There’s only that much delay the ECJ will tolerate – Rotterdam court has to start from scratch in EBS, no clarification on waste shipments

The Court’s order in EBS, Case C-240/12 (available in French and Dutch only), has only now come to my attention (thanks to Raluca Rada) – and for the wrong reasons. This is a preliminary review by the Court at Rotterdam, concerning the application of the waste shipments Regulation.

The case at hand refers to a transport of unsorted used clothes from France to the United Arab Emirates via the Port of Rotterdam, seized by the Dutch authorities due to alleged failure to comply with the notification requirements under the waste shipment Regulation for waste transit. The defendant in the criminal proceedings essentially argued that the Dutch authorities interpret the concept of ‘transit’ in too wide a manner. Since these are criminal proceedings, there is additional tension on the notion of transit in old v new waste shipments Regulation – under criminal law, the provision with the most advantageous consequences for the defendant needs to be applied, even if it was not applicable at the time of the alleged infringement (retroactive application of the milder criminal law; thank you to Gaelle Marlier for confirming that).

The ECJ forewarned the national court that not enough information on the facts had been given for it to review. Time was given for the national court to provide additional data – the oral hearing was postponed to accommodate the national court’s delay in answering. Subsequently, the national court wanted to hear the parties on the additional facts to be given to the court: such hearing could not be scheduled for some time in view of the workload of the national court. The ECJ was then requested to try and answer the question anyway, on the basis of the facts that had been given in the request, supplemented with the few extra nuggets that had been provided informally. Not surprisingly therefore, the Court in the end declined full stop.

I am not sure what this means for the procedure: presumably, the question may be asked again, this time with the right amount of data? To my knowledge these kinds of orders do not occur all that frequently, pity it should do in this case, for I was rather looking forward to hearing the outcome.

Geert.

Questions referred

Where waste is shipped by vessel from an EU Member State (in this case France) to a State in which the OECD-Decision does not apply (in this case the United Arab Emirates), is there ‘transit’ within the meaning of the former 2 and the new  Waste Shipment Regulation (WSR) if under way the vessel puts in at a port of another EU Member State (in this case the Port of Rotterdam)?

Does it make any difference to the answer to question 1 if:

there is storage and/or transhipment of that waste at that port and/or

that waste is taken ashore and/or

that waste is declared for import at customs?

Piercing the corporate veil in competition cases – The ECJ in Eni

Update 13 June 2019 for an interesting paper by Anil Yilmaz Vastardis and Rachel Chambers, comparing investment law and the relevant issues for corporate veil and human rights abuses, see here.

Update 21 September 2016. For an application in the environment field, see [2016] EWCA Crim 1043 R v Powell and Westwood and analysis by Robert Biddlecombe, who brought the case to my attention.

Update 20 June 2016 the strict approach was confirmed in C-155/14P Evonik.

There is no general EU rule on the piercing of the corporate veil. Neither company law nor tort law is sufficiently (or in the case of tort law even embryonically) harmonised to be able to speak of much EU influence here. However in EU competition law, the principle is more or less established and may, one suspects, inspire in other areas, too. In Eni, the ECJ confirmed on 8 May the strong presumption of attribution in the case of shareholder control.

It is established case-law under EU competition law that the conduct of a subsidiary may be imputed, for the purposes of the application of Article 101 TFEU, to the parent company particularly where, although having separate legal personality, that subsidiary does not autonomously determine its conduct on the market but mostly applies the instructions given to it by the parent company, having regard in particular to the economic, organisational and legal links which unite those two legal entities. In such a situation, since the parent company and its subsidiary form part of a single economic unit and thus form a single undertaking for the purpose of Article 101 TFEU, the Court has repeatedly held that the Commission may address a decision imposing fines to the parent company without being required to establish its individual involvement in the infringement.

In the particular case in which a parent company holds all or almost all of the capital in a subsidiary which has committed an infringement of the European Union competition rules, there is a rebuttable presumption that that parent company exercises an actual decisive influence over its subsidiary. In such a situation, it is sufficient for the Commission to prove that all or almost all of the capital in the subsidiary is held by the parent company in order to take the view that that presumption is fulfilled.

In addition, in the specific case where a holding company holds 100% of the capital of an interposed company which, in turn, holds the entire capital of a subsidiary of its group which has committed an infringement of European Union competition law, there is also a rebuttable presumption that that holding company exercises a decisive influence over the conduct of the interposed company and also indirectly, via that company, over the conduct of that subsidiary.

