Like a constructive trust, a resulting trust arises by operation of law, although unlike a constructive trust, it gives effect to intention - Justin Santiago
Both constructive and resulting trusts differentiate themselves from express trust which arises because a right-holder has manifested an intention that a trust come into existence. In the case of constructive and resulting trusts the intentions are not expressly stated.
This statement in this question is derived from Lord Browne-Wilkinson's judgement in Westdeustsche Landesbank Girozentrale v Islington LBC (1996) where his view was that all resulting trusts arise because of a presumption that the transferor intended to create a trust for himself. This statement supports the argument that resulting trusts are the result of an intention not to create a trust. This thinking is also reflected in the Privy Council case of Air Jamaica v Charlton 1999, where Lord Millet said: “But [a resulting trust] arises whether or not the transferor intended to retain a beneficial interest - he almost always does not - since it responds to the absence of any intention on his part to pass a beneficial interest to the recipient.”
This argument was put forward in the recent theses of Birks-Chambers that the the key to the resulting trust was not the intention to create a trust, but the intention of the donor not to benefit the recipient.
The statement by Lord Browne-Wilkinson however shows a flawed approach at looking at intention by means of deducing a presumed intention. To presume an intention would be going against the fundamentals of trust. To create a trust the intention must be manifested or expressed and the the courts have placed increasing importance on the intention of the parties when determining whether there is a trust or not. The perceived artificiality of presumed intentions in the resulting trust doctrine has led courts to move away from it affirmed by the House of Lords in Stack v Dowden [2007] UKHL 17; [2007] A.C. 432.
The use of the term "resulting trust" in such a case is a misnomer in itself. The orthodox theory of resulting trusts contained in Vandervell v IRC states that where it was said that the beneficial interest must belong to or be held for somebody; so if there was an evidential gap in this respect it was not to belong to the donee or be held in trust by him for somebody, it must remain with the donor. However such a notion is false as an equitable interest arises only at the point where the trust arises. It must be questioned whether there is such a thing as a beneficial interest that can be retained. Beneficial interests are created in the hands of the beneficiary who holds the trustee to account for his exercise of those rights : DKLR Holding Co (No 2) Ltd v Commissioner of Stamp Duties. There is therefore no retention of anything.
The argument of Birks and Chambers, that the fact “presumed” in such circumstances is that the transferor did not intend to benefit the transferee, was shown to be based on a number of misunderstandings. First, gratuitous transfers outside the relationships of advancement are not “apparent gifts”, only ambiguous transfers. Secondly, suspicions are not the same things as presumptions, and in any case, equity is not “suspicious” of gifts. Thirdly, it is not possible for equity to “presume” that “apparent” gifts are not gifts, for “not-gift” is at best a legal conclusion from proved facts, not a fact in itself. Fourthly, a “presumption” of “not-gift” cannot be a “presumption” of “non-beneficial transfer” for the law does not recognise a notion of non-beneficial ransfer distinct from transfers on declared trusts or as security. And fifthly, no satisfactory explanation was given as to why, assuming there is such a thing as a “non-beneficial transfer”, the law should respond to its “proof” by the raising of a trust for the transferor. For these reasons, the argument that there should, by a logical extension of the traditional resulting trusts, be resulting trusts in the generality of cases of unjust enrichment is unsustainable.
Constructive trusts on the other hand might be regarded as an approach based on outcomes and result rather than principle or sound theory, as indicated by the statement of Sir Peter Millett (in (1995) Trust Law International, 35) that ‘... the language of constructive trust has become such a fertile source of confusion that it would be better if it were abandoned’. While not all reaction has been so extreme, much academic and judicial commentary has advocated restraint in the employment of the constructive trusts as a panacea for lack of a clear intention to establish a trust and the need for certainty.
Constructive trusts arise by operation of law and is imposed by the court as a result of the conduct of the trustee and therefore arises quite independently of the intention of any of the parties. The types of constructive trust :-
a. Constructive trusts arising on a specifically enforeceable contract for the sale of a title to land or known as Vendor – Purchaser Constructive Trust by William Swadling
The moment you have a valid contract for sale the vendor becomes in equity a trustee for the purchaser of the estate sold and the beneficial ownership passes to the purchaser. There must be a valid contract of sale and and the contract must be one of which a court of equity will grant specific performance.
b. Constructive trusts arising when equity perfects an imperfect gift – donor done everything within his power to make the gift of perfect.
About Me
- Justin Santiago
- Justin Santiago, BAppSc (Hons), MBA, LLB (Hons) comes from a journalism, market research, intellectual property and strategic communications consulting background. Now based in Melbourne he spends his time advising businesses on how to communicate to their customers as well as writing on various subjects of interest in this blog.
Friday, May 22, 2009
Answering legal questions
How to start an answer
The issue is whether… can pursue a claim in …. against ...
The issues to identify in this question are …
The question at issue is whether ...
We will evaluate the facts of the current case in light of the law of …
To prove … a claimant must establish …
The three key elements to establish a claim in …
Defences such as … may be raised
The claimant has the burden of proof and must prove his/her case beyond …
In the current situation …
… is the case most on point. There the House of Lords ruled that…
According to …
What constitutes a ….
