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ISBN 9985-9146-1-9

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Supranational Law as International Law and Vice Versa

European Community (EC) law is a well-discussed topic in Estonian society today. Several European training programmes have been launched which contain a description of the EC legal system. Presently, it is a legal system which is yet in its developing stages, and however uniformly interpretable the EC rules may be, there is still room for interpretation; and not only for the European Court of Justice (ECJ).

In my Introduction to EC Law course, I have started lectures with a warning that upon launching into the problems of European law, a certain shift of one’s former legal thinking is necessary for adaptation. EC law attempts a rather aggressive integration based on specific economic/political interests. This is the main difference between the EC legal system and the changing construction of national law and the elegant but often unenforceable international law. EC law is developing rapidly; maybe even too fast. There are many legal questions that remain unanswered or that can be offered a multitude of answers. Examples include the principle of subsidiarity, the relationship between international law and EC rules, and the value of rulings of the ECJ among rulings of international judicial bodies.

Interestingly, Estonian legislation already contains references to EC law. For example, §11(2) of the Energy Act*1 provides as follows: “Quality requirements on energy, liquid fuel and network gas must be in conformity with EU directives”. *2 While this may be a disputable legal or political reference, §11(2) of the Radiation Act*3 uses a delegation provision in order to implement a specific directive with the following: “The values of the radiation factor and tissue factor specified in Council Directive 96/29/Euratom of 13 May 1996 shall be implemented by a directive of the Minister of Environment”.

The Association Agreement between Estonia and the European Communities and Member States *4 certainly gives rise to direct legal obligations. Without a long discussion of the agreement, one example is Part III (“Free Movement of Goods”) which establishes a free trade area in accordance with the provisions of the agreement, the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). Article 28 of the agreement provides as follows:

Where one of the Parties finds that trade with the other Party is related to dumping within the meaning of Article VI of GATT, that Party may take appropriate measures against such action, in accordance with the agreement on the implementation of Article VI of GATT, appropriate national legislation and the conditions and procedure provided in Article 32.

With regard to the agreement, it is not pure EC law, as this is an association agreement which has the status of an international treaty. However, in certain cases, the ECJ may act as the interpreter of agreements concluded with third countries.

In this regard, the main issue is the differentiation between two legal systems: international law and EC law. It seems that among all other matters, the extreme positivism of EC law is its strength. While the International Court of Justice (ICJ) has been balancing between positivism and naturalism in its rulings, the ECJ is much more consistent and less contradictory in its activities. In many of their rulings, judges of the Republic of Estonia have demonstrated an ability to interpret provisions of national law through Estonia’s international obligations. However, while international law is indeed “inter-national” law, EC law is by its character supranational and excludes choices of implementation, which can per se give rise to conflicts at the national level. The greatest difference between EC law and international law is the absolute supremacy of EC law. Nevertheless, when discussing EC secondary legislation already in force in Estonia, the legal contents and scope of these rules, with regard to the legal order of a country yet in the association stage, are rather problematic.

EC law is interpreted and defined by the ECJ. Even now, with the EC well on its way to developing a unique legal system, one must be well-informed of rulings that define the position and scope of international law rules in or through this legal system. For the Estonian legal system, particular importance can be attributed to the rulings related to the status of the association agreements, to GATT and to general international law.

EC law is certainly not a form of regional international law but is sui generis, recognising international law in appropriate circumstances. The relationship of international and supranational law has been often discussed and there are different views inside and outside the Community. It must be remembered that EC law developed from an international treaty. However, as explained by T.C. Hartley “though engendered by international law, Community law does not share all its characteristics; and the techniques and doctrines of Community law have more in common with branches of national law such as constitutional and administrative law than those of international law”. *5 Also however, the approach of the ECJ to the interpretation of treaties is generally consistent with the rule of international law derived from the Vienna Convention on the Law of Treaties. *6

To begin with a current issue, classical illustrations include the judgement in the Van Gend en Loos*7 case in which it was declared that the “Community constitutes a new legal order of international law”. The subsequent case of Costa v. ENEL*8 avoided making direct references to international law, using the phrase “its own legal system”.

