Annulment Procedure EU Law PDF

Annulment procedure EU LAW (Global Law) a. a. 2024/2025 PROF. AVV. LUCA CALZOLARI, PH.D, LL.M 0  Preliminary overview  The action for annulment is regulated by Article 263 TFEU (formerly Article 230 EC and 173 EEC), and th...

Annulment procedure EU LAW (Global Law) a. a. 2024/2025 PROF. AVV. LUCA CALZOLARI, PH.D, LL.M 0  Preliminary overview  The action for annulment is regulated by Article 263 TFEU (formerly Article 230 EC and 173 EEC), and the possible effects of an annulment judgment are governed by Article 264 TFEU.  Direct remedy = At a glance, it gives (i) Member States and EU Institutions and (ii) natural and legal persons the possibility of directly bringing actions before the Court of Justice to challenge the legality of acts adopted by the EU Institutions  the function is to review the legality (and not the merits) of acts adopted by EU institutions, bodies and organs  in other words, to verify if EU Institutions comply with EU primary law.  It is somehow similar to administrative jurisdictions at the national level. The model is notably the French one but is not dissimilar to the Italian one as well.  The annulment procedure ensures respect for the principle of legality, ensures that EU institutions are subject to the rule of law (see Art. 2 TEU).  Relationship with the preliminary reference procedure (of validity): the two jurisdictional remedies have similar functions but are different protection mechanisms: direct vs. indirect protection.  Together (and also with tools offered by national systems) 1 ensure (or should ensure) respect for the right to effective judicial protection (see Art. 6 and 13 ECHR; Art. 47 CFREU).  Preliminary overview (2)  Which acts can be challenged ex Article 263 TFEU?  How is the jurisdiction to hear the actions for annulment divided between the Court of Justice and the General Court?  Which are the grounds of appeal and the “defects” that can lead to the annulment of an act of EU secondary law?  How intense is the level and extent of the judicial review that can be exercised by the ECJ and the General Court?  Are there any time limits within which actions for annulment shall be submitted?  Which are the effects of the submission of the application (i.e., interlocutory effects) and the effects of the judgment rendered at the end of the procedure?  and above all, who at what conditions can bring an action for annulment?  The analysis of so-called locus standi is certainly the most important issue, especially with regard to the standing of natural and legal persons. 2  Which acts can be challenged ex Article 263 TFEU? Under Article 263(1) TFEU, the CJEU can review:  legislative acts (thus acts enacted jointly by the Parliament and the Council at the initiative of the Commission),  acts adopted independently by the Council, the Commission and the European Central Bank that are not recommendations or opinions (i.e., non-legislative acts)  acts of the European Parliament and the European Council (from Lisbon) intended to produce legal effects vis-à-vis third parties (hence non-legislative acts)  acts of Union bodies or organs intended to produce legal effects vis-à-vis third parties. 3 Which acts can be challenged ex Article 263 TFEU (2)? The list of acts that can be challenged has been amended several times in the various versions of the Treaty. E.g.:  in the first version of the Treaty (Art. 173 EEC) there was no provision for the appealability of acts issued by the European Parliament. Also because in the institutional design of the then EEC, decision-making power was reserved only to the Council and the Commission.  until Lisbon (Art. 230 EC) there was no provision for the appealability of acts of the European Council (which with Lisbon became an institution) or the other bodies and organs of the Union. Even before the amendments to the Treaties, however, these gaps were filled by the Court of Justice (with regard to acts of Parliament see, e.g., the well-known Court April 23, 1986, 294/83, Les Verts). The amendments to the Treaties are thus codification of the Court’s case law. Substantive approach = what is important to remember is that the Court has adopted a substantive rather than a formal approach to the matter.  Thus, to determine whether an act is appealable, one must take into account its substance (i.e., its contents and effects) and not the nomen iuris under 4 which it was adopted.  Which acts can be challenged ex Article 263 TFEU (3)?  To sum up, and not dissimilarly from the situation in virtually all national legal orders of the MSs, the notion of challengbale acts can be summarizes as including all definite measures intended to produce binding legal effects capable of affecting the interests of third parties who want to challenge them, thereby significantly altering their legal situation,  Even shortly, an act which is final, binding an affects third parties can be the subject of an action for annulment.  