These cases may be compared to other cases where …
This is distinct from Case Z where ...
The facts of the present case are very close to those in …
The present case can be easily distinguished …
X will fail in his claim because ...
The issue is whether… can pursue a claim in …. against ...
The issues to identify in this question are …
The question at issue is whether ...
We will evaluate the facts of the current case in light of the law of …
To prove … a claimant must establish …
The three key elements to establish a claim in …
Defences such as … may be raised
The claimant has the burden of proof and must prove his/her case beyond …
In the current situation …
… is the case most on point. There the House of Lords ruled that…
According to …
What constitutes a ….
These cases may be compared to other cases where …
This is distinct from Case Z where ...
The facts of the present case are very close to those in …
The present case can be easily distinguished …
X will fail in his claim because ...
Thursday, May 7, 2009
Article 226
Discuss the effectiveness of Article 226 procedure in ensuring compliance of Community law on the part of Member States. - Justin Santiago
Article 226 enables the Commission to take action against Member States which the Commission believes to be in breach of Community law and to ensure that Member States comply with their Community law obligations and procedures. Article 226 provides that if the Commission considers that a Member State has failed to fulfill an obligation under the Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations.This will result in a Declaration by the court to that effect. Article 228 was introduced to add a financial penalty to ensure Member States complied with Article 226 judgements. Art 228 is a separate action to impose fines to have a further deterrent effect depending on the seriousness of the breach and duration of the breach.
The advantages of proceedings under Article 226 are that the ECJ will pronounce directly on the compatibility of a Member State’s conduct with Community law compared to a preliminary reference from a national court under Article 234 where the ECJ will only give a ruling on the interpretation of Community law leaving it for the national court to spell out the implications of that ruling in the particular case.
The Commission initiates Article 226 proceedings either in response to a complaint from someone in a Member State or on its own initiative. Complaints are brought on the basis of information gained from diverse sources – through the press, from European Parliament questions or petitions or increasingly through the modern technological sources such as databases indicating when Member States have failed to notify their implementation of a directive. In the last 10 to 15 years complaints from citizens constitute a significant source for the detection of infringements and has suggested that this contributes towards a creating a more participatory Community in which citizens can play a role in law enforcement. However the individual has no say in determining whether or not the Commission actually initiates proceedings against a Member State : Star Fruit v Commission – Commission was not bound to take action but had a discretion also Commission had a right but not a duty to initiate proceedings before the ECJ following non-compliance with the reasoned opinion.
The most common reason for an Art 226 action is the non implementation, faulty implementation or non-application of secondary legislation. Very often it is the non-implementation of a directive within the allotted time limit. Directives need to be implemented by a certain date. The State is liable whichever of its organs is responsible for the breach and regardless of the internal division of powers between constitutional authorities and liable for the conduct of public agencies even if they are constitutionally independent : Commission v Ireland (Buy Irish).
The Commission often refers to the Member State’s obligation of sincere co-operation under Art 10 EC to underpin an action under Art 226. The Commission has absolute discretion on whether to start the Art 226 EC procedure and as to whether to take a case to the ECJ : Commission v Belgium. However the decision not to make a reasoned opinion and the decision not to submit a case to the ECJ have been held to be not reviewable under Art 230 EC as they are not acts that have legal effects : Alfons Lutticke. Additionally the discretion of the Commission to bring proceedings under Article 226 is excessively arbitrary.
The Art 226 procedure is intended to reach a negotiated settlement.Its informal administrative stage without recourse to a court enables many breaches to be resolved by friendly negotiations. This stage ends with the Commission issuing a reasoned opinion which forms the bases of the judicial stage of the proceedings before the ECJ. However this can be a long process and although an application for an interim measure under Article 234 can be made it must be established :-
1. There is a matter of urgency
2. There are factual and legal grounds to raise a prima facie justification for the interim measure
The effectiveness of an Art 226 action is diminished by the length of time the process takes and the lack of a serious penalty. The only result of a finding by the ECJ under Art 226 is that the Member State is in breach is a declaration to that effect. The Member State can continue to avoid complying with Community law obligations. Although documents related to the infringement proceedings is available a major source of frustration is difficulty in obtaining access to documents related to infringement proceedings.
The Commission does not have enough resources to bring enforcement proceedings against member states under Article 226. By introducing the concept of direct effect of EC law as well as indirect effect or in action for damages on the basis of the state liability doctrine, the ECJ enabled individuals and companies throughout the EU to become enforcers of Community law in the Member States without the need for Commission involvement.
There are also limited defences :-
1. Reciprocity
Argument of reciprocity was not applicable in the context of Community law as it was a new legal order which was not limited to creating reciprocal obligations as under international law.
