In its judgment in ECO-WIND Construction of 28 May 2020 (C-727/17, EU:C:2020:393)  the Court of Justice of the European Union examined the compatibility with EU law of a Polish law provision that introduced a geographical restriction on the installation of wind turbines. The rule in question states that there must be a certain minimum distance between wind turbines and residential buildings, in particular at least equal to or greater than ten times the height of the wind turbine measured from ground level to the highest point of the structure, including the rotor and rotor blades.

The question of the compatibility with EU law has arisen mainly because Member States are not allowed to introduce measures having equivalent effect to quantitative restrictions and as technical rules adopted by Member States which may lead to such restrictions must be notified to the Commission in advance. Since such a restrictive effect may also arise from the Polish provision concerning the installation of wind turbines (especially because wind turbines higher than 100 meters can occupy only a maximum of 1% of Poland’s territory), the Court has examined, on the basis of a reference for a preliminary ruling, whether the provision constitutes a technical regulation within the meaning of Directive 2015/1535 /EU. In its judgment, the Court held that the rule in question did not constitute a 'technical specification' or 'other requirement' within the meaning of the Directive, since it covers only provisions concerning the product itself or its packaging or a condition capable of significantly influencing the composition, nature or marketing of a product. Although a restriction concerning the geographical location of the wind turbines may have an effect on their marketing, this effect is not direct enough to establish compliance with that definition element. However, it will be for the national court to decide, whether the legislation at issue constitutes a de facto prohibition of the manufacture, import, sale or use of the product. 

The Court did not find the regulation contrary to Directive 2006/123/EC on services in the internal market because the rule in question did not fall within the scope of the directive since the production of a good (in this case electricity) could not be considered a service in itself.

Finally, the Court stated that the national legislation in question did not undermine the achievement of the targets for the use of energy from renewable sources (therefore the implementation of Directive 2009/28/EC) because the Member States had large discretion as to the measures to be taken to reach the threshold prescribed by the directive (in case of Poland, in 2020, 15% of the energy produced must come from renewable energy sources). However, it is for the national court to decide whether the national provisions at issue were necessary and proportionate (or perhaps a less restrictive solution existed).

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Created: 05 June 2020

In its judgment of 10 September 2019 the General Court of the European Union annulled the so-called OPAL decision. In the OPAL decision the Commission had approved the new conditions of operation of the OPAL pipeline, the pipeline which connects North Stream 1 with the Czech gas transmission system and which is exempted from TPA for 22 years. According to the new conditions of operation the formerly applied 50 % capacity cap was removed with the result that Gazprom, the only undertaking that has physical access to the OPAL pipeline, could transfer gas using almost the whole capacity of the pipeline. Poland brought the case before the General Court which upheld the application for annulment of the OPAL decision. In the reasoning of the judgement the General Court held that according to the principle of solidarity as laid down is Article 194(1) TFEU in the area of energy policy the Commission should have assessed the effects of the modified conditions of operation on the security of gas supply of Poland and the Central European Region. Since the Commission failed to assess these potential regional effects, especially the possibility of diverting large quantities from the currently used transfer routes - namely the Yamal and the Brotherhood pipelines -, its decision was unlawful and had to be annulled.

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Created: 25 October 2019

I just would like to make a short announcement concerning our project being implemented in partnership with the Hungarian Academy of Sciences, Centre for Social Sciences, aimed at the training in EU State aid law of national judges coming from all over the Central and Eastern European region. We are actually developing training material for the first session of the training to be held at the end of May in Budapest. The project is co-financed by the European Commision (in a considerable part), its title is: "Building Eastern European judicial capacities for the enforcement of EU State aid law". Our focus is on the role of national courts in enforcing EU State aid law, and in particular on the specific tasks and responsibilities those national courts are meant to fulfill in proceedings brought before them in this field. For more information see https://jog.tk.mta.hu/esemeny/2019/05/eeustaid-training-event1 

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Created: 04 May 2019

In his late January opinion, Advocate General Bot assessed the investor-state dispute settlement (ISDS) system introduced by the EU-Canada comprehensive economic and trade agreement (CETA) in Chapter 8, Section F as compatible with EU law. In case the forthcoming opinion of the Court of Justice follows his legal position, the world of international ISDS may experience a significant push towards developing a more robustly institutionalised, more transparent system of investment dispute settlement, where the guarantees applicable to judicial systems under the relevant fundamental rights provisions may be more closely observed. The changes may eventually lead to the setting up of a permanent international court for investment disputes, as declared in the CETA as an express intention of the contracting parties.

