Interpretation of EU Law

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by Hannes Rösler

1. Subject and purpose

Neither primary nor secondary EU law contains interpretation rules similar to those in Arts 7–9 CISG, Arts 5:101–5:107 PECL, Arts 4.1–4.8 UNIDROIT PICC and Arts 31–33 VCLT (interpretation of international uniform law). Instead, the European Court of Justice (ECJ) was created as an independent and supranational court with exclusive jurisdiction over the interpretation of European Community and Union law (Art 220 EC, now largely replaced by Art 19 TEU). This non-political body promotes unity, continuity and acceptance of EU law. The ECJ with its power to provide authoritative interpretation became a ‘motor of integration’ ensuring and extending the primacy of EU law.

The ECJ mainly uses the grammatical, systematic and purposive methods of interpretation. Von Savigny’s fourth method, the historical-political approach, is rarely employed. The reasons for this are the often complex and incompletely published legislative history as well as the fact that European legislation often represents the result of compromises. However, the EU legislature does list recitals which the ECJ employs in its purpose-oriented interpretation. On the other hand the ECJ refuses to consider the minutes of the Commission, the Council or Parliament that are not reflected in the legislation (ECJ Case C-404/06 – Quelle [2008] ECR I-2685, para 32).

First and foremost, the ECJ uses the literal method. In particular, it uses coordinate versions of texts in the different official languages. This shows the influence of the French Conseil d’Etat which also explains the concise and deductive style of reasoning employed by the ECJ. This approach limits the Court’s ability to make a contribution to legal theory and to the systematic development of European private law. The apodictic and self-referential nature of the judgments to some extent follows from the nature of the Court as an international panel of judges that has to reconcile different legal cultures and languages. It follows from this that an approach focused on the interpretation of the grammatical context and the analysis of common parlance within (autonomous) EU law must necessarily be limited.

This is why, crucially, the ECJ often employs purposive considerations, an approach not only used for resolving disputes caused by diverging versions of texts. This method is also suggested by the functional perspective chosen by the EU, trying to achieve the goals determined in the primary law, such as the creation of a common market. Considering the spirit and purpose of a provision as well as the comprehensive programme of the European Community can be problematic when different purposes (eg free market and protection interests) conflict. This applies to those directives that serve the overall interest of achieving the internal market but also address issues such as employee or consumer protection.

On the whole, the judgments often reflect effet utile. The practical effectiveness of EU law frequently seems to be the main objective of the court in its interpretation and development of law (principle of effectiveness). This approach can be witnessed in the extending of employment protection to part-time workers by classifying them as employees (ECJ Case 53/81 – Levin [1982] ECR 1035, para 15).

There is very little reference to comparative law in the ECJ’s judgments. References to the legal systems of Member States can more often be found in the opinions of the Advocate General. The lack of references to comparative law in the ECJ’s judgments may appear somewhat surprising given that directives are often based on comparative law. It also seems natural to assume that a panel consisting of judges from different legal systems would employ this tool. However, comparative considerations are not explicitly incorporated in the judgments to prevent the EU’s autonomous legal texts from being undermined by references to particular legal systems.

Nonetheless, comparative law has a role to play in filling gaps and developing general principles. For example, the ECJ explained state liability with reference to general legal principles, existing in international law and found in all the Member States (ECJ Joined Cases C-46/93 and C-48/93 – Brasserie du pêcheur [1996] ECR I-1029, paras 29 ff). Furthermore, Art 11(3) TEU/6(2) EU invites comparative references in providing that the common constitutional traditions of the Member States are a source of fundamental rights (see also Art 340(2) TFEU).

A distinctive feature of EU law is the fact that it is perceived of as an autonomous body of law. This is similar to the other Conventions over which the ECJ also has jurisdiction. In order for the rules and concepts of European law to be implemented consistently, their application has to be independent of national preconceptions. The Member States also have an obligation to uphold the autonomy of EU law. However, in the main it is the ECJ that creates interpretational guidelines having legally binding force (precedent, rule of). For this the ECJ depends on the willingness and case-based obligation on Member State courts to refer cases according to Art 267 TFEU/ 234 EC.