This entails, for example, that also atypical (non standard) acts have been considered as capable of being challenged under Article 263 TFEU:  the act of the Parliament that denied an election refund to a political party  both the act of the Council that approved an international agreement concluded by the Union, and the act of the Commission that concluded it (and this even though the international agreement is not itself appealable)  communications from the Commission;  resolutions of the European Parliament;  a press release of the ECB (Weiss case) 5  Which acts can be challenged ex Article 263 TFEU (4)?  Of course, the above does not mean that there are no limits. E.g.:  the express exclusion of recommendations and opinions shows that only binding acts are appealable. It follows that, among other things, the following are not appealable:  acts that stand as intermediate steps to the issuance of a final act.  acts that do not innovate pre-existing legal positions. 6  The division of competences between the ECJ and the GC As already mentioned, the jurisdiction over actions for annulment is divided between the General Court and the Court of Justice. According to Article 256 TFEU:  the General Court has jurisdiction to hear and determine at first instance actions for annulment brought by any applicant (natural and legal persons, Member States, EU Institutions) with the exception of those assigned to a specialized court and those reserved by the Statute to the Court of Justice (in fact, Art. 256 TFEU provides the same regime for other remedies, e.g., actions for failure to act under Art. 265 TFEU and actions for damages under Art. 268 TFEU); and  the Court of Justice jurisdiction to hear appeals on points of law. However, Article 51 of the Statute of the Court of Justice gives the Court of Justice jurisdiction to hear actions for annulment (or in default) brought by the EU institutions and the Member States against acts (or inactions) of the European Parliament and/or the Council (with the exception of those relating to state aid, dumping, and implementing powers), as well as against acts (or inactions) of the Commission on enhanced cooperation 7  The division of competences between the ECJ and the GC (2) In summary, therefore, the Court of Justice has jurisdiction to hear:  actions for annulment brought by the EU Institutions or the Member States against acts of the Parliament and/or the Council, except those concerning certain matters (e.g., state aid, dumping, etc.);  appeals against decisions rendered at first instance by the General Court. The General Court has jurisdiction to hear:  actions brought by natural or legal persons (always)  actions brought by Member States against acts of the Commission (excluding matters covered by enhanced cooperation);  actions brought by Member States against 8 acts of the Council in certain specified matters (e.g., state aid and antidumping).  Which are the grounds of appeal? According to Article (2) TFEU, the CJEU shall have jurisdiction to rule on actions based “on grounds of lack of competence, infringement of an essential procedural requirement, infringement of the Treaties or of any rule of law relating to their application, or misuse of powers” In addition to these grounds (on which see next slides), there is also an additional ground created by the case law of the CJEU, which is the non-existence of the act  although not provided for by the Treaty, the Court recognizes as a residual hypothesis and for the most serious defects the non-existence of acts.  For cases in which the act is vitiated by such obvious seriousness that it cannot be tolerated by the Union legal system (see Court June 15, 1994 C-137/92). 9  Ground of appeal: lack of competence  It can be internal or external (relative or absolute):  internal (or relative), if one institution infringes the competence of another institution (i.e. the Council adopt an act that should have been adopted by the Commission);  external (or absolute), if the competence does not belong to the Union but to the Member states (e.g., the EU adopts a regulation in matter as family law, direct taxation, etc)  Lack of competence is a matter of public policy = it can (and shall) be raised ex officio by the CJEU and/or it can be invoked at any stage of the proceeding.  Actually, it is difficult to distinguish the lack of competence from other defects: why?  The lack of competence is normally the consequence of the fact that an act has been adopted relying on a wrong legal basis resulting in the invasion of competences of other institutions or member states  Choosing a wrong legal basis is both a violation of the Treaties (as the legal basis are dispositions of the Treaties) and – as we will see – a violation of essential 10 procedural requirements  Ground of appeal: violation of essential procedural requirements  There is no definition of essential procedural requirements in the Treaty or in EU secondary legislation.  In summary, this defect exists when a particularly important formal requirement is not met.  It shall be a formal requirement capable of affecting the content of the act, i.e. the essential elements of the act.  Also, this defect is not easily distinguishable from a violation of law. 11  Ground of appeal: violation of essential procedural requirements (2)  The most frequent cases are:  Lack of motivation = this hypothesis can also be detected ex officio, as a reason of public policy. In fact, the duty to state reasons is not merely formal but is intended to guarantee the rights of the parties and for the Court to exercise its function of judicial review. The act must therefore set out the main points of law and fact on which it is based.  