Category Archives: EU Law

The ECB imposes a new strategy on the management of NPLs: a first analysis of the “Draft Guidance to Banks on Non-performing Loans”

Daria Sartori, PhD, Trainee Lawyer, Mercanti Dorio e Associati; Giulia Ferrari, PhD, Attorney-at-Law, Mercanti Dorio e Associati

Introduction

In general terms, non-performing loans (NPLs) are bank loans which are considered as unlikely to be paid back because of the debtor’s delay in paying the agreed instalments or interest for a certain amount of time.[1] When a loan is non-performing, banks must set aside capital on the assumption that the loan will not be paid back, thus reducing their capacity to provide new loans.[2] When banks are overburdened by NPLs, the entire economy suffers, one of the consequences being that privates will face difficulties in having access to credit.

Within the EU, the issue of NPLs has been a substantial one since the outbreak of the financial crisis of 2007-2008. At a macroeconomic level, the significant upward trend of NPLs has reflected the consequences of heightened unemployment, depreciated currency and tight financial conditions.[3] At bank level, the excessive amount of NPLs has been linked to poor loan underwriting, monitoring and control.[4]

NPLs are now specifically addressed by the “Draft guidance to banks on non-performing loans” (the Guide), drafted by the European Central Bank (ECB) and open to public consultation from 12 September to 15 November 2016. The Guide collects a number of best practices identified by the ECB in the course of its supervisory functions and relating to the issue of NPLs, defined as all exposures of banks which are held to be at risk of non-repayment according to EU standards.[5] While the Guide is not, technically speaking, a binding instrument, non-compliance with its standards may trigger the imposition of supervisory measures for credit institutions which, pursuant to Regulation n. 468/2014 of the European Central Bank of 16 April 2014, fall within the ECB’s scope of supervision (so-called “Significant Institutions”, or SIs).

The present contribution provides an overview of the Guide and highlights the main issues relating to the problem of NPLs at bank level.

Banking supervision within the EU

Following the financial crisis of 2007–2008, EU institutions have called for the creation of a “banking union”, ensuring the safety and soundness of the European banking system thorough increased financial integration and stability. The first step towards a banking union has been the creation of a Single Supervisory Mechanism (SSM), comprising the European Central Bank (ECB) and the national supervisory authorities of the participating countries. The SSM’s task is to ensure that EU policies and rules on the prudential supervision of credit institutions are implemented in a coherent and effective manner.

The ECB’s supervisory functions are exercised in accordance with the EU Capital Requirements framework, i.e. the Capital Requirements Regulation[6] and Capital Requirements Directive.[7] These instruments transpose into EU law the standards elaborated at international level by the Basel accords, and they confer on supervisory authorities the power of imposing measures.

With regard to the ECB, these measures range from less stringent (such as the power “to impose additional or more frequent reporting requirements”, pursuant to Article 16 of the Capital Requirements Regulation) to substantial ones (such as the power to impose pecuniary sanctions for non-compliance with ECB regulations or decisions, pursuant to Council Regulation (EC) No 2532/98 of 23 November 1998).

Whereas the Draft guidance to banks on non-performing loans is not an instrument allowing the ECB to impose sanctions, its standards represent the ECB’s supervisory expectation for the future and non-compliance may trigger supervisory measures,[8] such as those articulated by Article 16 of the Capital Requirements Regulation. Thus, the standards of the Guide can be considered as de facto binding for SIs, who should plan ahead interventions on their internal organization and policies in order to be able to meet the requirements by the time the Guide’s final version will be publicly available.

The ECB Draft guidance to banks on non-performing loans

On 12 September 2016 the ECB has launched public consultation on the “Draft guidance to banks on non-performing loans”. The consultation has been closed on 15 November 2016 but the comments received by the ECB have not been published yet, and the Guide itself is still in its draft version.

As mentioned above, the Guide collects a number of best practices relating to the issue of non-performing loans. It includes seven Annexes, providing samples of criteria and practices relating to every phase of the NPL life cycle.

The term “non-performing loans”, as used by the Guide, refers to non-performing exposures (NPE), as defined by the European Banking Authority (i.e., exposures satisfying either or both the “90 days-past-due” and “unlikely-to-pay” criteria),[9] as well as to foreclosed assets and performing exposures with an elevated risk of turning non-performing.[10]

According to the Guide, SIs must develop a specific NPL strategy, on the basis of a comprehensive assessment of the operating environment, i.e. of internal capabilities (self-assessment) and external conditions. The strategy thus elaborated must include targets relating to the development of operational capabilities and projected NPL reductions over the short (indicative 1 year), medium (indicative 3 years) and long-term line horizons. An operational plan must be developed accordingly, approved by the management body and reviewed at least annually. Credit institutions with high levels of NPLs are expected to report their NPL strategy and operational plan to the banking authority in the first quarter of each calendar year.

The strategy and plan must be embedded in processes at all levels of organization, and human resources must be organized accordingly. Thus, for instance, the NPL Guide requires the creation of separate NPL workouts units (WUs), dealing with NPLs along their life cycle and composed by staff members with dedicated NPL expertise and experience. Technical resources must be also implemented, including automated monitoring processes of the loan status, with early warning signals and reporting.

Credit institutions must implement effective and efficient control processes for the NPL workout framework, involving three lines of defence. The first line of defence comprises control mechanisms within the NPL workout units, ensuring that the NPL policy is adequately embedded in daily processes. The second line must ensure that the first line of defence operates effectively: it comprises risk management and compliance functions and requires continuous monitoring and reviewing of NPL operating model’s performance. The third line comprises the internal audit function, which must conduct regular (i.e., at least annual) assessments to verify adherence of the NPL framework to the NPL policy. Annex 5 to the Guide provides key elements of NPL framework-related policies (such as arrears management policy, forbearance policy, debt recovery/enforcement policy) that should be implemented by high NPL banks.

An entire chapter of the Guide is dedicated to NPLs secured by immovable property held as collateral.[11] In the past, delays in assessing the decline of real estate value have proved to affect substantially credit institutions’ balance sheets. In fact, a high number of NPLs is secured by immovable property, and the value of the latter may significantly change over time. The Guide requires regular monitoring and reviewing of the valuations for collaterals, carried out by independent and qualified appraisers in accordance with the requirements set forth by Article 208(3) of the Capital Regulation Directive. It emphasizes the importance of maintaining the valuations for collaterals in line with market changes: thus, while establishing a minimum regular interval for updates (one year for commercial immovable property, three years for residential), it also requires credit institutions to carry out more frequent valuations where the market is subject to substantial negative changes and/or where there are signs of significant decline in the value of the individual collateral. In this last regard, banks are also required to establish their own criteria for determining whether a “significant decline” has taken place.

With regard to NPL impairment measures and write-offs, the Guide encourages credit institutions to align consistently with the standards set out by the Capital Requirements Regulation and Capital Requirements Directive, even when the institution is part of a group and some units of the group are not located in the EU.

Internal organization and timely intervention on NPLs

The Guide stresses the importance of adequate internal organization and coherent NPL policies, allowing timely intervention on NPLs. These aspects are particularly significant when it comes to dealing with high value NPLs, whereby the sums involved are significant (usually, because the loan is granted to enterprises/corporations). In this case, a good management of NPLs can affect both the bank’s capacity to conduct businesses profitably and the good functioning of the overall economy.

With regard to high value NPLs, measures aiming to restructuring are more appropriate than enforcement measures. However, in order to be effective, restructuring must be timely and conducted by staff with adequate expertise and experience. Restructuring is a process to which banks frequently turn too late (when the exposure has significantly worsened, making it more difficult for the borrower to repay the entire debt). For this reason, the Guide’s focus on the organization of human resources and on the timely recognition of NPLs should be appreciated: an increased attention by credit institutions to these aspects can positively affect the economic growth.

Conclusion

In the light of the best practices collected by the ECB in the Draft guidance to banks on non-performing loans, credit institutions subject to the Single Supervisory Mechanism must tackle NPLs by assessing the operating environment, developing and implementing a specific NPL strategy and an operational plan.

The Guide’s focus on internal organization and timely intervention on NPLs is particularly appreciated, as it favours solutions to the main issues contributing relating to the problem of NPLs at the bank level.

Whereas the Guide is not a binding instrument, compliance with its standards may trigger the imposition of supervisory measures by the ECB on Significant Institutions. For this reason, SIs should plan ahead interventions on their internal organization and policies in such a way as to be compliant with the Guide’s standards by the time its final version will be publicly available.

[1] For a technical definition of NPLs, infra sub n. 7 and 8

[2] For a general overview of the topic, see the ECB’s explanation at: https://www.ecb.europa.eu/explainers/tell-me/html/npl.en.html

[3] IMF Working Paper of the European Department Non-Performing Loans in CESEE: Determinants and Macroeconomic Performance, by Nir Klein, March 2013, p. 3 (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2247224)

[4] ibid., p. 5

[5] Draft guidance to banks on non-performing loans, sub par 1.3

[6] Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012, OJL 176, 27.6.2013, p. 1–33

[7] Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, OJL 176, 27.6.2013, p. 338–436

[8] Draft guidance to banks on non-performing loans, sub par 1.2

[9] See paragraph 145 of Annex V to the “Implementing Technical Standards on Supervisory Reporting” (ITS)

[10] Draft guidance to banks on non-performing loans, sub par. 1.3

[11] Draft guidance to banks on non-performing loans, sub par 7, “Collateral valuation for immovable property”

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The EU Commission’s Fifth Report on relocation and resettlement of migrants: a(nother) proposal.

  • Introduction

On the 13th of July (2016) the European Commission issued the fifth report on relocation and resettlement of migrants  from the external EU’s borders, addressed to the European Parliament, the European Council and the Council.  The report provides an updated state of the situation of relocation and resettlement of migrants eligible to obtain international protection in EU countries in the light of the urgent migration crisis that Italy and Greece especially have been facing since 2015. The considerable increase in the number of migrants – many of whom are entitled to apply for relocation/resettlement – has imposed to the Commission to update its last report (i.e., the one issued in June 2016) with the aim of keeping the institutions fully informed about the situation at the “external borders” of Europe.  After a brief introduction about the relevant legislative framework, this post aims to underline some critical issues emerging from the relocation and resettlement policies of the European Union as set out in the official documents published so far.

  • The Council’s decisions establishing provisional measures in the area of international protection for the benefit of Italy and Greece.

