"Particularly vulnerable": at-risk consumers in the European Union consumer protection regime

3 hét ago

Introduction

In a previous blog post, I explored the notion of the average consumer as defined in European Union law and its interpretation by the European Court of Justice. This current article aims to serve as a continuation of the previous study, with the objective of presenting a brief analysis of two potential interpretations of consumer vulnerability developed in the literature of consumer protection, followed by an examination of the appearance of a singular major exception to the average consumer concept within the European Union consumer protection regime: the narrow scope of consumers acknowledged as ‘particularly vulnerable’.

Interpreting Consumer Vulnerability

The European Union’s default benchmark of the reasonable and empowered average consumer can be examined in contrast with the notion of consumer vulnerability. While the importance of the concept is a common thread in the literature of European consumer protection law, there are significant disagreements in how exactly the vulnerable consumer standard should be applied in practice. Two of the contrasting interpretations are worth briefly mentioning here, due to their arguments dealing with issues related to the provision of financial services to consumers.

Irina Domurath argues that vulnerability should replace the traditional information paradigm completely as the normative standard in the field of consumer credit and mortgage law, a segment of the financial services sector characterized by some of the most complex business-to-consumer transactions. This approach is predicated on three key arguments: first, the lack of actual freedom of contract in consumer law due to the stronger bargaining and market position of the commercial party. Second, the concept of the average consumer not being rooted in factual evidence, considering both the fact that actual consumers don’t exhibit rational market behavior and the shortcomings of the information paradigm when the quantity and complexity of available information become overwhelming to the consumer. Finally, the lack of an EU model of social justice due to a preference for an ‘access justice’ approach – that is, justice interpreted as providing consumers free and non-discriminatory access to the market – in order to protect the objective of internal market freedom.

Norbert Reich, on the other hand, argues that the concept of vulnerability should be restricted to certain identifiable groups of consumers. These include physically and intellectually disabled consumers – two groups traditionally regarded as particularly vulnerable in business-to-consumer relations – and poor or ‘economically marginalized’ consumers, a group that is talked about much less often in the context of vulnerability. This approach bases economic vulnerability on studies showing that over-indebtedness leads to those living in poverty having to pay risk premiums to access a large number of goods and services, often including essential services such as energy, telecommunications, and housing. In the context of access to financial services, Reich posits that only those consumers “who are in need of basic financial services and who, because of their economic situation, do not have access to them at all or who only have such access at unreasonable prices” should be considered vulnerable. Regardless of their differences, these two approaches share the notion that the vulnerable consumer concept can constitute an important addition to European consumer law, particularly when it comes to the provision of financial services to customers.

Furthermore, the idea of vulnerability should also be contrasted with the more traditional concept of the disadvantaged consumer. The application of these two approaches to disempowerment (generally defined as a weakening of the position of consumers in the market) often yields similar results but the concept of disadvantaged consumers operates solely on the basis of socio-economic factors (such as poverty, advanced age, lower educational attainment or belonging to a minority group). In comparison, the vulnerability concept posits that equating consumer disadvantage with the presence (or absence) of certain clearly defined socio-economic factors does not align with actual consumer behaviour and won’t therefore be suitable for identifying and addressing all forms of disempowerment. The vulnerability approach interprets consumer powerlessness as arising not only from the characteristics of the person, but from the interaction of these characteristics with a consumption situation. While different interpretations of vulnerability vary in their focus on different internal or external factors, the interactional nature of vulnerability remains a common thread. This focus on the interaction between the consumer’s personal characteristics and marketing practices allows the vulnerability approach to be both more robust and more mindful of consumer agency in comparison with an interpretation of disadvantage based entirely on consumers objectively belonging to a particular group.

As Peter Cartwright points out, the term ‘vulnerability’ is not without issue, either. Some authors find that labelling particular consumers as vulnerable is stigmatizing, creating the impression of a divide between “vulnerable consumers” and “the rest”. One solution to this issue is to consider vulnerability as relative and dynamic – an approach that is also compatible with our focus on the importance of marketplace interactions – and to recognize the vulnerability of different consumers in different circumstances instead of treating vulnerable consumers as a homogeneous group.

