Abuse of EU Law and Regulation of the Internal Market

Alexandre Saydé

• Publisher: Hart Publishing
• Year: 2014
• Print ISBN: 9781509907403
• eBook ISBN: 9781782254041
• Edition: 1
• Topic: Law
• Subtopic: International Law
• Index: Law

How can the concept of abuse of European Union law – which can be defined as undesirable choice of law artificially made by a private citizen – generate so much disagreement among equally intelligent individuals? Seeking to transcend the classical debate between its supporters and adversaries, the present study submits that the concept of abuse of EU law is located on three major fault-lines of EU law, which accounts for the well-established controversies in the field.
The first fault-line, which is common to all legal orders, opposes legal congruence (the tendency to yield equitable legal outcomes) to legal certainty (the tendency to yield predictable legal outcomes). Partisans of legal congruence tend to advocate the prohibition of abuses of law, whereas partisans of legal certainty tend to oppose it.
The second fault-line is specific to EU law and divides two conceptions of the regulation of the internal market. If economic integration is conceived as the promotion of cross-border competition among private businesses (the paradigm of 'regulatory neutrality'), choices of law must be proscribed as abusive, for they distort business competition. But if economic integration is intended to promote competition among Member States (the paradigm of 'regulatory competition'), choices of law by EU citizens represent a desirable process of arbitrage among national laws.
The third and final fault-line corresponds to the tension between two orientations of the economic constitution of the European Union, namely the fear of private power and the fear of public power. Those who fear private power most tend to endorse the prohibition of abuses of law, whereas those who fear public power most tend to reject it.
Seen in this way, the concept of abuse of EU law offers a forum in which fundamental questions about the nature and function of EU law can be confronted and examined in a new light.
In May 2013, the thesis that this book was based on won the First Edition of the European Law Faculties Association Award for Outstanding Doctoral Thesis.

Part I

The Phenomenon of Abuse of Union Law

Introduction: A Dynamic Perspective on Abuses of Union Law

The study of the phenomenon of abuse of Union law is characterised by a lack of clarity at the terminological, conceptual and practical levels. First, the terminology surrounding the abuse of law is notoriously versatile: on the one hand, the term ‘abuse’ and its derivatives are regularly used to aim at a broad range of phenomena going well beyond abuses of law; on the other hand, abuses of law are often addressed without having recourse to the term ‘abuse’ or its derivatives. Secondly, the definition of the concept of abuse of law has proved controversial, particularly in relation to the eventual use of subjective criteria and the distinction between abuse of law and abuse of rights. Thirdly and lastly, the treatment applied in practice to abuses of law is still heavily debated, both with regard to the technique (autonomous doctrine of abuse or statutory construction) and the outcome (proscribed or ratified).

The objective assigned to this part one is the deconstruction of the phenomenon of abuse of Union law with a view to clarifying the terms of the controversies present in this vast field of study. To that end, chapter one proceeds to a preliminary identification of the phenomenon of abuse of law, starting with a statistical analysis of the numerous official acts of Union law mentioning the term ‘abuse’. Two central distinctions will be drawn from this statistical analysis: the distinction between abuses committed by public authorities and by private individuals, on the one hand, and between abuses of law and abuse of rights, on the other.

Following the identification of the phenomenon of abuse of Union law, chapter two is devoted to the formal doctrine of abuse enounced by the Court in Emsland-Stärke. A particular emphasis will be put on the legislative origins of the doctrine and on eight seminal judgments in which the Court applied the formal doctrine of abuse: Emsland-Stärke, Halifax, Agip Petroli, Cadbury Schweppes, Vonk Dairy Products, Thin Cap Group Litigation, ING. AUER and PartService.

Building on the knowledge gained from the identification of the abuse of Union law and the study of the formal doctrine of abuse, chapter three proposes a definition of the concept of abuse of law. In essence, abuses of Union law will be defined as undesirable choices of law artificially made by private individuals. This definition can be decomposed in three elements: the presence of a gain-seeking choice of law attempted by a Union citizen; the artificiality requirement, which aims at identifying ‘naked’ choices of law that cannot be explained but for the regulatory benefit sought; and the teleological assessment, which seeks to determine whether such choices of law are desirable in the context of the legal regime affected. The last section describes the sanction of abusive practices, which consists in denying the undesirable choice of law attempted without questioning the validity of the economic transactions carried out.

On the basis of the definition of abuse of law established in the previous chapter, chapter four seeks to identify and treat a critical mass of Union legal acts in which abuses of Union law are addressed by means of alternative legal grounds, namely without having recourse to the formal doctrine of abuse. Common Union law reactions to artificial practices include informal doctrines of abuse, suspect periods, centre of gravity tests, free choice of law approaches or other legal grounds unrelated to the issue of abuse of law. This survey should incidentally demonstrate that the prohibition of abusive practices is a much broader phenomenon than is often contended, by no means limited to the cases in which the Court applied the formal doctrine of abuse.