2. Other Member States in breach
Grounds have been pleaded numerous time by Member States without success C266/03 – Commission v Luxembourg
3. Force majeur
Difficulties in parliamentary procedures or problems with the separation of powers within their systems to explain delay in compliance with EC law – rejected by the ECJ. However could be pleased where a bomb attack presented insurmountable difficulties rendering compliance with the Treaty impossible : Case 33/69 Commission v Italy (Re Transport Statistics) – data processing centre had been bombed however ECJ held that “time will erode the validity of the excuse.”
4. Internal difficulties
Internal difficulties not the Commission’s concern : C128/78 Commission v UK (tachographs)
5. Non-applicability of the offending law
C167/73 Commission v France (French Merchant Seamen) – rule in French code maritime was not enforced in practice against EU nationals but was not accepted because it gave rise to uncertainty about legal rights.
6. Community measure is illegal
C226/87 Commission v Greece – defence rejected because the appropriate remedy within the system of remedies set up by the Treaty was an action for judicial review under Art 230 EC.
7. Adequate implementation of the relevant community law by administrative measures
C29/84 Commission v Germany (Re Nursing Directives) – administrative measures widely publicized and not easily subject to alteration
8. Protection of fundamental human rights
Case 112/00 Schmidberger v Austria – freedom of expression and freedom of assemble were fundamental human rights guaranteed by the ECHR which are to be protected by the EC according to the TEU and hence the action by the claimant whose business of transporting goods was hampered by a demonstration failed.
Article 226 enables the Commission to take action against Member States which the Commission believes to be in breach of Community law and to ensure that Member States comply with their Community law obligations and procedures. Article 226 provides that if the Commission considers that a Member State has failed to fulfill an obligation under the Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations.This will result in a Declaration by the court to that effect. Article 228 was introduced to add a financial penalty to ensure Member States complied with Article 226 judgements. Art 228 is a separate action to impose fines to have a further deterrent effect depending on the seriousness of the breach and duration of the breach.
The advantages of proceedings under Article 226 are that the ECJ will pronounce directly on the compatibility of a Member State’s conduct with Community law compared to a preliminary reference from a national court under Article 234 where the ECJ will only give a ruling on the interpretation of Community law leaving it for the national court to spell out the implications of that ruling in the particular case.
The Commission initiates Article 226 proceedings either in response to a complaint from someone in a Member State or on its own initiative. Complaints are brought on the basis of information gained from diverse sources – through the press, from European Parliament questions or petitions or increasingly through the modern technological sources such as databases indicating when Member States have failed to notify their implementation of a directive. In the last 10 to 15 years complaints from citizens constitute a significant source for the detection of infringements and has suggested that this contributes towards a creating a more participatory Community in which citizens can play a role in law enforcement. However the individual has no say in determining whether or not the Commission actually initiates proceedings against a Member State : Star Fruit v Commission – Commission was not bound to take action but had a discretion also Commission had a right but not a duty to initiate proceedings before the ECJ following non-compliance with the reasoned opinion.
The most common reason for an Art 226 action is the non implementation, faulty implementation or non-application of secondary legislation. Very often it is the non-implementation of a directive within the allotted time limit. Directives need to be implemented by a certain date. The State is liable whichever of its organs is responsible for the breach and regardless of the internal division of powers between constitutional authorities and liable for the conduct of public agencies even if they are constitutionally independent : Commission v Ireland (Buy Irish).
The Commission often refers to the Member State’s obligation of sincere co-operation under Art 10 EC to underpin an action under Art 226. The Commission has absolute discretion on whether to start the Art 226 EC procedure and as to whether to take a case to the ECJ : Commission v Belgium. However the decision not to make a reasoned opinion and the decision not to submit a case to the ECJ have been held to be not reviewable under Art 230 EC as they are not acts that have legal effects : Alfons Lutticke. Additionally the discretion of the Commission to bring proceedings under Article 226 is excessively arbitrary.
The Art 226 procedure is intended to reach a negotiated settlement.Its informal administrative stage without recourse to a court enables many breaches to be resolved by friendly negotiations. This stage ends with the Commission issuing a reasoned opinion which forms the bases of the judicial stage of the proceedings before the ECJ. However this can be a long process and although an application for an interim measure under Article 234 can be made it must be established :-
1. There is a matter of urgency
2. There are factual and legal grounds to raise a prima facie justification for the interim measure
The effectiveness of an Art 226 action is diminished by the length of time the process takes and the lack of a serious penalty. The only result of a finding by the ECJ under Art 226 is that the Member State is in breach is a declaration to that effect. The Member State can continue to avoid complying with Community law obligations. Although documents related to the infringement proceedings is available a major source of frustration is difficulty in obtaining access to documents related to infringement proceedings.
The Commission does not have enough resources to bring enforcement proceedings against member states under Article 226. By introducing the concept of direct effect of EC law as well as indirect effect or in action for damages on the basis of the state liability doctrine, the ECJ enabled individuals and companies throughout the EU to become enforcers of Community law in the Member States without the need for Commission involvement.
There are also limited defences :-
1. Reciprocity
Argument of reciprocity was not applicable in the context of Community law as it was a new legal order which was not limited to creating reciprocal obligations as under international law.
