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Cover Page
Title: But Why? The Constitutional Case of the Duty to State Reasons and Privatisation in the EU’s Multilevel Administration.
Name: Eógan Hickey
Email: eoganh@gmail.com Student Number: 12289493
Mastertrack: LLM European Union Law Supervisor: Dr. Filipe Brito Bastos
Date of Submission: 26 July 2019
Word count: 12,987 (excluding cover, research questions, table of contents, abstract and bibliography).
Research Question: Are private delegates bound by the EU administrative law duty to state reasons where Member States have delegated to them responsibility for conducting
administrative procedures necessary to implement EU law obligations?
Sub-question 1: What specific doctrinal approaches may apply and under what conditions would they apply?
Sub-question 2: Can the duty to state reasons be expanded to cover private delegates when they act in a general rule-making capacity and how can that normatively be justified from an external perspective? Can the duty to state reasons legitimise private exercise of public power in this context?
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But Why? The Constitutional Case of the Duty to State Reasons
and Privatisation in the EU’s Multilevel Administration.
Contents
Cover Page ... 1
But Why? The Constitutional Case of the Duty to State Reasons and Privatisation in the EU’s Multilevel Administration. ... 2
Abstract ... 4
Introduction ... 5
I – Privatisation in the EU’s Multilevel Administration... 7
II – Duty to State Reasons ... 10
II.i – Introduction ... 10
II.ii – The Duty ... 11
III – Does EU Law Bind Private Delegates to the Administrative Duty to State Reasons? ... 15
III.i – National Autonomies ... 15
III.ii – Effectiveness ... 17
Effectiveness Generally ... 17
Compliance, Judicial Protection and Reasons ... 19
III.iii – Uniformity and the Complete System of Legal Remedies ... 20
III.iv – Conclusion ... 21
IV – How Do or Could Procedural Rights Apply in this Context?... 22
IV.i – Meroni ... 22
Applying Meroni to the Member States ... 23
Uniformity and Coherence as Vectors for Applying Meroni to Member States? ... 24
IV.ii – A Functionalist Definition of ‘the Member States’ ... 26
Introduction ... 26
Effectiveness and Functional Conceptions of Public Authority in EU Law ... 27
Concluding Remarks ... 32
IV.iii – Analysis – Two Roads, Same Destination? ... 32
Meroni ... 33
Foster/Farrell ... 33
Comparison ... 34
V – Expanding the Duty and Wider Consequences ... 36
V.i – Normatively Justifying an Expanded Duty ... 37
V.ii – Consequences ... 38
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Conclusion ... 40
Bibliography ... 42
Books ... 42
Chapters in Edited Books ... 42
PhD Theses ... 42
Journal Articles ... 42
Lectures & Speeches ... 44
Reports ... 44
Judgments of the Court of Justice ... 44
Opinions of Advocates General ... 47
EU Primary Law ... 47
EU Directives ... 47
EU Regulations ... 48
International Agreements ... 48
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Abstract
This thesis aims to tackle the consequences of Member State privatisation of administrative functions for the purposes of implementing EU law. It examines how EU law can ‘square the circle’ of Member States allowing private actors to exercise public powers falling within the scope of EU law, taking as a specific case study the duty to state reasons. That duty was chosen because it is both systemically and individually important. The main research question and two sub-questions (listed on the cover page) essentially ask, respectively: must private entities in such circumstances respect the duty to state reasons? Under what conditions? And how can the duty be expanded to cover action which would, at present, not be covered by the duty to state reasons under EU law? The thesis takes a variety of methodological approaches, mixing doctrinal and theoretical as well as predictive and normative perspectives to comprehensively, concretely and contextually answer these questions.
Answering the main research question, from an internal doctrinal perspective it considers whether EU law prevents the Member States from circumventing the duty to state reasons by privatising implementation (Chapter III). Then, answering the first sub-question, Chapter IV takes an internal, doctrinal and predictive approach to assess the precise conditions under which the duty would or could apply to private delegates at Member State level. It tackles this sub-question by seeking to draw lessons from existing doctrinal approaches in different but analogous fields. Answering the second sub-question, the thesis considers, from an external
normative viewpoint of deliberative democracy, whether the duty to state reasons should be
extended to cover legislative action by private entities and whether that can legitimise private exercise of public power (Chapter V). Chapter V also briefly sets all these questions in the broader context of a wider ongoing debate surrounding tensions between ‘public sphere’ and ‘private sphere.’ The first Chapters I and II are purely descriptive.
Ultimately the thesis concludes that EU Constitutional law forbids private delegates from evading the duty to state reasons at Member State level but the conditions under which this prohibition would apply are unclear. However, the likely approach is that the Court of Justice would functionally and broadly define the concept of ‘state’ or ‘public authority’ to hold private delegates directly bound to respect EU procedural rights including the duty to state reasons. Moreover, deliberative democracy provides an appropriate normative standpoint from which the duty could be extended to certain situations where private entities would not otherwise be bound and can legitimise private exercise of public power in such circumstances.
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Introduction
Issues around delegation of public power to private bodies (understood as a transfer of administrative decision-making power from a non-governmental actor to a private entity so as to confer on the private entity a degree of legitimacy of action)1 have long existed in EU law. For example, at national level, EU law regulates award of public contracts to private companies.2 Likewise, private rulemaking is prevalent in EU law: EU law incorporates harmonised standards drawn up by private organisations,3 a topic which has benefitted from scholarly scrutiny and generated some Court of Justice (‘the Court’, ‘CJEU’ or ‘ECJ’) jurisprudence.4
However, some Member States regularly delegate the power to implement obligations under EU law to private parties (‘delegates’) and EU law sometimes explicitly provides for this possibility. Yet, when this occurs, it is unclear whether and how delegates are bound by EU law to respect procedural rights. Meroni,5 an early staple of EU Constitutional and Administrative law which limits EU-level delegations, directly concerned delegation of executive power to private entities. Although Meroni sets clear limits to delegations of executive powers at EU-level, it is less clear whether and how EU law controls delegation of Member States’ powers to implement EU law to private entities.
This topic has received little scholarly scrutiny and never has been considered by the ECJ. Importantly therefore, this thesis represents an original contribution. Although a limited number of scholars have considered whether Member States’ private delegates are bound by public law obligations generally, the specific case of the duty to state reasons has received sparse attention. Moreover, the question is worth re-examining considering recent jurisprudence.
This thesis is structured as follows. Chapter I sets the scene, describes practical examples of delegation of implementation of EU law to private delegates. Chapter II describes the duty to state reasons. Chapter III considers the main doctrinal question and asks whether, from an internal perspective, EU law requires that private delegates at National level respect the duty to state reasons. After concluding that it does, Chapter IV seeks, again from an internal
1 Donnelly, Delegation of Governmental Power to Private Parties: A Comparative Perspective (OUP 2007), 1. 2 Directive 2014/23/EU; Directive 2014/24/EU; Directive 2014/25/EU.
3 E.g.: Article 4(1), Directive 2014/40/EU.
4 E.g.: C-613/14 James Elliott Construction Limited ECLI:EU:C:2016:821; and Hofmann & others, Administrative Law and Policy of the European Union (OUP 2011) ch. 17.