There have been several cases concerning the position of international agreements in Community law *9 . In the famous ERTA case, *10 the Court declared that the powers of the Community extend to relationships arising from international law, and “hence involve the need in the sphere in question for agreements with the third countries concerned”.

One of these agreements has been GATT. *11 In cases from 1972 and 1975, *12 it was necessary to examine whether GATT has a direct effect in the Community system. Although the ECJ denied the direct effect of GATT provisions (mostly because of the great flexibility of the provisions), *13 it declared important lines of reasoning. Firstly, the ECJ stated that “before the incompatibility of a Community measure with a provision of international law can affect the validity of that measure, the Community must first of all be bound by that provision”. This seems to be recognition of the supremacy of general international law norms, but is still a very conditional recognition. Direct effect has been the means by which the Court has decided the appropriate circumstances for using international law provisions. The Court also demonstrated its independence from any influence (international or national) in deciding the direct effect of an international agreement.

The ECJ has continued to recognise the direct effect of certain international agreements, being influenced by political reasons, as most of these agreements are association agreements with potential Member States of the Community (recognising even the direct effect of the Councils of Association decisions). *14 It is important to note that association agreements traditionally consist of several references to international texts (some of them legally binding). For example, the so-called Europe Agreement between the Community and Estonia *15 makes references to undertakings made within the context of the Conference on Security and Co-operation in Europe (CSCE) and the Organisation for Security and Co-operation in Europe (OSCE), the Helsinki Final Act, the Charter of Paris for a New Europe, the European Convention for the Protection of Human Rights and Fundamental Freedoms *16 (ECHR), the European Energy Charter Treaty, GATT, WTO principles, and so on.

Another area in dispute concerns the protection of fundamental rights and freedoms. The ECHR has a somewhat special position in Community law as provided for in Article F(2) *17 of the Treaty of European Union, which entered into force on 1 November 1993.

Despite some inconsistency in its case law, *18 in a recent case, *19 the Court of First Instance concluded that “fundamental rights form an integral part of the general principles of law whose observance the Community judicature ensures...” and “...the Court of Justice and the Court of First Instance draw inspiration from the constitutional traditions common to the Member States and from the guidelines supplied by international treaties for the protection of human rights on which the Member States have agreed or to which they have acceded”. The importance of principles of international law was recognised by the ECJ already in 1974 in the Van Duyn*20 case. In regard to the rule that a State is precluded from refusing its own nationals the right of entry or residence, the ECJ declared that “... it is a principle of international law which the EEC Treaty cannot be assumed to disregard in the relations between Member States”.

Discussion under Article F(2) however, seems to have a very special character. The fact is that the ECJ quoted the ECHR essentially as if it applied directly in Community law. As expressed by J. Temple Lang, *21 “the main substantive difference between the Convention and Community principles of fundamental rights seems to be that the Community rules are broader than the Convention”. This is certainly a dualist view of the EC legal system in which Community law may apply in a wider sphere than the Convention, supported by the “general principles of Community law” such as proportionality, legal certainty and constitutional traditions (meaning the emerging case law of the ECJ and every national court in the European Community as a Community law court). *22

As noted above, the principle of direct effect was formerly a key component of the sui generis constitutional nature of EC law in the case of international agreements. This raises the question of the role of customary international law in the Community legal order. Rebus sic stantibus is a well known doctrine of international law and an exception to the pacta sunt servanda principle, by which a fundamental change in the state of facts which existed at the time a treaty was concluded may be invoked as a ground for terminating the treaty or withdrawing from the treaty. The doctrine has been historically used for political purposes to justify violations of international treaty norms by signatories of a treaty. The doctrine has also been codified in the Vienna Convention on the Law of Treaties. *23 Furthermore, the ICJ recognised that Article 62 of the Vienna Convention, dealing with a fundamental change of circumstances, must be treated as international customary law. *24 Article 62(1) lays down two conditions. Firstly, the existence of such circumstances must have constituted an essential basis for obtaining the consent of the parties to be bound by the treaty. Secondly, the change of circumstances must have the effect of radically transforming the extent of the obligations still to be performed under the treaty.