2. Interpretation of primary law

Regarding law with constitutional status, the ECJ is willing to practice judicial activism. Judges are no longer la bouche de la loi as demanded by Montesquieu, but exceed the possible literal meaning and thus cross the line to the further development of law (judge-made law). Nowhere—not in the interpretation of EU law nor in other legal systems—is this line drawn clearly. However, a distinction should be drawn between interpretation and innovation since the judicial development of law demands an unintended regulatory gap and thus a higher effort of reasoning. According to Art 220(1) EC, which is now mainly replaced by Art 19(1)(I) TEU, the role of the judges of the ECJ is to develop EU law. This is justified on the basis that the Court has to ‘ensure that in interpretation and application of this Treaty the law is observed’ and the fact that the ‘law’ transcends the rules expressly stipulated in the treaties.

The most important legal principles developed through this process by the ECJ to complement the written primary law are the primacy (ECJ Case 26/62 – van Gend & Loos [1963] ECR 3) and the direct effect of EU law (ECJ Case 6/64 – Costa/E.N.E.L. [1964] ECR 1141). Also significant are the application of fundamental rights in the EU (ECJ Case 29/69 – Stauder/Stadt Ulm [1969] ECR 419), the specification of fundamental freedoms (ECJ Case 120/78 – Cassis de Dijon [1979] ECR 649), state liability (ECJ Joined Cases C-6/90 and C-9/90 – Francovich [1991] ECR I-5357) and the extent of EU citizenship (ECJ Case C-184/99 – Grzelczyk [2001] ECR I-6193).

By developing these principles the Court is creating and specifying those elements of the rule of law required by a fully-fledged legal system. Ultimately, according to the conception of the ECJ, European law is not part of international law, which is characterized by a strong consideration of national sovereignty. Although concluded by way of an international agreement, the E(E)C Treaty is—in contrast to more common international treaties—the constitutional charter of an autonomous community based on the rule of law (ECJ Opinion 1/91 – EEA I [1991] ECR I-6079, para 21). This is why the ECJ expounded in Francovich that state liability is inherent in the EU legal system.

Case law regarding the effects of directives is also fundamental. For example, once the time limit for implementation has expired, a directive can have a ‘vertical’ direct effect for the state. However, a direct ‘horizontal’ effect, ie between private parties, does not exist (ECJ Joined Cases C-397/01 to C-403/01 – Pfeiffer [2004] ECR I-8835, para 108). This rule is based on the systematic reasoning that a horizontal effect of directives would override the distinction between directives and regulations set out in the EC Treaty and now in the TFEU (ECJ Case C-91/92 – Faccini Dori [1994] ECR I-3325, para 24).

3. Rules of interpretation for national courts

These legal developments on the constitutional level affect European private law. Besides the relevance of the state liability doctrine for the law of torts, this is also true for the obligation of national courts to interpret national law in accordance with European law. Acting as a kind of meta-rule, this influences and controls the four above-mentioned methods of interpretation and does so in a way that is similar to the interpretation in conformity with the constitution (verfassungskonforme Auslegung) known to German law. Furthermore, the obligation of the Member States to interpret law in accordance with European law includes the compatibility with primary law and the conformity with secondary law. In particular, the Member States’ courts are obliged to interpret their laws in a way that conforms to the directives. This has to be done by applying their own national methods of interpretation (ECJ Joined Cases C-397/01 to C-403/01 – Pfeiffer [2004] ECR I-8835, para 116).

Accordingly, the national law has to be interpreted on the basis of the wording and the purpose of the directive in question as far as feasible under national rules (ECJ Case C-106/89 – Marleasing [1990] ECR I-4135, para 8; also ECJ Case 14/83 – von Colson and Kamann [1984] ECR 1891, para 28). Such interpretation in accordance with a directive can directly affect and, therefore, disadvantage private individuals. This leads, in effect, to a horizontal effect which is otherwise excluded. The more generously this way of interpretation is permitted, the more the actual scope of state liability for legislative injustice is minimized (cf, however, for a mistake by the judiciary ECJ Case C-224/01 – Köbler [2003] ECR I-10239; ECJ Case C-173/03 – Traghetti del Mediterraneo [2006] ECR I-5177).