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perspective, to predict conditions under which the ECJ would bind private delegates to respect the duty by analogising with two existing approaches in different but related fields. Chapter V briefly considers, from the external normative perspective of deliberative democracy, whether the duty to state reasons could be expanded to cover private rulemaking, simultaneously legitimising private exercise of public power, before placing the entire thesis in the context of wider public/private tensions.
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I – Privatisation in the EU’s Multilevel Administration
An administrative decision is an act which establishes the law for an individual or certain group of individuals.6 EU law sometimes specifically provides Member States the power to delegate (parts of) administrative procedures to private parties and even where EU law is silent on the matter there are examples of Member States delegating administrative decision-making powers to private parties.
Examples of fields where EU law specifically allows Member States to ‘contract-out’ implementation include: electricity tendering regulation;7 seed potato marketing;8 protection against organisms harmful to plants;9 organic labelling;10 compliance with food, feed, animal health and welfare rules,11 employment services network participation,12 vehicle roadworthiness testing,13 and implementing structural funds.14 In other cases, EU secondary law is silent but Member States delegate powers to private entities anyway, for example
6 Della Cananea, Due Process of Law Beyond the State: Requirements of Administrative Procedure (OUP 2016), 17.
7 Article 8(5) Directive 2009/72/EC concerning internal market in electricity provides that Member States are to designate an independent ‘authority or public or private body’ to be responsible for organisation, monitoring and control of tendering procedures for new electricity capacity.
8 Article 2(d)(ii) and (iii) Directive 2002/56/EC on marketing seed potatoes defines ‘official measures’ as those taken inter alia ‘by any legal person whether governed by public or by private law, acting under the
responsibility of the State’ and ‘in the case of ancillary activities which are also subject to State control, by any natural person duly sworn for that purpose’ provided those persons ‘derive no private gain from such measures.’ 9 Article 2(g) Directive 2000/29/EC on protective measures against introduction of organisms harmful to plants or plant products provides that Member States’ responsible authorities may delegate their tasks under the Directive to ‘any legal person, whether governed by public or by private law, which under its officially approved constitution is charged exclusively with specific public functions, provided that such person, and its members, has no personal interest in the outcome of the measures it takes.’
10 Article 27(4)(b) of Regulation 2007/834/EC on organic production and labelling of organic products permits control tasks under the regulation to be delegated from the competent authority to a ‘control body’ which is defined in Article 2(p) as inter alia an ‘independent private third party carrying out inspection and certification.’ 11 Article 5 Regulation 2004/882/EC on official controls to ensure verification of compliance with feed and food law, animal health and animal welfare rules provides that competent authorities may delegate control tasks to control bodies. Control bodies are defined in Article 2(5) as ‘independent third party to which the competent authority has delegated certain control tasks.’
12 Regulation 2016/589 (‘the EURES Regulation’) Recital 13 provides that the ‘[i]t should be possible for any organisation, including public, private or third-sector employment services, which undertakes to fulfil all criteria and the full range of tasks set out in this Regulation to become a EURES Member.’
13 Article 4(2) Directive 2014/45/EU on periodic roadworthiness tests for motor vehicles provides that roadworthiness tests shall be carried out by inter alia authorised private bodies. E.g., in Ireland Statutory Instrument 477/2006 confers roadworthiness testing functions on the Road Safety Authority (‘RSA’). The RSA Act 2006, s. 5 permits the Road Safety Authority’s functions to be outsourced. At present roadworthiness testing of non-commercial vehicles is delegated to Applus+: https://www.ncts.ie/1109. Applus+ is a company on the Spanish stock market https://www.applus.com/en/InvestorRelations/Shareholders. An independent appeal may be conducted by AA Ireland: https://www.ncts.ie/1172. AA Ireland is a limited company:
https://www.theaa.ie/#.
14 Article 38(b)(iii) Regulation 2013/1303 on structural funds provides that managing authorities may entrust functions to inter alia bodies governed by private law. Article 123(1) provides that managing authorities may be private bodies. Article 124(2) provides that an independent private law body may be designated as audit authority to management and certifying authorities.
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immigration detention,15 Schengen visa processing,16 and control of foot and mouth disease.17
Member States also delegate powers to conduct various environmental services and functions within the scope of EU law.18 Finally, self-regulating professional associations may also control access to economic or professional activity in certain member states, which often falls within the scope of EU law.19
In some of these cases only part of the procedure is delegated to the private party and actual discretion rests with a public authority. However, some of the examples given, such as vehicle roadworthiness testing and electricity tendering vest power to conduct administrative procedures (and thereby make administrative decisions) in private parties, including final decision-making power.20 Although Member States are bound by EU fundamental rights norms when they act within EU law’s scope (a broadly defined concept),21 it is unclear how fundamental procedural norms such as the duty to state reasons apply when private delegates exercise EU law powers.
It should be noted that in certain environmental contexts the Directive on public access to environmental information (‘Aarhus Directive’)22 may provide an appropriate remedy to an individual seeking reasons, in part because the Directive itself provides a broad, functional definition of ‘public authority’ which covers private entities conducting public functions.23 However, this Directive only applies to environmental information.
15 Articles 8-11 Directive 2013/33/EU on reception conditions for applicants for international protection provides that applicants may be detained in certain circumstances and sets conditions and safeguards for such detention. Some Member States have contracted out operations and management of immigration detention facilities to private companies while others have contracted out important functions such as security at such facilities: E.g., the UK (Global Detention Project, ‘United Kingdom Immigration Detention Profile’, October 2016 https://www.globaldetentionproject.org/immigration-detention-united-kingdom-2) and Netherlands (Global Detention Project, ‘Netherlands Immigration Detention Profile’, November 2016
https://www.globaldetentionproject.org/immigration-detention-netherlands).
16 See: Sánchez-Barrueco, ‘Business as usual? Mapping outsourcing practices in Schengen visa processing’ 44(3) J.Ethnic & Migration Studies 382.
17 Annex 1.2, now-repealed Directive 1985/511/EEC on control of foot-and-mouth disease designated the Pirbright Institute’s Animal Virus Research Institute as national laboratory for both UK and Ireland. The Pirbright Institute is an independent company and registered charity https://www.pirbright.ac.uk/about-us/our-governance.
18 See generally: Ebbesson, ‘Public Participation and Privatisation in Environmental Matters: An Assessment of the Aarhus Convention’, (2011) 4 Eras.L.Rev. 71.
19 E.g., in Ireland solicitors are regulated by the Law Society of Ireland which is also tasked with educating and representing solicitors: https://www.lawsociety.ie/About-Us/Who-we-are/.
20 The power to take final decisions is important because, as will be explained in Chapter II, the duty to state reasons normally only applies at the point the final decision is taken.
