Schlagwort-Archive: Saar Briefs

The Transpacific Partnership (TPP) negotiations are finished: The Potential Impact on Progress in TTIP

Analysis of the Situation after the Conclusion of the Negotiations for a TPP Agreement

By Leif Johan Eliasson*

While many European interest groups and national governments have been obsessing about the Transatlantic Trade and Investment Partnership (TTIP) since 2013, the American debate has focused predominantly on the Transpacific Partnership (TPP). Now that negotiations on TPP have been completed one could expect Americans to pay greater attention to TTIP. Conversely, TPP’s conclusion puts pressure on the EU to engage on TTIP in order not to lose out on shaping and benefitting from free trade deals (FTAs) reshaping the global trading system. However, reality is more complicated, and there is no guarantee that finalizing TPP negotiations unequivocally ensure progress on the larger and more technically challenging TTIP. Among the most important questions to consider when pondering this issue is the timing and uncertainty of the ratification of TPP, the precarious nature of support for trade in the US, the geopolitical implications of a completed TPP, and the desire for consistency and compatibility in chapter and sector specific agreements across TPP and TTIP (given the much greater focus on regulations in TTIP), Furthermore, one must also consider the steadfast opposition to TTIP amongst certain European interest groups and parties; objections only indirectly tied to TPP, and where the completed negotiations are unlikely to alter opponents’ positions.

I. The ratification of TPP

There are numerous hurdles, in several countries. Though not constitutionally required to do so, former Canadian PM Harper has committed to allowing a parliamentary vote of ratification on TPP, newly elected Prime Minister Trudeau has vowed to ‘scrutinize every part of TPP’ as his Liberal Party, though inherently pro-trade, is wary of the agreement.[1] Japanese domestic opposition is growing in the wake of tightening of the rule-of-origin requirements on auto parts during the last throws of negotiations in order to gain approval from other countries.[2] In the US the Trade Promotion Authority Act signed by President Obama includes detailed requirements for any FTA where negotiations conclude prior to 1 July, 2018.[3] The President must wait 90 days after announcing his intention to sign an agreement, during which time the text is made public, public debate ensues, and consultations on the text occur between the Administration and Congress. Other actors such as the USTR advisory committee on TPP (and later TTIP) will also issue their recommendations. Though US chief negotiator Michael Froman insists TPP cannot be reopened because that threatens a delicate multilateral balance achieved in TPP, and that the agreed text will be that which is sent to Congress, the administration may need to approach treaty-partners and require modifications of the agreement in order to increase the likelihood of Congressional approval; demands for further concessions forced reopening of the last three FTAs signed by the US.[4] After a deal is signed the Administration has 60 days to prepare a list of all US domestic laws which need alteration because of the FTA, and the U.S. International Trade Commission has 105 days to analyze the FTA’s impact on the US economy. When the final implementing legislation for the FTA is introduced in Congress the House has 60 days and the Senate 30 days to hold a vote.

President Obama will need bipartisan support since the far-flanks of both parties oppose FTAs generally, and both TPP and TTIP in particular. The Democratic Party candidates are tripping over each other opposing the deal; two leading Republican contenders (Trump, Huckabee) have also expressed serious doubts. Interestingly, a majority of Democratic voters support trade with developed countries, as long as there are strong labor provisions, and they support TTIP, whereas the leadership remains skeptical or opposed. The Republicans are equally divided, with a strong faction of Republicans (primarily protectionist, tea-party supporters) opposed to trade agreements.[5] Thus you have the interesting coalition of far-left (trade unions) and far-right protectionists arguing for a common cause, albeit, ostensibly, for different reasons.[6] Populist slogans by isolationist Republicans and union-backed Democrats reinforce such beliefs – even though every ratified agreement, on the whole, has benefitted the US economy.[7] But even influential Republican trade advocates in Congress, like Senator Orrin Hatch and Representative Paul Ryan, have expressed serious concerns since the deal was announced.[8] Absent their support TPP faces a nearly insurmountable path. We should expect a very contentious domestic debate as the ratification process overlaps with the 2016 US presidential campaign.

Perhaps surprisingly, there is much less detail known about TPP (the text will be released mid-November) than TTIP, since none of the participants have released negotiating texts, and leaks have been minimal. Although the 700 American advisers with access to the TPP text were briefed in a day long presentation on 14 October the release of the completed TPP text may still cause problems for ratification. We may see numerous American interest groups joining trade unions – the AFL/CIO launched its largest ever lobbying campaign in an attempt to defeat TPA and the completion of TPP, and remains determined to stop ratification[9] – in opposing ratification in response to sector-specific concessions made by the US administration. While the particular issues of Congressional concern may differ (adherence to labor and environmental standards will not be an issue vis-à-vis Europe) most of the aforementioned legal and political hurdles apply also to TTIP. The possible exception being the debate on TTIP ratification during the presidential race, as it remains highly unlikely that even a skeleton TTIP text will be finalized by August 2016 (when Congress recesses for the election)

II. The precarious nature of support for trade agreements in the US

One, perhaps contrarian, way in which a rapid ratification and implementation of TPP may help TTIP is that American support for free trade tends to correlate with good economic times; support sunk during the financial crisis when Americans expressed concerns of being personally worse off due to international trade. In 2002 78 % of Americans thought trade was a good thing; by 2008 it was 53%, while two-thirds expressed support for trade in 2010, as the recovery took hold. When the recovery stalled in 2014 only 57% of Americans viewed trade as an economic opportunity, while 35% saw trade as a threat to jobs, and only 29% believed trade was good for them personally.[10] Most difficult when trying to promote trade agreements is that only one in five believe trade creates jobs and 17% believe they raise wages; two-thirds are convinced that a purchase of an American company by foreigners is bad.[11] Myths about NAFTA and KORUS causing job losses and negative trade balances help explain citizens’ and unions’ lingering resistance to trade agreements. Nevertheless, if TPP is ratified in 2016, the anticipation of immediate tariff removals on some products, easier investment regulations, and future tariff reductions and tariff-rate quota increases could help spur economic growth, rendering Americans more supportive of trade deals while countering opposition arguments of a negative impact on jobs and the economy.

III. The geopolitical implications of a completed TPP

American growth will also help European exports, but more importantly, the geopolitical reality of shifting tides towards Asia will only be reinforced with TPP. This should help focus European minds on whether they wish to set the terms and principles guiding China’s continued integration and participation in the global economy. As part of the American pivot to Asia TPP will serve to expand American presence and solidify a western-originating, rules-based, international trading system. China has built its economic success on entering and slowly adapting to this system – but with modifications away from key elements, such as copyright and patent protection, rule of law and dispute settlement for investors, labor laws, and product safety. The Chinese leadership is increasingly concerned with being sidelined and subjected to standards set by its economic rivals through agreements such as the TPP, TTIP, and the Trade in Services Agreement (TiSA).[12] During the global financial crisis China showed some willingness to assume responsibility for international stability, engaging in the G20, refraining from new protectionism, and increasing the float of its currency – even if the latter was subsequently tightened.[13] Nonetheless, China’s questionable adherence to international agreements is evidenced by WTO dispute panel rulings, especially on autos and parts,[14] and neither the US nor the EU are today independently capable of convincing China to open markets, reject protectionism, cease discriminatory practices, and protect intellectual property. As another example, more than half of American and 60% of European recalls in 2013 were Chinese products.[15]

China’s growing trade with both the US and Europe attests to their interests in “engaging China, not isolating it… [and] TTIP, TPP and related initiatives are important instruments to help frame Beijing’s choices…there is no denying that TTIP and related initiatives are injecting new movement and energy into efforts to open markets and strengthen global rules.”[16] TPP is the first step of ensuring higher quality products entering signatories’ markets, and a TTIP would further ensure that two-thirds of the global market place is covered by compatible, higher quality standards, and lower tariffs. Chinese exporters will then have to comply with western based standards, while exporters to China adhering to these standards will be so numerous as to constitute a second level of external pressure on the Chinese authorities to improve domestic rules and regulations. Stated differently, producing lower quality products only for the Chinese market will no longer be viable. Large companies such as Samsung have welcomed unified standards across the Atlantic, but if TTIP fails may go with Chinese standards as the single largest market[17] A completed TTP followed by a comprehensive TTIP signals western unity on an open international system, with high standards across all sectors.

IV. Consistency and compatibility across TPP and TTIP

The stalemate in the World Trade Organization means trade liberalization globally is occurring through megaregional and large bilateral agreements. There is a desire for consistency and compatibility in chapter and sector specific agreements across TPP and TTIP; though the latter will focus much more on regulatory compatibility vis-à-vis greater emphasis on market access and tariffs in TPP (Pascal Lamy, the former head of the World Trade Organization, called TPP “the last of big old-style trade agreements”).[18] Many of the technical, regulatory, and tariff details of TPP (as they emerge) will likely be matched or exceeded in TTIP. According to reports, in the important area of automotive vehicles TPP includes two different methods and percentages for calculating Rule-of-Origin for finished vehicles and parts.[19] One of each matches the EU-Korean (KOREU) and US-Korean (KORUS) agreements, resulting in a further global vehicle harmonization; TTIP will undoubtedly incorporate the same methods.[20] KOREU and KORUS, as well as the EU-Canadian FTA (CETA), exclude the most “contentious” agricultural products from complete tariff elimination, including beef, pork, rice, and dairy. The same applies in TPP[21], cementing global standards based on reasons of “serious domestic interests,” while virtually guaranteeing an identical outcome in TTIP.

A major obstacle to pork and beef exports (in addition to tariffs) in both TPP and TTIP appears to be resolving itself. The American National Pork Board is urging members to consider whether the benefits of using ractopamine (a muscle-producing drug banned in over 160 countries) outweigh the costs of lost market shares.[22] With increased anti-biotic, hormone free pork and beef voluntarily produced in the US, and the higher quota for tariff-free imports of such meat expected in TPP, TTIP negotiators may find a way to satisfy US Congressional concerns, the American farm lobby, and EU citizen groups and policy makers opposed to conventional American meat products by reducing tariffs and significantly raising the tariff rate quota to where American ranchers could export as much antibiotic and hormone free beef and pork the European market demands.

Progress on TTIP is largely premised on progress in two areas: geographical indicators (GIs; trademarks in the US) and an investor-state dispute settlement mechanism (ISDS). Both these are included in TPP, and depending on the exact language following “legal scrubbing” (lawyers cleaning up the text) may push TTIP negotiations in the same direction. According to leaked documents and analysis of the Intellectual Property Chapter of TPP “GIs protected under a trademark regime can be used for extension of protection in TPP Parties. [GIs] can be a sign or combination of signs, not merely a word or – even more specifically – a geographic place name…the TPP language ensures that Parties must extend protection to GIs [which] may incorporate or consist solely of designs or other source-identifying signs”, and there are detailed provisions for challenging infringements of GIs.[23] The language should fall close to what Europeans desire for TTIP, but GIs have heretofore proven so contentious negotiators have not even broached the issue in a serious fashion.