The relocation and resettlement policies of the EU have been framed, firstly, by the Council Decision 2015/1523 of 14 September 2015 establishing provisional measures in the area of international protection for the benefit of Italy and Greece. This was followed, just a few days later, by the Council Decision 2015/1601 of 22 September 2015 (hereafter the Decision), which provided for a few changes regarding the number of migrants needing a relocation plan. With regard to the latter instrument, it was adopted in accordance with Article 78, para 3, of the Treaty on the Functioning of the European Union, which authorises the Council to adopt provisional measures when one or more Member States are faced with an emergency situation involving a massive inflow of third countries’ nationals, in order to relieve those Member States. This provision regulates the main points that the European Union should respect in order to establish a common policy of asylum, subsidiary protection and temporary international protection for eligible third country nationals. The principle of mutual solidarity and the rule of fair sharing of responsibility between Member States in the management of the refugee crisis at the external borders have been recognised as the two keystones of the Decision. In addition, the individual rights granted by the Charter of Fundamental Rights of the European Union (hereinafter the Charter), along with the rights of vulnerable groups, act on the background of the Decision, balancing the needs of both public order and national security, these two becoming an inevitable paradigm of the management of every humanitarian crisis by the EU.[1]

The 23rd introductory paragraph of the Decision permits a temporary derogation from the Dublin’s Regulations System. This system provides that the Member State in which third countries’ nationals enter is responsible for their international protection. In recognition of the emergency situation in Greece and Italy, those countries have been relieved of this ‘entry and stay’ rule set out in article 13 of Reg. 604/2013.[2]

However, the Decision has let several shadows and grey areas subsist, together with the necessity to solve some critical issues. Some of these have been faced by the new report and the draft proposal for a European Union regulation establishing a Union Resettlement Framework – which has been attached to the report – while some others have been left unsolved/unresolved?. As for the latter, one could consider, for instance, the unclear legal force of the relocation and resettlement rules as regards the Member States.

  • The content of the report.

The goal of the Fifth Report[3] is to accelerate the implementation of the relocation and resettlement schemes by the Member States. It is articulated in two sections, dedicated to the relocation (1) and the resettlement (2) schemes, respectively, and containing different highlights which emerged during the reporting period, from 14th of June to 11th of July. In particular, the report warns against the bad situation of Italy in comparison to Greece. While relocation transfers from Greece have increased during the reporting period as compared to the previous one (from 594 to 710), those from Italy have decreased and remain at an unsatisfactory level (66 compared to 186). In this connection, major concerns have been expressed by the Commission regarding the relocation of vulnerable groups, especially unaccompanied minors. [4]

On the one hand, the report requires Italy to provide clearer information on the number of arrival, to develop a special procedure for the relocation of unaccompanied minors, which is at this time extremely slow, to open additional hotspots as planned and to improve its cooperation with the other Member States. On the other hand, it was difficult for the Commission to ignore that so far several Member States have not complied with their obligations as established by the Council Decision of 22nd September 2015. Despite the deployment of many experts to Greece and Italy by the European Asylum Support Office, the data provided by the fifth report show an increasing level of (humanitarian) emergency and a worrisome deterioration of the refugee crisis. It unfortunately appears that the efforts made by and the means available to the countries at the external borders are not yet sufficient to face the ongoing inflow of migrants seeking international protection.

Regarding the resettlement scheme (sub 2 of the Decision), it has resulted in the resettlement of about 8000 people (mostly Syrian nationals from Jordan, Lebanon and Turkey) to twenty different countries. The Commission has also made reference to the EU–Turkey statement of 18 March 2016, which foresees the activation of the Voluntary Humanitarian Admission Scheme with Turkey, currently still at the negotiation stage. This scheme is part of the general political agreement between EU and Turkey concluded last March with the aim of stopping the unconditional flow of migrants from the eastern route to Greece.[5]

The report’s conclusion is twofold. On the one hand, the Commission has urged Italy to quickly step up its processing capacity and to cooperate more closely with Member States in implementing the relocation scheme, especially regarding the situation of the vulnerable group of unaccompanied minors.  On the other hand, the Commission has exhorted all Member States to urgently provide an adequate response to the crisis and to build up support of Italy and Greece by increasing the number of pledges. The Commission has also expressed its concern by ‘reserving the right to take action against those Member States not complying with their obligation’.[6] This statement – which could play a role in terms of political effectiveness – compels the EU institutions to ask themselves about the kind of actions that could be taken in order to induce Member States to comply with the Council’s Decision.

  • The proposal

The problem highlighted by the Commission’s report has not been solved by the proposal attached thereto, establishing a Union Resettlement Framework and amending Regulation (EU) n. 516/2014.[7] The explanatory memorandum of the proposal underlines the ’voluntary basis’ of the resettlement commitments of all Member States, as established by the framework regulation. The effort required might be considered ‘binding’ given the principles of fair sharing of responsibility and solidarity, which are crucial to the aim of building a Common European Asylum System and consistent with the policy on better migration management adopted by the European Agenda on Migration.[8]

In this sense, the proposal acknowledges several core principles and good practices in the field, namely: a) reducing divergences between Members States and creating common rules for resettlement; b) discouraging second movements of the resettled people in the EU; c) distinguishing the policy of resettlement from the so-called Dublin’s regulation system; d) increasing the already central role of the United Nation High Commissioner for Refugees (hereinafter UNCHR), European Asylum Support Office (hereinafter EASO) and stakeholders in general to support Member States in managing the crisis; e) protecting fundamental rights linked to asylum and international protection, in accordance with Articles 18 and 19 of the Charter and with the principle of non discrimination;[9] f) offering priority protection to vulnerable groups;[10] g) arranging two different procedural pathways, namely, an ordinary one and an expedited one, depending on the grade of  urgency.

  • Conclusions

The publication by the Commission of the Fifth Report on relocation and resettlement has created some momentum for EU institutions and Members States to consider the status of the common European system in the field of asylum and international protection. While certain satisfactory steps have been made at the external borders of Greece, the Italian situation remains critical and very few chances to sort out the problems generated by the massive inflow of migrants there are in sight. The main issue at stake is still the lack of synergy and mutual cooperation among Member States when it comes to relocation and resettlement. Notwithstanding the political pressure exerted by the Commission, the invocation of the supreme principles of solidarity and fair sharing of responsibility in migration crisis has failed to induce Member States to comply with their commitments. Together with the absence of a mechanism of sanctions in cases of non-implementation of the Council Decision by Member States, this is liable to lead to the failure of the relocation and resettlement policy.

One day, the strength of common principles might be sufficient to induce Member States to implement the obligations arising from any decisional act of the European Union, especially in such a delicate political field as the management of a migration crisis. For now, the European Union is unable to compel Members States (regardless of the proximity to the external border) to implement its plans on relocation and, indeed, to respect the fair sharing of responsibility. Therefore it cannot manage this huge crisis in a proper way and, considering the proportions of the emergency, this might result in the collapse of the whole system.

[1] On this point see, for example, the creation and the update of the EURODAC system, starting from the COUNCIL REGULATION (EC) No 2725/2000 of 11 December 2000 concerning the establishment of ‘Eurodac’ for the comparison of fingerprints for the effective application of the Dublin Convention; another example could be the attention paid to the defence of external borders and the fight against irregular immigration which are central to the migration crisis management of the EU, as provided by the EU- Turkey statement of 18th March 2016 and within the new proposal itself of 13th of July 2016.

[2] The so-called Dublin’s Regulation System establishes which Member State is responsible for the examination of the asylum application. See Regulation (EC) No 1560/2003 and Regulation (EU) No 604/2013.

[3] Fifth Report on relocation and resettlement from the Commission to the European Parliament, the European Council and the Council, Brussels 13.7.2016, COM(2016) 480 final.

[4] Fifth Report, COM(2016) 480 final, 8 – 9.

[5] On this issue see, among others, G. Goalwin, The EU-Turkey Agreement on Refugees: Echo of a Tragic Past, available online at http://religionandpolitics.org/2016/05/03/the-eu-turkey-agreement-on-refugees-echo-of-a-tragic-past/ accessed 30th August 2016.

[6] Fifth Report on relocation and resettlement, COM (2016) 480 final, Brussels 13.07.2016, p. 11.

[7] Regulation (EU) No 516/2014 of the European Parliament and of the Council of 16 April 2014 establishing the Asylum, Migration and Integration Fund, amending Council Decision 2008/381/EC and repealing Decisions No 573/2007/EC and No 575/2007/EC of the European Parliament and of the Council and Council Decision 2007/435/EC.

[8] The European Commission set out the long-term policy on better migration in the European Agenda on Migration, which developed President Juncker’s Political Guidelines. Proposal for a Regulation COM (2016) 468 final, 2016/0225 (COD), p.5.

[9] The principle of non discrimination is granted by several Universal and Regional legal provisions on human rights, namely: Article 1, 2 and 7 of the Universal Declaration of Human Rights; Article 2 and 26 of the International Covenant on Civil and Political Rights; Article 1 of the International Convention on the Elimination of All Forms of Racial Discrimination; Article 1, 8 and 24 of the American Convention on Human Rights; Article 14 of the European Convention of Human Rights.

[10] To individuate the vulnerable groups, the Commission also refers to other international tools such as the United Nations Conventions and the Conventions of the Council of Europe.

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The European Court’s Grand Chamber decision in Biao v. Denmark: A case of indirect discrimination against nationals of non-Danish ethnic origins

Introduction

Within the context of the on-going EU migration crisis, Denmark has been subjected to huge criticisms with regard to a recent bill that is considered to violate asylum seekers’ fundamental rights. More recently, on 24 May 2016 the Grand Chamber of the European Court of Human Rights (ECtHR) issued its decision in the case Biao v. Denmark, regarding matters of family reunification and held that Denmark had unjustifiably violated the prohibition of non-discrimination towards some of its nationals.[1] The Court found, by twelve votes to five, that there has been a violation of Article 14 of the European Convention of Human Rights (ECHR) read in conjunction with Article 8 of the Convention.[2] The Government had indeed failed to show that there were compelling or very weighty reasons unrelated to ethnic origin to justify the indirect discrimination to which the applicants had been subjected arising from the relevant national legislation.[3] Notably, this decision came after the Chamber, in 2014, had found that the Danish authorities had struck ‘a fair balance between the public interest in ensuring effective immigration control and the applicants’ need to be granted family reunion in Denmark and concluded that there had been no violation of Article 8 taken alone.[4]

In order to reach its conclusions, and consistently with its practice, the Grand Chamber considered ‘instructive’ to interpret the Danish legislation on family reunification in the light of the relevant EU law, including the Court of Justice of the European Union’s case law in the matter.[5] This post aims at examining the Grand Chamber’s decision in light of the recent developments in the relationship between the Courts of Strasbourg and Luxembourg. It will be concluded that the decision in Biao v. Denmark is perfectly consistent with the ECtHR’s practice of not only making reference to EU law and the case law of the Court of Luxembourg, but also verifying the compatibility of national legislations or practice with the ECHR, trying to look at the former through the lens of the relevant EU law or case law. Some comments on the political value of this decision when it comes to Denmark and migration issues are also included among the conclusions.

