Annulment Action Against an EU Measure

There are several conditions which must be fulfilled for an applicant to bring an annulment action against an EU measure under Article 230 EC. In order for it to be judicially reviewable, the contested Act must firstly be ‘open to challenge’, or, more simply put, ‘intended to produce legal effects vis-à-vis third parties’. Although an exhaustive list of reviewable acts is absent from the Treaty, it is clear that the types of legislation as listed in Art. 249 EC are reviewable as the term ‘legal effects’ means that the act must bring about a distinct change in the legal position of the applicant, that is, a change to their rights and obligations (Case C-22/70 Commission v Council (ERTA) [1971] ECR 273]). As the measure which BWI and FOFA wish to challenge is a Regulation it is thus eligible for judicial review.

In the European Union, there are four main forms of judicial review actions: inter-institutional actions, actions brought by Member States, administrative actions brought by Member States and administrative actions brought by private parties. For the purposes of this problem, we are concerned only with the latter of these. Private parties under this category are otherwise known as ‘non-privileged applicants.’ ‘Non-privileged applicants’ are referred to as ‘natural and legal persons’ in Art.230, simply meaning ordinary people and corporations.

In seeking to bring judicial review proceedings under Art.230(4), natural and legal persons may have locus standi in three circumstances: where the decision in question is personally addressed to the applicant; where the decision is addressed to a third party but is of ‘direct and individual concern’ to the applicant, or; where the decision is in the form of a regulation but is of ‘direct and individual concern’ to the applicant. ‘Direct and individual concern’ is assessed as two separate conditions, and both must be fulfilled in order for proceedings for judicial review to be permitted.

For a measure to be of direct concern to the applicant, all that is required is that the legal position of the applicant be directly affected. Chalmers et al describe the test of direct concern as ‘akin to a test of causation’ (pp 418-419). This not only means that there must be a causal link between the loss or damage suffered by the applicant and the measure of EC law being challenged, but that the interest which is being affected by the EC measure must be a legally recognised interest. This point is well illustrated by the Front National case (Case C-486/01 P Front National v European Parliament [2004] ECR I-6289).

Equally, Dreyfus v Commission (Case C-386/96P Dreyfus v Commission [1984] ECR I2309, at para 43) provided a test for direct concern which remains the principal test today:

‘… for a person to be directly concerned by a Community measure, the latter must directly affect the legal situation of the individual and leave no discretion to the addressees of that measure who are entrusted with the task of implementing it, such implementation being purely automatic and resulting from Community rules without the application of other intermediate rules.’

Turning now to the requirement of individual concern, the restrictive approach to standing adopted by the courts has made the issue considerably more problematic than that of its partner requirement of direct concern. The concept of ‘individual concern’ was defined by the ruling of the Court of Justice in Plaumann (Case 25/62 Plaumann & Co v Commission [1963] ECR 95). Here, the court held:

‘Persons other than those to whom a decision is addressed may only claim to be individually concerned if that decision affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed.’

There is much criticism to be made of this formula. Under the Plaumann closed category test, even those directly affected may be found not to have locus standi if the court does not consider the applicant to be individually identifiable not only at the time of application, but in the future too. Chalmers et al rather poignantly express this point:

‘Private parties will be able to seek judicial review of Decisions not expressly addressed to them only of they can distinguish themselves from all other persons, not only actually but potentially.’

Possibly the biggest and most obvious criticism that can be made of the Plaumann formula relates to the already stringent measures taken by the courts in preventing the so-called ‘floodgates’ of litigation. The requirement of ‘direct concern’ must surely already attend to this worry. Equally, the decision of the court in rejecting the Plaumann company’s claim is hard to reconcile with one of the main purposes of judicial review itself: that of protecting and upholding individual rights against the acts of the European institutions. The ruling in Plaumann is yet harder to reconcile with Van Gend en Loos (Case 26/62 Van Gend en Loos v Nederlandse Administratie der Belastingen [1963] ECR 1) – decided a mere five months prior to Plaumann – whereby the court went out of its way to make it easier for the ‘non-privileged’ to be able to seek remedies in the courts.