This issue of a fundamental change of circumstances has recently been dealt with by the ECJ in a judgement of 16 June 1998 (EEC/Yugoslavia Co-operation Agreement, Suspension of Trade Concessions, Vienna Convention on the Law of Treaties, rebus sic stantibus clause). *25 The judgement contains several interesting remarks of the ECJ with respect to international law in general.

During the proceedings of the case, the Commission raised the essential question of whether, in the absence of an express clause in the EC Treaty, the international law rules referred to in the order of reference may be regarded as “forming part of the Community legal order”. Thus, in the opinion of the Commission, the individual does not “have the right to rely on grounds deriving from the legal relationship between the Community and a non-member country” because the issue belongs within the scope of international law.

In response, the ECJ made reference to a previous judgement, *26 declaring expressis verbis, that “the European Community must respect international law in the exercise of its powers”. The ECJ followed the aforementioned opinion of the ICJ, declaring that “even though the Vienna Convention does not bind either the Community or all its Member States, a series of its provisions, including Article 62, reflect the rules of international law...”. Furthermore, the Court stated that “the rules of customary international law concerning the termination and the suspension of treaty relations by reason of a fundamental change of circumstances are binding upon the Community institutions and form part of the Community legal order”. The Court also declared its willingness to recognise other principles of international law, mentioning that the pacta sunt servanda principle “constitutes a fundamental principle of any legal order ...”.

In this case, the Bundesfinanzhof (Federal Finance Court) of Germany referred two questions concerning the validity of a Council Regulation suspending the trade concessions provided by the Co-operation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia for a preliminary ruling under Article 177 of the EC Treaty. The questions arose in proceedings between A. Racke GmbH & Co. and the Haptzollamt Mainz (Principal Customs Office) concerning a customs debt arising on the importation into Germany of certain quantities of wine originating in Yugoslavia. The Co-operation Agreement is an international treaty between the European Economic Community (by its Member States) and the Socialist Federal Republic of Yugoslavia from 1980. It was approved on behalf of the Community by a Council Regulation of 1983.

The Co-operation Agreement was concluded for an unlimited period. However, in a declaration of 1991, the EC and its Member States announced their decision to terminate the Agreement with Yugoslavia because of the pursuit of hostilities in the territory of the former Republic of Yugoslavia (resulting in the break-up of the state into several new states), and their consequences on economic and trade relations. The declaration made reference to Article 1 of the Regulation as the ground for suspending the treaty. The problem of the case arose when Racke demanded free circulation of goods by reference to the provisions of the Agreement. According to Racke, the subsequent Regulation to the declaration was not valid because of a violation of the Vienna Convention, a binding customary law. Consequently, Racke claimed that it had the right to rely directly on the rights of preferential treatment granted to it by the Co-operation Agreement. Thus, the question referred by a national court to Luxembourg asking for a preliminary ruling, concerned the validity of the disputed Regulation suspending the Agreement, under the rules of customary international law.

There is no doubt that the Co-operation Agreement concluded by the Council, if concluded according to the EC Treaty, forms an integral part of Community law. This kind of dualist approach first appeared in 1976, when Advocate General Trabucchi *27 expressed the opinion that “ Community law, international agreements are not binding on private individuals as such, but only by virtue of an act of a Community institution (i.e. the decision or regulation formally concluding the agreement)”. Although the ECJ has recognised the direct effect of agreements, it has not always recognised the locus standi of applicants (usually workers from non-member States). In this case, the ECJ referred to the Demirel case, *28 where the Court recognised the legal rights of a Turkish national, despite previous contrary cases concerning the direct legal rights of migrant workers, and accepted the locus standi of the applicant.