 

The facts

 

The case of Biao v. Denmark concerns the applicants’ complaint about the Danish authorities’ refusal to grant them family reunification in Denmark. Mr Biao is a Danish national of Togolese origin who is married to Asia Adamo Biao, a Ghanaian national. They live in Sweden and have a son who got Danish citizenship due to his father’s nationality. Their application for residence permit in Denmark and, therefore, their family reunification got refused in 2003 and 2004. The Danish Supreme Court upheld such a refusal in January 2010.

Before the ECtHR the applicants claimed to have been subjected to indirect discrimination in the application of the attachment requirement provided by the Danish Aliens Act as amended in December 2003, which introduced the so-called 28-year rule.[6] Pursuant to such a rule, in order for a Danish national, who has not acquired his/her nationality from the moment he/she was born and that is married to a third country national, to enjoy the privileges associated to citizenship in matters regarding family reunification, he/she needs to prove that he/she has got stronger ties with Denmark than with any other country by residing in Denmark for at least 28 consecutive years. The 28-year rule thus resulted in a differential treatment between Danish-born citizens and other nationals, as Danish nationals who had acquired nationality from the moment they were born were exempted from such a requirement.[7] This treatment was also an indirect discrimination on the basis of race or ethnic origin because persons acquiring Danish nationality later in life ‘would overwhelmingly be of different ethnic origins, that is other than Danish’.[8]

The conclusions of the Court

Having recalled that ‘a difference in treatment may take the form of disproportionately prejudicial effects of a general policy or measure which, though couched in neutral terms, discriminates against a group’,[9] and that indirect discrimination does not necessarily require a discriminatory intent,[10] the Grand Chamber considered it to be a reasonable assumption that people, who have acquired a Danish nationality later in life, would be more likely to be of non-Danish ethnic origins and that, to the contrary, Danish-born people were more likely to belong to the Danish ethnic group.[11]

According to the Court, the burden of proof was then on the Government to show that the difference in the impact of the legislation pursued a legitimate aim and was the result of objective factors unrelated to ethnic origin. Indeed,

‘no difference in treatment based exclusively or to a decisive extent on a person’s ethnic origin is capable of being justified in a contemporary democratic society and a difference in treatment based exclusively on the ground of nationality is allowed only on the basis of compelling or very weighty reasons.’[12]

Although the Court noted that Article 8 ECHR when taken alone ‘cannot be considered to impose on a State a general obligation to respect a married couple’s choice of country for their matrimonial residence or to authorise family reunification on its territory’,[13] it also held that it could apply to the present case what had been concluded in Konstantin Markin v. Russia with regard to difference in treatment on the ground of sex. That is, that ‘general biased assumptions or prevailing social prejudice in a particular country do not provide sufficient justification’.[14] The Court found that similar reasoning should apply to discrimination against naturalised nationals and therefore excluded that the problems relating to integration could be sufficient justification for the 28-year rule.

The Court also affirmed that thanks to Article 5 (2) of the European Convention on Nationality, which has been ratified by 20 states, including Denmark, there was a trend towards a European standard aiming to eliminate the discriminatory application of rules in matters of nationality between nationals from birth and other nationals.[15]

Hence, it concluded that, ‘having regard to the very narrow margin of appreciation in the present case’,[16] the Government had ‘failed to show that there were compelling or very weighty reasons unrelated to ethnic origin to justify the indirect discriminatory effect of the 28-year rule’.[17]This rule indeed has ‘a disproportionately prejudicial effect on persons who acquired Danish nationality later in life and who were of ethnic origins other than Danish.’[18]

EU Law and the ECtHR

It is well known that the two legal regimes pertaining to the EU and the ECHR are quite different when it comes to the principle of non-discrimination.[19] Moreover, although the Treaty of Lisbon, under article 6 (2), provides for the possibility for the EU to accede to the ECHR, in December 2014 the Court of Justice of the European Union (CJEU) issued a negative opinion in this respect. Furthermore, in its recent practice the Court of Luxembourg has increasingly avoided making explicit reference to the ECtHR’s case law.[20] As for the European Convention, according to the CJEU,

‘[i]t must be borne in mind that, in accordance with Article 6(3) TEU, fundamental rights, as guaranteed by the ECHR, constitute general principles of the EU’s law. However, as the EU has not acceded to the ECHR, the latter does not constitute a legal instrument which has been formally incorporated into the legal order of the EU.’[21]

The Strasbourg Court, on its side, has been constantly referring to both EU law and the case law of the CJEU. For instance, in its recent case Arlewin v. Sweden,[22] the Court has pronounced itself on the compatibility of the Swedish courts’ practice in application of Brussels I Regulation (44/2001) with the ECHR. In this respect, it has been observed that:

‘[t]he Court of Strasbourg relies upon the findings of the Luxembourg Court and reaffirms the existence of a direct dialogue between the two jurisdictions, with the first affirming the findings of the second in a noteworthy manifestation of its endeavour to choose –whenever possible- an interpretation of the ECHR that facilitates the proper application of EU law by national authorities.’

Consistently with this view, in Biao v. Denmark the Grand Chamber also took into consideration the relevant EU law and CJEU’s case law. Indeed, although, ‘[t]he rules for family reunification under EU law did not apply to the applicants’ case in August 2004’, the ECtHR noted that:

‘it is instructive to view the contested Danish legislation in the light of relevant EU law. Given that the first applicant has moved to Sweden, by virtue of Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the member States, and in the light of the CJEU’s judgment of 25 July 2008 in Metock v. Minister for Justice, Equality and Law Reform (…), the applicants and their child now have a prospect of success in applying from Sweden for a residence permit in Denmark.’[23]

Conclusions

Different legal issues arise from migration, as it is a multifaceted and complex phenomenon. Apart from the current EU migration crisis, which mostly relates to non-EU nationals, some national policies regulating issues concerning migrants can have an impact on the rights of EU nationals. If it is true that the non-discrimination prohibition contained in Article 14 ECHR has not acquired a perfectly overlapping application with the EU non-discrimination legislation, it is also worth noticing that the Strasbourg Court has examined the relevant Danish legislation in the light of the relevant EU law and affirmed that the applicants’ new applications could now possibly have ‘a prospect of success in applying from Sweden for a residence permit in Denmark’.

This decision will probably lead Danish authorities to amend their Aliens Act and abolish the 28-year rule. It is however striking that at a time when ‘no difference in treatment based exclusively or to a decisive extent on a person’s ethnic origin is capable of being justified in a contemporary democratic society’, a national legislation of both an EU member and CoE state has been considered to have indirect discriminatory effects on the sole ground of race/ethnicity.

[1]Case of Biao v. DenmarkApp no. 38590/10 (ECHR, 24 May 2016).

[2]Ibid. at 154.

[3]Ibid. at 138 [emphasis added].

[4]Ibid. at 64.

[5]Ibid. at 135.

[6]Ibid. at 35.

[7]Case of Biao v. DenmarkApp no. 38590/10 (ECHR, 24 May 2016) at 25.

[8]Ibid. at 102.

[9]Ibid. at 103.

[10]Ibid.

[11]Ibid. at 112.

[12]Ibid. at 114 [emphasis added].

[13]Ibid. at 117.

[14]Ibid. at 126.

[15]Ibid. at 132.

[16]Ibid. at 138.

[17]Ibid.

[18]Ibid.

[19] See, e.g., See also European Union Agency for Fundamental Rights, Handbook on European non-discrimination law (Publication Office of the European Union 2011).

[20]OddnýMjöllArnardóttir and Antoine Buyse, Shifting Centres of Gravity in Human Rights Protection: Rethinking Relations Between the ECHR, EU, and National Legal Orders(Routledge 2016) 19-24.

[21] Opinion 2/13, Delivered on 18 December 2014 (full court), at 179.

[22]Case of Arlewin v. Sweden App no 22302/10 (ECHR, 1 March 2016).

[23]Ibid. at 135 [emphasis added]. See also European Union Agency for Fundamental Rights, Handbook on European non-discrimination law (Publication Office of the European Union 2011) 58-59.European-Court-of-Human-Rights.jpg

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Article 21 of the Charter of Fundamental Rights vs the national public interest in prohibiting age discrimination (Directive 2000/78): Hütter and Schmitzer cases

Introduction

Article 21 of the Charter of Fundamental Rights (CFR) on “Non-discrimination” embraces a positive task for the Member States to eliminate anything which produces unlawful distinctions in society or concrete hurdles towards achieving equality. [1] In 2009, after the entry into force of the Lisbon Treaty, the Charter became a legally binding catalogue of fundamental rights within the EU legal order.[2] The Preamble of Directive 2000/78, at point 6, cites the Charter as a legitimating source for combating discrimination against elderly people. Thus, the relationship between the Charter and Directive 2000/78 on “Equal Treatment in Employment and Occupation” has been understood as a link between ‘legitimacy’ and ‘potency’[3], and it became particularly relevant by virtue of the Charter’s new legal status.

The equality approach embedded in article 21 CFR, which prohibited any discrimination on the basis of the listed grounds, is recalled in article 2 of Directive 2000/78, which defines how the “principle of equal treatment” needs to be interpreted within the boundaries of the Directive and particularly in accordance with article 1.[4] The Directive, however, at article 6 incorporates a contradiction. In fact, article 6 allows certain age discriminations, by considering ‘lawful’ both direct discrimination (when one person is treated less favourably than the other in a comparable situation) and indirect discrimination (an apparently neutral practice which can create disadvantages). According to article 6, such differences can be objectively justified only by a legitimate aim and the means of achieving that aim needs to be appropriate and necessary. Thus, while Article 21 provides a broad but unequivocal legal framework for prohibiting discriminations, articles 2 and 6 of the Directive 2000/78 respectively provide  both the grounds on which discrimination is prohibited and the grounds on which age discrimination can be justified.  Such duality means, Member States often face the uncertainty of what can objectively justify age discrimination.

Two notable Austrian cases, decided by the European Court of Justice (hereinafter: the Court), demonstrate how article 21 CFR and article 6 of Directive 2000/78 should be mitigate by the principle of proportionality, which requires an adequate balance between a rights provision and a state or public interest. The cases are: David Hütter v Technische Universität Graz[5] and Schmitzer v Bundesministerin für Inneres.[6]

Case law

1) The Hütter case and article 6 of Directive 2000/78

According to article 6 of Directive 2000/78, a justification for difference of treatment must be “objective”. This means that it should be supported by a legitimate aim within the context of national law and the means to achieve such legitimate aim must be “appropriate and necessary”. The legitimate aims listed under Article 6 include: legitimate employment policies, labour market and vocational training objectives. Indeed, under article 6, differences of treatment may include “minimum conditions of age… for access to employment or to certain advantages linked to employment”.