Failure to consult an institution (or body) where necessary. The most common case was the failure to consult Parliament.  Incorrect legal basis = the identification of an incorrect legal basis if it has consequences for the conditions under which the act was adopted. Conversely, if the choice of an erroneous legal basis does not lead to a difference in the procedure (e.g., a unanimous vote is taken anyway) the possible illegality constitutes only a purely formal defect, which does not lead to the nullity of the 'act (Court Sept. 27, 1988, 165/87, Commission v. Council). As mentioned, it can also be considered grounds for incompetence 12 or violation of law.  Ground of appeal: infringement of the Treaties or of any rule of law  It is certainly the ground of appeal that is most frequently invoked.  Even from a logical point of view, in fact, it includes all the other grounds of appeal, it is a sort of catch all categoru  The principle of legality requires that acts of the EU comply with the Treaties.  But not only that: in fact, Article 263 TFEU speaks of violations of the Treaty or any rule of law relating to its application.  Thus, general principles developed by the case law of the Court or derivable from the constitutional traditions of the Member states, as well as - within certain limits - rules of international agreements and customary law, are also parameters for the legitimacy of EU secondary acts. 13  Ground of appeal: infringement of the Treaties or of any rule of law (2)  Hierarchy within secondary law = secondary law itself can also be a parameter for assessing the legitimacy of certain other acts of secondary law.  the Treaty provides for a hierarchy among sources and in particular among some acts of secondary law  legislative acts are higher-ranking sources than delegated or executive acts (see Articles 289 and 290 TFEU).  Thus, this ground of appeal can be invoked also in the case of violation of any legal norm that is hierarchically superior to the act being challenged.  International law = an international agreements can be used as a parameter to challenge EU secondary law only if it is provided with direct effect.  The Court of Justice has a non-univocal attitude toward this issue.  While it accepts it for many agreements, the Court has a more cautious attitude for example toward WTO (formerly GATT) rules.  this is due to the flexibility and the peculiarity of the relevant international treaties, which also allow for the resolution of any disputes by means of "political" mechanisms.  The Court accepts that WTO rules are a parameter of legitimacy only if the act of Union law in question is an act of implementation of a particular obligation undertaken in the 14 WTO or if the act expressly refers to a provision of the WTO treaty.  Ground of appeal: misuse of power  Misuse of power is a residual ground of appeal.  It occurs when a given institution exercises a power granted to it by the Treaties for the exclusive (or at least decisive) purpose of achieving a goal other than the goal for which the power has been conferred on it or for purposes other than those stated in the act itself (e.g., adoption of a decision that claims to have been adopted to ensure the protection of public health and instead appears to be based on a desire to reassure consumers – so-called Mad Cow case).  However, according to case law, it is necessary to submit to the Court objective, relevant and concordant evidences of misuse power.  Misuse of power also includes misuse of procedure: when a procedure is used for purposes other than that for which it was established. 15  The extent and limits of judicial review under Article 263 TFEU.  It follows from the examination of the grounds (or, rather, from the very fact that the Treaty provides a list of grounds for appeal) that the judicial review that can exercised by the Court of Justice and the General Court is limited to the legitimacy of the act and is not extended to merits of the contested acts.  This is in deference to the principle of the division of powers, according to which the Courts of the Union cannot “replace” the institutions that issued the act.  This implies that the review cannot be extended to the appropriateness and adequateness of the challenged act.  These aspects, in fact, do not fall under any of the grounds examined above.  The practical consequence is that, if it believed that the challenged act is flawed, the CJEU cannot modify it, the Court can only annul 16 it.  The extent and limits of judicial review under Article 263 TFEU (2)  However, the CJEU can exercise and do exercise full judicial review of the legality of the act that includes full cognizance of the facts underlying the challenged act.  In certain areas, it is particularly difficult to identify and define within what limits the review of legality exercised by the Court of Justice should lie.  The best known example is decisions rendered by the Commission in antitrust or state aid matters.  In this area, the Commission's decisions that can be appealed for annulment are in fact based on complex economic assessments for the examination of which the Commission enjoys wide discretion.  