The EU Commission’s September 2015 proposal for a new permanent investor-state court has thus far upset everyone and satisfied no one.[24] It was summarily dismissed by American policy makers and businesses, as well as European Business, as a proposal which will “…effectively exclude smaller companies and lead to endless appeals and erode investor protection. [and] “In reality it won’t be possible for any investor to be compensated.[25] Conversely, European and American public interest groups oppose the proposal because it fails to completely eliminate ISDS. [26] Negotiators also confirm that a revised ISDS, combining the features of the 2012 US Model BIT and the EU Commission’s proposals for reform, is included in TPP, adding pressure for an ISDS in TTIP.[27] Some scholars argue ISDS is unnecessary between two democratic regions with mature judicial systems.[28] However, leaving cases to domestic courts or establishing a state-to-state (US-EU) system of dispute settlement for investors becomes legally challenging given differing domestic obligations and benefits ascribed to nationals and foreigners. Domestic legal contexts continuously change, making it extremely difficult for courts, and resulting in further uncertainty for investors.[29] ISDS is arguably necessary in TTIP as a precedent and common model for ongoing EU and American bilateral investment treaty negotiations with China.[30] The latter has also for years sought to be classified as a market economy by the US and EU, thereby making it legally much tougher to charge China with unfair trade practices; excluding ISDS from TTIP weakens western negotiators’ positions in negotiations with China, and sets a dangerous precedent if/when China achieves its desired status but retains a weak judiciary. Yet opponents deem even a completely revised ISDS in TTIP an unacceptable “price”, and they have successfully shaped public opinion and many policy makers to this effect.[31] Though TPP appears to satisfy most of what advocates of “reform but keep ISDS” desire, much hard work and compromise will be required in both areas; participants confirm that ISDS has not even been discussed in any TTIP negotiating round since January 2014.

V. European opposition to TTIP

Most businesses and consumers recognize that most products and services on either side of the Atlantic are generally of equally high quality and safety standards; the fastest growing part of trade across the Atlantic is intra-firm, with most companies having extensive representation and/or incorporation on both sides of the Atlantic.[32] The size of economic gains from an ambitious TTIP remains contested, but are estimated to boost EU and US GDP by 0.4 -0.8 percent annually, with roughly 80% of benefits stemming from removing non-tariff barriers (through e.g. mutual recognition and elimination of regulatory duplication and overlap). [33] Yet neither macroeconomic data nor models will determine the fate of TTIP. The latter is subject to a political debate anchored more in emotions and perceptions than empirics and geopolitical considerations, and anti-TTIP civil society interest groups thus far appear more successful in garnering support on key issues.

Europeans are generally more supportive of trade, and a majority supports TTIP, but significant opposition to TTIP has risen in key states such as Germany, France, Austria, and, increasingly, the UK, and the Socialist & Democrats group in the European Parliament is internally split on the agreement.[34] European opponents of trade agreements are enthusiastic, well organized and vocal, and TPP has not affected their strategy. Modern trade agreements focus on regulations, and where they differ between partners, coordination or various types of mutual recognition can be used by interest groups to raise salience by claiming agreements will hurt consumers in the form of lower standards (‘race to the bottom’) or perceived harmful regulations.[35] Dür and Mateo (2014) find that interest groups can increase public salience on an issue through public lobbying by arousing emotions and assigning blame for a ‘problem’ (the issue the group opposes).[36]The process of raising salience by evoking fears of threats to peoples’ food and public services is visibly invoked in TTIP.[37] The completion of TPP will do nothing to alter such perceptions; this can only occur by Europeans persuading fellow Europeans that an agreement with the US will ultimately deliver more benefits than living without one. As German Vice Chancellor Gabriel recently noted

Wenn es scheitert, werden wir uns anderen Standards anpassen müssen, vielleicht denen, die irgendwann zwischen China und den USA entwickelt werden. Da wird es weiter private Schiedsgerichte geben, keine oder nur geringe Verbraucherschutzstandards und ganz sicher keine Sozialstandards. Das sollten sich diejenigen, die jetzt „Stop TTIP rufen“ und sich jeder Verhandlung mit den USA verweigern, genau überlegen.[38]

To change European perceptions the EU Commission, the member states, and leading pro-TTIP groups must engage a better message, combining the threat of exclusion from standard-setting as TPP moves forward, with appealing stories of the benefit of TTIP.

VI. Conclusion

While concluding negotiations on TPP – keeping in mind a potential reopening due to Congressional concerns – may serve as a much needed push for TTIP negotiations by threatening to leave the EU behind in the ongoing reorganization of the international trading system, there are numerous developments, as outlined above, which may hamper a completion of TTIP. Given the timing and some controversial compromises struck in TPP (e.g. shorter patents for biopharmaceutical drugs) it faces a long and sluggish ratification process, and it remains uncertain to what extent TPP will influence the European debate on TTIP. There was a suspicion that the US was hesitant to offer extensive concessions in key areas such as agriculture in TTIP negotiations as long as TPP remained unfinished; conversations with negotiators reveal a European skepticism that anything will change. Some fear the US may have “offered what they can” in TPP; failing to gain unfettered access for pork and beef in TPP, why waste time on this with intractable Europeans? A completed TPP should spur TTIP opponents to consider TTIP a way of ensuing higher environmental, safety, regulatory, and labor standards vis-à-vis those in TPP, but this is unlikely due to widespread and deeply ingrained misperception, distortion, and myths about what these agreements entail. With a looming TPP ratification the EU needs TTIP more than the US, and it remains for Europeans advocates to convince European skeptics of the benefits of TTIP. This is a tall order.

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*Prof. Dr. Leif Johan Eliasson (jeliasson@esu.edu) is professor of political science at East Stroudsburg University, Pennsylvania, USA, and the author of several articles on transatlantic trade and European integration.

[1] Ray, Althia and Maloney, Ryan “Liberals Say No Free Vote On Trans-Pacific Partnership” Hufffington Post Canada, 7.10.2015 at http://www.huffingtonpost.ca/2015/10/07/trudeau-tpp-_n_8257950.html accessed 19.10.2015

[2] Inside US Trade “TPP rules of Origin is 45% for vehicles, with caveats’ 35-35% for auto parts”, 8.10.2015 accessed 8.10.2015.

[3] H.R. 1890/S. 995 Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ‘To establish congressional trade negotiating objectives and enhanced consultation requirements for trade negotiations, to provide for consideration of trade agreements, and for other purposes’ 114th Congress, 1st session

[4] Cf. Aggarwal, Vinod “U.S. Free Trade Agreements and Linkages”, International Negotiation, 2013, 18, 1, p. 89–110, DOI: 10.1163/15718069-12341246

[5] A May 2015 Pew Center survey found 58% of Democrats saying trade agreements were a “good thing,” compared to 53 % of Republicans, even as most Democratic members of Congress voted against TPA in June 2015. At http://www.people-press.org/2015/05/27/free-trade-agreements-seen-as-good-for-u-s-but-concerns-persist/ accessed 15.6.2015

[6] “Support in Principle for U.S.-EU Trade Pact But some Americans and Germans Wary of TTIP Detail”, Pew Research Center in Association with the Bertelsmann Foundation, 9.4.2014 at http://www.pewglobal.org/2014/04/09/support-in-principle-for-u-s-eu-trade-pact/ accessed 15.2.2015

[7] Hufbauer , Gary Claude and Schott, Jeffrey J. “NAFTA Revisited” Policy Options, Peterson Institute for International Economics, 2007; Adam Posen, Peterson Institute for International Economics, public presentation, 2.5.2014.

[8] Norman, Brett and Karlin, Sarah “Pharma’s next step on TPP” Politico, 12.10.2015 at http://www.politico.com/tipsheets/prescription-pulse/2015/10/pharmas-next-steps-on-tpp-210674 accessed 13.10.2015

[9] Union Advocate “AFL-CIO halts PAC contributions, gears up for battle to stop fast track” 11.3.2015 at http://advocate.stpaulunions.org/2015/03/11/afl-cio-halts-pac-contributions-gears-up-for-battle-to-stop-fast-track/; personal communication July, 2015.

[10] Pew Global Attitudes Study “Faith and Skepticism about Trade, Foreign Investment” 16.9.2014 at http://www.pewglobal.org/2014/09/16/faith-and-skepticism-about-trade-foreign-investment/ accesses 27.10.2014

[11] Ibid

[12] Song, Guoyou, Yuan, Wen Jin “China’s Free Trade Agreement Strategies” Center for Strategic and International Studies. The Washington Quarterly, 2012 35 (4), p. 107-119; Layne, C. After the Fall, International Politics, U.S. Grand Strategy, and the End of the Pax Americana, New Haven: Yale University Press, 2014

[13] Drezner, Daniel The System Worked: How the World Stopped Another Great Depression.

Oxford: Oxford University Press, 2014.

[14] E.g. “China –Anti-dumping and countervailing duties on certain automobiles from the United States” (WT/DS440/R). WTO Dispute Settlement Report, 23.5.2014 at http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds440_e.htm#bkmk440r accessed 25.8.2014

[15] European Commission – Press release “Keeping consumers safe: nearly 2500 dangerous products withdrawn from the EU market in 2014” Brussels, 23.3.2015

[16] Hamilton, Daniel “TTIP’s Geostrategic Implications” Summary Chapter p. 17, in Daniel Hamilton (ed) The Geopolitics of TTIP Repositioning the Transatlantic Relationship for a Changing World, Center for Transatlantic Relations, SAIS, Washington DC, 2014.

[17] Reported on BBC at http://www.bbc.com/news/uk-scotland-30444398 14.12.2014 accessed 2.1.2015

[18] Bangkok Post, “Trans-Pacific free-trade pact ‚old-fashioned‘: ex-WTO chief” 28.5.2014 at http://m.bangkokpost.com/business/412233 accessed 2.24.2015

[19] Supra note 1

[20] Cf. argument in Eliasson, Leif Johan “International Standards: Past Free Trade Agreements and the Prospects in the Transatlantic Trade and Investment Partnership” Baltic Journal of European Studies 2015, 5 (1), p. 5-19

[21] Calms, Jackie “Trans-Pacific Partnership Is Reached, but Faces Scrutiny in Congress“ The New York Times, at http://www.nytimes.com/2015/10/06/business/trans-pacific-partnership-trade-deal-is-reached.html?_r=0 6.10.2015 accessed 8.10.2015

[22] Otto, Jeannine “Antibiotics, trade challenge pork industry” AgriNews, 3.8.2015, at http://agrinews-pubs.com/Content/News/Latest-News/Article/Antibiotics-trade-challenge-pork-industry-/8/6/13081 accessed 10.10.2015

[23] The text on both trademarks and geographical indications offers perspective and balance, treating trademarks and GIs as private intellectual property rights for all aspects of right acquisition, maintenance, challenge, and enforcement. “Trans Pacific Partnership IP chapter – trademarks, thoughts on geographical indications” IP watch 15.10.2015 at http://www.bilaterals.org/?trans-pacific-partnership-ip accessed 16.20.2014

[24] Transatlantic Trade and Investment Partnership Trade in Services, Investments and E-Commerce, Chapter II –Investment, release 9.16.2015, at http://trade.ec.europa.eu/doclib/docs/2015/september/tradoc_153807.pdf

[25] Politico .eu “Business Slams Malmström’s TTIP Pitch” 13.10.2015 at http://www.politico.eu/article/ttip-business-lobby-slams-malmstroms-arbitration-proposal-isds-businesseurope/ accessed 14.10.2015; Germak, Christopher “ A Free Trade Sop to Germany” Handelsblatt, 17.9.2015, at https://global.handelsblatt.com/edition/265/ressort/politics/article/a-free-trade-sop-to-germany’ accessed 15.10.2015

[26] “Do the Commission’s reform proposals for ISDS really solve the problem?” Stop-TTIP.Org at https://stop-ttip.org/blog/do-the-commissions-reform-proposals-for-isds-really-solve-the-problem/ accessed 13.10.2015

[27] Summary of the Transpacific Partnership Agreement, USTR, 15.9.2015 at USTR.gov; 2012 Model US Bilateral Investment Treaty at http://www.state.gov/documents/organization/188371.pdf accessed 14.2.2015

[28] Kleinheisterkamp, Jan “Is there a Need for Investor-State Arbitration in the Transatlantic Trade and Investment Partnership (TTIP)?” London: LSE Working Papers 10, 2014 <http://dx.doi.org/10.2139/ssrn.2410188 > accessed 6.5.2014.