The opinion was delivered in a procedure initiated by Belgium for an opinion of the Court of Justice on the legality of the CETA. The CETA, although signed by the parties, is not yet legally binding. Belgium put forward a number of claims contesting the compatibility of the provisions regulating the CETA ISDS system with the relevant principles and rules of EU law. It first raised that the establishment of the CETA ISDS forums, in parallel with the judicial system of the EU, undermines the exclusive and final jurisdiction of the EU Court of Justice to interpret EU law and review the legality of EU measures, and with that poses a threat to the autonomy and the particular characteristics of the EU legal order. It also asserted that the CETA ISDS provides opportunities of legal protection for Canadian investors which are not available to investors from the EU, thereby violating the principle of equal treatment and jeopardising the effectiveness of EU law. Finally, it claimed that certain provisions which regulate the composition of and the procedure before the CETA forums violate rights recognised in the EU Charter of Fundamental Rights, in particular the right of access to an independent and impartial tribunal.

The predictions before the delivery of the Advocate General’s opinion had been mixed. On the one hand, there was inevitable the fact that a little less than a year ago the Court of Justice declared in its ruling in Achmea (Judgment of 6 March 2018, Slovakia v Achmea BV, C-284/16, EU:C:2018:158) that clauses for investment arbitration in so-called intra-EU bilateral investment treaties (BITs) contravened core provisions of EU law. The opinion itself distinguished Achmea on two grounds. First, the obligations of the parties in the domain of the judicial protection of the rights made available to individuals are rather different in intra-EU relations and in the relationship of the Union with a third-State. Specifically, the Member States are bound by the obligations of mutual trust and loyalty towards each other, and the Union and a third-State are not. Second, the arbitration clauses of intra-EU BITs put EU law as the law applicable to the dispute and gave jurisdiction to the arbitration forum to interpret and apply EU law. In the case of the CETA ISDS system, these are explicitly excluded in law. As a more positive precursor for the assessment of the Advocate General, as recognised in the opinion, there was the pre-existing expectation that the Union will negotiate an international treaty with Canada covering international investment which will enable the mutual protection of investors’ rights under that treaty subject to a uniform level of legal protection as a matter of both substantive and procedural law. Bearing this in mind, it was unavoidable for the opinion to accept that the Union had no other political choice, when exercising the competences conferred onto it by the Member States in the field of external relations, but to favour establishing a system of ISDS for the CETA which would fulfil those requirements.

By-and-large, the Advocate General’s opinion relied on the provisions regulated in the CETA when declaring its system of ISDS as compatible with EU law. To much a lesser extent, it also relied on the special nature of the CETA forums, as forums of quasi-judicial decision-making, as well as the declared intention of the Union to use the CETA dispute settlement system as a first step towards improving the current system of ISDS. This approach seems rather solid legally. The only way to reach a different conclusion would be to assess the legal guarantees laid down in the CETA rules as providing either less certain legal (i.e., jurisdictional) boundaries, or a lesser degree of protection, in particular as matter of the applicable fundamental rights requirements. Reaching the latter conclusion may presume taking the position that investment dispute settlement forums should be subject to the same constitutional requirements as ordinary courts of law.

Concerning the first criticism that the CETA ISDS mechanism may undermine the final and exclusive jurisdiction granted to the EU Court of Justice in the interpretation as well as in the review of legality of EU law, the opinion asserted that the CETA provisions provide a number of legal guarantees which are capable of adequately safeguarding the jurisdiction of the Court. First, the jurisdiction of the CETA forums has been limited strictly to the application of two specific substantive provisions of the CETA. The application of EU law, by definition, falls outside of this remit. Second, when exercising their jurisdiction the CETA forums may only apply the relevant provisions of international law, which does not include EU law. Nor does this jurisdiction extend to the review of the legality of EU measures. Third, in light of the task imposed on the CETA forums, which is to grant ex post remedies to investors wronged in their rights, the interpretation and application of EU law, as well as the judicial review of EU measures, does not emerge as an issue in CETA ISDS procedures. Fourth, the impact of CETA ISDS decisions has been delimited in law. They will not bind other judicial forums (e.g., the EU Court of Justice) in other procedures, and any interpretation given to the applicable law, which may incidentally include EU law, will have binding effect neither on the EU Court of Justice, nor on national courts.