Mr Hütter, who worked as a public servant under Austrian law, was entitled to be paid in accordance with the length of his service. However, the law prescribed that the time he had spent working or training before the age of 18 was not to be included in the calculus. Consequently when, Mr Hütter, completed a period of apprenticeship as a laboratory technician with Technische Universität Graz (TUG), he was recruited at a lower incremental pay point compared to a female colleague in materially similar circumstances, but only 22 months older. The age limit imposed by Austrian law (Vertragsbedienstetengesetz ‘the VBG’) determined an unlawful direct discrimination. The TUG argued that the discrimination was justified by legitimate aims: to ensure that those who had pursued a general secondary education would not be treated less favourably than those who had pursued vocational qualifications; and to promote entry into the labour market for young people.

Mr Hütter brought a claim before the Landesgericht für Zivilrechtssachen Graz (Graz Regional Court for Civil Matters). He sought the payment of compensation equivalent to the difference in treatment he had received due to his age. He considered the difference in treatment to be unjustified and in breach of both Austrian Law and Directive 2000/78. That difference in treatment corresponded to a sum of EUR 69.60.  On the possibility to justify the discrimination suffered by Mr Hütter the ECJ (but he took the claim to Graz) expressed the following opinion:

National legislation which…excludes periods of employment completed before the age of 18 from being taken into account for the purpose of determining the incremental step at which contractual public servants of a Member State are graded, is incompatible with Articles 1, 2 and 6 of Directive 2000/78”.

This declaration motivated a subsequent amendment on Austrian law.

2) The Schmitzer case

The Amending Law apparently solved the incompatibility with Directive 2000/78, by modifying with retroactive effect the wording of Paragraphs 8 and 12 of the GehG (the Law on Salaries of 1956, Gehaltsgesetz) and acknowledging as full work experience the work period before the age of 18. Since then this is now taken into account for the purpose of determining the advancement reference date. Clearly, after the ECJ’s decision in Hütter the financial impact was considerably relevant for the Austrian State. In order to mitigate the financial impact, the Amended Law stated that those who suffered discrimination under the previous system could make an application to switch to the new system. However, in Schmitzer case it was argued that national legislation neutralises the advantage resulting from the inclusion of periods before the age of 18, also placing at a disadvantage only the civil servants disadvantaged by the previous system. In fact, the extension to the periods for the advancement reference date is likely to apply to them alone. Consequently, the adverse effects of the system existing prior to the Amending Law have not ceased entirely for civil servants.

Mr Schmitzer brought an action before the Verwaltungsgerichtshof (Administrative Court), challenging the decision of the Bundesministerin für Inneres which turned down his request for a review of his remuneration status under Paragraph 8 of the GehG, in the version prior to the Amending Law. The Schmitzer case was brought before the ECJ for a Preliminary Ruling which clarified how the “submission of a request by each interested party, as well as those relating to the extension of advancement periods” served “objectives of procedural economy, of respect for acquired rights and of the protection of legitimate expectations”. Mr Schmitzer, had  worked as a civil servant before turning 18,  claimed that the Amending law was still contrary to Directive 2000/78/EC, as it ingrained the effect of the original law. Thus, the ECJ focused on whether this difference in treatment could be justified in the light of article 6.

The Austrian government argued that the legitimate aim pursued by the Amending law was a “budgetary consideration”. The ECJ considered that although budgetary consideration could underpin a social policy of a Member State, it cannot constitute a self-standing legitimate aim within the meaning of article 6. For this reason, such age-based difference in treatment is not objectively justified as appropriate and necessary.

Conclusion

In the Hütter case, the Court recognized Member States’ freedom to determine public measures to promote the integration of young apprentices into the labour market. This freedom is somewhat ambivalent, as it is subjected to the interpretation of the Court. The Austrian policy that did not consider the work experience before the age of 18 was not objectively justified in relation to article 6. The ECJ decision had serious financial consequences for the State, compared to a trivial monetary detriment for Mr Hütter. In the subsequent Schmitzer case, the amendment of Austrian law was still considered to be unlawfully discriminatory as  ‘budgetary considerations’  cannot justify a measure that maintains indefinitely an age-based difference in treatment which was supposed to be eliminated. For this reason, it was not considered “a proportionate means of achieving a legitimate aim”, as required by article 6 of the Directive, although considering “budgetary considerations” as transitional arrangements for age discrimination could instead require a closer consideration by the Court.

[1]     Article 21 of the Charter of Fundamental Rights prohibits any discriminations based on “sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation”, reinforcing in this way the link to fundamental or human rights.

[2]                 Francesca Ferraro, Jesús Carmona, “Fundamental Rights in the European Union. The role of the Charter after the Lisbon Treaty”, (2015) EPRS European Parliamentary Research Service. Available online: <http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/554168/EPRS_IDA%282015%29554168_EN.pdf > accessed 21.05.2015

[3]     This is confirmed by the case Kücükdeveci v Swedex GmbH & Co KG [2010] IRLR 346  (concerning employment discrimination) where the Court noted that the Charter have the same legal value as the Treaties, including the horizontal effect

[4]     Article 1 (Purpose) “The purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.”; Article 2 (Concept of discrimination) “ 1. For the purposes of this Directive, the ‘principle of equal treatment’ shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in Article 1”.

[5]               Hütter v Technische Universität Graz [2009] ECR I- 5325 (C-88/08). Judgment of June 18, 2009

[6]                Leopold Schmitzer v Bundesministerin für Inneres [2014] ECR,  Case C-530/13

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Detention of asylum-seekers in the UK: a continuous violation of human rights

Introduction

Immigration detention is the detention of migrants who are seeking entry to a territory, or awaiting deportation, removal, or return from a territory.1 It might affect, inter alia, asylum-seekers; for this reason, EU law and international law have developed standards of protection for the human rights involved, with a special focus on applicants for international protection.

In the UK, immigration detention concerns, in the majority of cases, persons who have sought asylum at some stage during their immigration processes.2 The present post explores how the UK legal system deals with their detention and concludes that the current UK regime infringes the standards of protection set out by EU law and international law on many grounds, and it is in urgent need of reformation.

EU law

The main instruments of EU law regulating the detention of third-country nationals (TCN) applying for international protection are the Reception Conditions Directives3 and the recast Reception Conditions Directives.4 The recast Directives provide detailed rules, allowing for the detention of asylum-seekers only in a limited number of case,5 and only when other, less coercive measures cannot be effectively applied instead.6 They impose specific procedural guarantees on the decision to detain,7 and they require detention to be applied ‘only for as short a period as possible’.8 The UK has not opted in: thus, it is only bound by the less detailed regime provided by the Reception Directives.

Under the Reception Directives, TCNs applying for international protection cannot be considered as ‘illegally staying’ in the EU.9 Limitation to their freedom of movement is allowed only in exceptional circumstances.10 Member States have the duty to provide them with living conditions that are ‘adequate for the health of applicants and capable of ensuring their subsistence’.11 They must also ensure that applicants receive the necessary health care,12 and that persons who have been subjected to torture, rape or other serious acts of violence are granted the necessary treatment.13

It is to be noted that, in implementing EU directives, member states should be guided by the relevant principles enshrined in the Charter of Fundamental Rights.14 The Charter acknowledges the right to asylum:15 however, the European Court of Justice has not pronounced itself, yet, on the implications of this right.

International law

The most important international instrument regulating asylum is the UN Convention relating to the Status of Refugee (RC).16 The Convention precludes the imposition of penalties against refugees coming directly from a territory where their life or freedom was threatened, on the mere account of their illegal entry or presence in the State Party.17 More generally, international law is inspired by the principle that ‘seeking asylum is not an unlawful act’.18 Accordingly, the restriction of asylum-seekers’ right to liberty cannot be arbitrary, and must have a ‘legitimate purpose’ (namely: protection of public order, public health, and national security).19 The decision to detain must be taken on a case-by-case basis, with an assessment of whether it is necessary, reasonable in all the circumstances and proportionate to the purpose.20 Furthermore, national laws must establish a temporal limit for detention.21

In terms of regional Human Rights law applicable to the UK, it is noteworthy that the right to asylum is not enshrined in the European Convention on Human Rights and Fundamental Freedoms (ECHR)22or its Protocols, and no specific provision regulates the detention of asylum seekers.23 However, even if States Parties have the ‘right to control the entry, residence and expulsion of aliens’,24 they must still exercise this right in compliance with their human rights obligations.25 This includes Article 3 ECHR, which provides that no one shall be subjected to torture or to inhuman or degrading treatment or punishment.26 When assessing which conditions of detention amount to ill-treatment, the European Court of Human Rights (ECtHR) generally applies greater protection to ‘extremely vulnerable’ persons (such as asylum-seekers).27 Thus, applicants for international protection benefit from additional guarantees under the ECHR system.

UK law

In the UK, the detention of an asylum-seeker can be either criminal or administrative in nature. Under Section 24 of the Immigration Act 1971, any foreigner who ‘knowingly enters the United Kingdom in breach of a deportation order or without leave’ has committed a criminal offence. The Immigration Act also gives immigration authorities the discretional power to decide whether to detain migrants pending an examination of their qualification for entry or their removal or departure from the UK.28

The wide discretionary powers conferred upon UK administrative authorities on immigration detention are partly limited by the ‘Hardial Singh’ common law principles.29 However, there are still other issues, such as the absence of a fixed limit on the time that a person (even an asylum-seeker) may be held in immigration detention.30 In the absence of such a limit, the High Court has found that detention for a significant number of years was not unlawful.31 Moreover, there is no automatic or independent review of the appropriateness, lawfulness, or length of detention,32 and migrants subjected to administrative detention are not automatically brought to court with the opportunity to apply for bail.33

After the 1990s, successive Governments have applied a restrictive immigration regime.34 In the 2000s, the Labour Government expressly declared its intention to ‘introduce a new asylum process, detaining more people’,35 and launched the use of a ‘detained fast-track’ for asylum procedures, targeting ‘failed’ asylum seekers.36 The fast track procedure has now been extended to all claimants for asylum whenever ‘it appears that a quick decision is possible’.37 Obviously, this has radically increased the number of detention cases. 38 Indeed, since this extension, the UK has detained more asylum seekers and for longer periods than any other European State, except Greece.39

UK law and EU/international standards

Although the UK is the European country with the highest number of claimants for asylum protection, its legal system does not comply with many obligations under EU law and international law.