The obligation to interpret national law in conformity with directives, which commences upon expiration of the time limit for implementation (ECJ Case C-456/9 – Centrosteel [2000] ECR I-6007, para 17), is a consequence of the obligation to general loyalty under Art 4 TEU as the main replacement for Art 10 EC, Art 15(6)(I)(d) TEU as the main replacement for Art 4(3) EU, and the obligation to a precise transposition of directives under Art 288 TFEU/249(3) EC. Because it allows the national court to guarantee full effect of European law within its jurisdiction, this obligation is also ‘inherent’ in the treaties (see ECJ Joined Cases C-397/01 to C-403/01 – Pfeiffer [2004] ECR I-8835, para 114).

The primacy of an interpretation and development of law in accordance with European law, which applies to the entire national law, is limited by the allocation of rights and duties between legislature and judiciary. Therefore, the obligation to interpret in conformity with a directive must not lead to a contra legem interpretation of a national norm (ECJ Case C-212/04 – Adeneler [2006] ECR I-6057, para 110). In such a case, the national courts have to refer the norm for examination to the ECJ or declare it inapplicable. (The underlying principle of separation of powers also applies at the EU level. The ECJ cannot ‘cure’ Union law that is contrary to primary law by way of interpretation, but has to declare it void in the course of an action for nullity or a reference for a preliminary ruling, ECJ Case 314/ 85 – Foto-Frost [1987] ECR 4199 4230 ff). In order to determine the appropriate understanding of a directive, a national court does not only have to observe the judgments of the ECJ, but also—as far as possible—the interpretation practised in other Member States.

4. Range of interpretation concerning secondary law

a) General

With the exception of the decisions mentioned above, where the ECJ is regularly practising constitutional activism, the Court usually oscillates between effet utile orientation and judicial restraint—this being the reason why the decisions are in practice often hard to predict. Examples of judicial activism in private law are the decisions in ECJ Case C-168/00 – Leitner [2002] ECR I-2631, according to which Art 5 Package Travel Directive (Dir 90/314) also constitutes a claim for non-material damages and ECJ Case C-350/03 – Schulte [2005] ECR I-9215 and ECJ Case C-229/ 04 – Crailsheimer Volksbank [2005] ECR I-9273, dealing with consumer rights in a credit-financed sales contract of real estate according to the Doorstep Selling Directive (Dir 85/577). The ECJ, which first and foremost is a court in constitutional and administrative matters, employs self-restraint in civil cases. Such an approach also allows the ECJ to limit the increasing number of preliminary rulings according to Art 267 TFEU/234 EC and thereby ease the strain on its (adjudicative) capacity.

b) Dealing with catch-all clauses

The desire to ease the strain on its capacity also explains ECJ Case C-237/02 – Freiburger Kommunalbauten [2004] ECR I-3403 which authorizes the national court to decide whether a pre-formulated contractual term is unfair in terms of Art 3(1) Dir 93/13. On the other hand, ECJ Joined Cases C-240/98 to 244/98 – Océano Grupo [2000] ECR I-4941 and ECJ Case C-473/00 – Cofidis [2002] ECR I-10875 suggested a deeper review of contractual terms by the ECJ itself. However, in Océano Grupo the jurisdiction clause in question challenged the effectiveness of legal protection by the courts regardless of the type of contract. This is why the ECJ was able to affirm the unfairness of the contract clause. In Cofidis, the ECJ then declared a limitation period in consumer credit law, as contained in the French Code de la consummation, to be incompatible with Dir 93/ 13, due to the Union law principle of effectiveness, although the directive itself does not stipulate any periods of limitation or foreclosures.