21 See: C-617/10 Fransson ECLI:EU:C:2013:105, para 17ff. 22 Directive 2003/4/EC.
23 See Directive 2003/4/EC ibid, Article 2(2) (implementing Aarhus Convention on Access to Environmental Information 1998, Article 2(2)). Where a request for environmental information is refused, Articles 3(4)(b) and 6 provide a duty to state reasons and access to justice. Moreover, a request for access to environmental
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To concretise, let us take a hypothetical example based on footnote 15. H5T, a private company responsible for running a large network of immigration detention centres in several Member States, is concerned that its centres are running at a loss. Accordingly, it imposes a string of cost-cutting measures including limiting maximum shower use to 30 seconds per detainee per day across all centres. Outraged, the detainees believe their fundamental rights have been breached and seek a detailed statement of reasons, including information about profits and cost-savings, to assess the decision’s proportionality. However, H5T refuses to release such commercially sensitive information, responding that that would jeopardise its commercial strategy and that it is a private company which must act in its shareholders’ best interests. The detainees seek judicial review. Without concluding one way or the other, it is appropriate at this point to note that one might argue the decision is administrative (individual concern) or legislative (general application). This distinction will be crucial later.
information might sometimes be an appropriate substitute for a statement of reasons. See generally: Ebbesson, ‘Public Participation and Privatisation in Environmental Matters’ (n.18).
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II – Duty to State Reasons
II.i – Introduction
Governments privatise services for many reasons, but one is cost-effectiveness.24 However, this can negatively impact procedural rights and accountability as ‘the very reason for delegation to private entities is to ensure that delegates do not have to comply with the same restraints as the delegators … as bypassing such safeguards can save money.’25 Additionally, profit-seeking private delegates may sometimes pursue cost-savings by eliminating attention to an important goal like procedural justice.26 The duty to state reasons imposes a heavy administrative burden, partly because reasons-giving requires record-keeping.27 As it facilitates judicial review, it may not be in private delegates’ interest to disclose reasons where they could expose it to liability.
Although procedural rights are important to protect fundamental rights and freedoms, they also ensure political control of administration.28 Procedures generally are a means of ensuring judicial supervision,29 respect for equality and legality and a shield against arbitrariness.30 This contribution focusses specifically on the duty to state reasons, which forms part of a range of judicially-recognised procedural rights in EU law. Despite its importance, the duty is under-theorised in EU scholarship and generally.31
According to the ‘Hobbesian’ view in legal theory, reasons-giving is consequentialist. Reasons are given to negotiate, establish, repair, affirm or deny relationships.32 Their nature and
function depends on the relationship,33 whether between administrator and individual citizen
or administrator and fora of accountability/control (courts, parliaments, media). Reasons facilitate control and accountability, encourage acceptance and avoid or mitigate negative
24 For a comprehensive summary on the various rationales for delegation to private parties see: Donnelly, Delegation of Governmental Power to Private Parties (n.1), Ch 3; Moore, ‘Introduction to Symposium: Public Values in an Era of Privatization’ (2003) 116 Harv.L.Rev. 1212, 1223–1225.
25 Donnelly, ibid, 146. 26 Donnelly, ibid, 82.
27 Shapiro, ‘The Giving Reasons Requirement’ (1992) U.Chicago Legal Forum 179, 182ff. 28 Della Cananea, Due Process of Law Beyond the State (n.6), 20.
29 Ibid, 19. 30 Ibid, 33–34.
31 Mashaw, ‘Reasoned Administration: The European Union, the United States, and the Project of Democratic Governance’ (2007) 76(1) Geo.Wash.L.Rev. 99, 101; Brito Bastos ‘Beyond Executive Federalism: The Judicial Crafting of the Law of Composite Administrative Decision-Making’ (PhD thesis, EUI 2018), 167.
32 Mashaw, Ibid, 101–102. 33 Ibid.
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consequences (like quashing decisions or negative publicity).34 In this sense, reason-giving is
not free-standing: it is contingent on other fundamental rights and higher principles, especially judicial review. This is the dominant account of the duty to state reasons, including in the EU.35 However, another, ‘Aristotelian’ account sees that viewpoint as incomplete.36 It holds that reasons-giving is grounded in human rationality through an inherent desire to give reasons for self-conduct.37 This account posits that all rational beings want to be responsible, to account to another.38 Correspondingly, unreasoned administration treats citizens as mere objects without rational capacities, a means to effectuate state purposes.39 Accordingly, under that view the right to reasons is a freestanding fundamental right, independent of other fundamental norms.40
II.ii – The Duty
At EU level a duty to state reasons has been enshrined since foundation.41 The duty forms part of the right to good administration codified under Article 41 CFR. Article 296 TFEU does not bind Member States but there is debate whether Article 41(2) CFR, despite Article 41(1)’s express wording, binds Member States when they act within EU law’s scope.42 In Cicala the Court refused to hold the Member State bound by Article 41(2) CFR, yet some argue this case is confined to its facts.43 The conclusion that the Charter binds the Member States to respect
the duty is corroborated by the fact that the right to an effective remedy in Article 47 binds Member States.44
34 Ibid, 102.
35 Ibid, 105, 112ff.
36 Gardner, ‘The Mark of Responsibility’ (2003) 23(2) O.J.L.S. 157. 37 Ibid, 158ff.
38 Ibid, 161ff.
39 Mashaw, ‘Reasoned Administration’ (n.31), 105–106. 40 Ibid.
41 Ex-Articles 5, 15 and 65 ECSC; currently Article 296 TFEU.
42 The jurisprudence is elusive on this. In C-604/12 N ECLI:EU:C:2014:302, para 49 the Court stated that the right to good administration under Article 41 CFR reflected a general principle but did not explicitly clarify whether Member States themselves were directly bound by Article 41. However see AG Bot’s Opinion in N ECLI:EU:C:2013:714 para 36 where he suggests that Member States must respect the right to good
administration not only because it is a general principle but also because it is protected under Article 41(2) CFR. 43 C-482/10 Cicala ECLI:EU:C:2011:868 para 25ff. However, some scholars argue that in that case the Court refused to hold the Member State bound by Article 41 because it was not acting within the scope of EU law and therefore the Charter could not apply. See: Mihaescu, The right to good administration at the crossroads of the various sources of fundamental rights in the EU integrated administrative system (Nomos 2015), 281ff. 44 Mihaescu, ibid, 282ff. Confirmed by Explanation to Article 47 CFR.
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In any case, good administration, including the duty to state reasons, binds the Member States as a general principle, even if Article 41 CFR does not.45 The locus classicus of the Member
States’ duty is Heylens, where the ECJ held:
‘Effective judicial review, which must be able to cover the legality of the reasons for the contested decision, presupposes in general that the court to which the matter is referred may require the competent authority to notify its reasons. But where, as in this case, it is more particularly a question of securing the effective protection of a fundamental right conferred by the Treaty on Community workers, the latter must also be able to defend that right under the best possible conditions and have the possibility of deciding, with a full knowledge of the relevant facts, whether there is any point in their applying to the courts. Consequently, in such circumstances the competent national authority is under a duty to inform them of the reasons on which its refusal is based….’46
Accordingly, the Court justifies the duty under a dual rationale. One is institutional – the duty exists to ensure judicial review, respect for legality and the rule of law.47 The second rationale focusses on effective protection of individual rights. The Court also held that the duty only applies to final decisions48 and will accordingly ‘impute’ it to the final decision-maker.49 Recently the Court has reaffirmed that good administration, including the duty to state reasons, binds Member States when they implement EU law50 and also reaffirmed its twin rationale.51
Additional supporting rationales are transparency52 and encouraging decision-makers to exercise self-control and prevent ill-considered measures,53 a corollary of diligent and impartial
examination.54
There is one exception to the principle that the duty only applies to final national measures. In composite procedures involving preparatory measures by national authorities and final
45 However, whether CFR rights are hierarchically superior to general principles in case of conflict is still a matter of debate. See: Hofmann & Mihaescu, ‘The Relation between the Charter's Fundamental Rights and the Unwritten General Principles of EU Law: Good Administration as the Test Case’ (2013) 9 Eur.Const.L.Rev. 73. 46 C-222/86 Heylens ECLI:EU:C:1987:442, para 15.