2. Other Member States in breach
Grounds have been pleaded numerous time by Member States without success C266/03 – Commission v Luxembourg
3. Force majeur
Difficulties in parliamentary procedures or problems with the separation of powers within their systems to explain delay in compliance with EC law – rejected by the ECJ. However could be pleased where a bomb attack presented insurmountable difficulties rendering compliance with the Treaty impossible : Case 33/69 Commission v Italy (Re Transport Statistics) – data processing centre had been bombed however ECJ held that “time will erode the validity of the excuse.”
4. Internal difficulties
Internal difficulties not the Commission’s concern : C128/78 Commission v UK (tachographs)
5. Non-applicability of the offending law
C167/73 Commission v France (French Merchant Seamen) – rule in French code maritime was not enforced in practice against EU nationals but was not accepted because it gave rise to uncertainty about legal rights.
6. Community measure is illegal
C226/87 Commission v Greece – defence rejected because the appropriate remedy within the system of remedies set up by the Treaty was an action for judicial review under Art 230 EC.
7. Adequate implementation of the relevant community law by administrative measures
C29/84 Commission v Germany (Re Nursing Directives) – administrative measures widely publicized and not easily subject to alteration
8. Protection of fundamental human rights
Case 112/00 Schmidberger v Austria – freedom of expression and freedom of assemble were fundamental human rights guaranteed by the ECHR which are to be protected by the EC according to the TEU and hence the action by the claimant whose business of transporting goods was hampered by a demonstration failed.
Tuesday, May 5, 2009
Breach of Contract and Damages
What is a Breach of Contract
A failure to perform a contract in accordance with the terms of the contract is a breach of contract, which will entitle the other party to the contract to an appropriate remedy.
A breach of contract is one of the four principal ways in which a contract can be discharged the others being discharge by performance, by agreement and by operation of law.
Consequences of Breach of Contract
There are three principal consequences of a breach of contract :-
1. The innocent part is entitled to recover damages in respect of the loss which he/she has suffered as a result of the breach
2. The party in breach may be unable to sue to enforce the innocent party's obligation under the contract
3. The breach may entitle the innocent party to terminate further performance of the contract
Every breach of a valid and enforceable contract gives to the innocent party a right to recover damages in respect of the loss suffered as a result of the breach. An action for damages lies whether the term which is broken is a condition, a warranty or an innonimate term.
Therefor the first step is in determining whether it was a term. The courts have adopted an an objective approach and several criteria have been adopted according to Heilbut, Symons & Co v Buckleton :-
verificiation, importance, special knowledge and time statement was made.
Verification
A statement is unlikely to be a term of the contract if the maker of the statement asks the other party to verify its truth : Ecay v Godfrey.
Importance
The more important the matter, the greater the likelihood that the parties intended it to be a term.
Special Knowledge
If the person making the statement has some special knowledge or skill compared to the other party, the statement may be held to be a term : Oscar Chess Ltd v Williams.
Time Statement Was Made
If a statement was made near or at a time the contract was made, it is more likely to be a term : Routledge v McKay.
The next step would be to determine whether the term was a condition, warranty or inonimate term.
A term classified as a condition would enable the injured party to either terminate the performance of the contract and claim for damages or perform the contract despite the breach and recover damages instead : Poussard v Spiers. The exercise of the right to terminate the performance of the contract discharges the primary obligations of both parties for the future and imposes on the party in breach, by way of substitution, an anticipatory secondary obligation to pay damages to the innocent party.
A breach of warranty will only give the injured party the right to claim damages, the performance of the contract cannot be terminated : Bettini v Gye. This is in actual fact the secondary obligation to pay damages a s a result of the breach created.
A breach of an inonimate term could result in one of two things depending on the consequences of a breach. If a breach of the term results in severe loss and damage, the injured party will be entitled to terminate the performance of the contract and parties will treat themselves as being discharged from the contract (prospective only). If the breach involves minor loss, the injured party’s remedies will be restricted to damages.
The aim of an award for damages is to compensate the claimant for the loss which he has suffered as a result of the defendant's breach of contract.
A claimant could claim compensation on a number of grounds which will be determined by the amount of damages which a claimant can recover by way of compensation:-
1. Expectation interest - to put the claimant in the position which he/she would have been in had the contract been performed according to the terms.
2. Reliance interest - to put the claimant in the position he/she would have been in had he/she not entered into the contract.
3. Restitution interest - restore the benefit to the claimant which he/she had conferred upon the seller however the claimaint must establish that the defendant was enriched, that the enrichment was at the claimant's expense and that it was unjust that the defendant retain the benefit without recompensing the claimant.
The courts have come up with a number of doctrines that need to be fulfilled in order for the claimant to claim by way of expectation interest :-
Mitigation
A claimant is under a duty to take all reasonable steps to mitigate his loss ad the claimant must not unreasonable incur expense subsequent to the breach of contract.
Remoteness
A claimant's expectation interest will not be fully protected where some of the loss which he has suffered is too remote a consequence of the defendant's breach of contract - losses that occur naturally or as a result of the usual course of things or were within the reasonable contemplation of both parties ad the time the contract was made.
