Antitrust Alert: EU Court of Justice Battles with Itself on Delays at the General Court
In the latest fallout from long delays in General Court proceedings, the Court of Justice of the European Union (CJEU) now finds itself appearing before its own judges in challenging Orders of the General Court that determined that the CJEU was the appropriate representative of the European Union (EU) in damage claims arising from such excessive delays. These internal clashes may lead to further delays for litigants before the EU General Court.
The controversy surrounding prolonged proceedings before the General Court arises from its inability to keep pace with an influx of cases that has grown steadily since its establishment in 1989. This heavier caseload follows expansions in both the General Court’s jurisdiction and the EU’s volume of legislative activity. Various efforts over the years to bolster the General Court with additional judges have failed to succeed, in the face of the substantial costs of and political in-fighting amongst the EU Member States.
Damage claims for delayed proceedings before the General Court
The origin of the CJEU’s present appeals are the 2006 challenges by the companies Kendrion and Gascogne against the Commission’s 2005 decision imposing penalties for their participation in the so-called “industrial bags” cartel. The General Court took until 2011 – over 5 years – to rule on these cases, leading Kendrion and Gascogne to appeal these rulings to the Court of Justice (CoJ). The companies challenged the excessively prolonged proceedings before the General Court as an infringement of the fundamental right to obtain a decision within a reasonable time, as guaranteed by the Charter of Fundamental Rights of the European Union.
While the CoJ rejected the parties’ claims to set aside or reduce the fines, it indicated that such failure timely to adjudicate gave rise to an action against the EU for damages caused by the conduct of one of its institutions. The CoJ indicated that such claims should be brought separately before the General Court. In the interests of independence and impartiality, the CoJ indicated that the General Court would sit in a composition different from that which heard the underlying, lengthy dispute. (Even so, it remains questionable as to whether a judicial body should be entrusted with the task of determining whether its own conduct is wrongful.)
In the wake of the CoJ’s rulings in Kendrion and Gascogne, Aalberts Industries also initiated a damage claim for delayed proceedings at the General Court. Aalberts had filed an action in 2006 to annul the Commission’s fine imposed in the “copper fittings” cartel. While the General Court set aside the fine against Aalberts (as upheld by the CoJ), it took over 4 years for the General Court to issue such judgment.
Controversy over the proper target in damage proceedings against the EU
In bringing their actions for damages, Kendrion, Gascogne, and Aalberts Industries each directed claims against the CJEU (an institution comprising three jurisdictions, including the General Court and the CoJ), as representative of the EU.
The CJEU challenged these claims, contending that the European Commission would be the proper representative of the EU in such damage actions. The General Court dismissed the CJEU’s arguments and determined that the claims were properly directed against the CJEU. The General Court held that, when an act of one EU institution creates liability for the EU, then the EU shall be represented before the General Court by the institution responsible for the act. Clearly, these damage claims concern the behavior of the General Court, which is part of the CJEU. Thus, the CJEU is the proper representative of the EU in such cases.
The CJEU now has appealed these orders of the General Court, arguing that the General Court failed to take account of the requirements of judicial independence and impartiality when ruling that the CJEU had to represent the EU in these damage actions. The CJEU points out that the damage claims are (i) before the same judicial body (the General Court) that allegedly caused the matter in dispute and (ii) the General Court is also an integral part of the defending party (the CJEU); therefore, judicial independence and impartiality are compromised where the damages are to be satisfied from the CJEU’s budget (although the CJEU also challenges this contention, claiming that compensation should rather derive from the Commission’s budget).
Other challenges and hoped-for relief
The General Court’s difficulties in clearing its caseload are echoed in other recent judgments of the CoJ (e.g., Deltafina, Guardian, and FLS Plast). In these cases, the CoJ also determined that lengthy General Court proceedings infringed the right to obtain a decision within a reasonable time and that such failure could give rise to a separate action for damages before the General Court. All together, the EU courts are now facing over €20 million in damage claims for failure to timely adjudicate.
Relief from this downward spiral is sought through a renewed effort to expand the General Court. The EU Member States have agreed to a plan to double the size of the General Court by 2019, starting with the appointment of 12 new judges in September 2015. Companies litigating cases in Luxembourg would be the main beneficiaries of reform of the EU’s first-tier court, which should accelerate the entire EU judicial review and thereby open the way for businesses to reconsider their litigation strategies at the EU level. However, the European Parliament must still approve the considerable costs of an expanded General Court (estimated at some €14 million), which remain a point of controversy.
In the meantime, parties before the General Court will continue to suffer from the absence of enough judges. As the growing wave of damage actions shows, the General Court is falling seriously short of protecting the fundamental right to the timely adjudication of cases. However, while such claims may provide a source of relief for aggrieved parties, these cases further burden the already over-stretched General Court. This will necessarily result in adding to delays in proceedings for litigants in other pending cases. The General Court now also finds itself in the controversial position of both ruling on its own shortcomings and clashing with the CJEU, which firmly disputes its role as defendant in these claims.
The CJEU’s appeal against the Order of the General Court in Kendrion can be found here: CJEU Appeal in Kendrion (the CJEU’s appeals in Gascogne and Aalberts Industries are not yet published).
For more information, please contact your principal Jones Day representative or either of the lawyers listed below.
Juliette Stauffer, an intern, in the Brussels Office, assisted in the preparation of this Alert.
Jones Day prepares summaries of significant antitrust enforcement, litigation, and policy events as a service to clients and interested readers, to provide timely insight on antitrust and competition law developments relevant to business, but not as legal advice on any specific matter. Please visit our Publication Request form to add your name to our distribution list.
Jones Day publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our "Contact Us" form, which can be found on our website at www.jonesday.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.