47 See also: C‑413/06P Impala, AG Kokott’s Opinion ECLI:EU:C:2007:790, para 97–98. 48 Heylens (n.46), para 16.
49 See: Mihaescu, The right to good administration at the crossroads of the various sources of fundamental rightsin the EU integrated administrative system (n.43), 287ff.
50 C-46/16 LSCS ECLI:EU:C:2017:839, para 39. 51 Ibid, para 40.
52 Article 11(2)-(3) TEU.
53 Impala, AG Kokott’s Opinion (n.47), para 97. See also: Shapiro, ‘The Giving Reasons Requirement’ (n.27), 180.
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decisions taken by the Commission, where the Commission agrees with the national authority’s reasons it may satisfy its duty simply by referring to the preparatory national act’s reasons, a ‘referential’ statement of reasons.55 However, the Commission may only make a referential
statement of reasons where inter alia the affected party could take cognisance of the preparatory measure before the adoption of the Commission decision.56 In other words, in certain circumstances individuals may have a right to reasons against national authorities acting at preparatory stage.57 This is justified by the requirement of judicial protection.58 Although it does not appear to have arisen, this same logic could well apply by analogy where a national authority adopts a referential statement of reasons referring to another (privatised) national authority’s decisions and judicial protection applies.
At national level the duty applies to ‘individual decisions adversely affecting individuals against which the latter must have some remedy of judicial nature, and not national measures of general scope.’59 So although only those directly and individually concerned are entitled to reasons, this is interpreted broadly to include those ‘adversely affected.’60 In other words, the duty at national level applies to administrative decisions but not legislative acts. This means that if the detainees cannot prove directive and individual concern and H5T’s shower policy is considered akin to legislative rule-making the duty therefore cannot apply, even if it binds private delegates. We will return to this point later in Chapter V, but Chapters III and IV will assume H5T’s policy change is administrative and therefore only deal with application of the duty to private delegates in an administrative context.
The content of the duty depends on the case’s circumstances61 and the wider the
decision-maker’s discretion, the more important the duty.62 Reasons need not cover all matters of fact and law,63 but must clearly disclose the reasoning followed to enable persons to defend their rights and the Court to exercise jurisdiction.64 Thus, EU law takes a ‘Hobbesian’ view of the
55 See: C-119/97P Ufex ECLI:EU:C:1999:116, para 57; Ufex, AG Colomer’s Opinion ECLI:EU:C:1998:255, para 18ff. See: Brito Bastos, PhD Thesis (n.31), 178ff; Della Cananea, ‘The European Union’s Mixed Administrative Proceedings’ (2004–2005) 68 L.&Contemp.Probs. 197, 208 – 209.
56 T-199/99 Sgarvatti ECLI:EU:T:2002:228, para 102; Brito Bastos, ibid, 181ff. 57 Brito Bastos, ibid, 183.
58 Ibid, 182ff.
59 C-70/95 Sodemare ECLI:EU:C:1997:301, para 19.
60 See, e.g.: Ibid; C-195/80 Michel ECLI:EU:C:1981:284, para 22. See also: Mihaescu, The right to good administration at the crossroads of the various sources of fundamental rights in the EU integrated administrative system (n.42), 275 – 277.
61 Joined Cases 296 and 318/82 Leeuwarder ECLI:EU:C:1985:113, para 19. 62 Impala, Opinion of AG Kokott’s Opinion (n.47), para 126.
63 C-367/95P Sytraval ECLI:EU:C:1998:154, para 63. 64 C-269/90 TU München ECLI:EU:C:1991:438, para 26.
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duty as applied to Member States. It is not free-standing but a right contingent on higher principles including judicial protection, legality and fundamental rights and freedoms.
In EU law, legality requires that administrative procedures are followed.65 At EU level, failure to respect the duty amounts to a failure to respect an essential procedural requirement66 and can lead to annulment.67 However, at national level it is for the Member States, exercising procedural autonomy, to regulate consequences of failure to state reasons subject to principles of equivalence and effectiveness.68 Although the Court has repeatedly held that the right to good administration binds the ‘Member State’ and their ‘competent authorities,’ it has never considered whether those terms encompass private delegates exercising administrative authority under EU law. This brings us to the thesis’s central doctrinal question.
65 Hofmann & others, Administrative Law and Policy of the European Union (n.4), 152. 66 C-367/95P Sytraval (n.63), para 67.
67 Article 263(2) TFEU. 68 LSCS (n.50), para 47.
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III – Does EU Law Bind Private Delegates to the Administrative Duty to State Reasons?
This Chapter deals with the thesis’s main doctrinal question by examining it through fundamental constitutional principles of EU law. It concludes that these principles dictate that private delegates respect the duty to state reasons, before moving in the subsequent Chapter to consider the precise conditions under which they would be bound.
III.i – National Autonomies
The starting point is that EU law recognises the principles of national institutional and procedural autonomy. They, in principle, militate against either the Member States being bound by EU law to ensure that private delegates respect the duty to state reasons or private delegates being directly bound by the duty under EU law. National procedural autonomy encapsulates the idea that:
‘in the absence of Community legislation, it is for the Member States to lay down the procedural rules for legal proceedings intended to protect the rights conferred to individuals by EC law.’69
National procedural rules are ‘national systems of norms aimed to sanction respect of EU substantive law,’70 ‘sanction’ meaning ‘to designate the array of instruments of legal coercion that … guarantees respect for law in case of conflicts arising during application.’71 This concept
concerns national rules relating to judicial and administrative competence, procedure and rights of defence.72 It therefore includes conditions for applying the duty to state reasons in
administrative proceedings, as well as remedies for breaches.73
National institutional autonomy reflects the EU’s international law pedigree, treating Member States as unitary entities.74 It embodies the idea that EU law is in principle unconcerned with which national entities implement EU law so long as obligations are implemented, which can
69 See: C-33/76 Rewe (Saarland) ECLI:EU:C:1976:188, para 5 and subsequent case law. The principle applies equally to national judicial and administrative procedures. On administrative procedural autonomy see: C-137/08 Schneider, AG Trstenjak’s Opinion ECLI:EU:C:2010:401, para 65ff.
70 De Wilmars, ‘L'efficacité des différentes techniques nationales de protection juridique contre les violations du droit communautaire par les autorités nationales et les particuliers’, (1981) Cahiers de Droit Européen 379, 390.