Causation
A claimant can only recover damages in respect of the losses if there is a casual link between the loss and defendant's breach of contract.
Quantifying the Damage
It was established in Johnson v Agnew that damages are to be assessed as at the date of breach. But, where the claimant is unaware of the breach, damages will generally be assessed as at the date of on which the claimant, could with reasonable diligence, have discovered the breach.
Damages are generally assessed by reference to the market value of the promised contractual performance; that it to say, the claimant's loss is objetviely assessed. It has however also been recognised in Ruxley Electronics and Construction Ltd v Forsyth that the defendant was entitled to loss of amenity damages and the concept of 'consumer surplus' - claimant's subjective valuation of the contractual performance, which may be considered more than the market value - be considered.
A failure to perform a contract in accordance with the terms of the contract is a breach of contract, which will entitle the other party to the contract to an appropriate remedy.
A breach of contract is one of the four principal ways in which a contract can be discharged the others being discharge by performance, by agreement and by operation of law.
Consequences of Breach of Contract
There are three principal consequences of a breach of contract :-
1. The innocent part is entitled to recover damages in respect of the loss which he/she has suffered as a result of the breach
2. The party in breach may be unable to sue to enforce the innocent party's obligation under the contract
3. The breach may entitle the innocent party to terminate further performance of the contract
Every breach of a valid and enforceable contract gives to the innocent party a right to recover damages in respect of the loss suffered as a result of the breach. An action for damages lies whether the term which is broken is a condition, a warranty or an innonimate term.
Therefor the first step is in determining whether it was a term. The courts have adopted an an objective approach and several criteria have been adopted according to Heilbut, Symons & Co v Buckleton :-
verificiation, importance, special knowledge and time statement was made.
Verification
A statement is unlikely to be a term of the contract if the maker of the statement asks the other party to verify its truth : Ecay v Godfrey.
Importance
The more important the matter, the greater the likelihood that the parties intended it to be a term.
Special Knowledge
If the person making the statement has some special knowledge or skill compared to the other party, the statement may be held to be a term : Oscar Chess Ltd v Williams.
Time Statement Was Made
If a statement was made near or at a time the contract was made, it is more likely to be a term : Routledge v McKay.
The next step would be to determine whether the term was a condition, warranty or inonimate term.
A term classified as a condition would enable the injured party to either terminate the performance of the contract and claim for damages or perform the contract despite the breach and recover damages instead : Poussard v Spiers. The exercise of the right to terminate the performance of the contract discharges the primary obligations of both parties for the future and imposes on the party in breach, by way of substitution, an anticipatory secondary obligation to pay damages to the innocent party.
A breach of warranty will only give the injured party the right to claim damages, the performance of the contract cannot be terminated : Bettini v Gye. This is in actual fact the secondary obligation to pay damages a s a result of the breach created.
A breach of an inonimate term could result in one of two things depending on the consequences of a breach. If a breach of the term results in severe loss and damage, the injured party will be entitled to terminate the performance of the contract and parties will treat themselves as being discharged from the contract (prospective only). If the breach involves minor loss, the injured party’s remedies will be restricted to damages.
The aim of an award for damages is to compensate the claimant for the loss which he has suffered as a result of the defendant's breach of contract.
A claimant could claim compensation on a number of grounds which will be determined by the amount of damages which a claimant can recover by way of compensation:-
1. Expectation interest - to put the claimant in the position which he/she would have been in had the contract been performed according to the terms.
2. Reliance interest - to put the claimant in the position he/she would have been in had he/she not entered into the contract.
3. Restitution interest - restore the benefit to the claimant which he/she had conferred upon the seller however the claimaint must establish that the defendant was enriched, that the enrichment was at the claimant's expense and that it was unjust that the defendant retain the benefit without recompensing the claimant.
The courts have come up with a number of doctrines that need to be fulfilled in order for the claimant to claim by way of expectation interest :-
Mitigation
A claimant is under a duty to take all reasonable steps to mitigate his loss ad the claimant must not unreasonable incur expense subsequent to the breach of contract.
Remoteness
A claimant's expectation interest will not be fully protected where some of the loss which he has suffered is too remote a consequence of the defendant's breach of contract - losses that occur naturally or as a result of the usual course of things or were within the reasonable contemplation of both parties ad the time the contract was made.
Causation
A claimant can only recover damages in respect of the losses if there is a casual link between the loss and defendant's breach of contract.
Quantifying the Damage
It was established in Johnson v Agnew that damages are to be assessed as at the date of breach. But, where the claimant is unaware of the breach, damages will generally be assessed as at the date of on which the claimant, could with reasonable diligence, have discovered the breach.
Damages are generally assessed by reference to the market value of the promised contractual performance; that it to say, the claimant's loss is objetviely assessed. It has however also been recognised in Ruxley Electronics and Construction Ltd v Forsyth that the defendant was entitled to loss of amenity damages and the concept of 'consumer surplus' - claimant's subjective valuation of the contractual performance, which may be considered more than the market value - be considered.