Consumer Vulnerability in European Union Law

We should touch upon the question of how the vulnerable consumer category found its way into Community law next. First, it’s worth mentioning that while the majority of the ECJ’s case law followed the information paradigm closely, there were a few cases where the Court took a more protective approach: the earliest and most impactful of these decisions being the Court’s 1989 judgment in Case C-382/87 Buet. In Buet, the Court found that a French regulation prohibiting the door-to-door sale of educational material did not constitute a disproportionate restriction of the Treaty provisions on the free movement of goods, given that “the potential purchaser often belongs to a category of people who, for one reason or another, are behind with their education and are seeking to catch up. That makes them particularly vulnerable when faced with salesmen of educational material…”

Beyond these isolated cases, the vulnerable consumer concept has appeared in European Union legislation in the field of services of general economic interest (SGEIs). SGEIs were first defined by the European Commission as “market services subject to specific public service obligations by virtue of a general interest criterion” and later as “economic activities which deliver outcomes in the overall public good that would not be supplied […] by the market without public intervention.” While Member States generally enjoy a wide discretion in defining what exactly qualifies as an SGEI,  this discretion is considerably narrower in areas where EU regulation exists:  this includes services such as the supply of electricity, gas, water, postal services, telecommunications and may even extend to certain financial services: the Commission’s 2011 recommendation on access to a basic payment account is based on the explicit acknowledgement that access to basic banking should be considered a SGEI, considering its importance “for financial and social inclusion and to allow consumers to benefit fully from the single market”.

Beginning in the 1980s, market-oriented public service reforms across the EU lead to deregulation, privatization and trade liberalization in SGEI markets, promising greater choice and lower prices to consumers. During this period, the consumer was primarily seen as simply a market participant, and consumer protection considerations within the field of SGEIs appeared only on rare occasions, such as the Court’s decision in Case C-320/91 Corbeau, in which the Court emphasized that a postal service monopoly that is “entrusted with a service of general economic interest” has a universal obligation to provide its service „at uniform tariffs and on similar quality conditions, irrespective of the specific situations or the degree of economic profitability of each individual operation.”

It is against this backdrop of SGEI market liberalization that we can notice a greater recognition of consumer protection issues and the gradual development of the vulnerable consumer concept through the Second and particularly the Third Internal Energy Market (IEM) Packages. The Second Electricity and Gas IEM Directives opted to use the terminologically ambiguous category of the “vulnerable customer” as they established a wide-ranging public service obligation, requiring Member States to ensure the provision of gas to all customers connected to the grid and the provision of electricity to all household customers, at an affordable and non-discriminatory price and in a specified quality. In implementing these obligations, Member States must ensure “high levels of consumer protection” and in particular, “that there are adequate safeguards to protect vulnerable customers”. Since the Directives do not provide a concrete definition of the term, it is up to the Member States to specify the groups of energy customers that are to be deemed vulnerable.

The Third IEM Directives were the first to contain a direct reference to “vulnerable consumers” as such: the preambles to both the Electricity and the Gas Directives mention the importance of further strengthening the public service requirements established in these areas “to make sure that all consumers, especially vulnerable ones, are able to benefit from competition and fair prices.” Furthermore, the public service obligations were expanded with more specific guidelines on how Member States should interpret vulnerability and through what methods they should address its consequences: these include referring to “energy poverty” in defining vulnerable customers, the prohibition of disconnecting services to these customers in “critical times” and taking the appropriate measures to protect customers in “remote areas”. However, these categories were not explicitly defined in the Directives either; as such, wide discretion remained at Member State level. Finally, Annex I of both Directives contains a limited range of more specific consumer protection measures concerning the basic contractual rights of final customers in the gas and electricity markets.

