There’s something about Commission/Spain
Mon, Nov 23, 2009 posted by Pescatorius
There’s something profoundly odd about Commission/Spain. I have been struggling to see what it is, and I just can’t seem to find out what is it that keeps me wondering.
Commission/Spain is the first “judicial infringement” in the history of European Law. No minor deed, I must say. For over fifty years the Commission has avoided by all means to bring a Member State before the ECJ on the sole grounds of a national judicial decision. And it makes sense for several reasons: implementing the ECJ’s judgment will pose problems with national res iudicata, and the ability of a Member State to negotiate with the Commission in the course of the pre-contentious proceedings is practically null. Also, national courts have been the Commission’s and the ECJ’s first and foremost allies in the implementation of EC Law, and a message of the kind might interfere in a traditionally good institutional relationship.
Commission/Spain says farewell to all that.
For many years, it appears that the “registradores de la propiedad” were subject to VAT when providing the Spanish regional authorities tax liquidation services. Out of the blue, the Spanish Supreme Court overruled this practice and stated, in a special procedure that entails judgments of a particular normative force, that it all must change. The Supreme Court did not make a reference pursuant to article 234.3 EC, despite the fact that it was obliged to do so. A few months later, the Commission initiated article 226 EC proceedings against Spain on the sole grounds that, as a result of the Supreme Court ruling, the “registradores de la propiedad” were not subject to VAT anymore.
The ECJ has declared that Spain has infringed its obligations and therefore has stated that the “registradores de la propiedad” are indeed subject to VAT.
Therefore, the Spanish Supreme Court got it wrong.
Therefore, the ECJ has declared its first judicial infringement ever.
To make things clear, the judgment points out expressly to the Court’s decision in Commission/Italy (see paragraphs 125 and 126), the first case in which the Court attempted to give a go at a national judicial ruling, but finally chickened out. Now it appears that the time has come to implement what was mere theory in Commission/Italy, and the result is quite spectacular.
And now I begin to wonder: why is this a five-judge chamber judgment? And why was there no Opinion of Advocate General Sharpston? Why is the judgment only available in French and Spanish? Does this mean that it will be one of those routine infringements that are not published and are only of access on the internet in the language of procedure and french?
Am I going mad here, or is there something terribly odd in all this?
Can somebody tell me what on earth is going on here, or where is the Court heading, or what is the Court trying to say?
I certainly don’t manage to see where or what.
- Pescatorius
November 23rd, 2009 at 12:39 am
What would be the practical or legal consequence of a judgement against Spain?
November 23rd, 2009 at 1:00 am
Hi. I am a long time reader. I wanted to say that I like your blog and the layout.
Peter Quinn
November 23rd, 2009 at 8:41 am
It’s difficult to say at first sight. Also, I’m no expert in Spanish Law, and it will all depend heavily on what has the national Law provided.
I assume that Spain will rely on its courts and its “registradores”, and as of November 12 the latter will be subject to VAT. If this does not happen, the tax authorities and, eventually, the courts, will have to take measures in order to comply with the ECJ’s decision.
According to a long-time case-law, member States must derogate national provisions that have been declared incompatible with EC Law, either by the ECJ or national Courts. Therefore, the Spanish State must not only set aside the judgment, but also annul it. This is a different story, and I ignore if Spanish procedural rules include a sort of “recours en revision” enabling definitive judgments to be quashed by the Courts themselves. This would obviously be the most reasonable way out. The alternative is to enact a parliamentary rule openly stating that the “registradores de la propiedad” are subject to VAT, and therefore making it clear that in Spanish Law that is precisely the answer.
As for the unpaid VAT, I suppose the Commission is prepared for that and will eventually claim the reimbursement of all the unduly unpaid own resources, since the date of the Spanish Supreme Court’s judgment until 12 November 2009.
Fortunately this was a VAT case. No damages claimed by private parties are to be expected. But if there were, it is obvious that a Köbler scenario would then arise.
These are the immediate and practical consequences of the judgment. I will leave for another post the institutional dimension of the decision, and where is this taking us from the standpoint of Europe’s judicial architecture.
-Pescatorius
November 23rd, 2009 at 6:57 pm
One can only speculate (at least I can), but perhaps the idea was to avoid scoffing the Spanish court, for exactly the reasons mentioned in the post. By making as little noise about this ruling as possible, the ECJ might hope to get this out of the way without offending the Spanish. Now that this ruling is on the books, the lower Spanish courts and other Spanish authorities will start obeying it; there’s no need to make a big fuss to achieve that. That way, quietly, in a few years time the Spanish Supreme Court can officially overrule its precedent following this ruling without any need for anyone to be offended.
November 24th, 2009 at 7:52 pm
Reading paragraphs 64 and 65 of the judgment, I was wondering whether the ECJ simply wanted to take another route of controlling national courts: through their compliance with Article 234 obligation to refer preliminary references. The ECJ specifically asked the Commission whether the Spanish Supreme Court’s violation of its duty to refer was also included in the Commission’s action. After the negative response from the Commission (which meant that the ECJ could not give its ruling in this matter) the ECJ simply wanted to make as little as possible visible that it was in fact reviewing substantive application of EC law by the Spanish court - which it wants for some reason avoid? Would the ECJ be more transparent (i.e. behave “normally”) if it could rule on Article 234 violation?
On the other hand, when the Court was deciding which chamber gets the case, it could not be sure about the precise content of the application (since the case is allocated before the hearing). And giving the case to a 5-member chamber meant it did not want to do anything big (or at least - it did not want it to appear big…)
In any case, shall we expect completely secret judgments from the ECJ one day?
February 4th, 2010 at 9:35 pm
Am I too wrong if I think this is “just” a natural next step after Traghetti del Mediterraneo SpA?