What’s European Law and What Happens When It’s Broken?
(Bloomberg) -- The U.K. left the European Union to escape its jurisdiction. Germany’s Constitutional Court took it head-on. Now Poland is challenging its supremacy. We’re talking about EU law, the legal order that is meant to reign supreme across all 27 member states. Although each country’s government has agreed to follow the code, their own national courts don’t always like what they see. EU Justice Commissioner Didier Reynders has warned that attempts to subvert the primacy of EU rules could tear the trading bloc apart.
1. What is EU law?
The law of what is now the European Union goes back to the Treaty of Rome, signed in 1957, that was intended to help European countries trade with each other and boost their economies in the aftermath of World War II. Setting out basic principles like the free movement of goods, capital and workers, the treaty and others that followed provide the legal underpinning for the resulting volumes of laws, regulations and directives. Once they are adopted at the EU level, each member state must implement the policy into its national legislation.
2. How is it made and what does it cover?
The Brussels-based European Commission proposes new laws. Its members, one from each member state, are appointed and are supposed to represent the EU as a whole. Generally the European Parliament, which is directly elected, has to approve the proposal along with the Council of the European Union, made up of ministers or representatives from the 27 national governments. There are some legislative fields that countries have agreed to reserve for the EU level. These are the customs union, monetary policy for countries that share the euro, trade with countries outside the bloc, competition rules for the EU single market, and a common fisheries policy. But EU law also covers other areas, and has expanded over the years to include issues that affect daily life such as food safety or air pollution or data privacy. That sometimes forces changes in existing national laws.
3. Who enforces it?
If a member state violates the rules the commission can take that country to an EU court. If a country fails to comply with an EU court ruling -- which by treaty is binding across the bloc -- it can ultimately be fined. The bloc’s judges don’t always agree with the commission. For example, the commission has ruled that some preferential tax deals handed out by individual members violate EU state-aid rules, and ordered several companies to pay additional tax. The EU’s General Court last year ordered the annulment of a record 13 billion-euro ($15.4 billion) tax order against Apple Inc. In May, the same court canceled a 250 million-euro order against Amazon.com Inc.
4. What are these courts?
The EU has two, both based in Luxembourg. The Court of Justice, or ECJ, is the top court and the General Court is the lower court. The General Court deals with the facts in cases before it, while the Court of Justice focuses only on points of law. The ECJ handles direct actions, normally filed by the commission, against an EU member and issues rulings for national courts seeking clarification on EU law.
5. What was Germany’s challenge about?
Germany’s Constitutional Court directly targeted the ECJ in a stinging ruling in 2020, accusing the EU judges of overstepping their powers when they backed the European Central Bank’s controversial quantitative easing policy. The German judges said the supremacy of the ECJ didn’t apply in cases where it failed in its duties. The challenge was soon defused by the German government, but a year later the commission kicked off legal action against Germany, saying the ruling had threatened the primacy of EU law.
6. And Poland’s?
After years of conflicts over whether Poland was drifting away from democratic values such as an independent judiciary, Poland’s Constitutional Tribunal ruled in July that interim orders from the EU court on the issue weren’t compatible with Polish law and thus not enforceable. The standoff has raised fears about Poland’s ability to abide by EU rules and remain part of the bloc’s legal system, a key factor for investors in its $594 billion economy.
7. Hungary’s in a legal fight with the EU too, right?
Yes. The EU in July began proceedings against Hungary as well as Poland over laws the bloc says discriminate against LGBTQ people. Hungary has passed a law it says was designed to protect children against pedophilia, but which critics say discriminates against people based on their sexual orientation. The action against Poland is related to many municipalities in the predominantly Catholic country of 38 million people that have declared themselves “free of LGBTQ ideology” to prevent pride parades and other gay-friendly events.
8. What if a country refuses to comply?
In such cases, the commission could use a new tool to punish rule-of-law offenders by withholding funds from the bloc’s 1.8 trillion-euro pandemic stimulus package. Otherwise, there’s no marshal to send. The EU website says: “If, despite the court’s judgment, the country still doesn’t rectify the situation, the commission may refer the country back to the court.” It also can ask the court to impose fines. The disputes are in some ways an existential question for the EU. Reynders has said defending EU law and rights is essential to keeping the union on track as a bloc that allows free trade and shares common values. The ultimate choice for an unhappy member would be to leave, as the U.K. did in 2020.
The Reference Shelf
- A QuickTake on last year’s EU budget fight and a Q&A on the deal that freed the cash.
- More on the ECJ’s role in Brexit: Why EU Court of Justice Is a Brexit Battleground: QuickTake Q&A
- Bloomberg Opinion’s Andreas Kluth argues that the EU should be able to expel a member, and Clara Ferreira Marques explores how European autocrats are weaponizing homophobia.
- The European Commission explains the “acquis” that new members have to sign up to.
- A 2019 lecture by former European Judge Ian Forrester on European law in the U.K. after Brexit.
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