The first issue is the qualification of illegal entry as a criminal offence: all migrants, including applicants for international protection, can be held criminally responsible simply for entering the UK without leave. This provision clearly violates the UN Refugee Convention, which prohibits the imposition of penalties against asylum-seekers on the mere account of their illegal entry or presence in a State Party.40 It also runs counter to EU law, under which applicants for international protection cannot be considered as illegally staying in the territory of the EU, until the end of the procedure examining their application.41

The second issue is the indiscriminate detention of all illegal migrants under the immigration authorities’ wide discretionary powers. The ECtHR has held that the UK policy of assimilating the detention of asylum-seekers to the detention of all other migrants does not, per se, constitute a violation of their right to liberty and security.42 Furthermore, since the UK has not opted in to the recast Reception Directives, it is not bound by the EU provisions requiring Member States to use immigration detention only as a measure of ‘last resort’.43 However, the indiscriminate detention of asylum-seekers under the ‘fast-track’ procedure runs counter to the EU provisions requiring Member States to provide asylum-seekers with adequate living conditions.44 It also violates international law, under which the decision to detain should always be made on a case-by-case basis, with an assessment of whether it is necessary, reasonable in all the circumstances and proportionate to the purpose.45 In fact, the Council of Europe Commissioner for Human Rights has condemned the UK practice of approving detention for the sole purpose of processing asylum applications.46

A third issue relates to the conditions of detention, which are suspected of being degrading and inappropriate.47 International and domestic NGOs have reported that, at the time of being detained, migrants were not told whether there was judicial scrutiny of their detention48 and were not given adequate access to legal representation or funding.49 Additionally, the use of gender-mixed accommodation puts women at risk of sexual violence, and creates distinct problems for children. 50

A fourth issue is that in the UK there is no fixed limit to the time a person may be held in immigration detention. The United Nations Committee Against Torture has urged the UK to ‘introduce a limit for immigration detention and take all necessary steps to prevent cases of de facto indefinite detention’.51 However, no limit has been introduced, either in statute or in case law.

Conclusion

The current UK regime on the detention of asylum-seekers is very poor. Despite clear European and international standards, there is an absence of minimum procedural and substantive safeguards for asylum-seekers. In addition, the State’s unwillingness to opt in to the recast Reception Directives allows situations which, in most EU member states, would be regarded as violations of EU law.

This year, a cross party-group of MPs has ‘called for an end to the indefinite detention of migrants, warning that too many people are being unnecessarily detained, under a system they deemed to be “expensive, ineffective and unjust”’.52 One cannot but share this opinion and hope that future UK governments will work concretely to guarantee better compliance with EU and international obligations. At the same time, the UK should opt in the recast Reception Directives, and bring its regime in line with current EU standards.

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Human rights outcasts: seriously-ill migrants as beyond the reach of European protective legal regimes

Illegal aliens suffering from a life-threatening illness have been excluded from the protection of article 3 (right to personal integrity) of the European Convention of Human Rights (ECHR) and of the European Council Directive 2004/83/EC.[1] This post examines the European Court of Human Rights (ECtHR)’s and the European Court of Justice (ECJ)’s positions regarding medical asylum seekers and some of the contradictions emerging from the ECtHR case-law.

The case of S.J. v. Belgium originated in the Belgian Alien Office’s decision to expel Ms S.J., a Nigerian young mother of three, in 2010.[2] Upon her arrival in Belgium in 2007, Ms S.J. was diagnosed with a serious immune system deficiency requiring antiretroviral treatment. She was closely monitored for the following years and as a result her state of health was stabilised. As she had no realistic prospect of obtaining access to the appropriate medical treatment in Nigeria, Ms S.J. requested the ECtHR to declare that her deportation would violate article 3 of the ECHR since it would expose her to a premature death in conditions of acute physical and mental suffering. On 27 February 2014, relying on the principle established in N. v. UK, the ECtHR Chamber ruled that Ms S.J.’s expulsion would not breach article 3.[3] Nonetheless, the Belgian government eventually decided to grant her indefinite leave to remain in Belgium on account of the strong humanitarian considerations characterising her situation.[4] Accordingly, the Grand Chamber struck the case out on 19 March 2015, without departing from the Chamber’s finding of non-violation of article 3.[5]

In his dissent to the Grand Chamber decision, Judge Pinto de Albuquerque strongly criticised the ECtHR’s approach in medical asylum cases and called upon the Court to revisit the ‘unfortunate principle’ laid down in N. v. UK (2008).[6] This case concerned an HIV-infected young Ugandan woman threatened with expulsion from the UK.[7] The Grand Chamber found that her removal to Uganda would not breach article 3 on the basis of the following considerations:

Aliens who are subject to expulsion cannot in principle claim any entitlement to remain in the territory of a Contracting State in order to continue to benefit from medical, social or other forms of assistance and services provided by the expelling State. The fact that the applicant’s circumstances, including his life expectancy, would be significantly reduced if he were to be removed from the Contracting State is not sufficient in itself to give rise to breach of Article 3. The decision to remove an alien who is suffering from a serious mental or physical illness to a country where the facilities for the treatment of that illness are inferior to those available in the Contracting State may raise an issue under Article 3, but only in a very exceptional case, where the humanitarian grounds against the removal are compelling.[8]

The only case where the ECtHR found the circumstances sufficiently exceptional to conclude that the applicant’s removal would be contrary to article 3 was D. v. UK (1997).[9] The applicant was in an advanced stage of Aids and his short life expectancy was contingent on the continuation of the medical treatment available to him in the UK. He was close to death and had formed a bond with the carers who supported him through the end of his life. As he did not have any familial, social or other support in his country of origin, St Kitts, where the adequate medical treatment for his illness was not available, the ECtHR held that his deportation would violate article 3.[10] This case contrasts with subsequent medical asylum cases where the ECtHR found that the circumstances of the applicants were not sufficiently distressing for an issue under article 3 to arise if they were expelled.[11] Their situations were distinguished from D. v. UK on the basis that their illness had not reached a critical stage or that family members could take care of them in their country of origin.[12]

It appears from this case-law that the expulsion of seriously-ill aliens may only raise an issue under article 3 where their illness is so advanced that their death is imminent. As long as their health condition is stable at the time of the proposed removal and they are fit to travel, the ECtHR does not consider as a relevant factor the impossibility in fact of accessing adequate medical treatment in the receiving state, even though this circumstance would most likely cause the applicant’s premature and painful death. In N. v. UK, for instance, N. contended that she would not be able to afford the necessary treatment in Uganda and the Court recognised that without such treatment her state of health would rapidly deteriorate, causing her intense suffering.[13] Yet, her circumstances were not found sufficiently compelling to prevent her expulsion and she died within a few months of her return to Uganda.[14]

The ECtHR has established that article 3 requires Convention states not to remove persons under their jurisdiction to countries where they would be at risk of being exposed to inhuman or degrading treatment.[15] However, the Court has distinguished between situations where the prohibited treatment would emanate from the intentional acts or omissions of public authorities and those where the serious harm would stem from a naturally-occurring disease and the lack of resources to treat it in the receiving country.[16] This distinction is difficult to reconcile with the absolute nature of the prohibition contained in article 3.[17] It seems that it should not matter whether the suffering of an individual arises from an intentional act or a natural condition as long as it reaches a certain degree of gravity and can be prevented by the act of a Convention state. Indeed, even if a state’s responsibility is not engaged on the basis of the deficiencies of its health system, the actions subject to scrutiny under the ECHR are not those of the receiving state but of the expelling state. As pointed out by Judge Power-Forde in her dissent to S.J. v. Belgium (2014), the ‘crucial fact’ that will precipitate the suffering and death of the applicant is not the failure of the receiving country’s health system but the implementation of the removal decision by the expelling state.[18] Pursuant to the rationale of article 3 in removal cases, i.e. protecting individuals from exposure to inhuman or degrading treatment outside the Convention system, the expulsion of aliens to a country where they run a real risk of suffering such treatment should engage the responsibility of the expelling state even though the serious harm is not strictly imputable to the receiving state.

The distinction made by the ECtHR on the basis of the source of the prohibited harm has brought it to adopt contradictory approaches in cases concerning the extradition of prisoners and in medical asylum cases.[19] This difference of treatment is apparent when comparing Aswat v. UK (2013) and S.J. v. Belgium (2014)[20]. In the former, a mentally-ill suspected terrorist whose extradition was requested by the United States claimed that his transfer would expose him to a more hostile prison environment which could result in the deterioration of his mental and physical health. The Court agreed and held that his extradition would engage the responsibility of the UK under article 3.[21] By contrast, in the latter, although it was established that the medical treatment upon which the applicant’s life and personal integrity depended would only be available in her home country at considerable costs, which she could not afford, the Court did not find that her removal would violate article 3.[22]

Migrants suffering from life-threatening conditions are not only excluded from the protection of article 3 ECHR but also from the protective regime granted to refugees and persons otherwise in need of international protection by the EC Directive 2004/83/EC.[23] In M’Bodj v. État belge (2014), the Belgian Constitutional Court requested a preliminary ruling by the ECJ on the question whether aliens suffering from a serious health condition should be included in the category of persons protected by this Directive.[24] The ECJ ruled that, for the Directive to apply, the serious harm to which an alien would be exposed upon removal to his home country ‘must take the form of conduct on the part of a third party and that it cannot therefore simply be the result of general shortcomings in the health system of the country of origin.’[25] Accordingly, it was held that Directive 2004/83/EC does not protect seriously-ill aliens whose state of health is in risk of deteriorating if they are expelled, unless they are intentionally deprived of treatment in the receiving state.[26]

The situation of illegal migrants suffering from a life-threatening condition in countries in which they have been refused asylum is very precarious. However, rather than extending the protective scope of human rights and EU law to afford a minimum level of protection to those vulnerable people, the ECtHR and the ECJ have accepted that European member states have the right to deport them even where such a course of action would in all likelihood bring about their death in dire conditions. It is to be hoped that the ECtHR will align its medical asylum case-law with the protective standard of article 3 as elaborated in other removal cases. The lowering of the very high gravity threshold required for article 3 to be engaged in medical asylum cases could have an impact on the ECJ’s interpretation of serious harm under Directive 2004/83/EC and on the domestic law of Convention states. Such a step is needed to prevent persons like N. being sent to their death with the sanction of European human rights law.

[1] Council Directive 2004/83/EC of 29 April 2004 on minimum standards for the qualification and status of third country nationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection granted OJ L 304/12.

[2] S.J. v. Belgium App no 70055/10 (ECtHR, 19 March 2015).

[3] S.J. c. Belgique App no 70055/10 (ECtHR, 27 February 2014).

[4] S.J. (n 2) para 56.

[5] ibid para 61.

[6] ibid para 1.

[7] N. v. the United Kingdom (2008) 47 EHRR 39.

[8] ibid para 42.

[9] D. v. the United Kingdom (1997) 24 EHRR 423; see also B.B. v France App no 47/1998/950/1165 (ECtHR, 7 September 1998) where the European Commission of Human Rights had found that the expulsion of the applicant would violate article 3.