Monday, May 4, 2009
Bill of Rights
The constitutional implications of a British bill of rights. - Justin Santiago
A bill of rights would be likened to a written constitution outlining the positive rights of individuals and private citizens. It details the rights people have with regards to treatment from the State and remedies/protection available. A bill of rights would be likened to a form of law superior to other laws because it originates in an authority higher than the legislature which makes ordinary law and which can only be changed by special procedures. An example of this is the Constitution of the United States which requires not only the approval of Congress but also the the co-operation of other outside bodies (three-fourths of the States need to be in agreement – i.e. 38 of the 50 States have to be in favour of the amendment).
A bill of rights would have several constitutional implications :-
In the United Kingdom, where Parliament is supreme and may create any law that it pleases (by a simple majority vote in
Parliament), the bill of rights could always be amended or repealed by legislature in exactly the same way as any other ordinary Act of Parliament. A bill of rights would go against the doctrine of parliamentary sovereignty and would bind the UK in a way that it may not want.
A bill of rights may not be as flexible as the current situation with its extensive use of conventions which can change over time for example the convention that a Prime Minister has to be chosen from the party with a majority in the House of Commons has come about with the increasing importance of electoral representation in the highest seat in government. It allows for flexibility so that laws and rights move with the times and human rights can become more protected with time. The concept of entrenchment does not exist so these laws in turn do not bind future parliaments thus allowing even more flexibility. There has been a move towards subjecting political processes and decisions to formal hard law regulation that is enforceable by the courts – judicialization – and giving some level of rigidity to positive rights.
A bill of rights would also necessitate a Supreme Court to strike down any law that is in conflict with the Constitution. This would place the doctrine of separation of powers on a firmer footing in the UK. The Executive too would not be able to impinge on the independence of the judiciary. The view propounded by Lord Woolf was that “There was a growing encroachment by the government on judicial independence, warning that judges may need a written constitution to protect themselves from further political interference. This is to ensure that the judiciary can uphold the Rule of Law, prevent government from abusing its powers and to be independent from the government.”
A bill of rights would be likened to a written constitution outlining the positive rights of individuals and private citizens. It details the rights people have with regards to treatment from the State and remedies/protection available. A bill of rights would be likened to a form of law superior to other laws because it originates in an authority higher than the legislature which makes ordinary law and which can only be changed by special procedures. An example of this is the Constitution of the United States which requires not only the approval of Congress but also the the co-operation of other outside bodies (three-fourths of the States need to be in agreement – i.e. 38 of the 50 States have to be in favour of the amendment).
A bill of rights would have several constitutional implications :-
In the United Kingdom, where Parliament is supreme and may create any law that it pleases (by a simple majority vote in
Parliament), the bill of rights could always be amended or repealed by legislature in exactly the same way as any other ordinary Act of Parliament. A bill of rights would go against the doctrine of parliamentary sovereignty and would bind the UK in a way that it may not want.
A bill of rights may not be as flexible as the current situation with its extensive use of conventions which can change over time for example the convention that a Prime Minister has to be chosen from the party with a majority in the House of Commons has come about with the increasing importance of electoral representation in the highest seat in government. It allows for flexibility so that laws and rights move with the times and human rights can become more protected with time. The concept of entrenchment does not exist so these laws in turn do not bind future parliaments thus allowing even more flexibility. There has been a move towards subjecting political processes and decisions to formal hard law regulation that is enforceable by the courts – judicialization – and giving some level of rigidity to positive rights.
A bill of rights would also necessitate a Supreme Court to strike down any law that is in conflict with the Constitution. This would place the doctrine of separation of powers on a firmer footing in the UK. The Executive too would not be able to impinge on the independence of the judiciary. The view propounded by Lord Woolf was that “There was a growing encroachment by the government on judicial independence, warning that judges may need a written constitution to protect themselves from further political interference. This is to ensure that the judiciary can uphold the Rule of Law, prevent government from abusing its powers and to be independent from the government.”
Sunday, May 3, 2009
Legislation in the EU and the role of the Institutions
In the European Community, the power to approve new legislation is distributed between the Commission, the Council and the European Parliament. Does this accord with the concept of separation of powers? Discuss.
There is no single body identified as the “legislature” for the Community as a whole. There is also no one single legislative procedure and is dependent on what is specified under any particular Treaty Article.
There are several different procedures :-
1. The Commission acting alone – under Article 86(3) which concerns the role of the State in relations to public undertakings the Commission has the power to promulgate directives or decisions.
2. The Council and Commission acting alone – can take action without the intervention of the Parliament. The Council will act on a proposal from the Commission and take the decision in accordance with the voting requirement in the relevant Treaty article. Used in relation to aspects of free movement of workers and of capital, economic policy and common commercial policy
3. Council and Commission in consultation with Parliament - under the Treaty of Rome legislative power was concentrated in the Commision and the Council. The Commission would propose a measure and the Council would vote upon it. Parliament's only role was to be consulted before the proposal could be legislated in what is known as the consultation procedure. The Council did not have to incorporate the Parliament’s opinion or give reasons for rejecting it. The role of Parliament was strengthened by the ECJ which ruled that the Parliament must be consulted when so required by the Treaty. Failure to observe this essential procedural requirement is a ground for annulment under Article 230 EC : Roquette Freres v Council.