Notwithstanding the apparent strictness of the court in Plaumann, some flexibility in approach was shown in the subsequent case of Piraiki-Patraiki v Commission (Case C-11/83 Piraiki-Patraiki v Commission [1982] ECR 207). Here it was held that where applicants can prove, at the time of adoption of the measure, that they belong to a class of persons that is completely closed, they will meet the requirement of individual concern. What exactly will constitute a class that is ‘completely closed’, however, is not altogether clear. The applicants in the case were a group of Greek cotton traders and it was held by the court that ‘[T]hey had entered into contracts which were to be carried out during the months to which the decision applied constitutes a circumstance which distinguishes them from any other person concerned by the Decision’. On this basis, they fulfilled the closed category test of Plaumann.

Where private parties wish to institute proceedings of judicial review against a regulation rather than a decision, even bigger challenges must be overcome. Proving ‘individual concern’ of an EC measure proves particularly difficult if we consider the definition of a regulation given by Art.249, under which they are expressed as having ‘general application’. This issue was touched upon in Calpak (Cases 789 and 790/79 Calpak and others v Commission [1980] ECR 1949). Here it was held that the mere choice of passing a measure in the form of a regulation cannot change the nature of the measure in question:

‘The objective of that provision is in particular to prevent the Community institutions from being in a position, merely by choosing the form of a regulation, to exclude an application by an individual against a decision which concerns him directly and individually; it therefore stipulates that the choice of form cannot change the nature of the measure.’

The above case law portrays the rules governing standing for non-privileged applicants seeking to institute judicial review proceedings under Art.230 as unduly restrictive. As a general rule, it is difficult for natural or legal persons to challenge an EC measure, especially a regulation. The requirements under Art.230(4) were narrowly interpreted for so long that it seemed that private parties would never be able to surmount the formidable admissibility barriers thrown at them. There has, however, been a partial shift from the Court of Justice’s initial traditionally strict stance to a more nuanced test post- Cordoniu (Case C-309/89 Cordoniu SA v Council [1994] ECR I-1853). The essence of Cordoniu seems to be that simply because a measure is of a legislative nature (i.e. a regulation), it does not follow that it can not be of direct and individual concern to an applicant. This is a significantly more liberal approach taken by the court and one which conflicts immensely with the Plaumann formula. It seems that the EU courts will deviate from the strict test in Plaumann where there has been what Craig and de Burca describe as ‘an infringement of rights or a breach of duty’. What makes the annulment procedure for non-privileged applicants so unattractive is undoubtedly the short limitation period under Art.230(5).

Today, the leading cases on locus standi are UPA (Case C-50/00P Unión de Pequeños Agricultores (UPA) v. Council [2002] ECR I-6677) and Jégo Quéré (Case C-263/02P Jégo Quéré v Commission [2004] ECR I-3425). In the former, Advocate General Jacobs delivered a compelling opinion in which he called for reform of the test for individual concern. Acknowledgement of his proposals looked hopeful when the Court of First Instance restated the Plaumann formula a few weeks later even though they did so did narrower terms. Any such hope was subsequently dashed, however, by the European Court in its judgment of UPA when it followed neither the suggestions of Advocate General Jacobs nor those of the Court of First Instance, instead ruling that ‘[I]t is for the Member States to establish a system of legal remedies and procedures which ensure respect for the right to effective judicial protection’ (at para. 41 of the judgment). Although the idea of complete reform of the concept of individual concern was dismissed, meaning that Plaumann remains good law, the judgment does raise the prospect of indirect challenges via preliminary references from a national court under Art.234 EC. The ECJ’s approach post UPA is neatly encapsulated in the judgment of Unibet (Case C432/05 Unibet (London) Ltd. and Unibet (International) Ltd. v Justitiekanslern):

‘… the principle of effective judicial protection of an individual’s rights under Communitylaw must be interpreted as meaning that it does not require the national legal order of a Member State to provide for a free-standing action for an examination of whether national provisions are compatible… provided that other effective legal remedies, which are no less favourable than those governing similar domestic actions, make it possible for such a question of compatibility to be determined as a preliminary issue, which is a matter for the national court to establish.’ (at para.65).

Taking the above into consideration, both BWI and FOFA would be able to prove direct concern as the EC measure which they are challenging (Council Regulation 247/09) affects their legal situation. However, BWI fail to meet the requirement under Plaumann with regard to establishing individual concern as they do not possess any attributes which are ‘peculiar’ to them, nor can they be ‘differentiated from all other persons’ in order to distinguish themselves individually ‘just as in the case of the person addressed’, as required by the formula. Therefore, the only option left for BWI is to commence an action in the national court and hope for a preliminary reference to the Court of Justice under Article 234 EC. Under Art. 234, while a national court is not permitted to hold a Community measure to be invalid, it can refer a question concerning its legality to the ECJ for a preliminary ruling, as seen in Foto-Frost (Case 314/85 Foto-Frost [19870 ECR 4199. Although Art.234 provides applicants who are unable to challenge a Community measure under Art.230 an alternative avenue, it remains a rather inadequate solution.