And this is because competition law is characterized by the presence of the so-called indeterminate legal concepts (such as the notion of relevant market, abuse of dominant position etc.) whose concrete integration requires the use of specialized technical rules provided by economic sciences.  Although in areas requiring complex economic assessments the Commission has a discretion in economic matters, the Court's case law recognizes that this does not imply that the Union court must refrain from reviewing the Commission's interpretation of economic data.  In fact, the CJEU is required to verify not only the material accuracy of the evidence adduced, its reliability and consistency, but also to ascertain whether that evidence constitutes the totality of relevant data that must be taken into account in assessing a complex situation and whether it is of such a nature as to support the conclusions drawn from it (Chalkor judgment, Tetra Laval judgment, Otis judgment).  The example of antitrust review is useful to show that even in areas where the review of legality is traditionally more limited, it is still quite incisive, although not extended to the merits, but also because with regard to sanctions the review is extended to the merits  The General Court and the Court of Justice can modify the amount, not just annul the decision 17  Locus standi: privileged applicants  Nowadays, privileged applicants are Member States and the EU institutions (initially only the Council and the Commission then also the EU Parliament – see next slide).  They are privileged because they can always challenge any act of EU secondary law, without having to meet any procedural requirement  In particular, they do not need to prove any specific relation with the act that they wish to challenge nor that they have a specific interest in bringing the action.  The interest of the privileged applicant is indeed presumed:  Member states, as “master of the treaties”, and the EU institutions, as subjects who act to protect the EU legal order, have an interest in seeing any act that is unlawful annulled, even if it does not affect them.  “Unlimited legitimacy” also serves to ensure the protection of the institutional balance: indeed, as seen, an action for annulment is (also) meant to guarantee the powers and competences of each EU institution. 18  Locus standi: privileged applicants – the EU Parliament  Treaty of Rome: EU Parliament has no locus standi.  Complete lack of locus standi of the EU Parliament is confirmed by the case law (e.g. in the Comitology Judgment, the CJEU held that the Parliament is for sure not a privileged claimant as it was not mentioned by then Article 177 EEC, but it cannot even be qualified as a legal person, and therefore it has no locus standi even as a non- privileged applicant (Court Sept. 27, 1988, 302/87, Parliament v. Council):  The EU Parliament is a semi-privileged claimant, and as such it can only bring annulment actions in order to safeguard its prerogatives (Chernobil Judgment (Court Oct. 4, 1991, 79/88):  The position reached by the case law (i.e., that the EU Parliament is a semi-privileged applicant) is codified by the Treaty of Maastricht.  Treaty of Nice and then the Lisbon: the EU Parliament 19 is a privileged applicant  Locus standi: semi-privileged applicants  This category of applicants can only bring annulments actions which are necessary to protect the prerogatives conferred upon them by the Treaties  Under the Treaty of Lisbon, the ECB, the Court of Auditors and the Committee of the Regions (the latter only from Lisbon) are semi- privileged applicants  The list is now provided by Article 263(3) TFEU 20  Locus standi: not-privileged applicants  The notion of not-privileged applicants include natural and legal persons, i.e. individuals  As the regime is the same ever since the Treaty of Rome (see Article 177 EEC), the fact that natural and legal persons have always been capable of bringing annulment actions was another proof of the special role of individuals in the EU legal order  The notion of legal persons is a notion of EU law (includes e.g., third states, regions, entities that do not have legal personality under national law).  Individuals are not-privileged because their right to appeal is (significantly) limited by the Treaties (and even more so by the case law of the CJEU) 21  Locus standi: not-privileged applicants  The TFEU has significantly modified the legal regime dealing with the standing of not- privileged applicants  To understand the innovation, it is therefore necessary to examine both the current regime under Article 263 TFEU and the previous one, under Article 230 EC (and 177 EEC)  Article 230(4) EC provided that any natural or legal person could bring an action against:  a decision addressed to that person  a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former (i.e., to the applicant).  