‘Practice what you Preach’: EU law extends to third countries the right to an effective legal remedy

The signs already bode well, but now it is firmly established: third countries are potential litigants before the EU courts in annulment actions (Article 263 TFEU). Although ‘court watchers’ may have predicted this outcome of Case C-872/19 P Venezuela v. Council (hereafter: ‘the Venezuela case’), this ruling is one that merits close attention for several reasons. There is an issue of consistency (with other lines of case law on direct concern, see below) and there is the issue of the potential wider repercussions for EU Common Foreign and Security CFSP. Yet foremost, the case merits attention (and applause) for the fact that the CJEU signals once more that the right to an effective remedy is a core value of the EU legal order, to be enforced domestically, internationally …and upon the EU itself.

The road to ‘Venezuela’

In this well documented case, the Venezuelan Government wished to challenge the restrictive measures adopted by the Council in an action for annulment (263 TFEU). In view of the dire situation in the country in terms of democracy and the rule of law, the EU attempted to weaken the Maduro administration, an administration not recognized as legitimate by several countries, including the United States. To that end the EU had adopted CFSP decision 2017/2074 that called for several restrictions to the sale of weapons and other sensitive products and services to Venezuela. Since a number of these restrictions related to competences under the TFEU, the Council adopted on the same day also Regulation 2017/2063 dealing with the sale of equipment, technology or software ‘that may be used for internal repression’ by the Venezuelan authorities. It was the latter regulation (based on article 215 TFEU) that Venezuela challenged before the General Court under 263 TFEU (the underlying CFSP Decision being largely immune from legal review under article 24 (1) TEU).

In its 2019 ruling the General Court however denied locus standi under Article 263, fourth paragraph, TFEU. It held Venezuela not to be directly concerned by the restrictions, one of the requirements for non-privileged applicants to initiate annulment actions against EU acts not addressed to them. Indeed the regulation was not addressed to Venezuela. It ‘merely’ addressed EU based operators and denied them the right to sell equipment, software or technology to their counterparts in Venezuela, be they public or private entities. Venezuela may have been prominently mentioned in the Regulation, it was not as such addressed. The Venezuelan state not being the addressee, its direct concern had to be established. By denying direct concern the General Court sidestepped the issue that was far more politically sensitive: can third states be regarded as ‘legal persons’ and thus be eligible to initiate annulment actions under 263 TFEU in the first place? In the this appeal case the CJEU had the opportunity to set this right by revisiting this point ex officio (being a legal person is after all a central part of the locus standi question, a matter of public policy to the Court).

Can a third state be a legal person under Article 263, fourth paragraph, TFEU?

As said, the caselaw of the EU courts was already pointing in the direction of an acceptance of third states as possible non-privileged litigants. Being a public law entity was already no problem at all (e.g. Deutsche Bahn) nor being a public law entity with certain state like attributes, including sub-national entities such as Gibraltar or the Netherlands Antilles.

All of these were allowed to litigate under the fourth paragraph of 263 TFEU, thus as non-privileged applicants. The privileged status remains reserved to the Member States proper (and of course the EU institutions themselves). Although occasionally some of these, highly autonomous, public entities would claim (unsuccessfully) a treatment on par with the Member States as did the Netherlands Antilles when challenging an EU regulation on rice and ‘defending their own economic interest’ for which they felt the Government in The Hague was not to be trusted). Furthermore it remains to be seen whether international agreements between the EU and third countries may grant the latter privileged status. This was touched upon in C-70/04 where the case was made that Switzerland could be assimilated with an EU Member State for the purposes of annulment actions under the EU-Swiss Air Transport Agreement. Sadly the issue was left undecided since Switzerland had locus standi in any event under the 4th paragraph of 263 TFEU.