These consumer protection considerations were finally brought to the forefront of regulatory attention with the entry into force of the Fourth Electricity Directive in 2019. Article 3 of the new Directive requires Member States to ensure the competitive, consumer-centred, flexible and non-discriminatory functioning of their electricity markets as a general organizational rule. While the legislator is still primarily motivated by market considerations, the Directive also sets out the requirements for a “consumer-centred” market in specific detail in its Chapter III titled “Consumer Empowerment and Protection” which incorporates and greatly expands the measures that previously appeared in annexes to the Directives and as guidelines for the provision of public service obligations. With regard to the basic contractual rights of customers, Article 10 introduces a range of new measures to protect the interests of household consumers and particularly, vulnerable ones; these include requirements that customers “be provided with a summary of the key contractual conditions in a prominent manner and in concise and simple language” and that “suppliers shall offer final customers fair and transparent general terms and conditions, which shall be provided in plain and unambiguous language and shall not include non-contractual barriers to the exercise of customers' rights, such as excessive contractual documentation.” Article 28 deals specifically with vulnerable customers: while the definition of the concept remains the responsibility of the Member States, the Directive includes a more extensive set of guidelines than before, incorporating in particular certain potential sources of vulnerability such as “income levels, the share of energy expenditure of disposable income, the energy efficiency of homes, critical dependence on electrical equipment for health reasons, age or other criteria” while also reprising previously established categories such as energy poverty, critical times and remote areas. Given that the Directive sets 1 January 2021 as the deadline for transposition into national legislations, all Member States can now be expected to be in compliance with these heightened standards of consumer protection in the electricity market.

This approach moves beyond the view of consumers as purely rational entities whose market participation serves to maximize their individual utility and considers their heterogeneity; that some of them may not be in a position to access the purported benefits of market reform. While the limited scope of these Directives means that they provide a higher standard of protection to consumers only in the context of the provision of services of general economic interest, the more protective approach taken here has the potential to influence future legal instruments in the field of consumer protection.

The earliest piece of legislation within the narrower field of consumer protection to refer to the vulnerability of certain consumers was the Unfair Commercial Practices Directive (2005/29/EC). Article 5 of the Directive calls for additional protection against those “commercial practices which are likely to materially distort the economic behaviour only of a clearly identifiable group of consumers who are particularly vulnerable to the practice or the underlying product because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee.” A similar provision appears in Recital (19) of the Preamble to the Directive. While the Directive uses the term “particularly vulnerable consumers”, the definition it establishes refers to a “clearly identifiable group” based on a small and of exhaustively defined set of characteristics (mental or physical infirmity, age or credulity), and as such, it is largely static in nature: a consumer is either considered vulnerable in every business-to-consumer interaction or not vulnerable at all.

The Commission’s later guidance documents on the application of the Unfair Commercial Practices Directive provide further context to the evolving interpretation of the Directive’s provisions. The first guidance document, released in 2009, makes reference to the concept of “weak and vulnerable” consumer: while the legislator opted against using it as the generally applicable standard, the inclusion of the concept was still deemed necessary to protect all types of consumers. The document then elaborates on the criteria used in Article 5 to define vulnerability: mental or physical infirmity may include sensory impairment, limited mobility and other disabilities; age may be considered both from the perspective of older (elderly people) and younger consumers (children and teenagers); while credulity is a neutral term that covers any consumer “who may more readily believe specific claims”.

The second guidance document, released in 2016, introduces a new, multi-dimensional interpretation of consumer vulnerability based on the Commission’s 2016 study on vulnerability across key markets. The study defines consumer vulnerability along five core dimensions: consumers facing a heightened risk of negative outcomes or impacts on their well-being; consumers having characteristics that limit their ability to maximize their well-being; consumers having difficulty in obtaining or assimilating information; the inability or failure of consumers to buy, choose or access suitable products; and the higher susceptibility of such consumers to marketing practices. According to the guidance document, the fifth dimension – consumers being more susceptible to certain marketing practices – is the most relevant to the approach used by the Directive, closely matching the definition given in Article 5 (“particularly vulnerable to the practice or the underlying product”) but in practice, the majority of consumers show vulnerability in at least one dimension while a third of consumers are vulnerable in multiple dimensions.

Directive 2011/83/EU (Consumer Rights Directive) only mentions vulnerability briefly in Recital (34) of its Preamble, adopting the definition introduced in the Unfair Commercial Practices Directive: “the trader should take into account the specific needs of consumers who are particularly vulnerable because of their mental, physical or psychological infirmity, age or credulity in a way which the trader could reasonably be expected to foresee.” The Directive does not elaborate further on this provision besides establishing its limits by noting that “such specific needs should not lead to different levels of consumer protection”; the Commission’s 2014 guidance document is similarly reticent on the topic. As per the Commission’s recent announcement, it will release new guidance documents to both Directives by 2022, as part of its New Consumer Agenda, set in action in November 2020. Since consumer vulnerability is considered one of the five key areas of the Agenda, there is hope that the new documents will promote a more empowering approach towards the interpretation of the provisions on vulnerable consumers.