The problem for not-privileged applicants is that, although not defined by the EC Treaty, these requirements (and in particular that of “individual interest”), have been interpreted very narrowly by the Court of Justice 22  The notion of direct concern  In order for it to directly affect an individual, it is necessary that the challenged measure directly affects his or her legal situation and leaves no discretionary power to the addressees of the measure who are in charge of its application (an Institution or a Member State)  the application of the measure shall be automatic and shall result from the challenged legislation alone without intervention of other intermediate rules (for all 1971, International fruit)  In other words, there must be a direct causal link between the act of EU law and the effect on the individual's position. Examples:  1970, Alcan: Belgium asks Commission for quotas to import aluminum at reduced customs duties. If Commission accepts Belgium is not obligated to grant firms the right to import at reduced duties. If Commission refuses, companies have no locus standi, because between the Commission’s act and their legal position lies Belgium's discretion.  Ratio: Belgium, that had an interest coincident with those of the companies, could appeal.  1971, Boch: Germany asks the Commission the permission to block imports of a certain product. Germany told the importing firm that if the Commission agreed, it would block imports. Companies have legal standing to challenge the Commission decision.  Ratio: Germany and the companies have divergent interests 23 and there is no discretion Member State.  The notion of individual concern  1963 Plaumann (Court July 15, 1963, 25/62): “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”  1978 Toepfer: introduces the so-called closed group test. A subject can be individually affected by an act even if it is no different from all other subjects but is part of a closed group of subjects already identified before the act takes effect (e.g., license holders).  1980 Calpak: to distinguish between decision and regulation introduces the test based on so-called abstract terminology. A true regulation is the act drafted in general and abstract terms, no matter whether it is possible to identify the number of addressees (e.g., 1 throughout the Union)  1994 Codorniu: more liberal. 24  Limited standing and the system of jurisdictional remedies offered by the Treaties  The strict application of the Plaumann formula has meant that actions for annulment against acts not addressed to the plaintiffs have been considered admissible in extremely limited cases.  As such acts can affect the rights of individuals in the same way as measures formally addressed to them, the compatibility of Article 230 EC (or rather the Court of Justice's interpretation of that provision) with the right to effective judicial protection was therefore questioned.  The Court rejected these criticisms by emphasizing the need to consider the system of judicial remedies provided by the EC Treaty, and now the TFEU, in its entirety.  Judicial protection is adequately guaranteed by the possibility of individuals to challenge the validity of acts of which they are not addressees indirectly, i.e., by challenging before national courts the measures adopted by Member States in implementation of such acts and requesting, here, a reference for a preliminary ruling on validity under Article 267 TFEU (formerly25 Article 234 EC).  Limited standing and the system of jurisdictional remedies offered by the Treaties (2)  The limitation of this argument concerns acts of general application that do not provide for any implementing measures.  The inflexibility of the Plaumann formula and the concomitant absence of national measures on which to base a reference for a preliminary ruling made both mechanisms of protection, now provided by Articles 263 TFEU and 267 TFEU, in this case not operative.  The only form of judicial protection can be obtained by individuals only after consciously violating them in order to challenge their validity in the following court proceedings before the national court.  According to some, this does not seem compatible with Article 2 TEU, which declares the Union to be founded on the principles of legality and the rule of law or, rather, subject to the rule of law.  Indeed, judicial protection is a cornerstone of the rule of law, and the possibility of access to a court is an essential aspect of that right.  Judicial review, moreover, is a principle common to the constitutional traditions of member states and guaranteed by Union law itself, including in light of Articles 6 and 13 of the ECHR and, today, Article 47 of the Charter of Fundamental Rights of the European Union. 26  The call for a revision of the system: UPA and Jego Quere cases  Article 230 EC has been challenged by both the doctrine and some of the Advocates General and the Court itself.  These argued that the then Articles 230 EC and 234 EC did not provide individuals with adequate and effective judicial protection and that, therefore, it was necessary for the Court to change its interpretation of the notion of individual interest, to implement, at the very least, the protection offered by the then fourth paragraph of Article 230 EC.  2002 UPA: Advocate General Jacobs  2002 Jégo Quérè:  In both of these cases, however, the Court confirms its orientation, and reaffirms the suitability of the system of judicial remedies provided by the Treaty to guarantee individuals effective judicial protection, including with respect to acts of general application that do not require enforcement measures.  