A second, well documented and promising, case was that of Poland shortly before its accession to the EU. Wanting to challenge an EU act under 263 TFEU, it claimed it had to delay proceedings under 263 TFEU until after its accession (when Poland would have privileged status). Yet Poland was told it could have challenged the act easily before accession as non-privileged applicant. Although not the addressee it was undoubtedly directly and individually concerned (meaning the 2 month deadline within which proceedings must be brough started to run much earlier than the Polish Government had hoped).

Although both the Swiss and Polish cases were ‘compelling’ (to use Advocate General Hogan’s words (see point 77 of his opinion) they dealt with ‘third states’ (an EFTA state and a state about to accede) that were both highly interconnected with the EU legal order). This explains that even the issue of privileged status was on the table.[i] Both cases therefore might still allow for an a-contrario reasoning setting apart the Venezuela case. That was however not the case with what was the most promising of the ‘pre-Venezuela’ cases: Cambodia v. Commission. The Kingdom of Cambodia, a third state that is certainly not highly interconnected with the EU legal order, challenged safeguard measures that, although not addressed to Cambodia as such, severely affected the import of Cambodian rice. The General Court here stated that ‘neither the fourth paragraph of Article 263 TFEU nor any other provision of primary law excludes third States from the right to bring an action for annulment; a third State, which has legal personality under both international and domestic law, may not be prevented from challenging an EU act before the General Court’ (Cambodia v. Commission, pars 49 and 50).

In fact, the issue of ‘legal personality’ (an autonomous EU legal concept, independent from international or domestic law) had itself already been expanded greatly to the point where even lacking it might not bar an ‘entity’ from launching an annulment action.[ii] The classic case on this is PKK that, just like the Venezuela case, dealt with restrictive measures: ‘an existence sufficient for it to be subject to restrictive measures, it must thus be accepted on grounds of consistency and justice that this entity continues to have an existence sufficient to contest that measure before the EU Courts (PKK, pars 38-54 and 107-122). Simply put: if you are deemed ‘real enough’ to be subject to sanctions, you must also be deemed ‘real enough’ to contest them. PKK also inspired Advocate general Hogan in Venezuela (and then the CJEU itself) stating that anyone affected by restrictive measures must have access to the EU courts to protect its rights ‘irrespective of its legal qualification under national, international and perhaps indeed EU law’.

Practice what you Preach!

The CJEU opening up the action for annulment in 263 TFEU to 3^rd countries (as non-privileged applicants) thus seems in line with earlier case law, especially with the General Court’s ruling in Cambodia. There is also no reason why the granting of such international openness would be barred by public international law (see for instance Kassoti and Carrozzini). There are good reasons to support this decision of the Court. One such argument is systematic: the possibility that EU Member States allow third countries to bring claims before their domestic courts. That being so, these can subsequently refer questions on the validity of EU acts to the CJEU. The legal effects of a declaration of invalidity are for practical purposes identical to those of an annulment under 263 TFEU (also erga omnes and, usually, ex tunc).

Yet, there is a more profound reason in favor of the Court’s ruling. The most important argument is one that emerged in response to the main criticism in the Venezuela case (voiced by a number of intervening Member States as well as the Council): that of asymmetry. Allowing third countries access to EU courts might undermine EU Common Foreign and Security Policy as the EU might not have such options before the domestic courts of Venezuela. With the proliferation of EU sanctions, litigation opportunities also open up to other third countries (e.g. Russia), a point already made by other commentators. This ‘asymmetry argument’ recalls the caselaw on the justiciability of WTO law in the EU legal order (see rulings like Van Parys) although it may be argued that this analogy does not work. Making the justiciability of a consensual multilateral treaty subject to reciprocity is arguably not the same as access to justice when contesting unilateral measures. The more important question however is this: should this argument (for what it is worth) outweigh respect for the rule of law and access to justice?

Fortunately the CJEU holds this not to be the case when it firmly swept the asymmetry argument away. It stated that ‘The obligations of the European Union to ensure respect for the rule of law cannot in any way be made subject to a condition of reciprocity as regards relations between the European Union and third States’ (see par 52 of Venezuela). Thus, even if such asymmetry were to be a fact (Venezuela has actually not imposed any restrictive measures on the EU nor on its Member States and even if that were so it might very well be that its legal system allows foreign entities locus standi in Venezuelan courts) that cannot trump the main argument that the EU is based on the values in art 2 TEU including the Rule of Law.