[29] Eliasson, Leif Johan “Fear v. Facts, the Case for ISDS in Modern Trade Agreements” Global Politics Magazine, 7.6.2015, at http://global-politics.co.uk/wp/2015/06/07/fear-v-facts-the-case-for-isds-in-modern-trade-agreements/“; Erixon, Frederick Investor-state disputes have put a spanner in the works for TTIP”, European Voice, 19.6.2014, p. 5

[30] Meunier, Sophie and Morin, Jean-Frédéric “No Agreement is an Island: Negotiating TTIP in a Dense Regime Complexchapter 14 in Jean-Frederic Morin et al (eds) The Politics of Transatlantic Trade Negotiations TTIP in a Globalized World, Publisher: Ashgate.

[31] “Europeans don’t want investor state dispute settlement in trade agreements” stop-ttip.org at

https://stop-ttip.org/europeans-dont-want-investor-state-dispute-settlement-trade-agreements/ accessed 12.10.2015; Public Citizen, “Growing European Government Opposition to Investor-State Regime Shadows This Week’s U.S.-EU Talks, New Report Takes on Obama Administration Defense of Parallel Legal System for Foreign Corporations” 2.10.2014 at http://www.citizen.org/documents/press-release-isds-tafta-report-october-2014.pdf accessed 10.10.2014; Aline, Robert “European Parliament backs TTIP, rejects ISDS”, EurActiv, 13.7.2015, at http://www.euractiv.com/sections/global-europe/european-parliament-backs-ttip-rejects-isds-316142?utm_source=EurActiv+Newsletter&utm_campaign=874f8bf9f3-newsletter_daily_update&utm_medium=email&utm_term=0_bab5f0ea4e-874f8bf9f3-245748513 accessed 17.7.2015

[32] Young, Alasdair R. and Peterson, John, Parochial Global Europe 21st Century Trade Politics, Oxford, Oxford University Press, 2014; Young, Alasdair R. “The Distinctive Politics of the Transatlantic Trade and Investment Partnership Negotiations” EUSA Political Economy Bulletin, June 2015, p. 9-14.

[33] Francois, Joseph. et al, “Reducing Transatlantic Barriers to Trade and Investment – An Economic Assessment”, Final Report for the European Commission,

Contract TRADE10/A2/A16, Center for Economic Policy Research, London, 2013.

Felbermayr, Gabriel et al Transatlantic Trade and Investment Partnership (TTIP): Who benefits from a free trade deal? Global Economic Dynamics Paper, Gütersloh: Bertelsmann Stiftung, 2013.

Regulations, and thus acceptable compromises on mutual recognition, equivalence, compatibility, or harmonization, reflect and affect domestic legal, socioeconomic, and cultural variables, are uneasily quantified but highly important to the public’s perceptions of an acceptable outcome.

[34] 76% of Americans and 75% of Europeans in early 2014 said they desire closer regulatory integration with the EU/US respectively. Pew Global Attitudes Project, April, 2014,

http://www.pewglobal.org/2014/04/09/support-in-principle-for-u-s-eu-trade-pact accessed 9.5.2014; EU-US Negotiations on TTIP A Survey of Current Issues, European Parliamentary Research Service, June 2015 — PE 559.502 at

http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/559502/EPRS_IDA(2015)559502_EN.pdf accessed 1.10.2015; Levy-Abegnoli, Julie, “TTIP: EU parliament vote paves way for new ISDS” The Parliament Magazine, 8.7.2015, at https://www.theparliamentmagazine.eu/articles/news/ttip-eu-parliament-vote-paves-way-new-isds accessed 10.7.2015; personal interviews with MePs June 2015.

[35] cf. De Ville, Ferdi and Siles-Brugge, Gabriel “The Transatlantic Trade and Investment Partnership and the Role of Computable General Equilibrium Modelling: An Exercise in Managing Fictional Expectations.” New Political Economy, 2015 20(5), p. 653-678;

  1. Young, Alasdair and Peterson, John “The EU and the new Trade Politic” Journal of European Public Policy, 2006, 13(6), p. 795-814

[36] Dür, Andreas and Mateo, Gemma, “Public Opinion and Interest Group Influence: How Citizen Groups Derailed the Anti-Counterfeiting Trade Agreement”, Journal of European Public Policy, 2014, 21(8), p. 1207.

[37] Eliasson, Leif Johan “The Transatlantic Trade and Investment Partnership: Interest groups and public opinion” European Union Studies Association’s 14th Biennial Meeting

Boston, March 5-7, 2015.

[38] Wirtschafts Woche „Wir brauchen einen Handelsgerichtshof mit den USA“ 10.10.2015 at http://www.wiwo.de/politik/deutschland/sigmar-gabriel-zu-ttip-wir-brauchen-einen-handelsgerichtshof-mit-den-usa/12422424.html accessed 11.10.2015

Image credit: Gobierno de Chile

Suggested Citation: Eliasson, Leif Johan, The Transpacific Partnership (TPP) negotiations are finished: The Potential Impact on Progress in TTIP, jean-monnet-saar 2015, DOI: 10.17176/20220308-174610-0

Your Facebook Data Just Got a Lot More Secure – Case Analysis C-362/14 Maximillian Schrems v Data Protection Commissioner

Dissecting the Safe Harbor Decision of the ECJ

[Note: For a broader overview on the topic look at our recently published Saar Blueprint by Oskar Josef Gstrein – Regulation of Technology in the European Union and beyond (10/15) which also covers the Schrems Case]

Kanad Bagchi[1]

Privacy is not something that I’m merely entitled to, it’s an absolute prerequisite.” Words of Hollywood legend Marlon Brando, which to the mind of the author, most aptly epitomizes the Opinion of the Court in its Schrems decision (“Opinion”), delivered on 6th October 2015. Long-standing concessions regarding data processing and transfer between the European Union (“EU”) and United States (“US”) were summarily dismissed in the face of competing claims to the right to privacy and data protection. The Court declared that Commission Decision 2000/520 (“Decision”) recognizing the equivalence of US data protection mechanisms, fails to ensure ‘an adequate level of protection’ for EU citizens, as mandated under Directive 95/46/EC (“Directive”), EU’s principle data protection law. Further, the Court reserved the powers of a Member State National Supervisory Authority to admit and examine claims against processing and transferring of data to third countries, irrespective of the European Commission (“Commission”) finding that a particular third country ensures an adequate level of protection. The Opinion is likely to derange data intensive businesses in the EU and US, compelling authorities on both sides of the Atlantic to rework existing transfer arrangement. In other words, the Opinion is arguably the strongest response to Edward Snowden’s revelations with respect to extensive surveillance and monitoring activities undertaken by US authorities in the recent past, and has already received much fanfare amongst privacy activists and the likes.

In the present post, the author dissects different aspects of the Opinion, in an attempt to produce more clarity and coherence on EU data protection rules and the Commission Decision on ‘Safe Harbor’, so as to underline the obligation of EU and member state authorities arising out of the same. The post also speculates on the immediate implications of the decision on US and EU tech firms and considers the momentous task ahead of the respective authorities.

Maximillian Schrems’s tryst with Privacy

In the backdrop of Edward Snowden’s revelations concerning mass scale Internet and phone surveillance conducted by the US National Security Agency, Mr. Schrems, an Austrian national, approached the Data Protection Commissioner in Ireland, insisting that Facebook Ireland be prohibited from transferring his personal data to the US. Schrems’s claim was rejected by the Commissioner on the grounds, inter alia, that the former was constrained from advancing a plea of ‘inadequacy of protection’ as the EU Commission through its Decision had concluded otherwise. On appeal however, the High Court reasoned that neither the Directive nor the Decision, when read in the light of both the Irish Constitution and the Charter of Fundamental Rights of the European Union (“Charter”), prevents national supervisory authorities from examining, in limine, a claim contesting the adequacy of protection afforded to his personal data in the third country. Finding that the above enquiry involved questions relating to the interpretation of EU law, the High Court thought fit to refer the questions to the ECJ for a preliminary ruling.

EU Safe Harbor rules and its context

Directive 95/46/EC has a twin set of objectives underpinning data protection within the EU and beyond. First, it provides a framework for the processing of personal data by member states of the EU and lays down certain safeguards pertaining to the same. Second, in the interest of international trade and business, it acknowledges and prescribes for a mechanism to ensure cross border free flow of personal data between EU member states and third countries. For the purposes of its second objective, and with which the author is most acutely concerned, the Directive prescribes for certain core principles (“safe harbor principles”) that ought to govern MS discretion in the transfer of personal data beyond EU borders. Article 25 of the Directive, inter alia, provides that a member state in approving such transfer of personal data is to satisfy herself that “…the third country in question ensures an adequate level of protection…” after considering all “…the circumstances surrounding a data transfer…” In this regard, if the Commission gathers that a third country falls short of providing for an ‘adequate level of protection’, member states ought to implement measures “…necessary to prevent any transfer of data of the same type to the third country in question…” Likewise, if the Commission finds that a third country ensures an ‘adequate level of protection’, member states are to similarly take measures in pursuance of the same.

To ensure the proper implementation of the above-mentioned principles, the Directive calls for the establishment of independent National Supervisory Authorities (“supervisory authorities”) within each member state, endowed with an extensive set of powers. For instance, MS are to consult their respective supervisory authorities while formulating internal measures to give effect to the Directive. Further, such authorities have the power to investigate and access data pertaining to processing and transfer, deliver opinions with respect to processing operations, and also the power, if not the obligation, to agitate through legal means before national courts, the incorrect or improper implementation of the Directive by member state authorities. EU citizens may approach supervisory authorities and lodge claims “…concerning the protection of his rights and freedoms in regard to the processing of personal data…”, and have the right to be informed of the outcome of their claim. In essence, a whole gamut of responsibilities relating to supervision and monitoring the implementation of the Directive has been conferred on national supervisory authorities.

