EU Law Monitor

European Union Law Monitor - October

Introduction

With a potential Brexit deal imminent, we thought it prudent to resurrect our European Union Law Briefing – albeit with a slightly different visage – with a view to continuing on a monthly basis. October's edition contains eight articles on contemporary EU law issues, from looking at new bodies like the EPPO and the proposed Digital Media Observatory through to cookie consent and unfair terms case law. At the end of this briefing you will also find a transposition table, which will aim to keep track of Ireland’s domestic implementation of Directives over the coming months.

 

 

New European Public Prosecutor’s Office to be established

Article 86 of the Treaty on the Functioning of the European Union (‘TFEU’) provided for the creation of a European Public Prosecutor’s Office (‘EPPO’) which would be tasked with investigating cases of crime which affect the financial interests of the Union, such as fraud, money laundering and corruption.

The EPPO was then officially created by Regulation 2017/1939 as an indivisible body of the Union with its own legal personality. An independent body, accountable to the triumvirate of EU institutions – being the Parliament, the Council and the Commission – the core tasks of the EPPO are set out in Article 4 of the Regulation:

‘The EPPO shall be responsible for investigating, prosecuting and bringing to judgment the perpetrators of, and accomplices to, criminal offences affecting the financial interests of the Union which are provided for in Directive (EU) 2017/1371 and determined by this Regulation. In that respect the EPPO shall undertake investigations, and carry out acts of prosecution and exercise the functions of prosecutor in the competent courts of the Member States, until the case has been finally disposed of.’

Beginning operation in 2020, the EPPO has 22 signed up Member States. Although Ireland is not among these participant countries, we have signed up to the above Directive which sets out the various criminal offences which are to be considered contrary to the financial interests of the Union. As Joseph Maguire notes in this month’s Gazette, this seems to imply a ‘wait and see’ approach on our part.

The obvious upside of this would be that we could monitor the level of ‘evocation’ – the phrase used to denote the taking over of a prosecution by the EPPO, over-riding the authority of Member State prosecutors – and make a judgement call as to whether membership of the EPPO will ultimately help or hinder us in our efforts to combat organised criminal activity.

Interestingly, the EPPO will have two delegated prosecutors in each country, with the prosecution being carried on in MS courts and in accordance with national law. However, the actions of the EPPO will be co-ordinated from a central office, based in Kirchberg, Luxembourg City. Non-participating countries Hungary, Ireland, Poland and Sweden may yet opt to join. If a Brexit deal falls through and the UK opt to re-join the EU in some capacity, they may also request to do so subject to Commission approval.

 

 

Plans laid for EU Digital Media Observatory with remit to monitor ‘fake news’

On 1 October 2019, the European Commission opened a call for tenders to create a digital platform geared towards fighting disinformation in digital media. The European Digital Media Observatory, as it will be known, will enable fact-checkers, academics and researchers to pool their collective resources, knowledge and insight as a means of providing support to policy makers in the fight against so-called ‘fake news’.

Although not explicitly mentioned, it is widely believed that the creation of this Observatory has been spurred on by online misinformation campaigns which EU officials believe are responsible for Brexit and the rise of hyper-polarised politics coming to the fore both online and at ballot boxes across the Union and indeed, further afield.

Writing in The Guardian in March, French President Emmanuel Macron rallied against the kind of ‘fake news’ which he believes to be responsible for Brexit. He wrote:

‘Who told the British people the truth about their post-Brexit future? Who spoke to them about losing access to the EU market? Who mentioned the risks to peace in Ireland of restoring the border? Retreating into nationalism offers nothing; it is rejection without an alternative. And this is the trap that threatens the whole of Europe: the anger mongers, backed by fake news, promise anything and everything.’

The call for tenders will run until 16 December and has a spending cap of €2.5 million. Part of the Commission’s action plan on disinformation, this body will also aim to pull together data from various platforms as a means of facilitating more in-depth academic research. According to reports, there will be no direct employees of the Observatory but rather, it will function as a focal point for co-ordinating efforts. For further information, please click here.

 

 

Up to 40% of Supreme Court cases now have ‘significant EU law element’ – Chief Justice Clarke

Speaking at the launch of a new book on the European Union’s common foreign and security policy last Wednesday, Chief Justice Mr Frank Clarke remarked that ‘somewhere between 33 and 40 per cent of the cases being heard by the Irish Supreme Court have a significant European Union law element’.

