Austro Mechana: the CJEU edges closer to contract and tort dovetailing under Brussels I.

The CJEU today held in Case C-572/14 Austro Mechana. I reported earlier on the AG’s Opinion (which was issued not too long ago). That post also refers readers to Tobias Lutzi‘s analysis. He points quite correctly (indeed entirely correctly) to the issue of dovetail between (now) Article 7(1) and 7(2). Given the interplay between Handte and Kalfelis, is an obligation between parties which is not contractual, necessarily one in tort? I.e. do these two dovetail? Following Kalfelis itself, the answer must be no: an action falls under Art. 7(2) if it ‘seeks to establish the liability of a defendant’ and is ‘not related to a “contract” within the meaning of Article 5(1)’ (para 56). Therefore one must seek to establish the liability of the defendant, and not just review whether the claim is contractual or not.

In the case of collection of copyright levies for private use (where consent of the copyright holder is not sought and a compensatory levy is imposed by national law instead, in accordance with relevant instructions in EU copyright law), one would intuitively say that no ‘liability’ is established against the distributor of copyrighted materials to whom effectively collection of a State-imposed duty is outsourced.

In the present case, the action brought by Austro-Mechana seeks to obtain compensation for the harm arising from non-payment by Amazon of the remuneration provided for in Austrian law. That failure to collect , the Court holds (at 44) constitutes a harmful event within the meaning of Article 7(2). At 50: ‘Austro-Mechana’s claim seeks to establish the liability of the defendant, since that claim is based on an infringement by Amazon of the provisions of the UrhG imposing that obligation on it, and that that infringement is an unlawful act causing harm to Austro-Mechana.’

The Court therefore does not dismiss the first criterion of the Kalfelis formula (‘establishing liability’). Yet it surely stretches it. The Court’s initial formulation of a two-pronged condition of application, therefore has not disappeared. However if the criterion of establishing liability is too readily accepted, the relevance of the initial formulation is certainly fading.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.

Orgacom v Vlaamse Landmaatschappij: When internal taxes become customs duties.

In Orgacom v Vlaamse Landmaatschappij, Case C-254/13, the ECJ sent out its regular reminder of the core foundation of EU law: namely it being a customs union.

Upon receiving instruction to challenge a national tax, it is useful intuition first of all to assess whether what client is complaining about, is not actually a customs duty (or charge having equivalent effect) per Article 30 TFEU (previously 25 EC), rather than an internal tax. If it is, a win is signed, sealed, delivered. That is because contrary to the possibility for Member States to argue an exception to a trade-restrictive national tax (Article 110 TFEU, previously Article 90 EC), per the ECJ’s case-law (Vinal v Orbat, Case 46/80, was the pivotal kick-off case), there is no room for manoeuvre whatsoever which could ever justify a customs duty.

Qualifying a charge as a customs duty or an equivalent charge, renders this charge contrary to the Treaty by its very nature. Charges which fall under Article 110, on the other hand, are only incompatible with the Treaty where they are discriminatory or protective.

What distinguishes both? Any pecuniary charge, whatever its designation or mode of application, which is imposed unilaterally on goods by reason of the fact that they cross a frontier, and which is not a customs duty in the strict sense, constitutes a charge having an effect equivalent to a customs duty. The only exception is where the charge in question represents payment for a service rendered to the importer, of a sum in proportion to the service, or if it forms part of a general system of internal taxation, applied systematically in accordance with the same criteria to both national products and imported or exported products: such charges on importation fall under Article 110 TFEU where they form part of a general system applicable systematically to categories of products in accordance with objective criteria, irrespective of the origin of the products.

Orgacom is a classic tutorial in the application of Article 30 TFEU. In the case at issue, the levy in question affects the importers of surplus livestock manure on import. The trigger for the levy is simply the amount of importation in the preceding year. That there is a similar levy imposed on fertilisers produced in the Flanders Region, is not sufficient to have it qualify as a tax under Article 110: it is the frontier crossing which is the trigger; the duty is not imposed at the same marketing stage (the disputed levy is imposed on importers; while the same levy in the Flemish Region affects producers); and the two levies are calculated using different methods.

The Court therefore also dismisses first hand the argument that the levy was needed to control the stocks of manure in Flanders and to protect domestic production against external measures that distort competition and impose an additional environmental burden on Flanders: because, as noted, once the measure is qualified as a charge having equivalent effect as a customs duty, wriggle room is out of the question.

(Of note is that the Belgian Constitutional Court had previously held the levy incompatible with Belgium’s internal Economic and Monetary Union).

Never ever underestimate the power of Article 30 TFEU.

Geert.