In pursuance of its powers under the Directive, the Commission adopted Decision 2000/520 certifying that processes and mechanisms established by the US authorities ‘ensures’ an adequate level of protection of personal data transferred from the EU. In this regard, the Commission relied on a system of self-certification and public disclosure by organizations within the US, of their intent and willingness to abide by the safe harbor principles. The framework for the above mentioned process was implemented in accordance with the guidance provided by the US Department of Commerce through frequently asked questions. By way of derogation however, the applicability of the safe harbor principles to US organizations could be circumscribed so far as it is “…necessary to meet national security, public interest, or law enforcement requirements…”. It is important to note that the Decision was adopted in the year 2000, representing a state of affair dating back fifteen years and has remained unaffected since.

Ruling of the Court

The Court decided two sets of questions, namely, first, whether the powers of National Supervisory Authorities were constrained as a result of the Commission Decision on adequacy levels in the US and second, whether the Commission Decision was valid under extant rules of EU law.

At the outset, the Court observed that the Directive and its provisions ought to be interpreted in the light of Charter, especially Article 7 (privacy) and 8 (data protection), in as much as processing and transferring of data is liable to intrude into the Charter rights. Art. 28 (1) of the Directive therefore required member states to establish independent supervisory authorities tasked with the mandate to monitor the former’s compliance with EU law. Towards that end, the Court noted, supervisory authorities derive their power and competence directly from “…primary law of the European Union…” and operate independently to that of the Commission Decision. In the same breath, the Court determined that a Commission Decision adopted in pursuance of the Directive does not foreclose the power of the supervisory authority from examining claims relating to processing of personal data. If upon such examination, it appears that claims relating to the violation of Art. 7 & 8 of the Charter or the principles stated in the Directive are plausible, the supervisory authority ought be in a position to challenge the same in the courts of the member states, which in turn ought to refer the question to the ECJ through the preliminary reference procedure. Thus, in effect, the Court ruled that a determination by the Commission of the adequacy or inadequacy of a third country regime in protecting the rights of the individual does not prevent supervisory authorities from entertaining claims pleading to the contrary.

Although the High Court did not specifically raise the question of validity of the Commission Decision, the ECJ after perusing through the scheme of the safe harbor regime, concluded that “…until such time as the Commission decision is declared invalid by the Court, the Member States and their organs, which include their independent supervisory authorities, admittedly cannot adopt measures contrary to that decision…” Hence, it became imperative for the Court to examine the validity of the Commission Decision as against both the requirements of the Directive and the Charter.

While the Directive allows the Commission to conclude that “…a third country ensures an adequate level of protection within the meaning of paragraph 2 of this Article, by reason of its domestic law or of the international commitments…” it admittedly does not define either the content or the standard in determining the adequacy of protection afforded by the third country’s regime. Under such circumstances, the Court reasoned that ‘adequate protection’ ought to mean ‘essentially equivalent’ if not ‘identical’ to the protection afforded to citizens in the EU.

In this regard, the Court found that the system of self-certification could only constitute a reliable measure of adequacy if the same was backed by mechanisms to identify and punish errant US organizations. The Commission Decision however, to the mind of the Court, did not contain “sufficient findings” with respect to any such mechanism employed by the US to ensure an adequate level of protection. Moreover, a turning point for the Court was its finding that the safe harbor principles were to govern, albeit voluntarily, the conduct of US organizations only, without having a consequent binding effect on the US public authorities. Therefore, the Decision admitted of the possibility of the safe harbor principles and its applicability being limited by state authorities in the interest of national security or public interest. Consequently, the Court examined that the Decision was silent with respect to specifying either any limits to such state interference or to the existence of effective legal protection against the same. While EU law, interpreted in the light of the Charter and the Court’s prior rulings, limit state interference to what is “strictly necessary”, the Decision allows US authorities to store all personal data on a “generalized basis”. Such general collection and processing of data, without the possibility of an effective remedy, the Court declared, constitutes an infraction of the rights guaranteed under the Charter, including Articles 7, 8 and 47 (effective judicial protection), thereby affecting the validity of the Commission Decision.

In addition, the Court declared invalid Article 3 of the Decision in so far as it restricted the powers of the national supervisory authorities to entertain claims relating to the adequacy of protection enshrined under third country rules on data protection.

Further Comments

The Schrems decision mirrors Advocate General Bot’s opinion in most parts, barring however, some minor deviations (for a fuller enquiry here). In essence, the ECJ ruled that the present standard of protection afforded by the US does not match up to that of the EU and hence, US companies cannot be trusted with personal data belonging to EU citizens. Whether good wisdom prevailed on the Court, depends on which side of the debate one finds oneself on. Indeed, the Court conveniently assumed certain regulatory and administrative artifacts of the US system, without having provided US officials with the opportunity to be heard on the matter. Moreover, as pointed out, incessant reliance was placed by the Court, on outdated Commission reports suggesting a less rigorous approach towards the preservation of individual liberties in the US. Therefore extreme criticism has been leveled against the Court in condemning an entire system of rules and regulations on the basis of presumptuous evidence. Also the Court’s insistence on a standard of ‘adequacy’ resting on “essentially equivalent” rather than “identical” is neither precise nor helpful, leaving much to judicial oversight and less to bureaucratic discretion. While the Court did not find the process of ‘self-certification’ to be inherently repulsive to the idea of equivalent protection, it nonetheless emphasized that such certification alone was inadequate in the absence of consequent enforcement of the same. It begs the question as to whether the US authorities will now have to commission independent bodies much like the national supervisory authorities in the EU, to constantly monitor the implementation of the safe harbor principles.

Where has the decision left State authorities and Private corporations?

The EU and the US were already undergoing negotiations for a review of the Decision in the aftermath of the Snowden revelations, and it is reasonable to suggest that the Commission will have to seek more far reaching commitments from the US authorities than were previously estimated. Considering the differing standard of protection afforded to privacy rights in the EU and the US, a new agreement on the subject is likely to be long drawn and tiresome. In the meanwhile, personal data transfer for US companies is definitely going to get more cumbersome and costly, as the process of transfer would be largely governed by 28 different national rules on the subject, with each displaying varying degrees of bureaucratic skirmishes. Although there are reports suggesting that certain companies in anticipation of the decision, had already started reviewing their transfer policies, including considering moving to options like model contract clauses and binding corporate rules, the situation is a far cry from ‘business as usual’, especially for small and medium enterprises.

That apart, the Opinion has received a favorable response from privacy activists and human rights groups, especially in the light of the Court’s insistence that mass surveillance and indiscriminate sourcing of personal data constitutes a violation of the Charter rights. Further, as a result of the Opinion, supervisory authorities are likely to exercise a more active role in accessing the cross border transfer of data, which only adds yet another layer of protection to personal data. Privacy advocates are already anticipating that in the long run, European citizens may be able to contend that their data be stored and processed only within the borders of EU, much like the recent Russian agenda. Nonetheless, as things stand today, the clock has been turned back several years and much has been left to chance and uncertainty.

[1] Kanad Bagchi (kanad.bagchi@gmail.com) is an MSc Candidate in Law and Finance at the Faculty of Law, University of Oxford, UK. Formerly, he was a research assistant at Europa-Institut, Universität des Saarlandes, Germany.

Suggested Citation: Bagchi, Kanad, Your Facebook Data Just Got a Lot More Secure: Case Analysis C-362/14 Maximillian Schrems v Data Protection Commissioner, jean-monnet-saar 2015, DOI: 10.17176/20220308-174158-0

Case analysis of the ECtHR judgment in Delfi AS v. Estonia (app. No. 64569/09)

The difficulties of information management for intermediaries

By Oskar Josef Gstrein[1]

 A. Introduction

“The medium is the message”.[2] This phrase coined by the Canadian philosopher Marshal McLuhan in the 1960s seems to be nowhere as true as when it comes to the processing and distribution of information on the internet. The philosophy of media has boomed with the start of the new millennium and also other less “speculative” sciences such as law have to deal more and more with the aspects of information processing.

Since the collection of personal data has become a lucrative business model[3] there is a need for more and better regulation. However, not only the sheer content of data is important. Also aspects of accessibility and possibilities for contextualization define the “value” of data.

Recently, not only private actors try to design the future of the internal market of the European Union in that regard.[4] Regional authorities also seem to become more and more proactive in the field. The European Data Protection Supervisor Giovanni Butarelli is talking about “a defining moment for digital rights in Europe and beyond.”[5] The European Commission has declared the “Digital Single Market” one of its top priorities for the coming years.[6] National politicians like Angela Merkel warn their countries and the entire continent of falling behind in the technological arms race,[7] hence not being able to shape the future of the world. And ultimately, the regional courts keep continuing to deliver judgments which aim at redefining law and its application in the digital landscape.

It could very well be argued that especially the actors last mentioned have a constantly underestimated impact when it comes to shaping the future of cyberspace and the concept of privacy in the digital age. By now the Court of Justice of the European Union (CJEU) has delivered numerous judgments with ground-breaking character.

In the year 2014 it not only struck down the EU’s data retention directive 2006/24/EC on the 8th of April.[8] On the 13th of May it also established the right to delist information from the index of a search engine via its controversial “Google Spain” decision.[9] And it looks like with cases such as Max Schrems’ and his Europe v. Facebook campaign[10] pending before the court[11] the list will not come to an end soon.

What all of these judgments have in common is that their main legal problems are not connected with the content of the information that is being processed. What is crucial is the question of how accessibility and transferability of data is organized and evaluated from a legal perspective.

This can also be seen in the SABAM vs. Netlog judgment[12] and the UPC Telekabel Wien case.[13] Like the already mentioned decisions these cases clearly point to the fact that modern information management and its regulation is not only a matter of the content of information, but especially of the role of the so-called “intermediaries”. The regulation of intermediaries becomes an ever more important aspect when considering the future development of the digital space.[14] Their business practices and conduct is crucial for the accessibility, presentation and contextualization of information. When it comes to understanding the conditionality of liability of such service providers the Articles 12 to 14 of Directive 2000/31/EC can be helpful.[15]

However, regulation of the activities of intermediaries takes not only place within the EU. The Grand Chamber decision in the case Delfi AS v. Estonia[16] from the 16th of June 2015 the Court of Human Rights in Strasbourg (ECtHR) has delivered another important judgment which tries to strike the right balance between the fundamental rights to privacy and the freedom of expression and information.

B. The decision in Delfi AS v. Estonia

I. The background of the case

Delfi AS runs an online newsportal of national importance in the country of Estonia.[17] On the 24th of January 2006 an article with the title “SLK Destroyed Planned Ice Road”[18] was published. The report suggested that AS Saaremaa Laevakompanii (Saaremaa Shipping Company, a public limited liability company) made it impossible to use several ice roads. The latter temporarily connect the Estonian mainland to several islands in the region which SLK normally connects by offering ferry services.