Aspects of European Union law which arise in daily practice include immigration and environmental issues. Insofar as criminal practice is concerned, there is also a frequent need to invoke the use of European Arrest Warrants so as to prevent those suspected of crimes in other jurisdictions from slipping through the cracks, as it were.

Indeed, as any student or practitioner will know, EU legislative initiatives like the General Data Protection Regulation and the Unfair Terms in Consumer Contracts Directive have featured heavily in Irish case law – the latter being relied on heavily in mortgage and repossession cases with particular frequency.

Moreover, the jurisprudence of the Court of Justice of the European Union is having more of an influence in shaping Irish law, as evidenced by a ruling from last December which provided in effect that the Workplace Relations Commission has the power to disapply national law which was in contravention of EU law.

Constitutional Law of the EU’s Common Foreign and Security Policy by Dr Graham Butler is available for purchase here.

 

 

Regulation on enforcing EU rules for the agri-food chain to apply from December

Regulation (EU) 2017/625, which aims to establish official controls to ensure that agri-food legislation which aims to safeguard human health, is correctly applied and enforced. The regulation introduces a harmonised approach to official controls around food businesses, from primary producers to retailers.

It should be noted that these controls also apply to agri-food chain products which have been brought to market in the EU from third countries. An official factsheet released by the Commission notes that this new risk-based approach, backed by a comprehensive IT management systems will also help to safeguard plant and animal welfare.

At the centre of the enforcement side of this Regulation is cooperation, as EU countries will be required to share the administrative burden of such a regime in addition to giving an undertaking that they will ensure the exchange of information so as to facilitate prosecution for non-compliance. National authorities will also be required to publish annual reports. The Regulation applies from 14 December 2019.

 

 

Unfair terms in loan contracts cannot be replaced by general provisions of MS law – CJEU

In the case of Dziubak v Raiffeisen Bank International AG (Case C-260/18), the Court of Justice of the European Union has clarified that unfair terms – in this case relating to the applicable interest rate being indexed to a foreign currency – cannot simply be replaced by general provisions of Polish civil law.

The interest payable on the couple’s mortgage was indexed to the Swiss franc, despite the fact that the loan was to be repaid in Polish zlotys. While this was technically advantageous for the borrowers to begin with, they were exposed to the risk which would result from any fluctuation in the exchange rate.

To this end, an action was brought before the Regional Court in Warsaw seeking a declaration of invalidity in respect of the loan contract in question as it was alleged by the borrowers to be in contravention of the directive on unfair contract terms in consumer contracts. These terms could not simply be severed, the borrowers contended, as it would result in contractual impossibility.

The Polish court referred to the judgment in Kasler (Case C-26/13) in which the Court of Justice held that the national court may substitute an unfair term with a provision of national law in order to maintain the validity of the contract. They asked, through a request for a preliminary ruling, whether the directive permits the substitution of Polish law for this purpose. They also asked whether the directive permits the annulment of the contract where allowing the contract to stand minus the unfair terms alters its very nature.

While the CJEU accepted that it is possible for supplementary provisions of national law to maintain the validity of a contract while also avoiding altering its nature, the provisions put forward by the Polish court in this instance were not suitable. However, they also noted that the directive does not preclude the annulment of the contract in question by the Polish court. For further reading on preliminary rulings procedure, click here.

 

 

EU considering measures outside of fines for breaches of competition law – Vestager

Margrethe Vestager was catapulted into the international spotlight in June 2017 for her decision to levy a €2.4 billion fine against Alphabet Inc., the parent company of Google, for abuse of a dominant position. The year after that, she again received international headlines for spearheading the pursuit of Apple for €14 bn in unpaid taxes plus interest which she claimed owed to Ireland. It should be noted that this money is being held in escrow pending appeal.

Having been elected to an unprecedented second term, Ms Vestager has now also been tasked with reforming the EU’s digital economy – a role she says she is ‘happy and humbled’ to fulfil. Speaking to EU legislators last week, the Dane stated plainly that fines are ‘not doing the trick’ and that she will have to consider more ‘far-reaching’ remedies. However, she has ruled out breaking up companies as her role is about doing ‘the least intrusive thing in order to make competition come back’.