Conclusions

The power imbalance inherent in business-to-consumer interactions is further exacerbated in the case of certain consumers due to personal factors such as age, over-indebtedness or disability. The additional protections provided by the vulnerable consumer concept could prove particularly useful to these consumer subgroups, especially in the context of problematic sectors – such as the consumer financial services market – either applied on a case-to-case basis as an extension to the standard of the “reasonable and empowered” average consumer to protect the interests of those most at risk from certain commercial practices or potentially replacing the current average consumer standard completely. To help identify cases of consumer vulnerability, detailed guidelines utilizing categories similar to the ones seen in the case of energy markets – such as “energy poverty”, “critical times” and “remote areas” – could also be developed for other consumer markets, based on those characteristics that have the greatest potential to adversely affect the ability of consumers to make informed decisions in a specific sector.

While the term “particularly vulnerable consumers” has already made an appearance in EU consumer protection legislation, the current approach omits many potential causes of vulnerability – such as poverty – and only differs from the traditional ‘disadvantaged consumer’ approach in the choice of terminology, having little in common with the dynamic and relational approaches developed in literature. This might prove particularly problematic in the field of financial consumer protection, considering that financial markets are so complicated and the service providers operating in these markets offer their services with such complex terms and conditions that, in practice, consumers are generally unable to meet the standard of a reasonable and well-informed 'average consumer'. In line with Domurath’s arguments referenced earlier, it seems reasonable to claim that this area would benefit considerably from legislation adopting a more dynamic approach from literature that would allow for any consumer to be considered vulnerable with regard to the particularities of a specific business-to-consumer interaction.

 

For a list of references, click HERE.

Author: Daniel Szilágyi, doctoral candidate, University of Debrecen, Faculty of Law

  Kategória: Services of General Economical InterestPublic ServicesBrexit Eng: Fogyasztóvédelem: Consumer Protection: 16th Anniversary: 
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CJEU: The Hungarian and the Polish progressive taxes do not infringe EU law on State aid

3 hét 5 nap ago

On 16 March 2021, the Court of Justice of the European Union (CJEU) ruled that the Polish tax on the retail sector and the Hungarian tax on advertisements do not infringe EU law on State aid. Both judgments dismiss the Commission’s appeals against the rulings of the General Court.

Background to the dispute

Poland introduced a progressive tax on the retail sector. That tax was based on the monthly turnover of any retailer involved in the sale of goods to consumers. That tax entailed two bands: a rate of 0.8% applied to turnover between 17 and 170 million Polish zlotys and a rate of 1.4% was charged for the part of the turnover exceeding that amount.

The European Commission initiated the formal investigation procedure in respect of that measure and considered that that progressive tax constituted State aid incompatible with the internal market.

The General Court held that the Commision was wrong to consider that the progressive tax at issue would lead to a selective advantage in favour of undertakings with low turnover linked to that activity.

Hungary had introduced a progressive tax on revenue linked to the publication and broadcasting of advertisements in that Member State. That tax, based on the net turnover of persons who broadcast or publish advertisements (print media, audiovisual media or billposters), operating in Hungary. That tax entailed initially six, later only two rates. The amended measure was accompanied by the option – for taxable persons whose profits before tax in 2013 were zero or negative – to deduct from their tax base 50% of the losses carried forward from previous years.

The European Commission initiated the formal investigation procedure in respect of that measure and considered that the tax measure adopted by Hungary, on account of both its progressive structure and the possibility of deducting the losses carried forward that it included, constituted State aid that was incompatible with the internal market.

The General Court annulled that decision, holding that the Commission had erred in finding that the measure at issue constituted selective advantages.

The Commision appealed the General Court’s judgments.

Findings of the Court

So the substantive issue in both cases is whether the use of progressive rates generates or does not generate different tax treatment.

First the Court noted that the classification of a national measure as ‘State aid’, within the meaning of Article 107(1) TFEU, requires all conditions to be fulfilled.

So far as concerns the condition relating to the selectivity of the advantage (which is the subject of the Commission’s appeal), the traditional method of analysis applied in the case law for a tax measure to be classified as ‘selective’ is the so-called derogation test. The Commission must begin by identifying the ‘normal’ tax system applicable in the Member State concerned, and thereafter demonstrate that the tax measure at issue is a derogation from that 'normal' system. The problem is that the measure differentiates between operators who are in a comparable factual and legal situation, without finding any justification with regard to the nature or scheme of the system in question.