71 Ibid. 72 Ibid.
73 LSCS (n.50), para 47.
74 Verhoeven, ‘The Constanzo Obligation and the Principle of National Institutional Autonomy: Supervision as a Bridge to Close the Gap’ (2010) 3 R.E.A.Law 23, 25.
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be seen from, e.g., the fact secondary law typically refers to ‘competent national authorities.’75
The Court first recognised the principle in International Fruit, holding:
‘it is for [Member States] to determine which institutions within the national system shall be empowered to adopt … measures.’76
Accordingly, national institutional autonomy permits Member States to delegate their powers to private entities.77 Under these principles, absent EU legislation, Member States are in principle free to set their own judicial and administrative procedures (including reasons-giving requirements) and remedies for enforcing EU law rights. Institutional autonomy means there is no impediment to contracting-out implementation of EU law to private delegates.
However, that is not the end of the matter and brings us to two points. First, it has long been recognised that autonomy is subject to twin limits of equivalence and effectiveness,78 which mean procedural rules governing actions concerning EU law rights are ‘no less favourable than those governing similar domestic claims (equivalence) nor render virtually impossible or excessively difficult the exercise of rights conferred by [EU] law (effectiveness).’79 As equivalence requires remedies be available where they would be in similar domestic actions,80 it may provide a remedy depending on the Member State.81
Second, the Court has also held that national autonomy must be reconciled with the need to apply EU law uniformly to avoid unequal treatment82 and with the Member States’ obligation
to take ‘all appropriate measures’ pursuant to their obligation of loyal cooperation.83 As we
will see later, the Court is even occasionally willing to employ a technique of ‘vertical equivalence’ to impose EU-derived procedural standards as a minimum benchmark at national level.
75 Ibid, 27.
76 Joined Cases 51-54/71 International Fruit ECLI:EU:C:1971:128, para 3.
77 Chiti, ‘The EC Notion of Public Administration: The Case of the Bodies Governed by Public Law’ (2002) 8(4) Eur.Pub.L. 473, 485.
78 Rewe (n.69).
79 C-188/95 Fantask ECLI:EU:C:1997:580, para 39.
80 C-160/14 Ferreira da Silva ECLI:EU:C:2015:565, para 50.
81 Some argue that equivalence in practice plays very little role because it contradicts effectiveness and the Court prefers the latter. See: Bobek, ‘Why there is No Principle of “Procedural Autonomy” of the Member States’ in Micklitz & De Witte, The European Court of Justice and the Autonomy of the Member States (Intersentia 2012).
82 C-205/82 Deutsche Milchkontor ECLI:EU:C:1983:233, para 17.
83 Article 4(3) TEU; Klamert, The Principle of Loyalty in EU Law (OUP 2014), 15ff, 261ff ; Hinton, ‘Strengthening the Effectiveness of Community Law: Direct Effect, Article 5 EC and the European Court of Justice’ (1999) 31 NYU J.Int.Law&Pol. 307.
17 III.ii – Effectiveness
Effectiveness Generally
Chapter II already explained that the duty to state reasons’ rationale is to facilitate judicial review. Because of this and for reasons below, the principle of effectiveness, understood both as effective compliance and judicial protection, applies particularly strongly to the duty to state reasons. It weighs against Member States circumventing the duty by contracting-out the implementation of EU law to private delegates.
Effectiveness is oft-invoked but elusive. Bobek denies it is a ‘legal principle’ at all because it lacks internal limits due to the ‘excessive difficulty’ formulation,84 which results in an unpredictable ‘I-know-it-when-I-see-it’ test.85 However, for present purposes it will be considered a legal principle with some concrete predetermined obligations for Member States. Effectiveness in the procedural autonomy jurisprudence is defined as prohibiting national rules which render exercise of EU law rights virtually impossible or excessively difficult.86 However, the principle is wider than that construction indicates. Effectiveness can be understood as ‘[an] expression … of the idea that Union law must be construed and applied as to enable it to function in the way it has been conceived.’87 The Court has held that ‘Member States may [not] … adopt any measure which would conceal the Community nature and effects of any legal provision from the persons to whom it applies’88 and also that when assessing compatibility of national provisions the Court must consider EU law’s aims and objectives.89
Effectiveness has been labelled supremacy’s natural follow-up in the domain of judicial procedure,90 protecting balance of powers between EU and Member States. In Lucchini,
effectiveness was invoked to compel national authorities to discard res judicata where it prevents recovery of unlawful state aid.91 In Olimpiclub, the Court explained that in Lucchini national authorities usurped an exclusive Commission competence, upsetting the division of powers.92
84 Bobek, ‘Why There is No Principle of “Procedural Autonomy” of the Member States’ (n.73), 314. 85 Ibid, 312.
86 C-432/05 Unibet ECLI:EU:C:2007:163, para 43.
87 Klamert, The Principle of Loyalty in EU Law (n.83), 262. 88 C-50/76 Amsterdam Bulb ECLI:EU:C:1977:13, para 7. 89 Ibid, para 9.
90 Adinolfi, ‘The “Procedural Autonomy” of Member States and the Constraints Stemming from the ECJ’s Case Law’ in Micklitz and de Witte (eds), The Court of Justice and the Autonomy of the Member States (n.81), 293. 91 C-119/05 Lucchini ECLI:EU:C:2007:434, para 61–63.
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Two forms of effectiveness can be distinguished: ‘effective compliance’ (usually called ‘effectiveness’ or ‘effet utile’) and effective judicial protection. Effective compliance is understood to ‘encapsulate the idea of obedience, sanction and enforcement’ of EU law obligations while effective judicial protection relates to ‘the ability of individuals to obtain redress in national courts’ for breaches of EU law.93
In Johnston the Court held the requirement of judicial review was a general principle of EU law.94 In UPA the Court held that it is ‘for the Member States to establish a system of legal remedies and procedures which ensure respect for the right to effective judicial protection,’95 an obligation now codified in Article 19(1) TEU. The Court provided a ‘comprehensive modern summary’96 in Unibet.97 Citing (inter alia) Heylens the Court reiterated that effective judicial protection was a general principle stemming from Member States’ traditions which was reaffirmed by Article 47 CFR.98 The Court reiterated that national procedural autonomy was limited by equivalence and effectiveness.99 Exceptionally this requires creation of new remedies where no sufficient remedy exists100 but otherwise courts must (re)interpret national rules to be consistent with these principles.101
The relationship between effective compliance, judicial protection and procedural autonomy is debatable. Arnull argues that Unibet shows that ‘national procedural autonomy was but an aspect of … effective judicial protection’102 and calls AG Kokott’s later characterisation of
effective judicial protection as a specific expression of effectiveness ‘inconsistent with
Unibet.’103 However, the situation is unclear. In some cases, effective judicial protection of individuals is ‘an instrument to ensure the effective compliance of Member States….’104 Either
way, these principles’ application usually compels the same result – enforcing EU law at national autonomy’s expense.105
93 Nebbia, ‘The Double Life of Effectiveness’, (2008) 10 C.Y.E.L.S. 287, 288. 94 C-222/84 Johnston ECLI:EU:C:1986:206, para 18.