In the present case, for the entire duration of the infringement in question, Eni held, directly or indirectly, at least 99.97% of the capital in the companies which were directly active within its group in the sectors in which there had been a violation of competition law. The ECJ held that in particular the absence of management overlap between Eni and the daughter companies, was not enough to rebut the presumption of the companies being a single economic unit. In competition law, therefore, the corporate veil may be quite easily pierced in a holding context, which undoubtedly is not the approach which many Member States take outside of the competition law area.

The waters therefore on the piercing of the corporate veil other than in the area of competition law, remain quite deep. This has an impact on the conflicts area, in particular in the application of the Rome II Regulation and the debate on corporate social responsibility, on which I have reported before on this blog.

Geert.

postscript: point made in e.g. the UKSC on 12 June 2013, in Petrodel v Prest (a matrimonial assets case which was decided on the basis of trust), where Lord Neuberger stated obiter  “if piercing the corporate veil has any role to play, it is in connection with evasion”.

Lord Sumption’s take was “there is a limited principle of English law which applies when a person is under an existing legal obligation…which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company’s separate legal personality“. He added ‘The principle is properly described as a limited one, because in almost every case where the test is satisfied, the facts will in practice disclose a legal relationship between the company and its controller which will make it unnecessary to pierce the corporate veil.’

Lord Clarke, agreeing with Lord Mance and others, stated “the situations in which piercing the corporate veil may be available as a fall-back are likely to be very rare”.

 

‘Appropriate assesment’ under the Habitats Directive as applied in Sweetman. Basically, avoid the water going under the (limestone) bridge.

In the event of a site classified under the EU’s Habitat directive, in case screening has revealed the possibility or the risk that a planned project may cause significant effects to the site, an ‘appropriate assessment’ will have to be drawn up. Sweetman is unusual in that, to Sharpston AG’s memory, the Court’s previous case-law concerns situations where there has been no appropriate assessment in terms of that provision and the question is whether such an assessment is necessary. Here, by contrast, an assessment was undertaken and there is no suggestion that it was improperly conducted – indeed, all the indications are that it was done with great care. Rather, the issue concerns the conclusion reached as a result of that assessment, on the basis of which the local authority adopted the decision at issue.

The habitat site concerned hosts a number of priority habitats (see here). If a proposed road development proceeds, 1.47 hectares of limestone pavement will be permanently lost.The discussion centres on the impact of this loss for the integrity and survival of the site.

The appropriate assessment stage corresponds to the second sentence of article 6.3 of the Habitats Directive, i.e.

In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.

The aim of the appropriate assessment is to provide an answer to this question, since the protection regime under the Habitats Directive only allows a project to be authorized on condition that it will not adversely affect the integrity of the site concerned, unless the exceptions of article 6.4 are applied.

In Sweetman the Court held that the interpretation of this criterion has to be construed as a coherent whole in the light of the conservation objectives pursued by the Habitats Directive, meaning that the integrity of the site is not adversely affected, in case it is preserved at a favourable conservation status. This entails the lasting preservation of the constitutive characteristics of the site concerned that are connected to the presence of the natural habitat type or the species whose preservation was the objective justifying the designation of the site in the list of SCI’s.

Based on this reasoning, the Court concluded that competent national authorities cannot authorize interventions in a site protected under the Habitats Directive where there is a risk of lasting harm to the ecological requirements of sites which host priority natural habitat types. According to the Court, that would particularly be so where there is a risk that an intervention of a particular kind will bring about the disappearance or the partial and irreparable destruction of a priority natural habitat type present on the site concerned. This risk needs to be assessed in accordance with the precautionary principle.

Previously, the Court had taken a similar approach with regard to the disappearance of priority species in Commission v Spain

In the main proceedings, the Lough Corrib SCI was designated as a site hosting a priority habitat type because, in particular, of the presence in that site of limestone pavement, a natural resource which, once destroyed, cannot be replaced. The natural habitat affected by the proposed road scheme is among the priority natural habitat types, which Article 1(d) of the Habitats Directive defines as ‘natural habitat types in danger of disappearance’ for whose conservation the European Union has ‘particular responsibility’.

The conservation objective, the Court noted,  thus corresponds to maintenance at a favourable conservation status of that site’s constitutive characteristics, namely the presence of limestone pavement. Consequently, if, after an appropriate assessment of a plan or project’s implications for a site, carried out on the basis of the first sentence of Article 6(3) of the Habitats Directive, the competent national authority concludes that that plan or project will lead to the lasting and irreparable loss of the whole or part of a priority natural habitat type whose conservation was the objective that justified the designation of the site concerned as an SCI, the view should be taken that such a plan or project will adversely affect the integrity of that site.