The Court of Justice upholds the General Court’s analysis that the progressivity of the rates provided for by the tax measures respectively at issue formed an integral part of the reference system.

According to the settled case-law of the Court of Justice, given the current state of harmonisation of EU tax law, the Member States are free to establish the system of taxation which they deem most appropriate, so that the application of progressive taxation falls within the discretion of each Member State (provided that the characteristics constituting the measure at issue do not entail any manifestly discriminatory element).[1]

It follows that, outside the spheres in which EU tax law has been harmonised, the determination of the characteristics constituting each tax falls within the discretion of the Member States, in accordance with their fiscal autonomy, that discretion having, in any event, to be exercised in accordance with EU law. This includes, in particular, the choice of tax rate, which may be proportional or progressive, and also the determination of the basis of assessment and the taxable event.

In that regard, it must be stated that EU law on State aid does not preclude, in principle, Member States from deciding to opt for progressive tax rates intended to take account of the ability to pay of taxable persons.

In light of the above, the Court of Justice considers that the essential elements constituting the tax, which include progressive tax rates, constitute, in principle, the reference system or the ‘normal’ tax regime for the purposes of analysing the condition of selectivity.

In the Gibraltar case[2], the Court noted that it cannot be excluded that the characteristics constituting a certain tax regime may, in certain cases, form a manifestly discriminatory element. But in the present cases, the Commission had not established that the characteristics of the measures adopted by the Polish and Hungarian legislatures respectively had been designed in a manifestly discriminatory manner, with the aim of circumventing the requirements of EU law on State aid.

In those circumstances, the Commission had incorrectly relied on an incomplete and notional system in considering that the progressive scale of tax measures respectively at issue did not form part of the reference system in the light of which the selective nature of those measures had to be assessed.

So on those grounds, the Court of Justice rejected all the appeals brought by the Commission against the judgments under appeal in their entirety­­­­­­.

*

These cases are of great significance, since they seem indicative of a growing respect for the fiscal autonomy of the Member States, which, in parallel, entails the introduction of limits on the Commission’s powers.

Maybe these cases can help interpret the compatibility with EU State aid law of the domestic digital services taxes implemented by some Member States…

*

Author: Krisztina Széles, PhD student, University of Debrecen, Faculty of Law

Reference:

https://curia.europa.eu/juris/document/document.jsf?text=&docid=238902&p...

https://curia.europa.eu/juris/document/document.jsf?text=&docid=238903&p...

https://curia.europa.eu/jcms/upload/docs/application/pdf/2021-03/cp21003...

https://eulawlive.com/op-ed-progressive-turnover-taxes-and-eu-state-aid-...

https://eulawlive.com/court-of-justice-polish-and-hungarian-progressive-...

[1] See judgments of 3 March 2020, Vodafone Magyarország, C-75/18, paragraph 49, and of 3 March 2020, Tesco-Global Áruházak, C-323/18, paragraph 69

[2] The judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P

Kategória: Local TaxBrexit Eng: Fogyasztóvédelem: Consumer Protection: 16th Anniversary: 
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CJEU: The tax scheme of four Spanish football clubs constitutes State aid

1 hónap 2 hét ago

On 4 March 2021, the Court of Justice of the European Union (CJEU) ruled that the tax regime that four Spanish football clubs have benefited from is considered illegal State Aid.

Background to the dispute

A Spanish law adopted in 1990 obliged all Spanish professional sports clubs to convert into public limited sports companies (’SLCs’), with the exception of professional sports clubs that had achieved a positive financial balance during the financial years preceding adoption of that law. Four professional football clubs (Fútbol Club Barcelona, Club Atlético Osasuna, Athletic Club Bilbao and Real Madrid Club de Fútbol) which came within that exception had thus chosen to continue operating in the form of non-profit legal persons and enjoyed, in that capacity, a special rate of income tax. Until 2016, that rate remained below the rate applicable to SLCs.

By the decision of 4 July 2016, the Commission had taken the view that that legislation, in introducing a preferential corporate tax rate for the four clubs concerned, constituted unlawful and incompatible State aid.

By application lodged at the Court Registry, Fútbol Club Barcelona brought an action for annulment of the decision at issue.