The content of the report was not challenged as such. But Delfi also offered the possibility to comment on the article, which received 185 comments until the 25th of January 2006.[19] Some of them were directly relating to “L” who was a member of the supervisory board of SLK and the most visible public figure of SLK at the material time.[20] The ECtHR gave some examples of the comments under the article in his judgment:[21]

  1.  „(1) there are currents in [V]äinameri
    (2) open water is closer to the places you referred to, and the ice is thinner.
    Proposal – let’s do as in 1905, let’s go to [K]uressaare with sticks and put [L.] and [Le.] in a bag“
  2. „bloody shitheads…they bathe in money anyway thanks to that monopoly and State subsidies and have now started to fear that cars may drive to the islands for a couple of days without anything filling their purses. burn in your own ship, sick Jew!“
  3. „good that [La.’s] initiative has not broken down the lines of the web flamers. go ahead, guys, [L.] into the oven!“
  4. „[little L.] go and drown yourself […]”

L. wanted not only these comments to be removed from the website, but also asked for compensation for non-pecuniary damage. Delfi removed the comments six weeks after the publication.[22] However, when it came to compensation, the publisher denied any responsibility for the content of the comments and claimed it was only acting as intermediary service provider in that regard. Several procedures were conducted in the national courts. Finally, the last instance court in Estonia (the Supreme Court) came to the conclusion that Delfi had a responsibility to protect L from the consequences of the unlawful comments and therefore should have prevented the publication in the first place.[23] Subsequently, in October 2009, Delfi set up a more sophisticated monitoring system for the comments involving a review procedure by a set of moderators who look at any comment before it is published.[24]

II. The proceedings in Strasbourg

After all national remedies had been exhausted Delfi made an application to the ECtHR on the 4th of December 2009. The much discussed judgment[25] of the First Section of the ECtHR from the 10th of October 2013 turned down Delfi’s complaint that there was a violation of the freedom of expression by Estonia whose courts demanded from the company to manage the comments under the article more actively. However, on the 17th of February 2014 the judgment was accepted to be reviewed by the Grand Chamber of the Strasbourg court.

In the proceedings before the Grand Chamber the argumentation of the parties basically stayed the same. Delfi claimed that any responsibility of the company to prevent damage regarding the reputation of L infringed its freedom of expression under Article 10 of the European Convention of Human Rights.[26] The court thus summarizes the position of Delfi with the words:

„The applicant company called on the Grand Chamber to look at the case as a whole, including the question whether the applicant company was to be characterised as a traditional publisher or an intermediary. A publisher was liable for all content published by it regardless of the authorship of the particular content. However, the applicant company insisted that it should be regarded as an intermediary and it had as such been entitled to follow the specific and foreseeable law limiting the obligation to monitor third-party comments. It argued that intermediaries were not best suited to decide upon the legality of user-generated content. This was especially so in respect of defamatory content since the victim alone could assess what caused damage to his reputation.“[27]

Nevertheless, the Grand Chamber basically confirmed the Chamber and national courts’ judgments by coming to the conclusion:

„In connection with the question whether the liability of the actual authors of the comments could serve as a sensible alternative to the liability of the Internet news portal in a case like the present one, the Court is mindful of the interest of Internet users in not disclosing their identity. Anonymity has long been a means of avoiding reprisals or unwanted attention. As such, it is capable of promoting the free flow of ideas and information in an important manner, including, notably, on the Internet. At the same time, the Court does not lose sight of the ease, scope and speed of the dissemination of information on the Internet, and the persistence of the information once disclosed, which may considerably aggravate the effects of unlawful speech on the Internet compared to traditional media. It also refers in this connection to a recent judgment of the Court of Justice of the European Union in the case of Google Spain and Google, in which that court, albeit in a different context, dealt with the problem of the availability on the Internet of information seriously interfering with a person’s private life over an extended period of time, and found that the individual’s fundamental rights, as a rule, overrode the economic interests of the search engine operator and the interests of other Internet users […].“[28]

And

„[f]inally, turning to the question of what consequences resulted from the domestic proceedings for the applicant company, the Court notes that the company was obliged to pay the injured person the equivalent of EUR 320 in compensation for non-pecuniary damage. It agrees with the finding of the Chamber that this sum, also taking into account the fact that the applicant company was a professional operator of one of the largest Internet news portals in Estonia, can by no means be considered disproportionate to the breach established by the domestic courts […].“[29]

C. Interpretation and Context

Considering its institutional aspect the numerous and close references of the Grand Chamber of the ECtHR to EU law and CJEU jurisprudence indicates that at least in the digital space there exists a single space of human rights protection in Europe. Keeping in mind the cumbersome negotiation process concerning the EU’s accession to the ECHR this leaves some hope for a more integration-friendly future which is more strongly oriented at practical necessities than institutional battle.[30]

Materially, the Delfi case refers to the question of “self-censorship” and asks if we have to fear a future where “chilling effects” become part of the everyday experience in the online world.[31] The fact that modern information processing makes surveillance much easier than in the past results in new challenges. The concepts of liberty and freedom have to be emphasized more strongly and updated in the modern context in order to remain intact. Our societies have to create new spaces where it can be expected that no one interferes in the private sphere and where not having to show an expected status quo at any point in time is necessary. Put simply: There needs to be a part in everybody’s life where polarizing – not illegal ­ behavior is possible and accepted.

However, it is also important to emphasize that information networks now are strongly integrated into the lives of their users. With more power comes more responsibility. The fact that a news portal of national importance can be run through the internet also means that it has to be able to live up to the same standards of accountability as traditional media. This is probably the strongest argument why the judgment of the ECtHR was essentially right. The professionalism of Delfi combined with the moderate and proportionate punishment leave the impression of a sound overall evaluation of the situation.

Ultimately, the question remains what Delfi v. Estonia will or should be remembered for. Considering the special circumstances of the case involving much more resources and professionalism than when it comes to the exchange of views via the Internet it seems unlikely that it will set a precedent outside of the world of professional journalism. It would be surprising if the ECtHR and even national courts would had decided in the same way if not a medium of national importance was the place where the unlawful comments were posted. If Delfi had, for example, been a small private weblog of a person or a social community or forum things would have been different. The impact of the comments would not have been that serious.

The actual lesson to be learned from this case is that we live in an age where it is not only important whether (sensitive) data is accessible or not. The question is more and more how easily and through which means it is accessible. This aspect is largely determined by the fact how intermediaries are positioned to process the relevant piece of data and under which regulatory circumstances they are required to interfere. In which scenarios will their social responsibility to protect privacy and the dignity of a person be more important than their duty to enable the free movement of data, thoughts and speech? In order to find the right answer to this question a complex balancing process is needed which can only be successfully concluded by looking at the potential scenarios and concrete cases. There is a strong need for differentiation between the different contexts of data processing.

————————————————-

[1] Mag. Dr. Oskar Josef Gstrein, LL.M. is an Assistant Professor at the Department of Governance and Innovation of Campus Fryslân, where he is also member of the Data Research Centre. His PhD-Thesis is on the topic “The Right to be Forgotten as a Human Right”.

[2] McLuhan, Understanding Media: The extensions of Man, Mentor, 1964, New York, Chapter 1, p. 1: “In a culture like ours, long accustomed to splitting and dividing all things as a means of control, it is sometimes a bit of a shock to be reminded that, in operational and practical fact, the medium is the message.”

[3] Rashid, Surveillance is the Business Model of the Internet: Bruce Schneier, via: https://www.schneier.com/news/archives/2014/04/surveillance_is_the.html – accessed 24.07.2015.

[4] Cf. Microsoft Digital Single Market Communication Response, via: http://mscorp.blob.core.windows.net/mscorpmedia/2015/07/Microsoft-Digital-Single-Market-Communication-Response-FINAL-17-July-2015.pdf – accessed 24.07.2015.

[5] EDPS, Opinion 3/2015, Europe’s big opportunity, p. 9, via: http://bit.ly/1SJrGSq – accessed 28.07.2015.

[6] http://ec.europa.eu/priorities/digital-single-market/ – accessed 24.07.2015.

[7] Merkel said: „Europa – hier spreche ich für ganz Europa, das im Augenblick weder Google, Apple, Facebook noch andere solche Unternehmen hat – darf sich nicht nur auf seine industrielle Wertschöpfung konzentrieren, sondern muss auch darauf achten, geeignete Rahmenbedingungen zu schaffen, um große Datenmengen so zu verarbeiten, dass die Individualität geschützt ist. Darüber wird zurzeit in Europa diskutiert. Deshalb sollten wir nicht nur ablehnen, sondern wir sollten uns auch überlegen, wie wir im Konsumentenbereich noch mehr eigene europäische Unternehmen bekommen und Start-ups fördern können. Denn wir sind hierbei im Augenblick im weltweiten Vergleich nicht vorne dran.“ Rede von Bundeskanzlerin Merkel zum Deutschen Evangelischen Kirchentag am 5. Juni 2015, via: http://www.bundeskanzlerin.de/Content/DE/Rede/2015/06/2015-06-05-rede-merkel-kirchentag.html – accessed 24.07.2015.

[8] CJEU, C‑293/12 and C‑594/12, Digital Rights Ireland, Kärntner Landesregierung, ECLI:EU:C:2014:238, cf. my Blog Post in German via: https://jean-monnet-saar.eu/?p=314 – accessed 24.07.2015.

[9] Media often wrongly refers to this as the „right to be forgotten“ judgement. However, the right to delist information is not about the deletion or erasure of information. It only limits access. Cf. CJEU, C-131/12, Google Spain SL and Google Inc. v Agencia Española de Protección de Datos (AEPD) and Mario Costeja González, ECLI:EU:C:2014:317. Also compare the Art 29 working group guidelines on the implementation accessible via: http://ec.europa.eu/justice/data-protection/article-29/documentation/opinion-recommendation/files/2014/wp225_en.pdf – accessed 24.07.2015. And finally a report on the success of the right to delist information from the 18.06.2015 via: http://ec.europa.eu/justice/data-protection/article-29/press-material/press-release/art29_press_material/20150618_wp29_press_release_on_delisting.pdf – accessed 24.07.2015.

[10] http://www.europe-v-facebook.org/ – accessed 24.07.2015.

[11] CJEU, C-362/14, Reference for a preliminary ruling from High Court of Ireland (Ireland) made on 25.06.2014 – Maximillian Schrems v Data Protection Commissioner.

[12] CJEU, C-360/10, Belgische Vereniging van Auteurs, Componisten en Uitgevers CVBA (SABAM) v Netlog NV, ECLI:EU:C:2012:85.

[13] CJEU, C-314/12, UPC Telekabel Wien GmbH, ECLI:EU:C:2014:192.

[14] Cf. Gasser, Schulz (editors), Governance of Online Intermediaries: Observations from a Series of National Case Studies, Berkman Center Research Publication No. 2015-5, via: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2566364 – accessed 24.07.2015.