95 C-50/00P UPA ECLI:EU:C:2002:462, para 41.
96 Arnull, ‘The Principle of Effective Judicial Protection in EU law: An Unruly Horse?’ (2011) 36(1) Eur.L.Rev. 51, 54. 97 Unibet (n.86), para 36ff. 98 Ibid, para 37. 99 Ibid, para 43. 100 Ibid, para 40–41. 101 Ibid, para 44.
102 Arnull ‘The Principle of Effective Judicial Protection in EU law’ (n.96), 55.
103 Ibid, 55, footnote 30 of article; C-75/08 Mellor, AG Kokott’s Opinion ECLI:EU:C:2009:32, para 28. 104 Nebbia, ‘The Double Life of Effectiveness’ (n.93), 292.
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Taking all this together, effectiveness places two requirements on Member States. First, effective compliance requires that Member States comply fully with EU law and refrain from undermining its aims and objectives.106 Second, individuals must be able to access EU law rights and obtain redress when breached, without excessive difficulty. With this in mind, the next section examines how the logics of effective compliance and judicial protection apply with particular force to the duty to state reasons.
Compliance, Judicial Protection and Reasons
The logic of effectiveness – as both compliance and judicial protection – applies particularly strongly to the duty to state reasons as it is necessary to enable both legality review and judicial protection.107 First, as an obligation under EU law itself, Member States must comply fully with the duty. Second, it allows others (including other EU and national institutions) to know whether EU law obligations have been complied with. Moreover, it encourages compliance by incentivising decision-makers to carefully make decisions according to EU law. Finally, and most importantly for present purposes, the duty itself is contingent on the right to effective judicial protection. As one author put it:
‘What can be clearly seen from Heylens is that the European Court attaches great importance to effective judicial protection and will impose obligations upon the national authority, such as the giving of reasons, in order that the individual is able to protect her/his rights….’108
The fact that the Explanation to Article 47 CFR itself cites Heylens corroborates this. Although the duty’s existence is contingent to effective judicial protection, that does not make it unimportant. In fact, because the effectiveness of judicial protection (and by extension, ability to scrutinise compliance) depends on reasons-giving, the duty is fundamental to EU law’s effectiveness. Accordingly, the principle militates strongly against EU law permitting private delegates to evade the duty to state reasons.
106 Effectiveness has also been closely linked with the obligation of loyalty under Article 4(3) TEU. See: Klamert, The Principle of Loyalty in EU Law (n.83), and Hinton, ‘Strengthening the Effectiveness of Community Law’ (n.83).
107 C-75/08 Mellor ECLI:EU:C:2009:279, para 59.
108 Thomas, ‘Reason-Giving in English and European Community Administrative Law’ (1997) 3 Eur.Pub.L. 213, 218.
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III.iii – Uniformity and the Complete System of Legal Remedies
As explained, in EU law the duty’s primary purpose is to facilitate judicial review and judicial protection. This brings us to a related point which provides additional support to the contention that EU law must bind private delegates to the duty. If the duty to state reasons is essential to judicial review, it has wider implications for the Treaties’ system of legal remedies and, therefore, the CJEU’s jurisdiction and uniform application.
The preliminary reference procedure is fundamental to the EU legal order. Regarded as the keystone to the twin pillars of direct effect and supremacy,109 invigoration of the EU judicial system and a European rule of law were key drivers of European integration, without which the EU may not exist.110 The Court has repeatedly held that the Treaties envisage a complete system of legal remedies.111 As part of this, the preliminary reference procedure under Article 267 TFEU establishes a cooperative relationship between ECJ and national courts to ensure correct and uniform application of EU law and protect individual rights.112 The Court has held that Article 267’s primary objective is uniform application which safeguards EU law’s consistency, full effect and autonomy113 and is therefore a fundamental requirement.114 In that system, Member States are obliged to respect the CJEU’s jurisdiction.115 The ECJ rejects national rules which limit possibilities to refer preliminary questions,116 as well as agreements conferring judicial powers on tribunals outside the EU judicial framework.117
If, as shown, the duty to state reasons is essential to judicial review, it follows that allowing private delegates to evade the duty will deprive national courts of the opportunity to judicially review those delegates’ actions. If that occurs, private delegates remain free to act contrary to EU law undetected and national courts cannot request preliminary rulings. Therefore, the ECJ
109 Mancini & Keeling, ‘From CILFIT to ERT: the Constitutional Challenge facing the European Court’ (1991) 11 Y.E.L. 1, 2-3.
110 Alter, Establishing the Supremacy of European Law: The Making of an International Rule of Law in Europe (OUP 2001), Ch 6. According to Alter, until the 1970’s Member States rarely complied with EU law to the extent that there was essentially no common market. The ECJ’s increased authority and possibilities for private litigants to invoke EU law reinvigorated European integration.
111 See: C-294/83 Les Verts ECLI:EU:C:1986:166, para 23; C-314/85 FotoFrost ECLI:EU:C:1987:452, para 15; Opinion 1/09 ECLI:EU:C:2011:123, para 70; C-72/15 Rosneft ECLI:EU:C:2017:236, para 66.
112 Opinion 1/09, ibid, para 84.
113 Rosneft (n.111), para 80; C-284/16 Achmea ECLI:EU:C:2018:158, para 35; Opinion 2/13 ECLI:EU:C:2014:2454, para 176.
114 C-143/88 Zuckerfabrik ECLI:EU:C:1991:65, para 26. 115 Opinion 2/13 (n.113), para 202.
116 C-689/13 Puligienica ECLI:EU:C:2016:199, para 33.
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is deprived of the opportunity of ruling on questions of EU law under Article 267. This accordingly jeopardises the unity (and arguably to a lesser extent primacy)118 of EU law.
III.iv – Conclusion
From the foregoing, we can draw one important conclusion. Although Member States’ institutional and procedural autonomy allow them to delegate implementation powers to private entities and dictate those entities’ procedures, fundamental principles of EU law including effective compliance, judicial protection and uniformity preclude private delegates from evading the administrative duty to state reasons. However, it is still unclear how (i.e. under what conditions) that conclusion operates. The next Chapter therefore examines two doctrinal approaches in EU law capable of applying the duty to state reasons to private delegates, beginning with Meroni and then considering a functional approach to defining ‘the State’ before analysing and comparing the two.
118 National procedural and institutional arrangements, including Constitutional law, cannot undermine EU law’s primacy and effectiveness. See: C-378/17 Boyle ECLI:EU:C:2018:979, paras 35-39, 45-50. Allowing private delegates to escape the duty to state reasons may undermine primacy. First, by potentially removing disputes from the jurisdiction of the ECJ under Article 267, practices contrary to EU law are more liable to subsist. Second, the primacy of the duty itself would be undermined. This is linked to the point already made that effectiveness is a consequence of supremacy. Indeed, recent case-law explicitly links ‘primacy, unity and effectiveness’; e.g.: Fransson (n.21), para 29; C-399/11 Melloni ECLI:EU:C:2013:107, para 60; C-42/17 Tarico II ECLI:EU:C:2017:936, para 47.
