For the sake of effectiveness: a tightened approach to preliminary reference obligations of the CJEU
In its recent judgment Commission v. France (C-416/17), the CJEU indicates that it is ready to do whatever it takes to preserve the integrity of EU law – a strong for European judicial dialogue in times of worrying judicial developments across the EU.
The preliminary reference procedure (Article 267 TFEU) is a fundamental component of the EU legal order that enables a formal judicial dialogue between national courts and the Court of Justice of the EU (hereafter: CJEU). This dialogue is important to stimulate European judicial cooperation, to enable national courts to apply EU law correctly, but also to preserve the effectiveness and uniformity of EU law throughout the EU. With the recent judgment Commission v. France (C-416/17), the CJEU reinforces the obligation of national last instance courts to seek its guidance on the correct interpretation of EU law. To my mind, this emphasis on the referral obligation is linked to worrying judicial developments inside the EU, particularly Poland and Hungary, which could negatively affect European judicial cooperation.
Underpinning legal framework
Before assessing the recent judgment, the framework of the preliminary reference procedure should be briefly recalled. Following Article 267 (2) TFEU, all national courts have the possibility to refer questions on the validity and interpretation of EU law to the CJEU. In contrast, national last instance courts are under the obligation to refer such questions to the CJEU (Article 267 (3) TFEU). The reason for this referral obligation is to avoid the emergence of settled national case law that conflicts with EU law. Thus, the preliminary reference procedure preserves the effectiveness and uniformity of EU law.
Yet, the CJEU established three exceptions to this referral obligation. Namely, in CILFIT (case 283/81) it determined that last instance courts are under no such obligation in case the correct interpretation of EU law is obvious (acte clair), or the CJEU previously ruled on the matter (acte éclairé), or EU law is irrelevant to solve the dispute. These exceptions award discretion to the national courts and highlight the mutual trust that underpins European judicial cooperation. In the recent judgment Commission v. France (C-416/17) the CJEU now addresses whether an overstepping of the CILFIT exceptions – and therefore non-compliance with the referral obligation – constitutes an infringement of EU law under Article 258 TFEU.
Referral obligation: Commission v. France (C-416/17)
Commission v. France (C-416/17) concerned French tax arrangements for dividend transfers from subsidiaries to parent companies. These tax arrangements were subject to several proceedings before the French Conseil d’État, including a referral to the CJEU (Accor C-310/09). Subsequently, the Conseil d’État had to decide whether the beneficial arrangements had to be available to EU sub-subsidiaries. In its Rhodia and Accor (both 10 December 2012) judgments, the Conseil d’État decided against this, concluding that EU law was clear on the matter and no reference to the CJEU was required. After receiving several complaints, the Commission initiated infringement proceedings against France on the basis of Article 258 TFEU arguing that the tax arrangements violate Articles 49 and 63 TFEU and that the Conseil d’État violated Article 267 (3) TFEU by not consulting the CJEU. I will restrict my observations to the latter.
In its judgment, the CJEU first clarified that all infringements of EU law committed by state entities, including independent courts such as the Conseil d’État, are attributable to the Member State. Subsequently, the CJEU reiterated its case law on the referral obligation, including the outlined CILFIT exceptions, as well as the judgments Association France Nature Environment (C-379/15) and Ferreira da Silva (C-160/14). In these judgments, the CJEU emphasised that any reasonable doubt concerning the interpretation of EU law is sufficient to trigger the referral obligation in Article 267 (3) TFEU. Hence, the CJEU insisted that last instance courts should not conclude too readily that a CILFIT exception is given.
When applying the legal framework to the facts of the case, the CJEU stressed, on the one hand, that a previously delivered CJEU judgment (Test Claimants in the FII GroupLitigation, C-35/11) cannot be disregarded by the Conseil d’État by simply claiming French law differs from British law. Such conclusion requires verification by the CJEU. On the other hand, the CJEU apparently considers the fact that it adopted an interpretation of EU law different to the one of the Conseil d’État sufficient to establish that there was reasonable doubt regarding the correct interpretation of EU law when the French court originally decided.
On the basis of these findings, the Conseil d’État could not assume that it was exempted from the referral obligation in Article 267 (3) TFEU, which constitutes an infringement under Article 258 TFEU.
Broader implications: Tackling the non-referral risk!
This is remarkable, given that it constitutes a novelty. It is the first time that the CJEU classified a violation of the referral obligation as an infringement of EU law under Article 258 TFEU. Although it should be recalled that the Conseil d’État has a particular relation with the CJEU (cf. for example Association France Nature Environment C-379/15), the present judgment has broader implications.
In the first place, it empowers the Commission, which can now target national courts of last instance for not consulting the CJEU. By doing so, the Commission supports the CJEU in preserving the effectiveness and uniformity of EU law. At the same time, the judgment is a warning towards national courts of last instance to apply the CILFIT exceptions more restrictively and determine carefully whether no referral obligation exists. This is reinforced by the conducted assessment: The fact that the interpretation of EU law in the presented judgment is different to the one employed by the national court six years earlier is apparently sufficient to conclude that there were reasonable doubts regarding the interpretation of EU law when the national court decided. Hence, national courts of last instance might either have to time travel or refer to the CJEU to be on the safe side, given that there is always the possibility that the CJEU decides differently.
Taken together, the CJEU emphasises the importance of the referral obligation for last instance courts. I would submit that this somewhat tightened approach has to be seen in connection with recent developments across EU Member States. Particularly the judicial reforms undertaken in Hungary and Poland cast doubt on the willingness of their national courts – with newly appointed judges – to refer preliminary questions to the CJEU. These doubts are supported by the recent Polish constitutional challenge to the compatibility of the preliminary reference procedure with the Polish Constitution. Simply, the CJEU depends on receiving preliminary reference referrals from national courts. This mechanism guarantees the effectiveness and uniformity of EU law. Due to the national developments outlined above, these principles seem under attack. With its judgment Commission v. France (C-416/17), the CJEU insists on the referral obligation and indicates that it is ready to do whatever it takes to preserve the integrity of EU law.