[10] ibid para 51-53.

[11] S.C.C. v. Sweden App no 46553/99 (ECtHR, 15 February 2000); Bensaid v. the United Kingdom (2001) 33 EHRR 10; Arcila Henao v. the Netherlands App no 13669/03 (ECtHR, 24 June 2003); Ndangoya v. Sweden App no 17868/03 (ECtHR, 22 June 2004); Amegnigan v. the Netherlands App no 25629/04 (ECtHR, 25 November 2004); N (n 6); Yoh-Ekale Mwanje c. Belgique (2013) 56 EHRR 35; S.J. (n 3).

[12] See N. (n 7) paras 32-41.

[13] N. (n 7) paras 47-48.

[14] ibid para 50-51; see S.J. (n 3), Opinion dissidente de la Juge Power-Forde p 39 and S.J. (n 2), Dissenting Opinion of Judge Pinto De Albuquerque para 2.

[15] Soering v. UK (1989) 11 EHRR 439 paras 90-91; Vilvarajah and Others v. UK (1991) 14 EHRR 248 para 103; Chahal v. UK (1996) 23 EHRR 413 para 79-81; Ahmed v. Austria (1997) 24 EHRR 278 para 39; H.L.R. v. France (1998) 26 EHRR 29 para 34; Salah Sheekh v. the Netherlands (2007) 45 EHRR 50 para 135; Hirsi Jamaa and Others v. Italy (2012) 55 EHRR 21 para 114.

[16] D. (n 9) para 49; N. (n 7) para 43.

[17] See Pretty v. the United Kingdom (2002) 35 EHRR 1 paras 49-52.

[18] S.J. (n 3) p 40-41.

[19] See previous post discussing Trabelsi v Belgium.

[20] Aswat v the United Kingdom (2013) 58 EHRR 1; S.J. (n 3), see Opinion dissidente de la Juge Power-Forde p 41-42..

[21] Aswat (n 19) para 57.

[22] S. J. (n 2) paras 123 and 126.

[23] Council Directive 2004/83/EC of 29 April 2004 on minimum standards for the qualification and status of third country nationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection granted OJ L 304/12.

[24] C‑542/13 Mohamed M’Bodj v. État belge (ECJ, 18 December 2014).

[25] ibid para 35.

[26] ibid para 41.

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Shall the definition of aggression contained in the 2010 Kampala amendment to the International Criminal Court (ICC) Statute have an impact on the application of the Directive on minimum standards for the qualification and status of third-country nationals and stateless persons as refugees or as persons who otherwise need international protection (EU Directive 2004/83/EC)? Some preliminary remarks on the case Andre Lawrence Shepherd v Bundesrepublik Deutschland

On 11 November 2014 Eleanor V. E. Sharpston, Advocate General of the Court of Justice of the European Union, delivered her Opinion in the case Andre Lawrence Shepherd v Bundesrepublik Deutschland. This case follows a request for a preliminary ruling from the Bayerisches Verwaltungsgericht München and concerns a US national who sought asylum in Germany. Mr Shepherd was trained as a maintenance mechanic for Apache helicopters and transferred to Germany in 2003; then, in September 2004, he was deployed in Iraq for one year. Subsequently, when his unit was recalled in Iraq, he refused to perform his military services as he deemed that the conflict was illegal. Thus, he applied for asylum in Germany as he claimed he risked persecution in the US. Indeed, because he did not reject the use of war and force tout court, he did not make any request for not being deployed on grounds of conscientious objection; therefore, he was liable to punishment in the US for refusal to perform his military services. In his asylum application, Mr Shepherd relied on the 2004 Qualification Directive (EU Directive 2004/83/EC). In particular, article 9, paragraph 2 (e),considers an act of persecution the prosecution or punishment for refusal to perform military service in a conflict, where performing military service would include crimes or acts falling under the exclusion clauses as set out in article 12 (2) of the same directive. Article 12, paragraph 2 (a), which reproduces article 1 (F) (a) of the 1951 Geneva Convention relating to the Status of Refugees, provides that

[a] third country national or a stateless person is excluded from being a refugee where there are serious reasons for considering that: (a) he or she has committed a crime against peace, a war crime, or a crime against humanity, as defined in the international instruments drawn up to make provision in respect of such crimes (…).

This case shows how EU law and refugee law are intertwined with other branches of international law, such as international criminal law. In particular, while according to the Advocate General Mr Shepherd might be granted asylum on the basis of article 9, paragraph 2 (e), of the Qualification Directive, with reference to the possible commission of war crimes, some aspects of the notion of crimes against peace might be of relevance in the ECJ’s decision. With respect to crimes against peace, the only precedent the drafters of the Geneva Convention had in mind was article VI of the Charter of the International Military Tribunal. Nevertheless, the formula chosen for article 1 (F) (a), namely the reference to the international instruments drawn up to make provision in respect of such a crime, permits both the Refugee Convention and the qualification Directive that follows it to keep being updated with regard to any further developments of international law. In particular, the wording of article 1 (F) seems to include also those treaties which are not yet in force, such as the 2010 Kampala amendment to the ICC Statute. When defining the crime of aggression, this latter makes an explicit reference to the UN Charter.[1] Thus, the way the UN Charter, especially its provisions which regulate states’ use of force, has been implemented cannot be overlooked. Coming now to article 9, paragraph 2 (e) of the Directive, the Office of the United Nations High Commissioner for Refugees (UNHCR) has affirmed that

UNHCR welcomes the recognition that prosecution or punishment for refusing to perform military service can constitute persecution. UNHCR understands that the provision will also apply where the refusal to serve relates to a conflict that in and of itself is contrary to public international law, such as for example when it has been condemned by the Security Council.[2]

In this regard, the 2006 Canadian Federal Court decision in the Hizman case[3] has confirmed that refugee protection is available to individuals who breach domestic laws, if compliance with those laws would otherwise result in the violation of ‘accepted international norms’. However, it has also clarified that

 It is only those with the power to plan, prepare, initiate and wage a war of aggression who are culpable for crimes against peace; (…). The ordinary foot-soldier such as the applicant is not expected to make his own personal assessment as to the legality of a conflict in which he may be called upon to fight. Similarly, such an individual cannot be held criminally responsible merely for fighting in support of an illegal war, assuming that his own personal wartime conduct was otherwise proper.[4]

In Shepherd v Bundesrepublik Deutschland, the Advocate General has adopted the same line of reasoning. Indeed, she argued that ‘[s]uch a crime by its very nature can only be committed by personnel in a high position of authority representing a State or a State-like entity. Mr Shepherd was never in that position. It is therefore unlikely that he would have been at risk of committing such an act.’[5] Article 8bis, paragraph 1 approved in Kampala also provides that

[f]or the purpose of this Statute, ‘crime of aggression’ means the planning, preparation, initiation or execution, by a person in a position effectively to exercise control over or to direct the political or military action of a State, of an act of aggression which, by its character, gravity and scale, constitutes a manifest violation of the Charter of the United Nations.[6]

In sum, the so-called leadership requirement of the crime of aggression is not particularly problematic. On the other hand, however, one cannot help noticing a significant discrepancy between the UNHCR Comments, the Qualification Directive as interpreted by the Advocate General, and the Kampala amendment, with respect to the UN Security Council (SC)’s role as to the legality of a conflict . While, according to the UNHCR, an explicit condemnation of a conflict by the Council would be a ground, although not the only one- of illegality of a war, Ms Sharpston stated as follows:

I am not sure that I understand precisely what is meant, as a matter of law, by the expression ‘sanctioned by the international community’. The UN Charter does not define what constitutes a legitimate war; nor am I aware of another international instrument that fills that lacuna (if lacuna it be). I cannot see that seeking to define the scope of Article 9(2)(e) of the Qualification Directive by reference to an undefined expression helps to take matters forward. Since the existence of a UNSC mandate is not a prerequisite to starting a war or defending against aggression, its presence or absence cannot be determinative of whether acts listed in Article 12(2) of the Qualification Directive occur.[7]

If it is true that a war fought on self-defence does not need any prior UNSC authorization, one should recall that article 39 of the UN Charter provides for the possibility for the Council to decide to use force whenever an act of aggression occurs. Thus, by making reference to the UN Charter in its threshold clause, article 8bis, paragraph 1, of the ICC Statute excludes any possible criminal responsibility every time the Council has adopted such a decision. At the same time, while any condemnation of the Council is supposed to be merely relevant for jurisdictional purposes, it might not impact on the substantive nature of the crime of aggression. In brief, in her Opinion the Advocate General has failed to consider that the Kampala amendment is the international instrument ‘drawn up to make provision in respect of such crimes’ par excellence. In this sense, the ECJ might depart from what has been argued by Ms Sharpston. This might be relevant in future cases involving military leaders of a State in the planning, preparation, initiation or execution of an act of aggression. In other words, since a prior UNSC authorization to use force makes a conflict legal under public international law, such a conflict would by no means constitute a manifest violation of the Charter of the United Nations. Thus, thanks to the Kampala amendment, a similar act could not be considered as an exclusion ground according to the Qualification Directive and, as a consequence, could not be relevant for the application of its article 9, paragraph 2 (e). Importantly, this might happen even before the Kampala amendment enters into force, no matter which state is going to ratify it, and regardless of the relevant state’s adherence to the ICC Statute.

[1] Resolution RC/Res.6, Annex I.

[2] UNHCR, Annotated Comments on the EC Council Directive 2004/83/EC of 29 April 2004 on Minimum Standards for the Qualification and Status of Third Country Nationals or Stateless Persons as Refugees or as Persons Who Otherwise Need International Protection and the Content of the Protection Granted (January 2005).

[3] Hinzman v. Canada (Minister of Citizenship and Immigration) (F.C.), 2006 FC 420, [2007] 1 F.C.R.).

[4] Hinzman v. Canada (Minister of Citizenship and Immigration) (F.C.), 2006 FC 420, [2007] 1 F.C.R. 561. See also D. Whetham, P. Robinson, A. Ellner, When Soldiers Say No: Selective Conscientious Objection in the Modern Military (Ashgate 2014).

[5] Opinion of Advocate General Sharpston, Andre Lawrence Shepherd v Bundesrepublik Deutschland, Case C‑472/13 [2014] E.C.R. __ (delivered on 11 November 2014) (not yet reported) § 42.

[6] Resolution RC/Res.6, Annex I.