In Freiburger Kommunalbauten the Court draws a distinction based on whether a contractual term can be found to be unfair without examining all contractual circumstances and without evaluating the advantages and disadvantages of the contractual term according to national law. In accordance with Freiburger Kommunalbauten it is therefore for the ECJ to interpret the ‘general criteria’ that are used in the directive in order to define the concept of unfairness. The actual examination of contractual terms, however, is the task of the national courts. Nevertheless, the answer to the question of how exactly to distinguish this competence remains as unclear as the general criteria to be used in reviewing contractual terms for unfairness. Any social, political or economic consequences are left out of consideration by the ECJ because their observation would require examining the national particularities.

c) Implementation by over-compliance — gold-plating

Sometimes referred to as the practice of gold-plating, a particular problem is presented by the transposition of directives beyond the minimal level of protection required in the case of minimum harmonization (consumers and consumer protection law) or when the scope of a directive is extended in the course of national transpositions. The modernization of the German law of obligations led to many transpositions of this nature in the field of consumer law. This raised the question of whether a divided interpretation or a consistent one should be employed.

In a case involving doorstep sales, the German Federal Supreme Court (BGH) decided in favour of the latter (BGH 9 April 2002, BGHZ 150, 248). In contrast to the directive, the Bürgerliches Gesetzbuch (BGB) does not require the contract to be concluded in a typical doorstep situation for a right of withdrawal to arise (§ 355 BGB). According to § 312(1)1 BGB, it is sufficient that the contract was initiated in such a situation and concluded later. As the BGH points out, the need of coherence and the prevention of contradictory valuations are the arguments against a divided interpretation.

In ECJ Case C-3/04 – Poseidon Chartering [2006] ECR I-2505, the ECJ affirmed that a reference to the ECJ is possible in this context. The case concerned the implementation of the Commercial Agents Directive (Dir 86/653) in the Burgerlijk Wetboek (BW). The ECJ argued that it is in the Community interest to avoid divergences and to interpret terms consistently. Furthermore, the ECJ only controls the relevance of questions referred to it for a preliminary ruling to a limited extent. The ECJ will only reject an application when the requested interpretation is self-evidently not related to the reality or the subject matter of the initial lawsuit or when the question is of general or hypothetical nature. This adds to an extensive influence of the ECJ on, for example, sales law (sale of consumer goods), which is implemented beyond the minimal level of obligation in the German civil code (Bürgerliches Gesetzbuch (BGB)), and opens a dialogue between the ECJ and the national courts—also concerning the interpretation of national law.

Literature

Joxerramon Bengoetxea, The Legal Reasoning of the European Court of Justice—Towards a European Jurisprudence (1993); Reiner Schulze (ed), Auslegung europäischen Privatrechts und angeglichenen Rechts (1999); Claus-Wilhelm Canaris, ‘Die richtlinienkonforme Auslegung und Rechtsfortbildung im System der juristischen Methodenlehre’ in Festschrift Franz Bydlinski (2002) 47; Jürgen Basedow, Nationale Justiz und Europäisches Privatrecht—Eine Vernetzungsaufgabe (2003); Gil Carlos Rodríguez Iglesias, The Court of Justice, Principles of EC Law, Court Reform and Constitutional Adjudication (2004) 15 EBLR 1115; Hannes Rösler, ‘Auslegungsgrundsätze des Europäischen Verbraucherprivatrechts in Theorie und Praxis’ (2007) 71 RabelsZ 495; Katja Langenbucher, ‘Europarechtliche Methodenlehre’ in Katja Langenbucher (ed), Europarechtliche Bezüge des Privatrechts (2nd edn, 2008) 1; Michael Schillig, ‘The Interpretation of European Private Law in the Light of Market Freedoms and EU Fundamental Rights’ (2008) 15 MJ 285; Mattias Derlén, Multilingual Interpretation of European Union Law (2009); Jürgen Basedow, ‘The Court of Justice and Private Law: Vacillations, General Principles and the Architecture of the European Judiciary’ (2010) 18 ERPL 443.

Retrieved from Interpretation of EU Law – Max-EuP 2012 on 29 June 2022.

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