FOFA, on the other hand, would be successful in establishing that Regulation 247/09 is of individual concern to them. Like the applicants in Plaumann, FOFA can not be differentiated from all other persons by reason of certain attributes peculiar to them because it is more than possible for another association similar to FOFA to hold a market event and sell home-made jams and preserves as FOFA do. They did, however, write to the EC Commission prior to Regulation 247/09 coming into force concerning methods of jam packaging and so it is on this basis that Sofrimport (Case C-152/88 Sofrimport v Commission [1990] ECR I-2477) is significant. Here, a French fruit-trading company sought judicial review of, inter alia, a regulation suspending the issue of import licences on the basis that their goods were in transit upon adoption of the regulation, establishing them as a restricted group. Similarly, FOFA had undertaken preparations for their upcoming market event prior to the adoption of Regulation 247/09. The EC Commission even acknowledged this in their reply to FOFA’s letter, and failed to mention any upcoming adoption of the regulation in their reply, stating that ‘the procedure described by FOFA seems reassuring and will be taken into consideration.’ FOFA may even be able to claim legitimate expectation as, in their reply, the Commission said nothing to discourage the actions of the association, despite having been made aware of its activities (Case C-104/89 Mulder v Council and Commission [1992] ECR I-3061). Like the fruit traders in Sofrimport, FOFA were in a very unique situation at the time of Regulation 247/09 being adopted and therefore fulfil the individual concern conditions outlined in Plaumann and Piraiki-Patraiki. As they have also initiated their challenge against Regulation 247/09 within the time limit of two months as specified under Article 230(5), FOFA can now be assessed on the remaining condition to bring an annulment action. INTERNATIONAL FRUIT / TIMEX

Once the first three conditions of annulment have been fulfilled (‘open to challenge’, brought within the time limit specified under Art.230(5), and standing), the final hurdle comes under Art.230(2) which describes the different forms of illegality and requires the measure being challenged to be one of the types specifically mentioned in the provision:

‘It shall for this purpose have jurisdiction in actions brought by a Member State, the European Parliament, the Council or Commission on grounds of lack of competence, infringement of an essential procedural requirement, infringement of this Treaty or of any rule of law relating to its application, or misuse of powers.’

FOFA has fulfilled the first part of this final requirement as it wishes to challenge an action brought by the European Council. The ground for annulment applicable in this situation will be infringement of the Treaty. Infringement of the Treaty encompasses the breach of several possible ‘general principles of Community law’, including, but not limited to: fundamental rights, proportionality, legal certainty, non-discrimination and transparency. Of these, we are concerned mainly with proportionality.

Proportionality (found in Art.5 EC) was launched as a general principle of Community law following the case of Internationale Handelgesellschaft (Case 11/70 Internationale Handelgesellschaft v Einfur-und Vorratsstelle Getreide [1970] ECR 1125) and then was later further elaborated in Fedesa (Case C-331/88 R v Minister of Agriculture, Fisheries and Food ex parte Fedesa [1990] ECR I-4023) where it was said:

‘…the lawfulness of the prohibition of an economic activity is subject to the condition that the prohibitory measures are appropriate and necessary in order to achieve the objectives legitimately pursued by the legislation in question’ (para.13).

While De Burca claims that the doctrine of proportionality is three-fold, other commentators such as Tridimas have asserted that proportionality ‘comprises two tests: a test of suitability and a test of necessity’ (Tridimas, 1999: 91). Perhaps more important, though, is the remedy that it can provide for an applicant. Unfortunately, there is no single formula the Court systematically and consistently uses when reviewing the proportionality of an act. A need for complete suitability or effectiveness has held to be not always necessary (Case C-434/04, Ahokainen and Leppik (2006) ECR I-9171, para. 3). Rather, it is the requirements of necessity and subsidiarity which appear to be of most importance with regard to a review of proportionality. Despite appearing in many judgments where the principle of proportionality has been applied, the precise meaning of these requirements remains (frustratingly) ambiguous. Nonetheless, the principle pf proportionality will usually be found to have been breached when unnecessary measures were taken, despite the availability of less intrusive alternatives that would have had a similar effect. It is for the applicant to show the court that such alternative measures were available, but were just not taken. Of course, this has the added advantage of saving the court the time of looking for an alternative to remedy the issue.