Lastly, chapter five is devoted to the long-standing debate on the room for legal uncertainty entailed by the prohibition of abuses of Union law. Without disputing that the prohibition of abusive practices is a source of legal uncertainty, this chapter argues that such criticism is simplistic as it ignores another fundamental value of any legal order, designated as legal congruence. Every legal order is characterised by a well-established trade-off between legal certainty and legal congruence: the more predictable are legal norms, the less equitable they can be in particular cases. The concept of abuse of law must be appraised in light of this trade-off between legal certainty and legal congruence. On the one hand, artificial practices are manifestations of a lack of legal congruence of Union law; in that sense, legal certainty can be viewed as a source of artificial practices. On the other hand, the fight against artificial practices amounts to a decision to reinstate legal congruence at the expense of legal certainty in particular cases.

Overall, this part one should hopefully provide a dynamic perspective on the phenomenon of abuse of Union law. Abuses of Union law form part of an endless cycle of public action and private reaction. Abuses of law are reactions of Union citizens to the adoption of Union laws; by contrast with other ‘abusive’ phenomena, they are characterised by the private nature of their author and the public nature of the victim (abuse private-public: chapter one). Indeed, Union laws are likely to be abused by Union citizens whenever they leave room for artificial choices of law (definition of abuse of Union law: chapter three). This private reception of Union laws provokes a renewal of public action at Union level: indeed, Union law reacts to artificial practices in specific ways explored in chapters two (formal doctrine of abuse) and four (alternative reactions). Yet these reactions of Union law are contradictory, as artificial practices can be either proscribed or ratified. As explained in the General Introduction, understanding this contradiction in the reactions of Union law to artificial practices is the fundamental purpose assigned to this study. A first explanation is sketched in chapter five, which submits that the concept of abuse of Union law cuts across an unsolvable trade-off present in every legal order and which opposes legal certainty to legal congruence.

1

Identification of the Phenomenon of Abuse of Union Law

This first chapter seeks to introduce and identify the phenomenon of abuse of Union law, by contrasting it with other phenomena of ‘abuse’, chiefly the abuse of rights. The use of the term ‘abuse’ and of its derivatives is indeed extremely common in the legal vocabulary of the European Union. A simple search executed on the official website of the European Union (EUR-Lex) is edifying on the near-frivolity with which the abuse terminology is invoked:¹ during the period 1954–2009, 5785 official documents mentioned the term ‘abuse’ or one of its derivatives. Within the European Treaties, which form the primary law of the European Union, the term ‘abuse’ appears in the three following contexts: first, in competition law, which prohibits abuses of a dominant position (Articles 102 and 104 TFEU, former Articles 82 and 84 EC); secondly, in the chapter on the protection of public health, in relation to the abuse of alcohol (Article 168 TFEU; the former Article 152 EC did not explicitly emphasise that objective); and finally, in Article 54 of the Charter of Fundamental Rights, which prohibits abuses of rights (replicating Article 17 of the European Convention on Human Rights).

The growing presence of the abuse terminology in Court’s rulings, regulations, directives and, overall, in the whole of European Union official documents is striking, as shown in Table 1 and Figure 1.

Figure 1 – Union Official Documents Mentioning the Term ‘Abuse’ (1954–2009): Chart

Table 1 – Union Official Documents Mentioning the Term ‘Abuse’ (1954–2009): Data

Both in absolute and relative terms, the evolution of the number of Union official documents mentioning the term ‘abuse’ is impressive. In relative terms, their number has been growing steadily since 1980 in all four types of documents, the most impressive growths concerning directives (from 0.7 per cent to 5.3 per cent of abuse presence) and the global set of official documents (from 0.6 per cent to 3.6 per cent). For the period 2000–09 alone, 339 Court rulings, 76 regulations, 52 directives and overall 3536 European Union official documents mentioned the term ‘abuse’ or a derivative (contrast with 17, 1, 1 and 44 for the period 1954–69). The evolution is particularly marked for the activity of the Court: if the Court used the term ‘abuse’ (or a derivative) once in every 19 decisions during the period 1980–89, it did so once in every 10 judgments during the period 2000–09.² Still more impressively, the Advocates General had recourse to the abuse terminology once in every 22 Opinions during the period 1980–89, and nearly once in every five Opinions during the period 2000–09.³

In short, abuse is everywhere in Union law. To explain this omnipresence of the abuse terminology, one could evoke both the adaptability and the high illustrative force of the word ‘abuse’, which is capable of spelling out striking ideas in very different contexts. However, this omnipresence of the abuse terminology creates a serious methodological pitfall to studies on any phenomenon of abuse: the identification of the right phenomenon among the plethoric set of utilis...

Table of contents

• Cover
• Title Page
• Dedication
• Foreword
• Contents
• Lists of Tables and Figures
• Table of Cases
• Table of Legislation
• General Introduction: The Topicality of the Concept of Abuse of Union Law
• Part I: The Phenomenon of Abuse of Union Law
• Part II: Abuses of Union Law and Economic Integration
• Annex
• Bibliography
• eCopyright