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IV – How Do or Could Procedural Rights Apply in this Context?
IV.i – Meroni
In Meroni, the then-High Authority (‘HA’) had delegated discretionary powers to Belgian private law entities (‘the agencies’). The Court invalidated the delegation and although it acknowledged the HA could delegate its powers to private bodies,119 set down three principles limiting such delegations. First, a delegating authority cannot delegate more extensive powers than those it itself was conferred (‘the first Meroni principle’).120 Because the HA, had it exercised the powers itself, would have been bound to state reasons and publish reports and data, the agencies also had to be bound by those duties.121 Moreover, because the HA’s decisions were subject to ECJ review, so too would the agencies’ acts have to be reviewable.122 By not subjecting the delegated powers to those conditions the HA infringed the Treaty and the delegation was invalid for infringing an essential procedural requirement.
Second, the delegation must be limited to ‘clearly defined executive powers … subject to strict review in light of objective criteria’ (‘the second Meroni principle’).123 Delegations of discretionary power are impermissible, because this constitutes an ‘actual transfer of responsibility.’124 Third, authority must be delegated expressly (‘the third Meroni
principle’).125 In ESMA, the CJEU narrowed the second Meroni principle.126 The Court emphasised that judicial review was available,127 a fact repeatedly highlighted in both Meroni
and Romano (which concerns delegation of rule-making) jurisprudence.128 Importantly, both
the Court and AG emphasised that Meroni concerned private bodies whereas ESMA was a public agency created by the EU legislature.129 This may imply that Meroni is more strictly applied where powers are delegated to private bodies.
119 Meroni (n.5), 151. 120 Ibid, p. 150. 121 Ibid, 149 – 150. 122 Ibid. 123 Ibid, 152. 124 Ibid. 125 Ibid, 151. 126 C-270/12 ESMA ECLI:EU:C:2014:18. 127 Ibid, para 53.
128 See: Bergström, ‘Shaping the new system for delegation of powers to EU agencies: United Kingdom v. European Parliament and Council (Short selling)’ (2015) 52(1) C.M.L.R. 219; C-98/80 Romano
ECLI:EU:C:1981:104.
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However, for present purposes, the first Meroni principle is most important. Simply put, if the Court were to accept that Meroni binds Member States, it follows that Member States cannot delegate EU law powers wider than their own. Any powers delegated must be subject to the same constraints that would apply if exercised by the delegator. Accordingly, if Member States are bound to give reasons for decisions within the scope of EU law, so too must private entities to whom member states delegate those powers.
Applying Meroni to the Member States
This brings us to whether private delegates at national level can be bound by the duty to state reasons directly through the first Meroni principle. Interestingly, some secondary EU laws permitting delegation cited in Chapter I impose limits that mirror the second Meroni principlebut say nothing about procedural rights.130
As mentioned, this question has received little attention, but one scholar who has considered the question is Donnelly. She concedes that applying Meroni would be the most desirable avenue for holding private delegates to public law standards (including the duty to state reasons) because ‘the test would simply be proof of delegation.’131 Separately, control of delegation has also been suggested as the optimal way to ensure constitutional accountability in the US.132 However, Donnelly concludes that it is unlikely that Member States are bound by
Meroni, stating:
‘the Meroni principle would seem to compel the conclusion that the Member State's private delegate is bound … since the Member State itself would be—although there is no evidence as to whether Meroni would be applied to Member States acting within the scope of EU law and the principle of institutional balance on which Meroni is based clearly does not apply to Member State delegation.’133
Donnelly bases the conclusion that institutional balance cannot apply to Member States on the Court’s refusal to apply the principle in Tralli, a staff case, because institutional balance ‘is
130 E.g., Article 27(5) Regulation 2007/834/EC on organic production and labelling of organic products and Article 5(2) Regulation 2004/882/EC on official controls performed to ensure verification of compliance with feed and food law, animal health and animal welfare rules limits delegation of discretionary powers by
stipulating that tasks may only be delegated to control bodies where inter alia: there is an accurate description of tasks and conditions under which they may be carried out; the control body is proven to possess the requisite expertise; the control body is impartial; and there is effective coordination between the control body and competent authority.
131 Donnelly, Delegation of Governmental Power to Private Parties (n.1), 284. 132 Metzger, ‘Privatization as Delegation’ (2003) 103 Colum.L.Rev. 1367. 133 Donnelly, Delegation of Governmental Power to Private Parties (n.1), 281.
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intended to apply only to relations between Community institutions and bodies.’134 Meroni’s
rationale indeed lies in protecting the Union’s inter-institutional balance.135 In fact, Meroni
represents the first genuine reference to institutional balance.136 Moreover, national institutional autonomy corroborates Donnelly’s deduction that institutional balance does not apply to Member States.
However, as outlined in the previous Chapter, national autonomy is limited by fundamental principles of EU law including effectiveness and uniform application. To reconcile national autonomy with effectiveness and uniform application, the Court sometimes applies a technique of vertical equivalence to ensure coherent judicial protection and uniformity in the legal order. This technique could arguably be used to apply Meroni directly to the Member States, setting the conditions under which States are bound to ensure private delegates respect the duty. The following subsection therefore examines how uniform application of EU law and the coherent system of legal remedies might dictate that the first Meroni principle should bind the Member States. It considers specifically whether these principles could justify the Court employing its vertical equivalence technique to apply the first Meroni principle at Member State level.
Uniformity and Coherence as Vectors for Applying Meroni to Member States?
As explained, equivalence means that procedural rules for safeguarding individuals’ rights under EU law must be no less favourable than those governing similar domestic actions.137 In
certain areas, the Court has frequently invoked the duty of cooperation under Article 4(3) TEU to ‘abstract specific Member State duties from general obligations’ to assure effectiveness.138 However, the question remains how those specific duties are to be precisely drawn. Some scholars propose the existence of a judicial technique of vertical equivalence (also called ‘communautarisation’ of procedure),139 defined as the idea that in certain fields, national
standards of judicial protection are replaced by Union-wide minimum standards derived from the standard of protection at EU level.140 It has been argued that this technique is employed
134 C-301/02P Tralli ECLI:EU:C:2005:306, para 46.
135 Meroni, (n.5), 152; C-409/13 Council v Commission (Macro-Financial Assistance) ECLI:EU:C:2015:217, para 64.
136 Jacqué, ‘The principle of institutional balance’ (2004) 41(2) C.M.L.R. 383, 384. 137 Unibet n.78), para 42.
138 Hinton, ‘Strengthening the Effectiveness of Community Law’ (n.83), 322, 331ff.
139 Heukels & Tib, ‘Towards Homogeneity in the Field of Legal Remedies: Convergence and Divergence’ in Beaumont & others (eds), Convergence and Divergence in European Public Law (Hart 2001).
140 Brito Bastos, ‘The Borelli Doctrine Revisited: Three Issues of Coherence in a Landmark Ruling for EU Administrative Justice’ (2015) 8(2) R.E.A.Law 269, 292–293; Heukels & Tib, ibid, 114.
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where necessary to ensure unity and coherence in the system of legal remedies,141 and explains
the Court’s decisions in some limited but important areas.