It is this aspect of Venezuela that deserves praise. By contrast to the Swiss, Polish or Cambodian cases, the rule of law and the concomitant right to an effective legal remedy is now the determining factor in the Court’s reasoning. The EU has the constitutional task to promote its values in the wider world (articles 3(5) TEU and 2 TEU). If that is so, one needs to practice what one preaches: subject yourself to the values you must promote globally. The price for this might indeed be putting yourself, in terms of reciprocal access to justice, in a vulnerable, asymmetrical, position (although as stated above in practice this remains to be seen). There would be something distinctly hypocrite in adopting restrictive measures like these that intend to act against the demise of democracy, fundamental rights and the rule of law and then deny an effective legal remedy to the most affected party.

At this juncture, there are good reasons to believe that the CJEU is also addressing an audience closer to home. By making the right to effective legal protection the key argument for opening up Article 263 TFEU the case also fits well in the current caselaw on the Rule of Law backsliding in certain EU Member States. The CJEU in fact supports its argument by referring to one of these recent cases, Repubblika, a case on the independence of the Maltese judiciary. The value of the Rule of law (and thus of effective legal protection) is core to the EU legal order and cannot be made subject to reciprocity no matter how much ‘realpolitik’ would wish for it.

The issue of Venezuela’s direct concern

Effective legal protection obviously does not merely depends on having the status of a ‘legal person’ in the meaning of Article 263, fourth paragraph, TFEU. It depends just as much on being directly and individually concerned. Individual concern, normally the hardest of these two hurdles, was not an issue here as the restrictive measures were of general application and not adopted through a legislative procedure (see art. 215 TFEU) hence a ‘regulatory act not entailing implementing measures’.[iii] Yet, as a non-privileged plaintiff Venezuela also had to establish that it was directly affected by the restrictive measures. The General Court denied this, stating that Venezuela might obtain the goods and services elsewhere (from non-EU operators, e.g. China a country that does recognize the Maduro administration). It thus deemed the effects for the Venezuelan state to be only indirect: it may have been more difficult to acquire certain goods and services but not impossible. The CJEU however corrects the General Court on this point: ‘The condition that prohibitions such as those laid down in Regulation 2017/2063 must be of direct concern to a legal person does not mean that it must be entirely impossible for that person to obtain the goods and services in question’ (see par. 71 of Venezuela).

This juncture of the Court’s ruling is certainly defendable and befitting the stance of interpreting article 263 TFEU in line with the right to an effective remedy. Yet, it also throws a new light on other caselaw dealing with the direct concern issue. In the past, sub-state entities were denied locus standi under 263, fourth paragraph, TFEU when challenging EU acts that denied them certain EU funding. As could be seen in the Regione Siciliana, the main reason would be that the withdrawn EU funds might still be replenished from a different source (usually the central authorities of the respective Member State). For the sake of consistency, it would have been interesting to see the CJEU engage with this line of its own caselaw, especially since cases like Regione Siciliana also deal with public entities, not being ‘Member States’, challenging EU acts under 263’s fourth paragraph. Obtaining the denied EU funds elsewhere is also for them ‘not entirely impossible’. The Court’s reliance on access to justice as a central value in interpreting article 263 TFEU is commendable but also shows that still more work needs to be done.

[i] Additionally, third countries were also accepted as intervening parties under art 40 of the Statute of the Court of Justice as happened in Case 91/81 where the Commonwealth of Dominica intervened.

[ii] See also Lenaerts, EU Procedural Law (2014), on p. 314 and the CJEU in the Venezuela case, par. 42

[iii] Although individual concern was likely not a problem to establish anyway here, in view of the Codorniu caselaw