The variations in application of the principle of proportionality, as highlighted in the case law, is merely indicative of the variation of the intensity of the court’s review of proportionality. This is a result of the different contexts in which the principle can be applied. For an infringement of proportionality to be found, the Community institution must have acted in a ‘manifestly inappropriate’ fashion. The outcome of a finding of an infringement of proportionality will again depend on the intensity of review (as seen in Case C-189/01 Jippes and others v Minister van Landbouw, Natuurbeheer en Visserij [2001] ECR I-5689), which itself can depend on a number of factors, but a review of the nature of the discretionary powers afforded to the institution and the nature of the affected rights predominates.

With regard to the principle of proportionality, the European Council may be found to have acted unnecessarily. This is particularly so when considering FOFA’s letter to the Commission which explained that if proper operational procedures were followed, then the feared risk of bacteria could be eliminated. This can be evidence for the court that the risk of bacteria could have been avoided by alternative means to those provided under Regulation 247/09. Furthermore, we are told that the super-heated steam treatment is both dangerous and not suitable for domestic use. The production of jam is a domestic activity enjoyed and practiced by many individuals, as shown by the existence of groups such as BWI and FOFA. Therefore, Regulation 247/09 seems to have been a rather extreme, or ‘manifestly inappropriate’ measure. As FOFA is able to institute Art.230 EC proceedings, this renders it exempt from instituting Art.234 proceedings. Therefore, FOFA can only seek a remedy at the European Court of Justice. In contrast, BWI does not fulfil the conditions under Art.230 and so can only seek a remedy in the UK courts with the hope of a preliminary reference to the ECJ.

As all the conditions for annulment have been fulfilled, FOFA will be successfully able to seek a remedy in challenging Regulation 247/09. A finding of illegality will normally lead the measure to be void, as stated in Art.231 EC. However, if the measure is a regulation, the Court is permitted to declare that only part of the measure void:

‘In the case of a Regulation, however, the Court of Justice shall declare, if it considers this necessary, state which of the effects of the Regulation which it has declared void shall be considered as definitive.’

Liability is governed by Art.288(2) EC, which allows compensation to be awarded to parties who have suffered damage or loss as the result of a Community measure. An action for liability under this provision does not require a finding of illegality under Art.230 and so both BWI and FOFA can be awarded compensation if they can be found to have suffered loss or damage as a result of Regulation 247/09. Looking at Mulder, we can infer that there are two main elements that the court looks for in deciding whether there is liability. As suggested by Chalmers et al, the institution must be seriously at fault, and the claimant must be part of a group which is particularly vulnerable to this fault.

The elements of non-contractual liability referred to in Art 288(2) have also been expressed via the ‘Schöppenstedt formula’ and its later modification in Bergaderm (Case C-352/98P Laboratoires Pharmaceutique Bergaderm v Commission [2000] ECR I-5291) which discuss legislative measures generally related to regulations. The effects of Bergaderm have been particularly significant as, in subsequent cases, the Court has indicated that it will operate a single test and will make no distinction between the types of act being challenged.

In light of the above, then, FOFA would have a strong case for judicial review and will likely satisfy the conditions to have Regulation 247/09 annulled, although, as mentioned, the Court does not have to render the whole measure void. FOFA are also likely to be awarded compensation for their loss caused by the enactment and implementation of Regulation 247/09, as its members were each fined. BWI, on the other hand, will not directly be able to have Regulation 247/09 annulled under Art.230, but may be able to take an indirect action under Art.234 whereby they may be granted interim relief. As they do not appear to have suffered any readily identifiable loss or damage as a result of the Regulation, it is unlikely that they will be successful in receiving any compensation under Art.288(2).

At first glance, the rules governing standing of non-privileged looks unjustifiably strict. The position of natural and legal persons, however, has been altered somewhat by the Lisbon Treaty. Under Article 263(4) LFTEU, individuals will not only be able to challenge administrative measures more easily, but there will also be greater judicial scrutiny and involvement with EU administration. This is further reflected by Art.263(5) LFTEU, which provides for the possibility of even more relaxed rules of standing for reviewing measures of regulatory agencies.