That does not mean that the planned project cannot go ahead – however the procedure for it to be allowed, becomes ever more stringent.

There’s no use crying over spilled milk. Or lamenting water having already gone under the bridge. However faits accomplis have no place in EU habitat protection , especially for priority sites: for once gone, it’s gone: otherwise it would not even be on the list.

Geert.

Is justice what you can afford to be done? ECJ turns to Aarhus Convention to apply ‘not prohibitively expensive’ in the EIA Directive.

In Edwards, the European Court of Justice (‘ECJ’) turned to the 1998 Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters, to interpret the provision ‘not prohibitively expensive’ in the European Directive on Environmental Impact Assessment (‘EIA’). These provide that members of the public (with sufficient interest) must have access to a review procedure before a court of law or another independent and impartial body established by law to challenge the substantive or procedural legality of decisions, acts or omissions subject to the public participation provisions of the Directive. Any such procedure must be, in the words of the Directive, ‘fair, equitable, timely and not prohibitively expensive.’

The House of Lords had affirmed a Court of Appeal’s decision to dismiss the appeal of Ms Pallikaropoulos and, on 18 July 2008, ordered her to pay the respondents’ (including the Environment Agency) costs of the appeal, the amount of which, in the event of disagreement between the parties, was to be fixed by the Clerk of the Parliaments. The respondents submitted two bills for recoverable costs in the amounts of GBP 55 810 and GBP 32 290. The jurisdiction of the House of Lords was transferred to the newly-established Supreme Court and the detailed assessment of the costs was carried out by two costs officers appointed by the President of the Supreme Court. In that context, Ms Pallikaropoulos relied on Directives 85/337 and 96/61 to challenge the costs order that had been made against her.

The Supreme Court asked the ECJ inter alia

– whether the question whether the cost of the litigation is or is not “prohibitively expensive” within the meaning of Article 9(4) of the Aarhus Convention as implemented by [those] directives be decided on an objective basis (by reference, for example, to the ability of an “ordinary” member of the public to meet the potential liability for costs), or should it be decided on a subjective basis (by reference to the means of the particular claimant) or upon some combination of these two bases?, and whether

– in considering whether proceedings are, or are not, “prohibitively expensive”, is it relevant that the claimant has not in fact been deterred from bringing or continuing with the proceedings?

In 2003, the EIA Directive had been amended and specific reference had been made to the Aaurhus Convention with which, the Directive said, the EIA Directive had to be ‘properly aligned’.

The ECJ held that the cost of proceedings must neither exceed the financial resources of the person concerned nor appear, in any event, to be objectively unreasonable.  As regards the analysis of the financial situation of the person concerned, the assessment which must be carried out by the national court cannot be based exclusively on the estimated financial resources of an ‘average’ applicant, since such information may have little connection with the situation of the person concerned. The national court may also take into account the situation of the parties concerned, whether the claimant has a reasonable prospect of success, the importance of what is at stake for the claimant and for the protection of the environment, the complexity of the relevant law and procedure and the potentially frivolous nature of the claim at its various stages. That the claimant has not been deterred, in practice, from asserting his or her claim is not in itself sufficient to establish that the proceedings are not, as far as that claimant is concerned, prohibitively expensive.

Plenty of criteria therefore for the Supreme Court to consider, altogether a (slight but important) dent in Member States’ national civil procedure rules.

Geert.

Preussen Elektra confirmed? Bot AG in Essent

Bot AG in Essent, Cases C-204/12 through to C-208/12 Essent v VREG (at the time of writing the English version of the Opinion was not yet available, however it will be soon) summarised the questions referred as whether the Flemish support scheme for renewable energy, which grants renewable energy certificates to producers of such energy only if they are located in the Flemish Region, and which obliges electricity distributors to surrender a minimum amount of such certificates without being able to offer such certificates obtained in other EU Member States, is compatible with the free movement of goods and with the EU’s non-discrimination principle. Directive 2001/77 regulates both renewable energy (or ‘green’) certificates – which are used by a Member State to show its meeting its obligations to produce a minimum amount of electricity from renewable sources – and certificates of origin, which allow an electricity distributors to prove that x amount of its electricity distributed, originates from renewable energy.

The Advocate General did not entertain at length the issue of whether renewable certificates in themselves qualify as ‘goods’ under the Treaty. The Flemish system may definitely have an impact on the import of ‘green’ electricity, with the latter undeniably having been held to be a ‘good’ under the protection of the free movement of goods. If the certificates scheme unjustifiably restricts the free movement of goods, it would at any rate be illegal and in need of proper justification.