[15] Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‚Directive on electronic commerce‘), Official Journal L 178 , 17/07/2000 P. 0001 – 0016, via: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32000L0031:en:HTML – accessed 28.07.2015. Cf. Woods, Delfi v Estonia: Curtailing online freedom of expression?, via: http://eulawanalysis.blogspot.de/2015/06/delfi-v-estonia-curtailing-online.html – accessed 28.07.2015.

[16] ECtHR, Delfi AS v Estonia, App. No. 64569/09, 16.06.2015.

[17] http://www.delfi.ee/ – accessed 28.07.2015.

[18] ECtHR, Delfi AS v Estonia, Mn 16.

[19] Ibidem, Mn 17.

[20] Ibid., Mn 16.

[21] Ibid., Mn 18.

[22] Ibid., Mn 19.

[23] Ibid., Mn 31.

[24] Ibid., Mn 32.

[25] ECtHR, Delfi AS v Estonia, App. No. 64569/09, 10.10.2013. via: http://hudoc.echr.coe.int/eng?i=001-126635 – accessed 28.07.2015; Cf. Synodinou, Intermediaries‘ liability for online copyright infringement in the EU: evolutions and confusions, Computer Law & Security Review, 2015, 31(1), p. 57 – 67; McCarthy, Is the writing on the wall for online service providers? Liability for hosting defamatory user-generated content under European and Irish law, Hibernian Law Journal, 2015, 14, p. 16 – 55.

[26] ECtHR, Delfi AS v Estonia, App. No. 64569/09, 16.06.2015, Mn 68.

[27] Ibid., Mn 66.

[28] Ibid., Mn 147.

[29] Ibid. Mn 160.

[30] Cf. the Blog posts on the topic: https://jean-monnet-saar.eu/?p=690 – accessed 28.07.2015; https://jean-monnet-saar.eu/?p=745 – accessed 28.07.2015.

[31] Cf. Cox, Delfi v. Estonia: Privacy Protection and Chilling Effect, via: http://www.verfassungsblog.de/en/delfi-v-estonia-privacy-protection-and-chilling-effect/ – accessed 28.07.2015.

Suggested Citation: Gstrein, Oskar Josef, Case analysis of the ECtHR judgment in Delfi AS v. Estonia (app. No. 64569/09), jean-monnet-saar 2015, DOI: 10.17176/20220308-165318-0

A Fervent Call For An Immediate Sovereign Debt Restructuring Plan for Greece

A response to the current situation and thoughts on a possible solution

by Kanad Bagchi[1]

Amidst the worsening situation in Greece, the IMF on 14th July updated its preliminary debt sustainability analysis on the country’s public debt, classifying the same as “highly unsustainable”.[2] The alarming tone of the present report reflects the dramatic change of events in the last two weeks characterized by bank closures and capital controls, further strangling an already distraught economy. It documents public debt in Greece to hover close to 200 percent of GDP in the following two years, significantly above earlier projections of 124 percent by 2020 and suggests that far reaching measures are required to be undertaken as opposed to what is being currently considered within EU circles. The timing of the report is also crucial especially in the light of the recent agreement among the Eurozone Member States (“MS”) to back Greece with a new bridge loan of 7 Billion euro and ECB’s pledge to raise the limit for its Emergency Liquidity Assistance to Greek Banks.[3] In addition to that a new round of deliberations is slated to begin between the EU partners and Greece over a possible third bailout to the tune of 86 Billion to be disbursed in the next three years. As much as the EU and more generally the world economy would like to extricate a speedy solution to the present crisis, it is important to unwind and take a leaf out of history to consider the efficacy and suitability of the above mentioned approach. In this regard, the author is poignantly reminded of the events in the year 2012, when Greece, after an unwarranted and potentially disastrous period of delay and political indecisiveness was finally subjected to a debt restructuring exercise of magnanimous proportions. It envisioned a 53.5% reduction in face value of the principal amount of 135 bond series, along with the exchange of new low-coupon Greek bonds with maturities of 11 to 30 years for the remaining 31.5%. Along with that two-year ESFS notes were substituted for the rest of the 15% of the face value of the bonds. In the end, several estimates put the total loss to investors to the tune of 70 – 75% of the Net Present Value of the bonds. Despite repeated calls from the IMF to trigger the process of debt restructuring as early as 2011 in return for further contributions, the EU remained in abject denial and continued negotiations on a lighter version of a ‘private sector involvement’ which ultimately was never put into force. Scholars have claimed that a restructuring of Greek debt towards mid 2011, by which time, an exercise of that nature was deemed unavoidable could have saved an additional 10 billion Euros.[4] The IMF had consistently expressed concerns regarding Greece’s debilitating finances and the urgency of debt relief only to receive severe resistance from both the ECB[5] and EU leaders. Consequently, in what was termed as an exercise, which was ‘too late and too little’,[6] despite being a debt restructuring operation of unprecedented proportions, both as regards its total amount and creditor losses, left much to be desired for. The hurried restructuring was inadequate in its design and cumbersome in its execution, resulting in unmitigated losses and exposed EU taxpayers to immense uncertainty and danger. Several studies post the 2012 restructuring have highlighted that ‘delay’ and ‘self denial’ were the two most prominent reasons for the restructuring’s ineffectiveness in putting Greece on the path of debt sustainability.

The prevailing situation in many aspects displays an uncanny similarity to the yesteryears and calls for a careful consideration of various options available to Greece and the EU. In this regard, the present IMF report meticulously considers three possible alternatives in the circumstances, which presently confound EU and Greece. First, a rescheduling of the total outstanding EU debt with extreme grace periods to the tune of 30 years. Second, direct annual transfers to the government budget of Greece and as a third measure, ‘deep upfront haircuts’ or a face value write off. While debt rescheduling appears to be the most politically viable alternative, especially in the current friable dynamics in the EU, it leaves much to chance and even more to wavering political compulsions in Greece. It is anybody’s case that even after two bailouts and a massive debt restructuring entailing a voluntary write-off to the tune of 53.5% of face value of the bonds, Greek debt as it stands today still remains unsustainable. Further, a third bailout with resulting fiscal and budgetary conditionality’s increases the tendency of Greece inching towards and remaining in the ‘high-debt and low-growth trap’. The constraints of the Economic and Monetary Union, pose a veritable obstacle in considering the second option, that of direct transfers to a MS budget, Greece in the present case, without further European Integration in the form of a Fiscal Union. A second debt restructuring, however, is both economically prudent and most likely imminent to ward off a continuing crisis in the medium to longer term. With respect to this, the author finds himself in good company, in as much as the IMF also disputes the medium and long-term sustainability of Greek debt in the absence of a consensus on some form of debt restructuring.[7] Unlike the 2012 operation, any attempt at a restructuring in the present circumstances is likely to be limited in its complexity in so far as, a significant portion of its debt is held by EU institutions, different MS and the European Financial Stability Facility. Therefore collating the various creditors groups and hammering out a suitable deal is far more feasible and way more efficient. Further, any debt restructuring plan, in the present circumstances is unlikely to be inhibited either by collective action problems or funding constraints as most of Greek debt is held by the official sector and commitments are underway for additional financial support.

In this regard, the author ardently calls upon EU leaders to earnestly explore the option of a further restructuring exercise in the light of current projections regarding Greece’s short terms and long term debts. Eurozone MS have so far displayed great resilience towards Greek fallibility, and the recent offer of a bridge loan is a further indication of their pledge to preserve the Euro and salvage Greece. In IMF’s estimation, even with an additional 85 billion Euros in loans to Greece over the next three years, its debt would still remain unsustainable unless certain extraordinary steps are undertaken. A suitable debt restructuring at this intervening stage, could potentially provide Greece with a much needed breather and allow it to wholeheartedly implement its past reform pledges. So far along with the IMF, both the US Treasury and even Mr. Schäuble, the German Finance Minister have acknowledged that any debt relief package for Greece has to resemble not just a simple debt rescheduling, but also some form of debt reduction.[8] Germany, despite such express acknowledgment remains uncompromising on the question of debt reduction and insists for an unprecedented alternative of a ‘time out’ for Greece from the Eurozone. In its support, Germany claims that a debt ‘haircut’ would tantamount to a breach of Art. 125 (1) TFEU. On the contrary, however, it is submitted that neither a reading of the treaties nor a perusal of ECJ case law supports that conclusion. Art. 125 (1) prohibits the Union or a MS from either exposing itself to any liability, or from assuming the commitments of other central governments, Greece in the present case. The ECJ in Pringle[9] had already ruled that the inherent objective of Art 125 (1) was to ensure that MS do not become complacent in maintaining a sound budgetary policy. The Court on that basis approved ESM loans as compatible with the article as strict budgetary conditions were a part of the package consisting of ESM loans. With respect to this any debt restructuring exercise inevitably involves an agreement on a number of conditions, mostly unpleasant and painful, between the creditors and the debtor state. Austerity measure, tax increases, government job cuts, labor law reforms and liberalization of key industries, only to name a few, are constituent elements of any debt restructuring operation, the sole objective of which is to ensure that the MS are not inclined to disregard the maintenance of sound budgetary policy. Therefore, an argument suggesting that any debt restructuring plan simplicitor, is a violation of Art 125 (1) is to impute a meaning to the article which the treaty does not envisage. What is crucial however is to evaluate the conditions appended to the debt restructuring plan and assess whether those conditions result in weaning MS from pursuing sound budgetary policy. It is urged that a possible debt restructuring, which is manifesting itself to be both unavoidable and imminent, requires the Eurozone’s immediate attention and unwavering commitment, lest it may find itself in similar debacle as it did in 2012. Moreover, it is crucial to take the IMF, with its resources and expertise, on board with respect to any future bailout mechanism in the EU, a commitment that it is only willing to make in the event of a debt restructuring for Greece. In the face of tremendous market speculation and investor fright, a debt restructuring commitment on the part of EU would send out an unambiguous message that the ‘Union’ is here to stay and that the present crisis is only a temporary impediment against the pledge of an ‘Ever closer Union’.

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[1] Kanad Bagchi (kanad.bagchi@gmail.com) was formally a research assistant at Europa-Insitut, Universität des Saarlandes, Germany. Currently he is preparing to continue his studies at Oxford. Views of the author are his own and should not be imputed to the institution he used to represent.

[2] “An Update of IMF Staff’s Preliminary Public Debt Sustainability Analysis”, IMF Country Report No. 15/186. Can be accessed here.

[3] “Greece debt crisis: Eurozone backs €7bn bridging loan”, BBC 16th July 2015. Can be accessed here.

[4] Jeromin Zettelmeyer, Christoph Trebesch, & Mitu Gulati, ‘The Greek Debt Restructuring: An Autopsy’, (PIIE Working Paper series, WP 13 – 8 (August 2013)). Can be accessed here.

[5]See ‘ECB warns against private role in bail-outs’, Financial Times, 13th October, here; Sylvester Eijffinger & Lex Hoogduin, ‘The ECB in (the) crisis’, DSF Policy Paper Series, No. 22 (June 2012).