[7] Opinion of Advocate General Sharpston, Andre Lawrence Shepherd v Bundesrepublik Deutschland, Case C‑472/13 [2014] E.C.R. __ (delivered on 11 November 2014) (not yet reported) § 70. ecj

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Justifying age discrimination in the recruitment of police officers: Mario Vital Pérez v. Ayuntamiento de Oviedo (Case C 416/13)

European and national legislation often disagree when a legitimate objective is relied upon to justify a situation of direct age discrimination. The Employment Equality Framework Directive 2000/78 prohibits discrimination on grounds of age in the fields of employment, occupation and vocational training. According to art. 2, equal treatment means “that there shall be no direct or indirect discrimination whatsoever on the ground of age”. The legislation sets out minimum requirements, which need to be respected by Member States in their national legislations. However, articles 4 and 6 of the Directive introduce a number of exceptions to the Principle of Equal Treatment. Under articles 4 and 6 Member States can introduce special national provisions that allow differences of treatment on the basis of particular occupational requirements, while article 6 sets out justified differences of treatment when pursuing a legitimate aim. [1] This post examines the interrelation between the exceptions found in art. 4 and 6 of the Directive and the general principle of equal treatment, by critically addressing the interpretation followed by the European Court of Justice in justifying certain cases of age discrimination within the scope of the Directive. The Court’s position on this topic has raised debates as to the effectiveness of a legislative protection against age discrimination.

In the recent case of Mario Vital Pérez v Ayuntamiento de Oviedo (Case C‑416/13), the local Spanish Court, the Juzgado de lo Contencioso-Administrativo No 4 de Oviedo (Spain), requested a preliminary ruling by the European Court of Justice. Mr. Pérez challenged the Spanish law, and in particular the law of the Principality of Asturias, on the coordination of local police forces (BOE No 169 of 16 July 2007). Indeed, he challenged Point 3.2 of the notice of competition (which is the official document in which the details and conditions for the police officers’ recruitment are provided), on the basis that it violates the fundamental right of access, on equal terms, to public office, as affirmed in the Spanish Constitution and in Directive 2000/78. Consequently, he sought annulment of that provision on the ground that an age barrier is not justified, inasmuch as physical fitness is ensured through the physical tests specified in the notice of the competition.  In addition, Mr Pérez observed that the laws enacted by the Autonomous Communities either do not set a maximum age (Andalusia, Aragon, the Balearic Islands, the Canary Islands, Castilla-La Mancha, Catalonia and Extremadura) or set it at 35 years of age (the Basque Country) or 36 (Valencia and Galicia); indicating a lack of consistency, on the part of the Principality of Asturias, when compared to the other Communities. Article 32(b) of the Spanish law specifies that one of the conditions for entry into the local police force is for the person to be at least 18 years of age and no more than 30 years of age.  Relying on Article 6 of Directive 2000/78, such an age limit has been justified by the Spanish law in the light of the objective of ensuring that local police officers possess a particular level of physical fitness for the performance of their professional duties. Art. 6(1)(c) provides that “the fixing of a maximum age for recruitment…is based on the training requirements of the post in question…or the need for a reasonable period of employment before retirement”. According to this provision, the rationale of the Principality of Asturias is that the maximum age of 30 could be justified on the basis of a physical requirement for the police officer position. On this point, prohibiting age discrimination oscillates between employment policies considerations on the one hand and the general principles of anti-discrimination law on the other.[2]

Two main questions arise when one examines the Pérez case; firstly, why direct age discrimination against police officers over the age of 30 should be justified on the basis of a required level of physical fitness intended as legitimate aim; and secondly, in what instances would the physical requirements ground relied upon be considered as “appropriate and necessary”.  The problem is whether the age at which a police officer can be recruited allows enough time to justify the training given and enough time to do the job before the physical demands become too much. A previous case, Colin Wolf v Stadt Frankfurt am Main, deals with the same employment policies. Consequently, it requires a separate analysis in order to see how the court has interpreted the age limit in Pérez case.

In Wolf case (c-229/08)[3] a preliminary ruling was requested from the ECJ to ensure a long career for officials, or at least to ensure a minimum period of service before retirement as a legitimate aim (Article 6(1)). Mr Wolf applied for an intermediate career post in the fire service (which involved physically demanding tasks such as fighting fires and rescuing people). The City of Frankfurt am Main replied to Mr Wolf that his application could not be considered, because he was older than the age limit of 30 years. The referring Court considered that it should be ascertained whether the difference of treatment on grounds of age could be justified by the German law.  The German General Law on equal treatment[4] at Paragraph 10.3 transposed art. 6(1)(c), in the same terms of the Spanish law in article 32(b), as seen above. The Court considered that the physical fitness of an applicant for an intermediate career post in the fire service is assessed in a separate selection procedure, to which Mr Wolf was not admitted because of his age. Following this, the Court limited its question to the interpretation of Article 6(1) of the Directive, in particular focusing on a possible justification of the difference of treatment resulting from the application of the national legislation at issue in the main proceedings[5]. In this particular case, the age barrier was held to be an appropriate objective for ensuring the operational capacity and proper functioning of the professional fire service, without going beyond what was necessary to achieve that objective. The Grand Chamber considered the physical requirements needed for the performance of fire-fighting and rescue duties which, according to the Court, are such that can only be performed by younger officials. This requirement has been justified as a “genuine and determining occupational requirement” on the basis of art. 4(1) of Directive 2000/78 alone. According to the Court, it does not constitute a discrimination on the ground of art. 1, without the need to further consider art. 6. In this way, the Court gave a very broad interpretation of the genuine occupational defence by finding that a maximum recruitment age, as well as physical fitness, was a genuine occupational requirement related to age.

On the contrary, in Pérez case the Court took the view that the level of physical fitness required to work as a local police officer cannot be compared to the “exceptionally high physical capacities” required in the case of fire fighters and therefore the age barrier was not justifiable. Hence, despite in Wolf the Court gave a broad interpretation of the genuine occupational defence for the purpose of art. 4(1), in Pérez the Court used the different nature and level of duties required as the core element for its interpretation and judgment. In Wolf case the maximum requirement age set in German national legislation has been regarded, first, as appropriate to the objective of ensuring the operational capacity and proper functioning of the professional fire service and, second, as not going beyond what is necessary to achieve that objective.

At the first instance, to justify an age barrier on the basis of physical capacity considerations deriving from a determined chronological age, seems to contradict the well-established principle of non-discrimination (Mangold case[6]). However, in both cases, the Court focused on interpreting the exceptions under art.4 and art. 6 of Directive 2000/78.  According to the Court’s approach in Pérez, the difference between justifiable treatment and prohibited age discrimination depends merely on a consideration of the physical duties of each post. Then, in Wolf case the Court considered the age limit as a means to protect the time allowed for a normal career as fire fighters. The same age limit has been instead considered as a discriminatory barrier for police officers career. The focus on the operational capacity and proper functioning of police officers and fire fighters, leads to an oversimplification of the situation, with the chronological age of the person concerned becoming the mere consideration of the Court.

In conclusion, in Wolf case the age barrier is “appropriate and necessary” for “the training requirements or the need for a reasonable period of employment before retirement” and has been both positively accepted and broadly defined by the Court. Despite the similarity, the Pérez case has been considered as a case of age discrimination. The situation of Mr. Pérez sparks reflections on the important economic consequences deriving from recruiting and training police officers characterised by short terms of employability. Ensuring more consistency from the European Court of Justice, especially when examining age discrimination exceptions, would encourage equality and an economic upturn from part of the national legislation. Particular attention at national careers management, especially when a European case has determined a precedent, would encourage a higher economic stability within each country and an overall legal reliability across Europe.

[1] Sargeant , M. Distinguishing between justifiable treatment and prohibited discrimination in respect of age, Journal of Business Law 2013

[2] Schiek, Dagmar, “Age discrimination before the ecj – conceptual and theoretical issues“ [2011] 48 Common Market Law Review, Issue 3, pp. 777–799

[3] Colin Wolf v Stadt Frankfurt am Main (2010) ECR, Case C‑229/08

[4] “Allgemeines Gleichbehandlungsgesetz“ of 14 August 2006 (BGBl. 2006 I, p. 1897, ‘the AGG’)

[5] see, inter alia, Case C‑321/03 Dyson [2007] ECR I‑687, paragraph 24; Case C‑392/05 Alevizos [2007] ECR I‑3505, paragraph 64 and the case-law cited; and Case C‑532/06 Lianakis and Others [2008] ECR I‑251, paragraph 23

[6] Werner Mangold v Rüdiger Helm, (2005) ECR I-9981, Case C-144/04

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Vulnerable workers in Central and East Europe: between European economic growth targets and offshoring

Introduction

The financial crisis that started when Europe slipped into recession in 2008/2009 raised a host of questions regarding productivity and employment. Potential problems deriving from the economic crisis, such as the decline of competitiveness, have been managed both through austerity policies and European programmes of loans to Central and European Countries (CEE).
As part of these measures, the EU, empowered by the EU Treaty and the principle of mutual assistance, adopted borrowing programmes, such as the Balance-of-Payments (BoP), specifically addressed to non-Eurozone Member States.). At the same time, because of austerity policies, taxes increased in the whole of Europe and the economic position of the most vulnerable Member States was made worse since this decreased their competitiveness and attractiveness to Foreign Direct Investment (FDI). Simultaneously, economies of developing countries, such as those in CEE, which were characterised by lower corporate taxes and limited wages, increasingly attracted FDI.
European stability, as promoted by the programmes of loans, seems to contrast with austerity policies which led to an increase in offshoring. In particular, because of higher taxes and increasing expenses in vulnerable Member States, many firms moved part of their production abroad, thereby exploiting the different levels of competitiveness between Member States. In this way, offshoring became a popular practice, since companies choose to outsource their production on the basis of lower labour costs and higher profitability. However, it can be argued that competitive edge and flexibility negatively impact worker protection, especially in those countries with lower social security standards. In fact, there is a correlation between vulnerability in working conditions and lower labour costs; in the host countries where enterprises relocate their productivity, the vulnerability of workers tends to be high. At the same time, within those European Member States which are outsourcing production, offshoring creates more job insecurity and precariousness.
It is suggested that it is only through European policies directed to ensure a minimum wage and adequate social protection to vulnerable workers that tangible levels of unemployment, job insecurity and unacceptable working conditions can be addressed. Moreover, these variations can, in fact, be the turning point for an improvement in the EU’s economy.