The General Court held that the Commission did not properly analyse the extent of the tax deductions for the reinvestment of extraordinary profits permitted under the aid regime, in order to determine whether an advantage exists for the purposes of Article 107(1) TFEU.

In the judgment of 4 March 2021, the Court of Justice, granting the form of order sought in the appeal brought by the Commission, sets aside the judgment under appeal.

Findings of the Court

The Court held that the General Court erred in law when it found that the decision at issue was to be construed as a decision relating both to an aid scheme and to individual aid. In the case of an aid scheme, a distinction must be drawn between the adoption of that scheme and the aid granted on the basis of it. Individual measures which merely implement an aid scheme constitute mere measures implementing the general scheme, which do not, in principle, have to be notified to the Commission.

Accordingly, the mere fact that, in the present case, aid was granted individually to the clubs on the basis of the aid scheme at issue cannot have any bearing on the examination which the Commission is required to carry out, under Article 107(1) TFEU, as regards proof of the existence of an advantage.

It follows that, in order to determine the existence of such an advantage, the Commission was required to examine, in the decision at issue, exclusively the ‘aid scheme’, and not the ‘individual aid’ granted on the basis of that scheme.

Thus, the fact that the Commission erroneously found that aid was granted individually is not a relevant fact to be taken into account by EU courts to determine the existence of an advantage. In those circumstances, therefore, the General Court was wrong to find such a fact to be relevant.

In the second place, the Court found that the examination under Article 107(1) TFEU, including therefore that of advantage, must be assessed with reference to the time of adoption of the scheme in question, by carrying out an ex ante analysis and may not depend on circumstances that take place after the adoption of the scheme.

It follows that the Commission was not required to examine, in the decision at issue, the effect of the deduction for reinvestment of extraordinary profits or if the deduction would neutralise the advantage resulting from the reduced tax rate.

Accordingly, it must be held that, in ruling, the Commission was obliged to carry out such an examination, and as such, the General Court erred in law.

The Court further held that the aid scheme at issue was, from the time of its adoption, liable to favour the clubs concerned, by operating as non-profit entities over clubs operating in the form of public limited sports companies, thereby conferring on them an advantage capable of falling within the scope of Article 107(1) TFEU.

So the Court of Justice of the European Union set aside the General Court ruling and confirmed the Commission’s decision that the tax scheme of the four football clubs constitutes State aid.

­­­­­­*

Author: Krisztina Széles, PhD student, University of Debrecen, Faculty of Law

 

Reference:

http://curia.europa.eu/juris/document/document.jsf?text=&docid=238464&pa...

https://curia.europa.eu/jcms/upload/docs/application/pdf/2021-03/cp21003...

https://eulawlive.com/court-of-justice-sets-aside-general-court-ruling-a...

https://eulawlive.com/op-ed-commission-v-futbol-club-barcelona-the-need-...

Kategória: State SubsidiesEuropean UnionBrexit Eng: Fogyasztóvédelem: Consumer Protection: 16th Anniversary: 
kutatocsoport5

European Criminal Law – From Where to Where? – Part One

1 hónap 2 hét ago

Nowadays, criminal law inspired by the European Union has evolved into a significantly developing discipline and the legislations of the Member States must comply with European requirements. The importance that all legal professionals have proper knowledge in this special area of interaction between criminal law and EU law (Karsai, 2004, 90.) cannot be stressed enough in the ambit of the current situation, especially in light of the fact that the EU is proceeding towards the realisation of the single area of justice (Polt, 2019a, 14.), and the endeavours of the EU appear in the development of the traditional cooperation in criminal matters, the deepening of legal harmonisation and the uniformisation of substantive and procedural law instruments as well. The issues under examination are present simultaneously on the theoretical and/or practical level, thereby vesting a serious task on the EU and the Member States, therefore on all concerned bodies of our country (Polt, 2019b, 332.).

In the following, we aim to summarise the milestones in the development of European criminal law in two parts.

Introductory Thoughts

Up until 1993 – when the EU was established and the Maastricht Treaty entered into force (Várnay & Papp, 2010, 54.) – there was hardly any consideration as to whether a community-level criminal law and the harmonisation of the Member States’ criminal law rules were necessary, and even after that this question arose only in connection with the possible means of protection against fraud infringing the European Communities’ (hereinafter: European Communities/EC) financial interests (Farkas, 2018, 75., see also Madai, 2011, 265–275.). It could not be imagined that the Member States would have provided the EC with the possibility of having a voice in their respective national legal systems in the field of criminal law (Madai, 2019a, 304.).

