The European Union’s Competence to Adopt Minimum Standards on Civil Procedure in light of the ELI/Unidroit Project

Many thanks to Prof. Marta Requejo for the useful tips and comments on the final version of this post.

Résumé : Depuis 2013, ELI et Unidroit mènent un projet commun dont le but est de produire des règles de procédure civile valables sur le territoire européen. Les résultats de cette association sont suivis de près par l’Union européenne, qui songe à adopter des standards minimaux en matière de procédure civile. Ainsi, ce post examine dans quelle mesure un acte législatif dans ce domaine est autorisé par les articles 81 et 114 du Traité sur le fonctionnement de l’Union européenne.

The ELI/Unidroit Project and the EU’s Initiative

In recent years, various European legislative acts involving rules of civil procedure have popped up. This results from the growing competence that the European Union (EU) has gained in the field of cooperation in civil matters after the entry into force of the Amsterdam and Lisbon Treaties. Nevertheless, these measures are either circumscribed to a single area of law (for example, see the Enforcement of Intellectual Property Rights Directive) or limited to specific procedural questions (for example, see the Legal Aid Directive). As an alternative to the current fragmentary system, the European Law Institute (ELI) and the International Institute for the Unification of Private Law (Unidroit) engaged in an ambitious project in 2013, which aims to build common European rules on civil procedure on the model of the ALI/Unidroit venture (for more details on this project, click here).

This project may well be used as a starting point by the EU, which is considering the opportunity to legislate in this field. Specifically, the European Parliament Committee on Legal Affairs is investigating the possibility for the EU to adopt rules on civil procedure. The Union is stated to be mulling over endorsing a directive on minimum standards in civil procedure that would adapt Member States’ national laws (all the documents related to this project are available here). Although some approximation of national procedures sounds desirable, the ability to achieve such a result is constitutionally limited. By all means, for the European institutions to adopt such a measure, they must comply with one of the grounds of competence provided by the Treaty on the Functioning of the European Union (TFEU). In light of this, the purpose of this post is to assess whether the EU might enact uniform standards of civil procedure under Art. 81 or 114 TFEU, which represent the main provisions that the European legislator could possibly rely on.

The EU’s Competence to Legislate under Article 81 TFEU

Beginning with Art. 81 TFEU, it enables the Union to legislate on matters where cross-border implications exist. In particular, Art. 81.2(f) TFEU explicitly states that the EU may implement measures, which ensure the elimination of obstacles to the proper functioning of civil proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States. Essentially, the use of this legal basis is theoretically limited to cross-border matters. In other words, glancing at this provision, one would conclude that legislative acts covering domestic cases are excluded. Over time, however, the Commission has ceaselessly tried to expand the scope of Art. 81 TFEU (for example, see the explanatory memorandum on the European Small Claims Procedure, COM (2005) 87, at par. 2.2.1). Among other things, it argues that the terminology of the Treaty is open enough to encompass purely national disputes with an effect on the internal market. Moreover, the construction of a dual regime that separates cross-border cases from national ones is discriminatory. If the Commission succeeds in widening the scope of the EU’s competence in judicial cooperation, it could acquire the power to enact more incisive texts within this field.

The EU’s Competence to Legislate under Article 114 TFEU

Alternatively, the EU may adopt measures which approximate –or harmonise– Member States’ legislations and have as their object the establishment and functioning of the internal market, based on Art. 114 TFEU. According to the European Court of Justice (C-376/98) the EU has the ability to fade differences between national laws, where these restrict fundamental freedoms or distort competition. In any case, the measure at stake must aim to establish or improve the functioning of the internal market. Taking these considerations into account, we identify two main elements that may obstruct the EU’s action:

  • First of all, it is complicated to prove whether procedural diversity actually constrains fundamental freedoms or distort competition. On the one hand, one may admit that the reduction of procedural differences within the EU might generate savings on costs and encourage people to litigate abroad. However, this assessment is rather abstract and is not supported by clear empirical evidence. For instance, data regarding the number of cross-border cases dealt with by national courts is still scarce. Moreover, the beneficial effects of a harmonisation measure could be meagre in case other factors additionally hamper cross-border litigation. Typically, consumers usually face other obstacles of equal or greater importance that impede them from vindicating their rights, like the potentially high costs of judicial proceedings, language barriers, and the lack of effective means to obtain redress. In this context, it would be more complicated to demonstrate the necessity and usefulness of harmonisation. Besides, if harmonisation is partial, important distinctions between legal orders would remain and thus, savings on costs would be limited regardless.
  • Second of all, in order for Art. 114 TFEU to apply, the construction of the internal market as defined by Art. 26 TFEU must be the primary goal of the measure at issue. Although the internal market justification may be theoretically difficult to establish as far as harmonisation of civil procedure is concerned, practice shows a different picture. For example, in order to justify the adoption of the Antitrust Damages Directive, the Union argued that different procedural rules on the right to compensation create a distortion of competition and represent a disincentive for undertakings to exercise their rights of establishment and provision of goods or services (see recitals 7 and 8 of the Directive). This is quite a rhetorical reasoning. It seems to us that the actual objectives of this text are to promote the right to full compensation and to optimise the interaction between public and private enforcement of competition law, as stated by the Commission’s Proposal (compare par. 1.2 and 3.1 of the Proposal). Despite this, the adoption of the mentioned Directive on the basis of Art. 114 and 103 TFEU has been approved.

The Principles of Subsidiarity and Proportionality

In all cases, a directive on minimum standards of civil procedure based on any of those two provisions must comply with the principles of subsidiarity and proportionality. However, it is not clear that a broad interpretation of Art. 81 and 114 TFEU actually respects the principle of subsidiarity, as it dramatically enlarges the EU’s competences. Additionally, the creation of a non-binding instrument might be a better alternative in light of the principle of proportionality. Nevertheless, it has to be highlighted that legislative acts are rarely tackled under these two grounds.

Conclusion

As a conclusion, this post has put the spotlight on the constitutional limits that may hinder the enactment of minimum standards in civil procedure at a European level. Certainly, the exponentially broad interpretation of the EU’s grounds of competence in practice may lead to the adoption of such a measure. Should this happen however, the legitimacy of said measure could be altered.

Alexia Pato, editor of the European and private international law section of blogdroiteuropéen

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