The Balance-of-Payments Facility (BoPF) and austerity policies

In the wake of 2008/2009 financial crisis austerity measures were announced in many EU Member States. Governments were called to implement credible adjustments in order to correct budget deficits and achieve the long term goals of ‘smart, sustainable and inclusive growth’ set out in the Europe 2020 Strategy . The States worst hit by the crisis were Latvia, Romania, and Hungary, which, as indicated above, received financial assistance from the European Union. Other European countries, within the Eurozone, had to undertake austerity policies, thereby encountering significant problems. In particular, the vulnerable states faced a large trade deficit and became unable to combat their substantial trade imbalances. This is aggravated by the fact that, since they are part of the Eurozone, they were unable to restore their competitiveness by devaluating their currency which is a typical measure adopted in these cases.
Art. 143 TFEU introduces a Balance-of-Payments (BoP) assistance programme aimed at strengthening the macroeconomic, fiscal and financial stability of non-Eurozone Member States and increasing the resilience and growth potential of their economies. As outlined in the Commission Work Programme 2014 and more widely in the Europe 2020 Strategy, the EU’s priority is to promote growth and job creation, particularly in small businesses. In line with this Strategy, medium-term financial assistance, established by Council Regulation (EC) No 332/2002 under the terms of specific legal duties of cooperation, has been provided to countries outside the Eurozone, even if the content and the legal implications of these duties are vague. Recently, €16 billion have been disbursed to Hungary (until 2010), Romania (until 2015), and Latvia (until 2012 before it adopted the euro).
However, the ongoing negotiations on the BoP show contrasting views on the actual effectiveness of these measures. There is an acknowledgement that loans programmes usually result in a general improvement in the overall economic situation. On the other hand, the financial stability and the growth perspectives of CEE countries remains an issue. In fact, the Commission criticised Hungary and Romania for their lack of political will to implement structural reforms. The last precautionary financial assistance programme for Romania was formally agreed upon in October 2013 (following two previous ones in 2009 and 2011 respectively). It is planned to extend until September 2015 providing general structural reforms largely related to improvements of equality, transparency in fiscal governance, public debit, monetary policies and FDI for innovations.
However, this EU programme fails to address the problem of labour exploitation. Probably, this lack of clarity creates a grey zone currently used by companies to take advantage of the differences in labour costs between Member States. In turn, this also affected the rights of workers in vulnerable states significantly, since they were pushed to review their policies on expenditure and taxes, to detriment of companies and workers. The political debates on the austerity measures focused mainly on the effects of the fiscal adjustments and the recession, while protecting the labour force has not been sufficiently taken into consideration, especially in terms of preventing their vulnerability

Offshoring to Central and Eastern Europe (CEE) and workers’ vulnerability

A strategy adopted by European companies to achieve competitiveness has been offshoring, that is, the relocation of production outside their own country. As noted above, this has allowed them to take advantage of lower taxes and less protective labour laws in order to reduce costs. In fact, the higher cost of doing business and the inflexibility of the labour market as a consequence of austerity policies encouraged companies to go abroad to manufacture (entirely or in part) their goods. The CEE countries are outside the euro zone and are close enough for the transport conditions to be favourable. These elements allow offshoring companies to exploit the differences in unit labour costs (ULCs) and labour productivity. Indeed, during the last decade CEE countries have received a significant amount of capital inflow to invest in productivity processes, especially in the manufacturing sector.
At the same time, in CEE countries the job quality has been measured as low and characterised as vulnerable. Indeed, according to the Organisation for Economic Co-operation and Development (OECD), workers’ vulnerability is a condition that is often simultaneously present with a certain level of poverty. Leschke et al. confirm this, reporting that there is a higher probability of low paid, unhealthy working conditions and unfair dismissal in the countries with the least adequate social protection systems. Offshoring seems to take advantage of the less favourable conditions of workers in CEE countries, thereby increasing their vulnerability. This practice is not illegal and part of the economic literature considers that, in the long term, it could be advantageous for both the offshoring and the target countries. However, when offshoring is driven by a cheaper labour force its intrinsic vulnerability becomes the main reason behind this choice of production.
Therefore, the European Union should be called to intervene on this point. The European Union has provided financial assistance to CEE countries, focusing on structural changes and political commitments, but it has not dealt with their working conditions. In particular, within the BoP framework, the Memorandum of Understanding concluded between the Commission and the Member States only mentions the ‘Economic policy conditions’, which include structural reform measures to improve business environment and support growth. Unfortunately, economic growth is not sustainable when it is based on poor and unsafe working conditions which encourage working poverty and inequalities. Accordingly, the ILO has provided evidence on how good quality jobs and social protection can in fact support economic growth.

Conclusion

Offshoring seems to take advantage of those conditions which are unfavourable to vulnerable workers. In order to protect these workers, a commitment to establishing a minimum wage and basic health, safety and welfare requirements should be written into contracts with providers, and measured and audited periodically. Interestingly, although the European Commission is highly committed to measuring competitiveness across Member States and the CEE countries, working conditions which generate this competitiveness seem to be largely ignored. Leaving aside any political considerations, the measures dealing with relocation should not be shaped around less favourable working conditions. Therefore, in promoting competitiveness the EU should seek to address specific policies to specific problems, rather than merely providing a service of strict economic surveillance over at risk countries or simply supporting non -Eurozone countries with loans.

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Directive 2014/41/EU on the European Investigation Order and the protection of a minimum level of procedural rights

On 7th March 2014 the European Parliament and the Council of the European Union adopted Directive 2014/41/EU on the European Investigation Order (EIO), which aims at providing Member States with a number of minimum standards in criminal evidence matters.[1] In this respect, the Directive at issue should be seen as one of the results of the European Union’s increasing interest on the principles of fair trial, including those relating to the pre-trial phase. This post attempts to assess the impact of Directive 41 on the EU’s efforts for a minimum standard of procedural rights for accused and suspected persons.

According to the relevant European Union’s primary and secondary sources – including Directive 2014/41/EU – all Member States must provide for a minimum level of guarantees connected to the right of defence, irrespective of the specific judicial system in force in each country. In particular, in December 2009, following the entry into force of the Lisbon Treaty, the European Council adopted the Stockholm Programme, which aimed at reforming the ‘current patchwork of rules’ and providing a single instrument in relation to the gathering of evidence in the EU.[2] This Programme also promoted a minimum level of procedural rights for accused and suspected persons, as a result of the new role played by both the European Union Charter of Fundamental Rights and the European Convention on Human Rights.

In examining Directive 41, one can identify a number of references to earlier EU instruments addressing such procedural rights. Indeed the 2nd, 12th, and 15th Whereas make reference to the Treaty on the Functioning of the European Union (TFEU), the EU Charter of the Fundamental Rights, and the three post- Roadmap Directives.[3]

In particular, Article 82 TFEU underlines the importance of the approximation of law and regulations, including those relating to such procedural rights, among Member States. This position is reiterated in Directive 41 that explicitly refers to Article 82 TFEU and to the main pillars of Judicial Cooperation in Criminal Matters, namely the principle of mutual recognition of judgments and that of mutual confidence between Member States. Accordingly, from Article 82 TFEU, and subsequently Directive 41, derives the necessity to provide minimum common rules in relation to the rights of individuals in criminal procedure.

The Directive also makes reference to the relevant provisions of the EU Charter, namely Articles 48 (concerning the presumption of innocence and all the rights of defence in criminal proceedings) and 52 (regarding the protection of the rights and freedoms of others). This reference is not a coincidence as it reflects the current importance of the EU Charter of Fundamental Rights in this field. Article 48, which shares the same content as Article 6 (2) and (3) of the ECHR, focuses on the right to defence and the presumption of innocence; while, Article 52, that is among the general provisions of the Chapter 7, highlights the importance of the scope of the rights and freedoms recognised by the Charter (and by the ECHR as well). Directive 41, through these references, underlines the need for building a new system of evidence and investigations in criminal matters based on these supreme principles.

In line with its efforts for the establishment of such minimum standards of procedural rights in criminal proceedings, the EU Council adopted, on 30 November 2009, a Resolution on a Roadmap for strengthening such rights.[4]As a consequence, the EU adopted the following directives: Directive 2010/64/EU on the right to interpretation and translation in criminal proceedings; Directive 2012/13/EU on the right to information in criminal proceedings; Directive 2013/48/EU on the right of access to a lawyer in criminal proceedings and in European arrest warrant proceedings, and on the right to have a third party informed upon deprivation of liberty and to communicate with third persons and with consular authorities while deprived of liberty. Accordingly, the adoption of these Directives acted as a first great step towards recognising and also applying the common general principles provided by both the EU Charter and the ECHR in regard to procedural rights. Thanks to them, the EU has for the very first time a list of the most important procedural rights, such as: the right to information, the right to access to a lawyer as soon as possible, the right to interpretation and translation, regardless of the personal condition of both the accused and the suspected person. Although Directive 41 is supposed to intervene in the specific field of evidence and investigation’s matters, its reference to these other Directives shows that the new-born system should act in compliance with the catalogue of rights drowned by post Roadmap Directives.

As it has been demonstrated, a reading of Directive 41 indicates that it has been conceived to be in compliance with these earlier  instruments  and consequently shares the same rationale. Indeed, it is not a coincidence that the 10th, 18th, 19th, and 39th Whereas make reference to the supreme interest of protecting the fundamental rights of accused and suspected persons, while balancing it with the European Investigation Order’s needs. Similar statements can also be found in Chapter I, article 1, paras. 3 – 4, and Chapter II, article 6, paras. 1 (a), which underline the importance of taking into account the right of defence when issuing a European Investigation Order.

Nevertheless, despite the efforts of Directive 41 to further the EU’s aim of setting a minimum standard of procedural rights for the accused and suspected persons, applying these rights in practice may be a challenge. Indeed, the mere declaration of principles regarding the minimum rights of accused and suspected persons may not be adequately enforced by Member States. Specifically, it is still unclear how suspected and accused persons would balance their rights with all the other powers involved in criminal proceedings, such as the Prosecution’s powers. One of the main obstacles to the realisation of this goal is that Directive 41 does not take into account the differences between the judicial systems of Member States and how this makes the application of such standards more difficult.

In brief, as long as each Member State continues to regulate its own procedural instruments in criminal matters without taking into account either the other Members States’ rules, or the European minimum common rules, ensuring an effective protection of procedural rights, including those linked to the field of the rules of evidence, will remain an unattainable ideal.

[1] As for the Directive’s precedents, see the Council Framework Decision 2003/577/JHA of July 2003 on the execution in the European Union of orders freezing property or evidence, and the Council Framework Decision 2008/978/JHA of 18 December 2008 on the European evidence warrant for the purpose of obtaining objects, documents and data for use in proceedings in criminal matters.

[2] De Capitani – Peers, The European Investigation Order: A new approach to mutual recognition in criminal matters, available on EU Law Analysis, http://eulawanalysis.blogspot.it/.

[3] We are talking about the Road Map on procedural rights which was adopted in 2009 by the Justice Council, see http://ec.europa.eu/justice/criminal/criminal-rights/index_en.htm. .

[4] Resolution of the Council of 30 November 2009 on a Roadmap for strengthening procedural rights of suspected or accused persons in criminal proceedings, text available on http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:295:0001:0003:en:PDF.

 

EP

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