However, in this case, the Court agreed with the opinion of Advocate General F.G. Jacobs, that “application of the customary international law rules in question does not require an impossibility to perform obligations, and there was no point in continuing to grant preferences, with a view to stimulating trade, in circumstances where Yugoslavia was breaking up”. The Court concluded that even the formal requirements of the Vienna Convention had been satisfied, as “the specific procedural requirements there laid down do not [form] part of customary international law”.

One can say that the ECJ cannot act as an agency of interpretation with respect to the Vienna Convention. However, the subject of interpretation in this case was customary law, not a treaty provision. On the other hand, it seems that customary international law may have a different scope in international legal thinking than in EC legal thinking. This is what Cassese *29 calls the “present crisis of custom”. It must be remembered however, that in this case, the Bundesfinanzhof asked for a preliminary ruling concerning the validity of a Council Regulation suspending trade concessions. Thus, the customary law provisions referred to were not the basis for the applicant’s claim directly. The customary law derived from the Vienna Convention was used by the Court as a subsidiary means for interpretation or guidance with respect to the application of Community law.

Another example of the ECJ as an interpreter of international law is the judgement *30 of the Court of First Instance from 28 April 1998 which deals with non-contractual liability and compensation for the impairment of property rights. In this case, the applicant’s claim was based on international law, making references to the first paragraph of Article 1 of the First Additional Protocol to the ECHR as well to the general principles of international law relating to the obligation to compensate for damage to property. The applicant also supported his claim with case law from the European Court of Human Rights and from public international law.

Searching for a causal link between Community action and the damages caused to the applicant, the Court found that the law of Iraq in question “cannot be regarded as a “reaction” by Iraq to the embargo ordered by the United Nations Security Council and put into effect by the Community by means of Regulation No 2340/90, because the measures against Iraq were adopted following earlier breaches of international law by that country”.

Similarly, as the ECJ held in a previous case *31 that although “... the imposition of a trade embargo against a non-member country to maintain international peace and security have, by definition effects which affect the freedom to pursue a trade or business, thereby causing harm to persons who are in no way responsible for the situation which led to the adoption of the sanctions, the fact nevertheless remains that the importance of the aims pursued by such rules is such as to justify negative consequences, even of substantial nature, for some operators”. To justify its somewhat jesuitic approach, the ECJ used quite declarative expressions such as the “objective of general interest so fundamental for the international community”. It seems that the ECJ followed the approach of the ICJ in adopting the erga omnes doctrine.

The position of international law in the Community legal order is still not sufficiently clear. EC legislation remains silent on most questions and case law of the ECJ is fragmented and full of inconsistency. Presently, Article 164 of the Treaty of European Union leaves significant room for further interpretation, stating that “[t]he Court of Justice shall ensure that in the interpretation and application of this Treaty the law is observed”. The phrase “the law is observed” could have a surprisingly wide meaning. *32

It seems that the Court adheres to the doctrine that there shall not be any customary Community law, as the ECJ is the highest authority and has the final say on what is the extent of the competence of EC institutions. On the other hand, according to the opinion of M. Hilf, *33 the Court no longer rules predominantly in favour of the process of integration, but perhaps sees itself more as an arbiter between the EC and its Member States.

Nevertheless, hope exists for some development in this area according

to a European Parliament resolution on the relationship between international law, Community law and the constitutional law of the Member States. *34 With the resolution, the Parliament inter alia called for the relationship between international law and Community law to be clearly stated in EC legislation, for the relationship with public international law to be regulated also in the second and third pillars, *35 and for the European Union to be given a legal personality. Highlighting that the separation of powers is an essential principle of the constitutional law of Member States, the resolution expressed the hope that any transfer of powers from the Member States to the European Union would be accompanied by an assignment of powers to the European Parliament as the direct embodiment of the will of the peoples who make up the European Union.