Shedding Light on Principles and Case C-101/08 Audiolux
Mon, Oct 19, 2009 posted by Cartesio
Compelling legal principles should be generally accepted in the national legal orders in order to be general principles of Community law (See Schermers, Judicial Protection in the European Communities, Kluwer, 1976, 24). In Case C-101/08 Audiolux, the Luxembourg Cour de cassation asked in essence whether there is a general principle of Community law of equality of shareholders under which minority shareholders are protected by the dominant shareholder’s obligation.
The Court of Justice answered negatively for some obvious reasons. First of all, there are no conclusive indications of the existence of such a principle after a thorough analysis of provisions of secondary Community legislation (paras. 34-52). Also, the treatment to which Audiolux lays claim does not constitute a specific expression, in company law, of the general principle of equal treatment. As put by the Court, the general principles of Community law have constitutional status while the principle proposed by Audiolux is characterised by a degree of detail requiring legislation to be drafted and enacted at Community level by a measure of secondary Community law. Therefore, the principle proposed by Audiolux cannot be regarded as an independent general principle of Community law (para. 63). It is also worthy to look at the Opinion of AG Trstenjak. The non-existence of a general principle is articulated around three main reasons (para. 125). The equal treatment of shareholders has no constitutional status in both Community law and the national legal orders. There is no solid conviction in legal literature regarding the existence of such a general principle. Finally, the alleged principle does not boast the general validity within a legal order which is typical of general principles.
So it resorts from Audiolux that a REAL general principle of Community law must be of general application and of constitutional reach. This is absolutely fine with me. And this is the very first time to my knowledge - apart from the Kadi case but more indirectly anyway (para. 285) - that the Court of Justice makes very very clear that the general principles of Community law have a constitutional status. They reflect indeed the fundamental values of the European society, the idea of limitation of power and symbolize the core of a substantive European rule of law. If this is the TRUTH, one should thus argue for a narrow definition of the general principles of Community law based perhaps on the EU Charter of Fundamental Rights and thus exclude peripheral principles like force majeure, unjust enrichment, good faith, protection of animal welfare or even the recently and widely discussed principle of abuse of law.
Cartesio
October 19th, 2009 at 4:52 pm
I agree that this is the correct outcome, politically if nothing else. The opposite result would have opened the door to a kind of EU common law, whereby the court would get in the business of making law as well as applying it.
I’m not sure, though, why general principles of law - like the concepts of force majeure, good faith and abus de droit mentioned in the post above - should be out. While they are not of constitutional status, they are the background against which all law is written. One could say that they are part of the grammar of the legal language. Surely the ECJ should be allowed to apply them just like any other court of law?
October 19th, 2009 at 7:31 pm
I agree with you, Martin, but the limit must be set somewhere. I don’t know where, but I think it’s good that the Court states openly who and when it is willing to develop principles.
Also, I think Audiolux is carrying a message towards significant voices who have fiercely criticized the use of principles by the ECJ (the Herzog article, in reaction to the Mangold judgment, comes to my mind).
- Pescatorius
October 19th, 2009 at 7:55 pm
Very interesting post. In French law there is an interesting distinction between the “principes fondamentaux reconnus par les lois de la République”, which have a constitutional status, and the “principes généraux du droit”, which prevail over regulatory acts (i.e., the acts adopted by the Executive branch) but not over laws.
In EC law the summa divisio seems to be, on the one hand, those principles that embody a fundamental right (and for that reason are undoubtedly constitutional); and, on the other hand, those principles that are more accurately described as “the general principles common to the laws of the Member States” referred to in Article 288 EC. It seems to me that the latter are constitutional by accident, i.e., just because it is the Treaty itself that contains an explicit reference to the European common law. Prima facie I would see no difficulty if these principles were referred to in a simple regulation (which would still allow to make good for the damage caused by another regulation).