The Court has expressly invoked coherence of the system of legal remedies to justify its exclusive jurisdiction to invalidate EU law142 and national courts’ jurisdiction to order interim relief against national measures.143 In Factortame the Court held national courts are obliged to grant interim relief against national implementing measures whose validity was challenged, a move with wide Constitutional ramifications for the particular Member State.144 In
Zuckerfabrik, the Court acknowledged that rules for granting interim measures were governed
by national law (i.e. a matter of procedural autonomy) but stated this might jeopardise uniform application,145 having acknowledged the need for coherence in granting interim relief.146 As uniform application is a fundamental requirement, the Court concluded that granting interim relief should be subject to uniform conditions.147 It chose criteria which ‘come very close to those … in … interim measures against acts of the [EU] institutions,’148 and the Union-level standard was therefore taken as the minimum benchmark for all Member States.
In Brasserie, citing its Zuckerfabrik statement that uniformity was a fundamental requirement, the Court considered the possibility of damages against Member States for breaching EU law.149 The Court held that, absent justification, the conditions under which Member States incur liability for damage to individuals caused by breach of EU law cannot differ depending whether national or EU authorities are at fault.150 It therefore held that national legislatures
were liable for damages caused by breaching EU law under the same conditions as the EU legislature is liable.151 This is ‘an obvious assimilation to the conditions governing the
[Union’s] non-contractual liability.’152 Additionally, Brito Bastos argues that Borelli is a
manifestation of vertical equivalence, as it sets uniform criteria for establishing jurisdiction to
141 Brito Bastos, ibid, 292–293; Heukels & Tib, ibid, 112. Lenaerts argues that the principles of equivalence and effectiveness exist to ensure systemic coherence in the system of EU legal remedies: Lenaerts, ‘The Rule of Law and the Coherence of the Judicial System of the European Union’ (2007) 44 C.M.L.R. 1625, 1645ff. 142 Rosneft, (n.111), para 78; FotoFrost, (n.111), para 17.
143 Zuckerfabrik (n.114), para 18.
144 See generally: Elliott, ‘Constitutional Legislation, European Union Law and the Nature of the United Kingdom’s Contemporary Constitution’ (2014) 10 Eur.Const.L.Rev. 379.
145 Zuckerfabrik (n.114), para 25. 146 Ibid, para 18.
147 Ibid, para 26. See conditions at: paras 23, 28, 30.
148 Heukels & Tib, ‘Towards Homogeneity in the Field of Legal Remedies’, (n.139) 121. 149 Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur ECLI:EU:C:1996:79, para 33. 150 Brito Bastos, ‘The Borelli Doctrine Revisited’ (n.140), 292; Brasserie, ibid, para 42. 151 Brasserie, ibid, para 42ff.
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review acts in composite administrative procedures based, essentially, on EU standards.153 As
he points out, Borelli, in forbidding national Courts from reviewing EU measures, follows the same logic as FotoFrost, which was based on the legal order’s unity and coherence.154
Accordingly, if private delegates are subject to the duty to state reasons at EU level, the Court, to ensure uniformity and coherence of the system of legal remedies, could apply its vertical equivalence technique to require that Member States ensure that private delegates respect the duty to state reasons under mirror conditions. This would mean the first Meroni principle itself could bind Member States when they implement EU law.
Despite Meroni’s appeal, for two reasons it is difficult to argue that coherence and uniform application demand it cover Member States. First, although judicial review was an important part of Meroni, it was nonetheless based on balance of powers between EU institutions, a rationale which, as argued, cannot apply to Member States. This distinguishes it from
Zuckerfabrik, Brasserie and Borelli, which are primarily grounded in effective judicial
protection, a rationale which applies strongly to Member States. Second, as explained below, the ECJ has a considerable body of jurisprudence endorsing a flexible, functionalist definition of ‘state’ from which it could draw ample inspiration in the context of the duty to state reasons. That approach would still respect uniform application and coherence of the system of legal remedies. There is therefore no compelling reason why Member States must be bound directly by Meroni.
IV.ii – A Functionalist Definition of ‘the Member States’ Introduction
Having concluded that Meroni’s underlying rationale of institutional balance precludes it from applying to delegations of power at national level, Donnelly then considers whether effectiveness points in favour of the Court adopting a definition of ‘state’ which would bind private delegates to EU fundamental rights and administrative law obligations. After perusing the relevant jurisprudence, she concludes that it does because effectiveness leads the Court to functionally define ‘the state’ to give widest possible protection to EU law rights.155
153 Brito Bastos, ‘The Borelli Doctrine Revisited’ (n.140), 292ff. 154 Ibid, 282; FotoFrost (n.111), para 15.
155 Donnelly, Delegation of Governmental Power to Private Parties (n.1), 281ff. Donnelly conducts this analysis in the context of examining whether ordinary human rights (as opposed to administrative law rights) apply to private delegates but states at 291 that the same legal logic applies with equal force to both cases.
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This is an eminently plausible and defensible conclusion but is worth revisiting for two reasons. First, to take account of important subsequent jurisprudential developments, which point even more strongly in favour of a functional approach which would subject private delegates to the duty to state reasons and give more guidance as to its operation. Second, because as explained, effectiveness applies particularly strongly to the duty to state reasons which also has implications for unity and effectiveness, points which Donnelly does not specifically consider.
Effectiveness and Functional Conceptions of Public Authority in EU Law
Drawing on Chiti,156 Donnelly argues that to maximise EU law’s effectiveness the Court takes a functionalist approach to defining the state and public administration. She undertakes her analysis by systematically examining and comparing case-law in diverse areas. What is particularly compelling about that approach is that it closely mirrors AG Sharpston’s later approach in Farrell,157 a landmark case which clarified the Foster test in favour of a wide definition of ‘the State’.
As mentioned, the duty is directed at ‘Member States’ and their ‘competent authorities’ yet these terms are undefined.158 Typically, Member States define ‘the state’, ‘public authority’, ‘administration’, etc., according to legal status and form rather than function.159 By contrast, in
specific areas the ECJ rejects an approach based on national legal form, instead invoking effectiveness to ensure national definitions of public and private have no impact on EU law’s application. This approach leads the Court to interpret ‘the state’ and related concepts narrowly or broadly depending on which approach will give maximum effect to the Treaties’ fundamental aims and principles. Moreover, it should be noted that (as mentioned) at least one piece of secondary legislation, the Aarhus Directive, adopts a functionalist definition of ‘public authority’ to include private entities exercising public functions.160
This section examines how the Court’s functionalist approach applies in free movement of workers, competition, state aid and procurement, before considering its approach in vertical direct effect of directives. Because the latter situation is relatively similar to the subject under discussion and the jurisprudence is well-developed, the vertical direct effect test will be taken
156 Chiti, ‘The EC Notion of Public Administration’ (n.77). 157 C-413/15 Farrell ECLI:EU:C:2017:745.
158 Heylens (n.46), para 15; Article 47 CFR.
159 For example, Italy prefers national legal concepts. See: Chiti, ‘The EC Notion of Public Administration’ (n.77), 476.