[6] Xafa, Miranda “Lessons from the 2012 Greek debt restructuring”, VOX Portal 25th June 2014. Can be accessed here.

[7] “IMF Director Christine Lagarde sees hope for Greek debt restructure”, Economic Times 16th July 2015. Can be accessed here.

[8] “Germany’s Tone Grows Sharper in Greek Debt Crisis”, The New York Times 16th July 2015. Can be accessed here.

[9] Thomas Pringle v. Ireland, Case C 370/12, para 53. (Hereinafter referred to as ‘Pringle case’). Can be accessed here.

Suggested Citation: Bagchi, Kanad, A Fervent Call For An Immediate Sovereign Debt Restructuring Plan for Greece, jean-monnet-saar 2015, DOI: 10.17176/20220308-165050-0

The inconsistent guardians of Human Rights in the Digital Age – Differing Standards and a Missed Opportunity

Analysis of the ECJ Opinion in Willems and Others (C-446/12 to C-449/12)

by Kanad Bagchi and Oskar Josef Gstrein[1]

I. Introduction

On the 16th of April 2015 the Court of Justice of the European Union (hereinafter ‘CJEU’/‘ECJ’/‘Court’) handed down its opinion[2] on the interpretation of Regulation No. 2252/2004[3]. In essence, the Regulation provides for the collection, storage and use of biometric data by Member States (hereinafter ‘MS’) for the purposes of issuing passports and other related travel identity documents.[4] The present case arose in the context of Mr Willems and others refusing to provide the Netherlands authorities with their digital fingerprints and as a result being denied passports and other national identity cards. In addition to collecting and using data for the purposes of the Regulation, the Netherlands Passport Law sought to use the same for other purposes including, detection and prosecution of criminal offences, conduct of investigations etc. Among other concerns, the applicants claimed that collecting and using data for purposes unrelated to the above Regulation constituted an infraction of their rights under the Charter of Fundamental Rights of the European Union (hereinafter referred to as ‘Charter’). A connected question was whether MS while exercising their discretion in the further use of the data collected in pursuance of the Regulation, are to follow the dictates of Articles 7 and 8 of the Charter and Directive 95/46[5]. Against that background, the third question referred to the CJEU, and with which the authors are most immediately concerned, was paraphrased by the ECJ as:

“…By those questions, which it is appropriate to examine together, the referring court asks essentially whether Article 4(3) of Regulation No 2252/2004, read together with Articles 6 and 7 of Directive 95/46 and Articles 7 and 8 of the Charter, must be interpreted as meaning that it requires Member States to guarantee that the biometric data collected and stored pursuant to that Regulation will not be collected, processed and used for purposes other than the issue of passports or other travel documents…”

In the first instance, the CJEU made a distinction between ‘use’ of biometric data for the purposes as prescribed in the Passport Regulation as such, and the ‘use’ of the same for purposes outside the scope of the Regulation. As regards the first, the Court deferred to its previous decision in Schwarz[6] to underline the compatibility of the Passport Regulation as against Articles 7 and 8 of the Charter. It is in relation to the use and storage of biometrics for purposes alien to the Regulation, that the Court did a significant U-turn from some of its previously decided cases, more particularly from its decision in the Digital Rights case.[7] It held that the Passport Regulation does not determine the use and storage of data by MS for purposes falling outside the scope of the same and hence by a narrow reading of Åkerberg Fransson,[8] the Charter rights relating to Article 7 and 8 do not apply to such exercise of discretion. In the words of the Court, “…Given that, in the present case, Regulation No 2252/2004 is not applicable, there is no need to determine whether the storage and use of biometric data for purposes other than those referred to in Article 4(3) thereof are compatible with those articles of the Charter…”[9] Accordingly, the Court considered that the validity of national measures going beyond the scope of the Passport Regulation has to be examined as against the relevant national law alone, and not against the provisions of the Charter. While the opinion has received a scathing attack from both Steve Peers[10] and Eduardo Gill-Pedro[11] on various counts, this article focuses on the irreconcilable position of the Court in the light of the principles as reiterated in the Digital Rights case.

II. Digital Rights and The Appropriate Standard To Test Proportionality and Necessity of an EU Measure

In Digital Rights the Court was invited to rule on the validity of the Data Retention Directive[12] as against inter alia, Articles 7 and 8 of the Charter. The main objective of the Directive was as follows:

This Directive aims to harmonise Member States’ provisions concerning the obligations of the providers of publicly available electronic communications services or of public communications networks with respect to the retention of certain data which are generated or processed by them, in order to ensure that the data are available for the purpose of the investigation, detection and prosecution of serious crime, as defined by each Member State in its national law.” [13]

The Court established that the combined effect of Art. 3 to 6 of the Directive whereby providers of communication networks were under an obligation to retain, although for a limited duration, and eventually share data so retained, with MS authorities for the purposes of the Directive, was a prima facie infraction of Art. 7 of the Charter. Art. 8 of the Charter also stood infringed, in the mind of the Court, in view of the Directive’s data processing obligations.[14] It is important to note that the Court considered the Directive’s interference as “…particularly serious…”[15] in the light of its invasive overturns. Thereafter the Court proceeded to assess whether the measures were proportional and necessary. Arguing for a strict scrutiny of legislative discretion for interference with the right to respect for private life, the Court derived that the measures as contained in the Directive does not muster the threshold of ‘necessity’, in as much as, it was unreasonably wide to include within its fold “…all means of electronic communication as well as all traffic data without any differentiation, limitation or exception being made in the light of the objective of fighting against serious crime…”[16] Two other facets of the Directive which weighed negatively in the Court’s assessment concerned the imprecise scope of its application coupled with inadequate safeguards, and the absence of any guidelines to determine the continuity and limits of the powers of the national authorities. It is instructive to reproduce the relevant paragraphs in full:

54. Consequently, the EU legislation in question must lay down clear and precise rules governing the scope and application of the measure in question and imposing minimum safeguards so that the persons whose data have been retained have sufficient guarantees to effectively protect their personal data against the risk of abuse and against any unlawful access and use of that data…”

60. Secondly, not only is there a general absence of limits in Directive 2006/24 but Directive 2006/24 also fails to lay down any objective criterion by which to determine the limits of the access of the competent national authorities to the data and their subsequent use for the purposes of prevention, detection or criminal prosecutions concerning offences that, in view of the extent and seriousness of the interference with the fundamental rights enshrined in Articles 7 and 8 of the Charter, may be considered to be sufficiently serious to justify such an interference. On the contrary, Directive 2006/24 simply refers, in Article 1(1), in a general manner to serious crime, as defined by each Member State in its national law…”

Additionally, the Directive was admonished on the ground that it was silent not only as regards prescribing limits on MS authorities, but also bereft in imposing an obligation on the MS concerned, to provide for limits to their own competences.[17] In consequence, the Directive was declared to be invalid, as “…the EU legislature has exceeded the limits imposed by compliance with the principle of proportionality in the light of Articles 7, 8 and 52(1) of the Charter…”[18]

In that backdrop, the next section of the article addresses the conspicuous judicial austerity of the Court with respect to the Passport Regulation, which in the opinion of the authors suffers from similar infirmities as the Data Retention Directive.

III. Differing Standards and a Missed Opportunity

In Digital Rights the Court displayed an acute concern, and validly so, at ensuring both the substantive and procedural rights as enshrined under Art. 7 and 8 of the Charter. A detailed two-step analysis was followed in determining the validity of the Data Retention Directive as against the Charter rights. The first step comprised of an enquiry as to the nature and extent of the infraction and the appropriate question to be asked was whether the “essence” of the rights was adversely affected. Since the Directive prohibited both the screening and acquiring of the specific content of the communication, it was declared not to adversely affect the essence of the right to respect for private and family life. Similarly, the right to protection of personal data was ensured through the Directive’s mandatory requirements pertaining to data protection and security as contained in the Data Protection Directive.[19] Having passed the first step, it is at the second stage of the enquiry that the Directive was declared incompatible with Art. 7 and 8 of the Charter. The second stage required the measures contained in the Directive to be both ‘proportional’ and ‘necessary’ in light of the mandate under Art. 52 (1) of the Charter and CJEU’s own jurisprudence. The Directive fell short on both counts, insofar as it contained imprecise rules on the one hand, governing the application of the Directive, and on the other, insufficient and inadequate safeguards to prevent abuse and misuse of the data so collected. AG Villalon in his insightful opinion in Digital Rights reached a similar conclusion, however employing a slightly different approach. He argued for a similar requirement of precision in EU legislation and termed the same as “…the quality of law requirements…”, meaning that the law “…must go beyond a purely formal requirement and cover also the lack of precision of the law…”,[20] and on that basis declared the whole Directive to be incompatible with Art. 52 (1) of the Charter.

As against that, it is surprising to notice the near absence of either judicial rigor or striking concern with respect to EU Passport Regulation’s imprecise scope and discretionary latitude as observed in the present case. Aside from delving into the ancillary question of whether the Netherland’s Passport law fell within the scope of Regulation, the Court’s indifference in subjecting the EU Passport Regulation to the mores of the Charter rights, is both disheartening and worrisome. In this regard, it is reasonable to argue that the impugned EU Passport Regulation woefully falls short of the standard that the Charter prescribes. It entrusts MS with an extraordinary amount of biometric data without providing for any safeguards as to the ultimate use of the same, once the MS have fulfilled their obligations under the Regulation. It allows the data collected in pursuance of the Passport Regulation, with a defined set of objectives and scope, to be instantaneously transformed into an instrument of state invasion, the moment MS act beyond the contours of the Regulation. Art. 7 and 8 of the Charter, contain within, as the court has noted, an obligation to ensure that data collected not misused or abused. Requirements of ‘necessity’ and ‘proportionality’, ordain that discretion as regards the collection and use of personal data is limited to the purposes of achieving the objectives of the measures alone, beyond which, any further use would be an infraction of the above principles.[21] It is submitted that, procedural Charter rights dictate not only the collection and use of the data undertaken in pursuance of the Passport Regulation, but also its ultimate use per se and it is in this connection, that the Passport Regulation does not meet the standards prescribed under the Charter. A connected concern arising from the above set of facts is that the standard of protection of biometric data is made dependent on their intended use. While the Charter standards apply when biometric data is collected and used in pursuance of the Passport Regulation, differing national standards will apply for its use in all other cases. Legal conundrums aside, contrasting standards present an undesirable path with respect to the ever evolving Regulations designed to protect the right to privacy and family life.

