statement mentioned earlier on the inadmissibility of gap-filling.

(65) Mayer, ‘Art. 19 EUV’, 502–504, and at 504: ‘Argument by analogy is thus used to compare a new case with a precedent in the light of the general legal principle.’ Principle-based reasoning by analogy is held to require a similarity between two cases in the light of the value promoted by a norm. See Mayer, ‘Art. 19 EUV’, 513. cf. C. Sunstein, Legal Reasoning and Political Conflict (Oxford, NY: Oxford Univ. Press, 1996), 71: ‘A precedent can serve as either a rule or an analogy.’ ‘A precedent serves not as a rule but as an analogy to the extent that it is at least plausibly distinguishable from the case at hand, but suggestive of a more general principle or policy that seems relevant to the case.’

(66) Langenbucher, ‘Argument by Analogy’, 502–503.

(67) For her, ‘[t]‌he sovereignty of the Member States is one of the main boundaries to judicial activism on the European level’. See Langenbucher, ‘Argument by Analogy’, 518.

(68) Langenbucher, ‘Argument by Analogy’, 517–518.

(69) See R. Streinz, ‘Der effet utile in der Rechtsprechung des Gerichtshofs der Europäischen Gemeinschaften’, in O. Due, M. Lutter, and J. Schwarze, Festschrift für Ulrich Everling (Munich: Beck, 1995), 1491–1510.

(70) M. Ross, ‘Effectiveness in the European Union Legal Order(s): Beyond Supremacy to Constitutional Proportionality?’, European Law Review, (2006), 476–498. Interestingly, R. Nazzini, ‘Potency and Act of the Principle of Effectiveness: The Development of Competition Law Remedies and Procedures in Community Law’, in C. Barnard and O. Odudu (eds), The Outer Limits of European Union Law (Oxford: Hart, 2009), 401–435, does not even mention effet utile in his text and only briefly mentions ex Art. 10 EC.

(71) Seyr, Der effet utile, 120, with references to Nicolysen, Ipsen, and Streinz (‘Prinzip der Funktionsfähigkeit der Gemeinschaft’).

(72) Seyr, Der effet utile, 121, referring to Grabitz.

(73) Seyr, Der effet utile, referring to Ormand and Bredimas.

(74) W. Burley and A.-M. Matti, ‘Europe Before the Court: A Political Theory of Legal Integration’, International Organization, 47 (1993), 41–76, 72–73.

(75) Burley and Matti, ‘Europe Before the Court’, 72–73.

(76) See Chapter 6.

(77) See Case 51/76 Verbond van Nederlandse Ondernemingen [1977] ECR 113, para 23; Case 148/78 Ratti [1979] ECR 1629, paras 20–23.

(78) Case 190/87 Moormann [1988] ECR 4689.

(79) See also A. von Bogdandy and S. Schill, ‘Art. 4 EUV’, in E. Grabitz, M. Hilf, and M. Nettesheim (eds), Das Recht der Europäische Union, Kommentar, Vol. II (Munich: Beck, 2010), para 62.

(80) See Chapter 3.

(81) See Chapter 3.

(82) See Seyr, Der effet utile, 110: ‘Überzeugender ist der Ansatz, die implied powers als eine besondere Art der Auslegung nach dem effet utile zu betrachten, die nur bei der Interpretation von Kompetenznormen zur Anwendung kommen kann.’

(83) Case 8/55 Fédération Charbonnière de Belgique [1956] ECR 292, at 299.

(84) Seyr, Der effet utile, 110: ‘Diese stellen mit anderen Worten die Rechtsfolge der Auslegung nach dem effet utile dar.’

(85) See also M. Cremona, ‘EU External Action in the JHA Domain: A Legal Perspective’, EUI LAW Working Paper, 24 (2008), 6.

(86) Opinion 1/76 European Laying-up Fund [1977] ECR 741.

(87) cf. P. Eeckhout, EU External Relations Law: Legal and Constitutional Foundations, 2nd edn. (Oxford: Oxford Univ. Press, 2011); P. Koutrakos, EU International Relations Law (Oxford and Portland, Oregon: Hart Publishing, 2006), 113.

(88) cf. J.-V. Louis, ‘Editorial: La Cour et les relations extérieures des la Communauté’, Cahier de Droit European, (2007), 285–291, 289.

(89) But see Weiler, ‘Transformation’, 2416, who does not mention Art. 10 EC in his account of ERTA but claims that ERTA was a case of purposive interpretation.

(90) See R. Kovar, ‘Les compétences implicites: jurisprudence de la Cour et pratique communautaire’, in P. Demaret (ed.), Relations extérieures de la Communauté européenne et marché intérieur: Aspects juridiques et fonctionnels (Brussels: Story, 1986), 15–36, 20–21.