It seems therefore that future initiatives will be forward-thinking and aim to prevent anti-competitive practices from taking root in the marketplace, as opposed to retroactively imposing fines for abuses which come to light at a later date. However, this will be checked by the EU law requirement that harm must be shown to have resulted from the anti-competitive practice before any action is taken. An injunction-type mechanism might be preferable, whereby Ms Vestager could order a company to cease the anti-competitive action pending the completion of an investigation.

However, lawyers at some of the UK’s top firms have expressed skepticism at this approach as it could lead to lengthy legal battles. Thomas Vinje of Clifford Chance told the Wall Street Journal that ‘if the commission loses in court and the interim measures are removed, then the commission may be discouraged from pursuing the case on its merits… and even if it does and succeeds, you still have a considerable delay’. Ms Vestager’s second term is scheduled to begin on November 1.

 

 

Cookie consent must be ‘active’, according to CJEU ruling

On Tuesday, 1 October, the CJEU offered its preliminary ruling on Planet 49 (Case C-673/17) which pertained to data protection. The key issue here was whether participants in a promotional lottery had properly consented to the transferring of their personal data to the company’s sponsors and partners.

Those who wished to partake in this lottery had been required to enter their postcodes, names and addresses. Following this they were asked to tick two checkboxes, the first of which would allow data to be transfer to the company’s sponsors and partners. The second of these would allow the company to use analytics tools to evaluate the participants online behaviour so as to enable the tailoring of ads. Those who did not at least tick the first box were forbidden from entering into the lottery.

The substance of the question which was referred to the CJEU by the German Federal Court of Justice was whether valid consent had been obtained. In offering its preliminary ruling, the CJEU noted that it should be answered having regard to both Directive 95/46 and Regulation 2016/679 (more commonly known as the GDPR). Article 2(h) of Directive 95/46 defines consent as being ‘any freely given specific and informed indication of his wishes by which the data subject signifies his agreement to personal data relating to him being processed. This points to active, as opposed to passive behaviour.

As the CJEU noted at para 55: ‘In that regard, it would appear impossible in practice to ascertain objectively whether a website user had actually given his or her consent to the processing of his or her personal data by not deselecting a pre-ticked checkbox nor, in any event, whether that consent had been informed. It is not inconceivable that a user would not have read the information accompanying the preselected checkbox, or even would not have noticed that checkbox, before continuing with his or her activity on the website visited.’

The conclusion was therefore drawn that it could not be concluded that the user had validly given his or her consent to the storage of cookies. Seemingly crucial to this decision was the fact the box appeared to be pre-selected, and had to be deselected in order for the user to refuse his or her consent. This will have implications going forward for companies relying on cookies for the collection of marketing data, as ‘active consent’ will be required.

 

 

And finally… An Taoiseach Leo Varadkar says ‘Brexit deal still possible’

While earlier in the week it seemed to be the case that issues relating to Northern Ireland and the border remained unresolved, An Taoiseach Leo Varadkar has today said that he believes ‘there is a pathway to a possible deal’ following a phone conversation with British PM Boris Johnson this morning.

Mr Johnson has signalled his intention to update Cabinet members on the negotiations this afternoon, following reports that negotiations between Brexit Minister Mr Stephen Barclay and the EU had reached a standstill. Remaining positive, An Taoiseach has said today that there is a lot of time between now and October 31 to reach a deal. However, whether this is possible remains to be seen as Mr Johnson gave an undertaking to a Scottish court earlier this month to request an extension if no deal is in place by October 19. Even if a deal is agreed, it will have to be passed through Westminster.

 

 

Directive Transposition Table1

Directive

Deadline

Status

2000/60/EC – Water Framework

22/12/2003

Commission has urged Ireland to rectify shortcomings in transposition, if not, a reasoned opinion will be issued.

2014/50/EU – Pensions portability

30/05/2018

Transposed by SI 239/2019

2014/62/EU – Currency counterfeiting

23/05/2016

Criminal Justice (Counterfeiting) Bill 2019

2017/1371 – Financial interests of EU

06/07/2019

Legislation proposed, summer 2019

2017/853 – Firearms directive

14/09/2018

Brexit delayed, SI 420/2019 (Aug 2019)

2018/843 – Fifth Anti-Money Laundering Directive (5ALMD)

10/01/2020

Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2019

 

 

 

Footnotes:

(1) Please note that this table is not intended to be comprehensive from the outset. It will be added to - and indeed, subtracted from - as the Oireachtas announces and passes legislation which correctly transposes EU law. The author does not accept liability for any error or omission in producing this table.

 

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