In connection with the first limb of the second claim that protection as a result of the establishment of the CETA ISDS mechanism Canadian and EU investors, with regard to their investments in the EU, are provided unequal opportunities of judicial, the opinion asserted that in the specific context of CETA investment dispute resolution the principle of equal treatment is applicable only in regards the protection of investments made by EU investors in Canada, on the one hand, and the protection of investments made by Canadian investors in the EU, on the other. All other parallel investment protection scenarios, including the EU investments of Canadian investors and those of EU investors, are in a factually different situation, therefore, their equal treatment is not required. In connection with the second limb of that claim that Canadian investors may avoid the payment of fines imposed on them for the violation of EU or national competition provisions by securing a decision from the CETA ISDS system that the enforcement of competition law was unlawful and that damages equal to the fine should be paid out to the investor concerned, the opinion held that the protection of competition is an objective specifically included in the CETA and that the CETA accepts the autonomy of its parties to introduce regulatory measures in the general interest, such as those aiming the protection of competition. On this basis, it concluded that it is unlikely that the CETA forums would, without violating the boundaries of their jurisdiction, deliver the earlier suggested decision.

Regarding the final claim that the rules governing the CETA ISDS system may contravene the fundamental right of access to an independent and impartial tribunal, the Advocate General asserted first that the fundamental rights requirements applicable to courts of law should be applied in the case of the CETA forums having taken into account their specific characteristics as quasi-judicial decision-making bodies. This could mean, for example, accepting that the rules regulating the remuneration of their members are legitimately different from those applicable to members of the national judiciary. In its response to the first limb of this claim that the regulation of the costs of the procedure before the CETA forums disadvantage investors with lesser means, the opinion highlighted that it is not excluded for potential CETA ISDS litigants to seek legal redress in the financially less burdensome procedures before national courts. It also noted that the applicable CETA provisions allow numerous exceptions making CETA ISDS available to all eligible investors. Regarding the second and third limb of the claim that the rules on remuneration, appointments and removals, and the code of ethics violate judicial independence and impartiality, the Advocate General asserted that the applicable CETA rules either provide sufficient guarantees in this regard, or do not raise the concerns formulated by Belgium.

Opinion of 29 January 2019, Advocate General Bot, 1/17 (CETA investment dispute settlement mechanism), EU:C:2019:72

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Created: 05 February 2019

In the fruitful cooperation of Wolters Kluwer Kft and the Károli Gáspár University there will be a third Energy law Conference to be held in Gárdony, at Vital Hotel Nautis, on 31 May and 1 June 2018. Lexcellence is going to take part again, both as audience and among speakers. The conference will focus on projects of the energy industry and their legal implications. Our presentation will provide a short overview of energy industry related State aid cases dealt with by the European Court of Justice during the past one-year peariod. We are really grateful to the organisers and would like to encourage all visitors of our home page to come and take part personally at the event.(https://shop.wolterskluwer.hu/termek-reszletek/jog/ingatlan/iii-magyar-energetikai-jogi-konferencia.p799/YSE3149.v7980)

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Created: 24 May 2018

In its 26 April judgments in ANGED (C-236/16 and C-237/16, EU:C:2018:291; C-234/16 and C-235/16, EU:C:2018:281) the Court of Justice of the European Union concluded that two Spanish regional tax measures levied on large retail establishments above a certain treshold did not confer a selective advantage (within the meaning of Article 107(1) TFEU) on smaller retail establishments not exceeding those tresholds and consequently not subject to the said taxes. According to the Court's interpretations those tax measures differentiated between groups of undertakings which were not in a similar legal and factual situation in the light of the objective of the measures, provided that the taxes at issue were meant to counteract the harmful environmental and town/country planning effects of retail establishments with large sales areas. As the Court emphasized, "in the absence of EU rules governing the matter, it [fell] within the competence of the Member States, or of intra-State bodies having fiscal autonomy, to designate bases of assessment and to spread the tax burden accross the various factors of production and economic sectors". The assessments provided in the ANGED judgments are legally in line with applicable case-law, however, they substantially depart in their practical results and conclusions from the judgment in World Duty Free Group, which laid down a wide interpretation of de jure selectivity  of tax measures.  The implication is that the bonmot of AG Jacobs from October 2000 (as laid down in PreussenElektra, EU:C:2000:585, par. 157) - according to which the assessment of selectivity is "a difficult exercise with and uncertain outcome" - is still actual today.

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Created: 08 May 2018