(91) Joined cases C-46/93 and C-48/93 Brasserie du Pêcheur [1996] ECR I-1029 (emphasis added).

(92) See the account by D. Chalmers, ‘Judicial Preferences and the Community Legal Order’, The Modern Law Review, 60 (1997), 164–199.

(93) But see Seyr, Der effet utile, 153–158, who makes no difference between either principle.

(94) See Craig and de Búrca, EU Law, 63. cf. Lasser, Judicial Deliberations, 351, who has commented: ‘The ECJ’s collegial decisions remain distinctly civilian – and especially French (i.e., ‘Continental’, ‘Cartesian’, and ‘cryptic’) – in style, despite their abandonment of the single-sentence syllogism. ECJ decisions continue to be unsigned, univocal, magisterial (‘authoritarian’), and largely deductive documents that reveal decidedly less than they might…’ There is a strong discrepancy between the terseness of the Court’s reasoning and the Advocate Generals’ elaborateness, such as is apparent from Joined cases C-6/90 und C-9/90 Francovich [1991] ECR I-5357.

(95) U. Everling, ‘The Court of Justice as a Decisionmaking Authority’, Michigan Law Review, 82 (1984), 1294–1310, 1308: ‘The Court of Justice is constantly impressed to find what wide-reaching intentions and ideas are often read into its decisions.’

(96) Lasser, Judicial Deliberations, 207–208.

(97) Lasser, Judicial Deliberations, 207–208.

(98) See K.F. Röhl and H.C. Röhl, Allgemeine Rechtslehre (Cologne: Heymanns, 2008), 536–537. In contrast to EU law, German constitutional law opens the German legal order to the closing of lacunae, and general principles in German law are, thus, rather concretizations of constitutional principles. AG Mazák in Case C-411/05 Palacios de la Villa [2007] ECR I-8531, para 85: ‘By formulating general principles of Community law – pursuant to its obligation under Article 220 EC to ensure observance of the law in the interpretation and application of the Treaty – the Court has actually added flesh to the bones of Community law, which otherwise – being a legal order based on a framework treaty – would have remained a mere skeleton of rules, not quite constituting a proper legal “order”…’. See Joined cases 7/56 and 3-7/57 Algera v Common Assembly [1957–58] ECR 39, at 55.

(99) Tridimas, General Principles, 17–18.

(100) See W. Buerstedde, Juristische Methodik des Europäischen Gemeinschaftsrechts (Baden-Baden: Nomos, 2006).

(101) Hartley, Foundations, 133.

(102) This problem is perhaps referred to by Tridimas, General Principles, 19, who mentions the Case C-70/88 Parliament v Council (Chernobyl) [1990] ECR I-2041 as an example of this.

(103) Poiares Maduro, ‘Interpreting European Law’, 20–22.

(104) I hesitate to see formal reasoning as a method in view of the apparent lack of theoretical underpinning.

(105) Conway, The Limits of Legal Reasoning, 161, N. MacCormick, Legal Reasoning, 100–101.

(106) Conway, The Limits of Legal Reasoning, 161.

(107) See, for this term, N. MacCormick, Questioning Sovereignty (Oxford: Oxford Univ. Press, 2001), 107.

(108) J. Temple Lang, ‘Article 10 EC: The Most Important “General Principle” of Community Law’, in U. Bernitz, J. Nergelius, and C. Cardner (eds), General Principles of EC Law in a Process of Development (The Hague: Kluwer Law International, 2008), 75–113, 76.

(109) See Craig and de Búrca, EU Law, 65: ‘It is equally important for such judicial decision-making to be fully reasoned.’ R. Streinz and C. Herrmann, ‘Der Fall Mangold: Eine “kopernikanische Wende im Europarecht”?’, Recht der Arbeit, (2007), 165–169, 169: ‘Für die Dogmatik des Gemeinschaftsrechts bleibt zunächst das Desiderat nach einer besser nachvollziehbaren Argumentation des EuGH zumindest bei Urteilen, die von ihm selbst offenbar als grundlegend eingeschätzt werden.’ (For the analysis of Union law remains the wish for a more transparent reasoning of the ECJ, at least regarding judgments, which itself appears to consider as fundamental.) See also Arnull, ‘Judicial Activism and the Court of Justice’, 28–29, who rejects ‘judicial activism’ as an appropriate term, and deplores case law that ‘confounds our expectations by overturning apparently settled principles without adequate justification or explanation of their wider implications’.

