Companies clamour for ECJ reform

Date: 11/05/2000

By Renée Cordes

IF SWEDISH truck giant Volvo decides to challenge the European Commission's decision in March to block its take-over of rival Scania by complaining to the European Court of Justice, it can expect to wait about two years for a ruling.

By then, both companies may have established long-running partnerships with other firms and the entire European market for trucks, buses and touring coaches may have changed beyond recognition. As a result, the court's judgement may be purely symbolic.

But if Volvo does decide to question the market definition which anti-trust regulators used in justifying their decision, as legal experts predict it will, it will have no option but to pursue what is becoming an increasingly lengthy, cumbersome and frustrating procedure.

Firms which want to turn to a blind and impartial Lady Justice are acutely aware that the pace at which she delivers results is slowing every year and that the legal bills will undoubtedly pile up while they wait. This causes problems not only for companies challenging competition decisions, but also for those awaiting key rulings on member states' interpretation of EU directives which cost industry time and money to implement.

Europe's highest courts - the final authority on interpreting Union law - are overburdened with cases which are taking longer and longer to resolve and are strapped for resources to handle their ever-increasing workload. The complaints they have to deal with are also becoming increasingly complicated, demanding more time and energy.

The number of cases pending before the ECJ and the Court of First Instance (CFI) more than doubled in the Nineties, up from a total of 728 in 1990 to 1,756 in 1998. During the same period, the time it took to get a preliminary ruling from the ECJ rose by about five months, to nearly two years.

With a host of central and eastern European countries preparing to join the EU within a few years, leading to an even greater flood of cases, there is mounting pressure on current Union member states to throw the courts a lifeline during the current round of EU treaty reform negotiations.

"These delays are a dissuasive element for companies to go to the courts at all since, by the time you get a ruling, it amounts to purely an academic exercise," says Dirk Hudig, secretary-general of European employers' federation UNICE, arguing that ECJ reform should be given top priority by Union leaders. "The credibility of the entire European legal structure depends on the proper functioning and execution of the legal system."

Supporters of reform argue that the situation is certain to get worse as the range of areas in which the EU legislates expands in the wake of the Amsterdam Treaty and the Commission's power to enforce legislation is bolstered. The ECJ is, for example, expected to face a growing number of cases relating to trade marks and the public's right of access to Union documents.

The CFI, whose role was initially limited to hearing competition cases, may eventually be asked to handle complaints related to the planned EU-wide patent. But it too is overloaded. "The CFI is not releasing the burden sufficiently on the ECJ to expedite cases in the way it had been hoped," says David Harrison, a partner at Allen & Overy.

National experts involved in the Intergovernmental Conference negotiations have already expressed broad support for a package of sweeping changes proposed by the Commission aimed at easing the courts' workload. These largely mirror a plan outlined by the ECJ itself.

In its reform proposal, the Court pointed out that it had already alerted EU governments to a "dangerous trend" towards an imbalance between the volume of incoming cases and the institution's capacity to deal with them.

If member states endorse its proposals by the end of this year, the courts will be on track for a radical overhaul beginning in the first half of 2001. But some of the simpler suggestions for reform could be introduced immediately without any changes to the EU treaty. These include the introduction of a fast-track procedure for cases deemed to be urgent and new rules stipulating that parties should not merely repeat arguments at oral hearings which they have already presented on paper.

Other, more fundamental changes would, however, take longer to implement since they must first be agreed unanimously by all 15 Union member states and included in the new treaty due to be finalised by December, which must then be ratified by national parliaments before coming into force.

Under the reform plan, the ECJ would only be obliged to handle cases which raised key questions about Union law and would have the power to turn others down. This would mirror the situation in the US, where the Supreme Court deals with only a small fraction of the cases it is asked to rule on every year.

The ECJ and the CFI currently have no choice but to deliver verdicts on all the cases which are lodged with them. Lawyers with experience in other legal systems have welcomed the idea of allowing them greater discretion to select cases, arguing that it would give the Luxembourg judges more of a policy-making role. "This would make the Court of Justice much more of a lawmaking body," says Rod Hunter, a partner in the Brussels office of Hunton & Williams. "It allows the judges to be much more pro-active and creative and has great political consequences."

But the second part of the long-term reform plan is more complicated. Both the Commission and the courts themselves have suggested giving the CFI the power to hear direct challenges from member states and other EU institutions in addition to the cases brought by companies and individuals allowed under current rules.

This has, however, sparked concern among some legal experts. "I am very worried about all this," says Julie Nazerali, a lawyer specialising in competition law at Beachcroft Wansbroughs. "If you do this, it will free up the ECJ a little bit to deal with other rulings, but it will clog up the CFI and in another two to three years we will have a new discussion about reforming the CFI."

In part to ease the burden on both courts, Union governments are discussing the possibility of increasing the number of judges from the current 15. Although the EU treaty does not provide for a link between nationality and membership of the court, it has always been tacitly agreed that there should be one judge from each member state.

Union governments face a difficult task in deciding whether the number of judges should be increased as a result of enlargement, which could push the number of judges up to 25 or more in the next few years. Critics warn that this may not be the best solution as it could threaten the court's ability to work as a unit and turn judicial panels into legislative-type bodies.

The other option is to set up specialist appellate tribunals to deal with highly technical cases such as those involving intellectual property rights - an area of law which is expected to expand significantly in the near future. While UNICE's Hudig welcomes this idea, some legal experts are sceptical.

"You can do it to a degree but you have to be careful," said US Supreme Court Justice Stephen Breyer in a recent interview with European Voice. Speaking after a visit to the US by some ECJ judges to compare notes, Breyer said appellate judges served an important purpose in interpreting the law in a way that ordinary citizens and lawyers who did not specialise in a particular field could understand, but warned that this role could be undermined if there were too many specialist panels.

Breyer also expressed amazement that ECJ judgements have to be translated into each of the Union's 11 official languages. What he may not have known, however, is that the court has only limited translation resources - another factor which has contributed to the mounting backlog of cases.

But critics dismiss claims that this is a key reason for the delay in delivering judgements, arguing that even if the Supreme Court had to translate its decisions into nearly a dozen languages, cases would still not take nearly as long to resolve as they do at the ECJ.

The courts' mounting backlog

Total cases pending

Source: European Court of Justice

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