In UPA, the Court acknowledged that a less restrictive system could be devised but stressed, at the same time, that any reform would be the responsibility of the Member States and not of the Court itself, and that it would require a treaty amendment.  The self restraint that characterizes this pronouncement raised several concerns: the question, in fact, was not whether the individual interest requirement should be removed from the Treaty but, rather, only whether the Court's interpretation of it was too restrictive. The Court is therefore calling for a revision of the Treaty to amend its jurisprudence. 27  The new regime provided by art. 263 TFEU  Article III-365 of the Constitutional Treaty.  Article 263 fourth paragraph TFEU provides that natural and legal persons may appeal against  Acts adopted against them,  or against acts which directly and individually affect them,  or against regulatory acts that directly affect them and do not involve any implementing measures.  Problem = what are regulatory acts? 28  The notion of regulatory acts  On the basis of the literal, teleological and historical interpretation of the notion, as far as the notion of "regulatory acts" is concerned, the General Court, in its Order of September 6, 2011, in Case T-18/10, concerning the Inuit case (upheld by C-583/11 P of the CJ, Judgment of October 3, 2013), had the opportunity to specify that:  the notion of 'regulatory act' within the meaning of the fourth paragraph of Article 263 TFEU must be interpreted as including any act of general application with the exception of legislative acts. Accordingly, a legislative act may be the subject of an action for annulment by a natural or legal person only if it directly and individually affects him or her. 29  Time limitation to bring an annulment action  Article 263 sixth paragraph TFEU provides that appeals for annulment must be filed, under penalty of forfeiture, within two months from:  from the publication of the act,  from its notification to the applicant, or,  failing that, from the day on which the appellant had knowledge of it (the latter is thus a residual criterion: if there is publication, the time limit runs from publication even if the party already knows the act before publication).  As far as publication is concerned (and thus acts other than directives and decisions that indicate their addressees), the time limit runs from 15 days after publication, and if the date of the Gazette is different from the date of its actual dissemination, the date of dissemination counts.  The time limit may be increased according to so-called distance terms (see Article 81 of the Rules of Procedure of the Court 30 and Article 102 of the Rules of Court Procedure; Italy 10 days).  The effects of the submission of the application  The bringing of an action under Article 263 TFEU does not in itself have suspensive effect (Article 278 TFEU).  However, the same Article 278 TFEU provides that the Court, when it considers that the circumstances so require, may order a stay of execution of the contested act.  Article 279 TFEU further provides that the Court, again as a precautionary measure, may order such provisional measures, other than suspension, as it deems necessary.  The decision to take an interim measure is taken by the President of the Court, who may also invest the plenum of the Court. There is a hearing for the parties to appear.  The requirements are the same as those that characterize interlocutory protection at the national level and/or in the infringement procedure and other remedies: fumus boni iuris and periculum in mora. 31  The effects of the judgement rendered by the CJEU  According to Article 264 TFEU if the appeal is upheld, the Court declares the contested act null and void.  It means that the annulment pronouncement has effects ex tunc, that is, from when act was adopted.  The effects are therefore demolishing and restorative, as in administrative proceedings.  This is a further confirmation nature of legitimacy of the remedy under discussion: Court has no power to condemn the defendant institution nor can it modify the act.  However, to comply with the principle of legal certainty, the second paragraph of Article 264 TFEU provides that court:  May order that annulment take effect only ex nunc (i.e., from the day of delivery)  may order that the act retain its effects until the institution or body that issued it amends it.  Until Lisbon, the second paragraph referred only to regulations. Today, incorporating the case law of the Court, the power to defer the32 effects of annulment to any type of act.  The effects of the judgement rendered by the CJEU (2)  A judgment of annulment has the effect of res judicata in both a formal and substantive sense. That is, it has erga omnes effects.  In contrast, a ruling dismissing an action for annulment does not prevent the validity of the act from being challenged again (by way of interlocutory reference given the two-month time limit).  Finally, annulment may also be sought only in relation to one or more parts (or even individual provisions) of the challenged act, and the Court may still decide to annul the act only in part if possible. 33