Namely, the position that criminal law falls outside of the scope of competence of the EC and that the Member States did not explicitly transfer their sovereignty to the EC in the field of criminal justice, therefore the EC does not have its criminal legal system (Weller, 1998, 331.), dominated for a long time in the history of European integration (see also Haas, 1958., Rosamond, 2000.).. In his study written in 1995, Károly Bárd still reported about the dominant opinion according to which criminal law was more connected to the national culture compared to other branches of law, therefore it is much more resistant to the integration attempts (Bárd, 1995, 150.). This is also referred to as the thesis of cultural dependency: comparing the crossing of national boundaries in criminal law, or the possibility thereof with the argument of the close connection of criminal law to the society, culture and arising from those, to national sovereignty (Karsai, 2004, 17.). As it was already noted by Bárd as well – while acknowledging the connection of criminal law and its application to national traditions (Ligeti, 2004, 15.) – the connection examined is not stronger than in the case of other branches or fields of law (Bárd, 1995, 157.). Moreover, Krisztina Karsai points out the common features which characterize the criminal law of all states or the development thereof (Karsai, 2004, 17–20., e.g. the same principles, the reinforced protection of human rights, etc.).

The criminal policy (Bárd, 2016, 437.) of the EU was brought into being by practical necessity (see also Pradel & Corstens, 2002, 5–6.). Together with the free movement of persons and the elimination of border control among the Member States the situation of offenders changed as well since it became easier to hide within Europe. The more and more noticeable internationalisation of crime and the emergence of new cross-border forms of crime appeared as important factors (Polt, 2019b, 331–332.). Thus, the new dimensions of criminal offences appeared, which made it ever so clear that the traditional (and substantially different even in terms of principles in each state) national legislation and application are practically useless against those forms of crimes that constitute the most severe risk to the European societies (Irk, 2017, 113., Madai, 2017, 259.).

Namely, these differences in criminal law protection may also result in the perpetrators ‘sensitive’ to such differences in the Member States choosing their place of operation or trying to ‘fall under’ the jurisdiction of a Member State where they could count on less serious legal consequences (Madai, 2019b, 134–135.). By the way, this approach is not an unknown phenomenon in criminal law, for example, there is an – essentially similar – institution of ‘forum shopping’ known in international private law, which also makes it necessary to harmonise the national criminal laws (Udvarhelyi, 2018, 296.). The same applies to cybercrime and economic crime as well, types of criminal offences that go beyond not only the territorial but also the functional limits of criminal law (Sieber, 2007, 31.). In can be mentioned as an additional crucial reason that together with the establishment of the EU, certain supranational legal subjects which had not existed before but now required criminal law protection were formed (such as the budget of the EU, the financial interests of the EU or the purity of its public life, Pápai-Tarr, 2007, 26.). All these made it inevitable that the substantial differences among the criminal regulations of the Members States were lessened, and ‘interoperability’ could be realized among the legal systems (Karsai, 2004, 27.).

In practice, the process of ‘legal harmonisation’ (legal approximation) means the phasing out of the differences of the national (Member State) legal systems in the interest of some kind of common goal, without the introduction of identical rules. Meanwhile, institutionalised legal harmonisation means a specific method, in the course of which the national legislations are transformed so that through the introduction of identical or similar legal instruments and legal solutions the legislations become suitable for realising the EU’s goals. Similarly, the legal harmonisation of criminal law could also be suitable for eliminating the differences among the Member States’ legal systems, however, this shall never be the end in itself; it shall always be carried out to achieve a common, substantial goal. In case of the legal harmonisation of substantive law – which is the subject to our assessment as well – this goal is the essentially identical consideration and regulation of the same acts, therefore, among others, achieving identical strictness, through which the abovementioned ‘forum shopping’ can also be eliminated (Karsai, 2008, 433–435.).