4. Council, Commission in cooperation with Parliament - the Single European Act (SEA) 1986 introduced the cooperation procedure under Article 252 EC increased Parliament’s role which reflected Parliament’s enhanced status after the initiation of direct elections in 1979. Now there was a second reading for the Parliament and if the Parliament vetoed the proposal, it could only be enacted by the Council acting unanimously. So a combination of the Parliament and one Member State acting together could defeat a proposal for legislation
5. Council, Commission in codecision with Parliament - further powers were given to Parliament on the basis of its directly elected nature. Parliament has increasingly be seen as providing a measure of democratic accountability to the EU. The codecisionmethod of legislation has become the method for making much important Community legislation except agriculture, fisheries, taxation, trade policies, competition and EMU.
In the codecision procedure the Council and Parliament must both agree on the wording of the legislation. After the first reading of the legislation by both of the bodies, the Parliament can propose amendments. The Council then adopts a common position accepting, rejecting or making further amendments to the bill. If Parliament does not accept the common position, then the Commission can either withdraw the legislation or a Conciliation Committee is convened between the Parliament and Council to try to adopt a joint text that they both agree on. If this is successful, the law is passed, if not then it is rejected.
6. Council in comitology with Commission and Parliament - once legislation has been passed into law, it needs to be implemented by the Council. The Council through a parent regulation would authorize the Commission to enact more specific regulations within a particular area. The Council has passed a lot of responsibility for this phase of the legislative process to the Commission but it is not carte blanche and subject to institutional constraints - a series of committees formed of national experts that work with the Commission during the implementation process and who can refer measures that they disagree with back to the Council for review.
This procedure is known as comitology laid down by the SEA and modified under Art 202 and has been highly criticised by the European Parliament because of its non-involvement and undermines the gains that Parliament has made through codecision. The comitology committees’ work is also not transparent and there are complaints that comitology gives the Council and national Governments too much control over the Commission, which interferes with the relationship between these different institutions.
There is no single body identified as the “legislature” for the Community as a whole. There is also no one single legislative procedure and is dependent on what is specified under any particular Treaty Article.
There are several different procedures :-
1. The Commission acting alone – under Article 86(3) which concerns the role of the State in relations to public undertakings the Commission has the power to promulgate directives or decisions.
2. The Council and Commission acting alone – can take action without the intervention of the Parliament. The Council will act on a proposal from the Commission and take the decision in accordance with the voting requirement in the relevant Treaty article. Used in relation to aspects of free movement of workers and of capital, economic policy and common commercial policy
3. Council and Commission in consultation with Parliament - under the Treaty of Rome legislative power was concentrated in the Commision and the Council. The Commission would propose a measure and the Council would vote upon it. Parliament's only role was to be consulted before the proposal could be legislated in what is known as the consultation procedure. The Council did not have to incorporate the Parliament’s opinion or give reasons for rejecting it. The role of Parliament was strengthened by the ECJ which ruled that the Parliament must be consulted when so required by the Treaty. Failure to observe this essential procedural requirement is a ground for annulment under Article 230 EC : Roquette Freres v Council.
4. Council, Commission in cooperation with Parliament - the Single European Act (SEA) 1986 introduced the cooperation procedure under Article 252 EC increased Parliament’s role which reflected Parliament’s enhanced status after the initiation of direct elections in 1979. Now there was a second reading for the Parliament and if the Parliament vetoed the proposal, it could only be enacted by the Council acting unanimously. So a combination of the Parliament and one Member State acting together could defeat a proposal for legislation
5. Council, Commission in codecision with Parliament - further powers were given to Parliament on the basis of its directly elected nature. Parliament has increasingly be seen as providing a measure of democratic accountability to the EU. The codecisionmethod of legislation has become the method for making much important Community legislation except agriculture, fisheries, taxation, trade policies, competition and EMU.
In the codecision procedure the Council and Parliament must both agree on the wording of the legislation. After the first reading of the legislation by both of the bodies, the Parliament can propose amendments. The Council then adopts a common position accepting, rejecting or making further amendments to the bill. If Parliament does not accept the common position, then the Commission can either withdraw the legislation or a Conciliation Committee is convened between the Parliament and Council to try to adopt a joint text that they both agree on. If this is successful, the law is passed, if not then it is rejected.
6. Council in comitology with Commission and Parliament - once legislation has been passed into law, it needs to be implemented by the Council. The Council through a parent regulation would authorize the Commission to enact more specific regulations within a particular area. The Council has passed a lot of responsibility for this phase of the legislative process to the Commission but it is not carte blanche and subject to institutional constraints - a series of committees formed of national experts that work with the Commission during the implementation process and who can refer measures that they disagree with back to the Council for review.