What is equally intriguing is that the Court upon declaring the Charter to be inapplicable to acts undertaken by MS outside the scope of the Regulation, made no overtures to test the validity of the Regulation itself.[22] Indeed in Schwarz, the Court had the occasion to rule on the question of ‘further use’ of the data collected in pursuance of the Passport Regulation; nonetheless, the decision was limited in its scope and effect. The referring court was skeptical with respect to the proportionality of the measures taken under the Regulation, which allowed for the data to be used for any other purpose otherwise than what is required for under the Regulation. However, the Court brushed aside such apprehensions by disassociating the question of validity of the Regulation from the impending risks arising out of further use of the data.[23] The validity of the Regulation having thus been established in Schwarz, the referring court in Willems was compelled to withdraw a renewed agitation of the same issue and retain only the question as regards the appropriate interpretation of Art. 4 (3) of the Regulation in light of the Charter.[24] It is argued that the Court had a wonderful opportunity to pick up from where it had left in Schwarz. While maintaining its ruling on the validity of Art. 1 (3) of the Regulation in Schwarz, it could have arguably insisted on an interpretation of Art. 4 (3) to reflect the applicants’ concern. In this manner, the EU Passport Regulation would continue to remain irreproachable so far as its intended scope and effect, as decided in Schwarz, however, Art. 4 (3) could be suitably interpreted to ensure that data collected in pursuance of the Regulation is not completely surrendered in the hands of the MS.

Considering the broader picture of fundamental rights protection in the EU and the position of the CJEU in the system, the present Opinion exposes the dangers of inconsistent approach as undertaken by the Luxembourg judges in relation to protection of citizens’ rights. As has been already laid out in this article, the CJEU in Digital Rights did not hesitate to extend the material and formal scope of Art 7 and 8 of the Charter when there was valid implication to do so. Also the much discussed decision in Google Spain[25] seemed to promise a more proactive stance of the Court in relation to the promotion of Human Rights of Europeans, a concern of utmost importance, especially in the digital age.

In the light of Willems, it is submitted that one has to carefully consider and differentiate between, on the one hand, rights with a strong ‘material’ component, like the right to life in Art 2 or the prohibition of torture in Art 3 and procedural constitutional guarantees, on the other. With respect to ‘material’ rights as such, it is evident that the emphasis of protection is on the guarantee itself, and it is likely that the Court and the European Institutions will apply a strong standard of harmonization when it comes to the realization of such guarantees. As an example one can refer to Commission President Juncker’s reaction to the discussion in Hungary about re-introducing death penalty in the country. Prime Minister Orbán was forced to clarify his comments on the death penalty, upon being threatened by Juncker with adverse consequences as regards Hungary’s rights within the Union. However, procedural constitutional guarantees, in essence, define the basic order of a state or a state institution. One can think of the values that the EU incorporates under Art. 2 TEU, the principles of conferral, subsidiarity and proportionality enshrined under Art. 5 or the reference to the political model of representative democracy in Art 10 TEU as suitable instances of the above. Since the EU is still a far cry from being a federation, one is not surprised that only a limited number of such provisions exist in the EU treaties as opposed to the constitution of MS.

But Willems questions if this is always desirable, especially from the point of view of the individual concerned. The approach of the judges in the decision works from a rational and strictly formalistic perspective. Nevertheless, it must be qualified as only a half-hearted attempt to entrench constitutional guarantees as against Court’s approach in Åkerberg Fransson and Melloni[26]. One can argue that the “ne bis in idem” principle as applied in Åkerberg Fransson is a veritable instance of enforcement of procedural constitutional guarantees at the level of the EU.

Following the same approach, one could have expected the Court to make a veiled reference to the ‘principle of legality’ as can be found in Art 20 par. 3 of the German Basic Law. Arguably, the difference between the ‘ne bis in idem’ principle and the principle of legality only concerns their antiquity. While the right not to be punished twice for the same offense existed since Roman times,[27] the principle of legality is a newer phenomenon. It is therefore not surprising that MS readily agreed to incorporate the ‘ne bis in idem’ principle in Art. 50 of the Charter, however, no such significant discussions were held as regards the ‘principle of legality’. Hence, it is rather difficult to extrapolate on a verifiable legal base for the principle of legality as a part of the EU legal order. Nonetheless, it is argued that since Art. 6 (3) TEU explicitly refers to “constitutional traditions common to member states’, the Court had the opportunity to consider that the Passport Regulation was deficient in the face of such a principle. A decision in that regard, would have been in tandem with the jurisprudence of the CJEU in fundamental rights issues, and would foster the Court’s position as a true guardian of Human Rights in Europe. An individual could reply on the judicial oversight of the Court, not only with respect to material and traditional procedural constitutional guarantees, but also when basic and commonly existent legal concepts such as the rule of law and its forms are in question.

One wonders if the formalism displayed by the Court is to be understood as a result of the criticism of the recent proactive stance taken by the Luxembourg judges in fundamental rights issues. Quite famously and to give just one example the German Constitutional Court immediately decried the approach of the Court Åkerberg Fransson in its Antiterrordatei decision.[28] In what was a very meticulously drafted reference to the CJEU in Willems, the referring court was prodding the question of the Passport Regulation’s validity, or in the alternative an interpretation of the Regulation consistent with the Charter Rights. The CJEU however, veered the argumentation from considering the infirmities in the Passport Regulation as such to an examination of the national legislation and whether the same was sanctioned by the Regulation.

The authors argue that the response of the Court does not clearly address the reference as was put to it. The reference was directed at the validity and interpretation of the Passport Regulation, whereas the Court concluded its opinion on the application of the Charter in relation to MS acting beyond the scope of the Regulation. In what can be characterized as an exercise in conscious indifference towards the frailties of the EU’s Passport Regulation, the present Opinion raises more questions than it answers, and appears disturbingly, as a step back from the decision in Digital Rights or Google Spain. Only the future will show whether the CJEU will be able to become a pillar of the system of fundamental rights system in the European Union.

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[1] Kanad Bagchi (kanad.bagchi@gmail.com) was a research assistant at Europa-Insitut, Saarland University, Germany. Views of the author are his own and should not be imputed to the institution he represents. Mag. Dr. Oskar Josef Gstrein, LL.M. is an Assistant Professor at the Department of Governance and Innovation of Campus Fryslân, where he is also member of the Data Research Centre.

[2] ECJ Opinion in joined Cases C-446/12 to C-449/12, 16 April 2015 (hereinafter ‘Willems’s case’). Can be accessed here.

[3] Regulation (EU) No. 2252/2004 on standards for security features and biometrics in passports and travel documents issued by Member States, OJ 2004 L 385, p. 1 of 13 December 2004 (hereinafter ‘Passport Regulation’/‘Regulation’). Can be accessed here.

[4] In paras. 30 ff. the court expressly excluded identity cards from the scope of Regulation 2252/2004. Such cards are common in some member states of the EU, like the Netherlands or Germany (“Personalausweis”), and enable citizens to travel in some countries of the Union like Passports. Hence, it is not standard for citizens of these countries to hold passports. Nevertheless, in para. 40 the ECJ states: “However, it is clear from the wording of the second sentence of Article 1(3) of Regulation No. 2252/2004, interpreted in the light of the findings in paragraphs 32 to 37 of the present judgment, that the EU legislature expressly decided to exclude from the scope of that Regulation identity cards issued by Member States to their nationals.”

[5] Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data, OJ L 281 of 23/11/1995. Can be accessed here.

[6] ECJ Opinion in Case C-291/12, 17 October 2013 (hereinafter referred to as ‘Schwarz’). Can be accessed here.

[7] ECJ Opinion in Joined Cases C-293/12 and C-594/12, 8 April 2014 (hereinafter referred to as ‘Digital Rights’). Can be accessed here.

[8] ECJ Opinion in Case C‑617/10, 12 June 2012. Can be accessed here.

[9] Willems’s case, para 50.

[10] See Peers, Steve, ‘Biometric data and data protection law: the CJEU loses the plot’, EU Law Analysis Blog, 17 April 2015. Can be accessed here.

[11] See Gill-Pedro, Eduardo, ‘Joined Cases C-446/12 – 449/12 Willems: The CJEU washes its hands of Member States’ fingerprint retention’, EU Law Blog, 29 April 2015. Can be accessed here.

[12] Directive 2006/24/EC on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending Directive 2002/58/EC, OJ 2006 L 105, p. 54 (hereinafter referred to as ‘Data Retention Directive’). Can be accessed here.

[13] Data Retention Directive, Art. 1.

[14] Digital Rights, para 34 – 37.

[15] Digital Rights, para 37; Similar concern was expressed in Schwarz, See Schwarz, para 25 & 30.

[16] Digital Rights, para 57.

[17] “…Nor does it lay down a specific obligation on Member States designed to establish such limits…”, Digital Rights, para 62.

[18] Digital Rights, para 69.

[20] Willems’s case, Opinion of Advocate General Cruz Villalon, para 109. Can be accessed here.

[21] Data Retention Directive was declared invalid by the Court riding on a similar interpretation.

[22] It simply made a reference to the Schwarz case. See Willems’s case, para 46.

[23] Schwarz, para 62.

[24] Willems’s case, para 27.

[25] ECJ opinion in Case C-131/12, 13.05.2014, Google Spain and Google, (hereinafter ‘Google Spain’). Can be accessed here.

[26] ECJ opinion in Case C-399/11, 26.02.2013, ECLI:EU:C:2013:107. Also see Canor, “My brother’s keeper? Horizontal Solange: ‘An ever closer ‘distrust’ among the peoples of Europe’, Common Market Law Review, 50, p. 383 – 422, 2013, p. 420 f.

[27] Gstrein/Zeitzmann,“Die ‚Åkerberg Fransson‚Ne bis in idem‘ als Wegbereiter für einen effektiven Grundrechtsschutz in der EU?‚ZEuS, 2/2013, p. 239 – 260, p. 240 f.

[28] 1 BvR 1215/07, 02.03.2013, ECLI:DE:BVerfG:2013:rs20130424.1bvr121507. In Section C the judges in Karlsruhe state in the last paragraph: „Accordingly, for the questions that were raised, and which only concern German fundamental rights, the European Court of Justice is not the lawful judge according to Art. 101 sec. 1 GG. The ECJ’s decision in the case Åkerberg Fransson (ECJ, judgment of 26 February 2013, C-617/10) does not change this conclusion. As part of a cooperative relationship between the Federal Constitutional Court and the European Court of Justice (cf. BVerfGE 126, 286 <307>), this decision must not be read in a way that would view it as an apparent ultra vires act or as if it endangered the protection and enforcement of the fundamental rights in the Member States (Art. 23 sec. 1 sentence 1 GG) in a way that questioned the identity of the Basic Law’s constitutional order (cf. BVerfGE 89, 155 <188>; 123, 267 <353 and 354>; 125, 260 <324>; 126, 286 <302 et seq.>; 129, 78 <100>). The decision must thus not be understood and applied in such a way that absolutely any connection of a provision’s subject-matter to the merely abstract scope of Union law, or merely incidental effects on Union law, would be sufficient for binding the Member States by the Union’s fundamental rights set forth in the EUCFR. Rather, the European Court of Justice itself expressly states in this decision that the European fundamental rights under the Charter are “applicable in all situations governed by European Union law, but not outside such situations” (ECJ, judgment of 26 February 2013, C-617/10, para. 19).“

Suggested Citation: Bagchi, Kanad, Gstrein, Oskar Josef, The inconsistent guardians of Human Rights in the Digital Age: Differing Standards and a Missed Opportunity, jean-monnet-saar 2021, DOI: 10.17176/20220308-164834-0