The Ever-Evolving Concept of European Criminal Law

In 2020, Ferenc Nagy still found that the expression ‘European criminal law’ shall be construed as an umbrella term for the European legislative development process rather than as a particular branch of law in the classical sense; besides, Nagy found it more appropriate to consider it as the process of Europeanisation and cross-border cooperation in criminal law (Nagy, 2002, 307.). Furthermore, Krisztina Karsai noted that the term ‘European criminal law’ did not refer to a well-defined field of law until the Lisbon Treaty entered into force. Legal scholars used it as a blanket term to cover the extraordinarily heterogeneous results of the development processes that were occurring in the subsystems of Member States’ criminal regulations (Karsai, 2015, 15–16.).

Today the concept of ‘European criminal law’ is generally accepted, which is used by the legal literature – most often in the strict sense of the term –, and according to Ákos Farkas (in Hungary, Ákos Farkas was the first who referred to this field of law as European criminal law, in 1997, Farkas, 2018, 76.) it is linked to the EU and is embodied in the criminal law legislation and institutional system related to the relationship between the EU and the Member States and that of the EU and EU citizens (Farkas, 2017, 17.). In other words, the term is understood as the existing and evolving system of regulations and instruments of the substantive criminal law and criminal procedural law of the EU (Farkas, 2012, 139–140.) which is a new field of law, although together with international criminal law it transforms the traditional approach of criminal law (Mitsilegas, 2009.).

However, at the same time – as it is highlighted by Péter Polt (Polt, 2019a, 10). – we obviously cannot refer to the complete legal harmonisation of substantive criminal law. There is not and there cannot be a ‘single European criminal law concept’, moreover, there is not and there cannot be a ‘single European criminal law’ either (Gál & Tóth, 2016, 463–494.), since, as it is pointed out by Barna Miskolczi, a criminal law consistent with our traditional criminal law approach and assuming governmental existence cannot be established in the EU, due to the particularities thereof (Miskolczi, 2019, 161.). With these considerations in mind, the – widely used and taught – concept of European criminal law, as described above, means a living criminal law, since, in the framework of judicial cooperation in criminal matters, the Member States use countless instruments on a daily basis.

However, these means of cooperation continue to assume a criminal law ecosystem linked to the existence of the state in the traditional sense, which remains functioning because the Member States have their own (substantive and procedural) criminal law, and these (supplemented by the principles of cooperation in criminal matters, of course) constitute a proper legal foundation for the cooperation of the bodies concerned. However, this is not a criminal law ‘without a state’ or ‘above a state’. Furthermore, as it is also noted by Miskolczi, an EU-level ‘integration criminal law’ in the non-traditional sense (this emerges from the very revelation that the ‘traditional’ European criminal law is unable to react to numerous fundamental issues, Miskolczi, 2018, 4.) would not be inconceivable, however, the efforts leading to the establishment thereof have not brought about a breakthrough yet (see Miskolczi, 2018, 12.).

Consistently with this, Ákos Farkas also notes that it is not a ‘fully-fledged’ field of law, but rather one that is indeed young and turbulent, as well as unsteady in some respect, which still faces numerous unsolved issues, and a single criminal law system is not visualised by the researchers of the field either; instead, they systemise it as existing material which has multiple sources (Farkas, 2018, 76.). As the most important lesson of discussing the issues with the definition, Barna Miskolczi states that the European criminal law is still on the way to ‘find itself’ (see Miskolczi, 2019, 160–161.), and he also notes that international criminal law is struggling with similar conceptual problems (Miskolczi, 2018, 8. refers to the following: „As opposed to international private law, even the compound word, i.e. the joint use of the expressions «international» and «criminal law» already seem troublesome.” Blaskó & Polt, 2014, 41.). Currently, Krisztina Karsai also considers that the relevance of European criminal law as an independent field of law can be represented as the criminal law content of EU law that came to life through the Treaty on the Functioning of the European Union (hereinafter: TFEU) and – along the lines of the purity of the branches of law – its Member State-level ‘manifestation’, in other words, the Member States’ ‘harmonised’ law, cannot be considered as part of the European criminal law (Karsai, 2015, 16.).

For a list of references, click HERE.

 

Author: dr. Petra Ágnes Kanyuk

Ph.D. Student at the Géza Marton Doctoral School of Legal Studies of the University of Debrecen, Department of Criminal Law and Criminology

The study was prepared with the professional support by the Research Scholarship for Ph.D. Students No. ÚNKP-19-3, granted by the Ministry for Innovation and Technology in the framework of the New National Excellence Programme.

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