(110) For a different perspective, see von Bogdandy, ‘Rechtsfortbildung’, 21.

(111) Case C-155/04 Mangold [2005] ECR I-9981. See M. Herdegen, ‘General Principles of EU Law: The Methodological Challenge’, in U. Bernitz, J. Nergelius, and C. Cardner (eds), General Principles of EC Law in a Process of Development (The Hague: Kluwer Law International, 2008), 343, 345; L. Gerken et al., ‘Mangoldals ausbrechender Rechtsakt (Munich: Sellier, 2009). See the literature cited by Streinz and Herrmann, ‘Der Fall Mangold’, fn 2. See, however, the apposite reposte by Arnull, ‘Judicial Activism and the Court of Justice’, 11, that such criticism is rarely based on a developed theory of where the limits of the judicial function are located.

(112) Case C-155/04 Mangold [2005] ECR I-9981, paras 74–75. See M. Ross, ‘Effectiveness in the European Union Legal Order(s): Beyond Supremacy to Constitutional Proportionality?’, European Law Review, (2006), 476–498, 493–495.

(113) See, among others, M. Dougan, ‘In Defence of Mangold?’, in A. Arnull et al. (eds), A Constitutional Order of States?: Essays in EU Law in Honour of Alan Dashwood (Oxford and Portland, Oregon: Hart Publishing, 2011), 219–244.

(114) See Craig, ‘The ECJ and Ultra Vires Action’, 421–422, showing what a coherent reasoning of the Court could have looked like.

(115) A. Arnull, ‘The Principle of Effective Judicial Protection in EU Law: An Unruly Horse?’, European Law Review, (2011), 51–70, 69. See also Craig, ‘The ECJ and Ultra Vires Action’, 421.

(116) See C. Tomuschat, ‘Das Francovich-Urteil des EuGH: Ein Lehrstück zum Europarecht’, in O. Due, M. Lutter, and J. Schwarze (eds), Festschrift fuer Ulrich Everling, Vol. II (Baden-Baden: Nomos, 1995), 1585–1609, 1593, who has doubted whether the principle of effectiveness permits compelling deductions (stringente Ableitungen).

(117) Ross, ‘Effectiveness’, 481.

(118) R. Nazzini, ‘Potency and Act of the Principle of Effectiveness: The Development of Competition Law Remedies and Procedures in Community Law’, in C. Barnard and O. Odudu (eds), The Outer Limits of European Union Law (Oxford and Portland, Oregon: Hart Publishing, 2009), 401–435, 416.

(119) Lasser, Judicial Deliberations, 210–211, arrives at a similar conclusion with regard to AG Tesauro’s Opinion in Brasserie du Pêcheur with his critique on what he calls meta-purposive argumentation, whereby ‘one telos is piled upon the next until the debate expressly revolves around the very structure, purpose, and existence of the Community legal order as a whole. What is in question and what drives the analysis is—to use AG Tesauro’s terms—‘the system of the treaty’. The argument therefore operates at an utterly fundamental level of systemic debate’.

(120) Case C-105/03 Pupino [2005] ECR I-5285, para 38: ‘That jurisdiction would be deprived of most of its useful effect if individuals were not entitled to invoke framework decisions in order to obtain a conforming interpretation of national law before the courts of the Member States.’ On this, see critically, M. Fletcher, ‘Extending “Indirect Effect” to the Third Pillar: The Significance of Pupino’, European Law Review, 30 (2005), 862–877, 871–872, noting that the reference to merely ‘most of its useful effect’ alluded to the fact that the preliminary reference procedure has a much wider scope than the interpretation of framework decisions.

(121) Case C-105/03 Pupino [2005] ECR I-5285, para 39.

(122) See Ross, ‘Effectiveness’, 483 for the ‘export’ metaphor. As discussed, the inter-pillar transfer of loyalty is validated by the Lisbon Treaty, which applies the former Community loyalty provision to the entire Union law regime.

(123) See Chapter 3.

(124) Case 14/83 von Colson [1981] ECR 1891, para 26.

(125) Joined cases C-397/01 and C-403/01 Pfeiffer [2004] ECR I-8835.

(126) Ross, ‘Effectiveness’, 481: ‘There is also, perhaps, a disingenuousness to the appeal of effectiveness as a rationale for development – who, after all, would advocate rules, methods or systems that proclaimed themselves to be ineffective?’

(127) See for a contrasting view, Conway, The Limits of Legal Reasoning, 140, who does not see this connection. His claim that the case law on reciprocal duties of the Union institutions to the Member States shows that the loyalty principle cannot be invoked in presumption of favouring intergration in any situation of interpretative doubt, in this light might need to be qualified.