Unlike in Preussen Elektra, distributors of electricity could still purchase renewable energy abroad – however such electricity is often more expensive (for it does not receive Flemish government support), and even if distributors were to purchase abroad, they would still have to surrender, after purchase, the necessary Flemish certificates.

The AG notes that the Court in Preussen Elektra allowed the German scheme despite it being discriminatory. This might have been an implicit reversal of the case-law that infringements of the free movement of goods may only be based on the court-invented ‘mandatory requirements’ (of which environmental protection is one; as opposed to those societal interests which are included in the explicit list of exceptions of Article 36 TFEU) where they do not discriminate. That it might have been such reversal  leads the AG to suggest, finding support in the integration principle, that the Court in Essent should make that reversal explicit. However an alternative reading of Preussen Elektra suggests that the judgment was simply poor precedent, especially given that the court did not only ignore the discriminatory nature of the German measure, but omitted at the same time to assess its proportionality. The poor judgment in Preussen Elektra may be explained by the series of harmonising measures in the Internal Market for electricity, which were being prepared at the time of the judgment and which have since entered the statute books.

Despite the AG suggesting such a rare explicit reversal of the Court’s case-law on the free movement of goods, he does not suggest that in the case at issue, the infringement is justified. Among his arguments for rejecting the measure (which also features the argument that the Flemish Region violated a promise made at the time the relevant scheme was approved by the European Commission under State aid rules), the one dismissing the ‘local production’ requirement is probably the least forceful. There is in my view merit in the argument that the relevant Union laws require Member States to roll-out their own, national renewable energy capabilities, and that systems such as the Flemish one may be required to support industry to work towards that goal (see the similar arguments at the WTO level).

The AG’s opinion contains a wealth of suggestions for the ECJ. It is likely that the Court will not take too much of that bait.

Geert.

Questions referred
'Is a national rule, such as that embodied in the Flemish Decreet van 17 juli 2000 houdende 
de organisatie van de elektriciteitsmarkt (Decree of 17 July 2000 on the organisation of 
the market in electricity), as implemented by the Besluit (Decision) of the Flemish Government
of 5 March 2004, as amended by the Besluit of the Flemish Government of 25 February 2005
on the promotion of the generation of electricity from renewable energy sources, where an
obligation is imposed on the suppliers of electricity to final customers connected to the
distribution network or the transmission network, to submit a certain number of green 
certificates annually to the Regulatory Authority (Article 23 of the aforementioned Decreet);
an administrative fine is imposed by the Vlaamse Reguleringsinstantie voor de Elektriciteits-
en Gasmarkt (VREG) on the suppliers of electricity to final customers connected to the 
distribution network or the transmission network when the supplier has not submitted a sufficient
number of green certificates to fulfil a quota obligation which has been imposed in respect of
green certificates (Article 37(2) of the aforementioned Decreet);
the Regulatory Authority cannot or will not take into account any guarantees of origin originating
from Norway and the Netherlands, and that being in the absence of implementing measures on the part
of the Flemish Government, which has acknowledged the equality or equivalence of those certificates
(Article 25 of the aforementioned Decreet and Article 15(1) of the Besluit of 5 March 2004), 
without that equality or equivalence being investigated by the Regulatory Authority 
in concrete terms;
in fact, during the whole time that the Decreet of 17 July 2000 was in force, only certificates for
the production of green energy generated in the Flemish Region were taken into account when
ascertaining whether the quota obligation had been fulfilled, whereas for the suppliers of electricity
to final customers connected to the distribution network or transmission network there was no 
possibility whatsoever of demonstrating that the guarantees of origin submitted met the condition of
the existence of equal or equivalent guarantees regarding the granting of such certificates, 
compatible with Article 34 of the Treaty on the Functioning of the European Union and Article 11 of
the EEA Agreement and/or Article 36 of that Treaty and Article 13 of the EEA Agreement?'
Is a national rule as referred to in subquestion 1 above compatible with Article 5 of the then
Directive 2001/77/EC 2 of the European Parliament and of the Council of 27 September 2001
on the promotion of electricity produced from renewable energy sources in the internal electricity market?
Is a national rule as referred to in subquestion 1 above compatible with the principle of equal
treatment and the prohibition of discrimination as embodied inter alia in Article 18 of 
the Treaty on the Functioning of the European Union and Article 3 of the then Directive
2003/54/EC  of the European Parliament and of the Council of 26 June 2003 concerning common
rules for the internal market in electricity and repealing Directive 96/92/EC?'
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