This procedure is known as comitology laid down by the SEA and modified under Art 202 and has been highly criticised by the European Parliament because of its non-involvement and undermines the gains that Parliament has made through codecision. The comitology committees’ work is also not transparent and there are complaints that comitology gives the Council and national Governments too much control over the Commission, which interferes with the relationship between these different institutions.
Saturday, May 2, 2009
Member State Liability
The signficance of Francovich and the provisions of Article 226 - Justin Santiago
The Francovich judgement established the principle of state liability to pay compensation for failure to transpose Community obligations into national law as outlined by Article 10. Francovich signaled the beginning of member state liability where member states can be held liable for non-implementation of a directive. This decision has paved the way for individuals to outflank the no horizontal direct effect ruling and to sue the State in damages where the state has failed to implement a directive. Three conditions were required to be fulfilled :-
1. Objective sought by the directive must include the creation of individual rights
2. The content of the rights must be ascertainable from the provision of the directive
3. There must be a causal link between breach of duty on the part of the State and the losses incurred by individuals
De Burca has additionally suggested that the case for direct enforcement against the state appears to be based on a concept of estoppel thereby the state may not rely upon its own failure to implement a directive properly.
However it has also been argued that the State should not be held liable as the State did no wrong to the claimants and the decision has blurred the distinction between private law rights and public law rights.
The correct course of action should have been by way of Article 226 which allows the Commission to take action against Member States which the Commission believes to be in breach of Community law and to ensure that Member States comply with their Community law obligations and procedure which includes implementing a directive. If the Commission considers that a Member State has failed to fulfill an obligation under the Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations.This will result in a Declaration by the court to that effect. This stage ends with the Commission issuing a reasoned opinion which forms the bases of the judicial stage of the proceedings before the ECJ. Art 228 was introduced by Treaty of the European Union in order to add a financial penalty to ensure Member States complied with Art 226 judgements. Art 228 is a separate action to impose fines to have a further deterrent effect depending on the seriousness of the breach and duration of the breach.
However Francovich was deemed necessary in light of the fact an action under Art 226 can be a long process. There are also limits to the effectiveness of Article 226 in ensuring compliance of Community law on the part of Member States :-
1 .The Commission has absolute discretion on whether to start the Art 226 EC procedure and as to whether to take a case to the ECJ : Commission v Belgium. The decision not to make a reasoned opinion and the decision not to submit a case to the ECJ have been held to be not reviewable under Art 230 EC as they are not acts that have legal effects : Alfons Lutticke. The discretion of the Commission to bring proceedings under Article 226 is excessively arbitrary.
2. The process is ineffective. The process is delicate, secret and often protracted - the effectiveness of an Art 226 action is diminished by the length of time the process takes and the lack of a serious penalty.
3. There is no genuine sanction against a member state which refuses to abide by the court’s ruling. The only result of a finding by the ECJ under Art 226 is that the Member State is in breach is a declaration to that effect. The Member State can continue to avoid complying with Community law obligations. The individual has no say in determining whether or not the Commission actually initiates proceedings against a Member State : Star Fruit v Commission – Commission was not bound to take action but had a discretion also Commission had a right but not a duty to initiate proceedings before the ECJ following non-compliance with the reasoned opinion. Although documents related to the infringement proceedings is available a major source of frustration is difficulty in obtaining access to documents related to infringement proceedings.
4. The Commission does not have enough resources to bring enforcement proceedings against member states under Article 226. By introducing the concept of direct effect of EC law as well as indirect effect or in action for damages on the basis of the state liability doctrine, the ECJ enabled individuals and companies throughout the EU to become enforcers of Community law in the Member States without the need for Commission involvement. An Art 226 declaration that a member state in breach will facilitate a state liability action by an individual.
There are also limited defences :-
1. Reciprocity
Argument of reciprocity was not applicable in the context of Community law as it was a new legal order which was not limited to creating reciprocal obligations as under international law.
2. Other Member States in breach
Grounds have been pleaded numerous time by Member States without success C266/03 Commission v Luxembourg
3. Force majeur
Difficulties in parliamentary procedures or problems with the separation of powers within their systems to explain delay in compliance with EC law – rejected by the ECJ. However could be pleased where a bomb attack presented insurmountable difficulties rendering compliance with the Treaty impossible : Case 33/69 Commission v Italy (Re Transport Statistics) – data processing centre had been bombed however ECJ held that “time will erode the validity of the excuse.”
4. Internal difficulties
Internal difficulties not the Commission’s concern : C128/78 Commission v UK (tachographs)
5. Non-applicability of the offending law
C167/73 Commission v France (French Merchant Seamen) – rule in French code maritime was not enforced in practice against EU nationals but was not accepted because it gave rise to uncertainty about legal rights.
6. Community measure is illegal
C226/87 Commission v Greece – defence rejected because the appropriate remedy within the system of remedies set up by the Treaty was an action for judicial review under Art 230 EC.
7. Adequate implementation of the relevant community law by administrative measures
C29/84 Commission v Germany (Re Nursing Directives) – administrative measures widely publicized and not easily subject to alteration
8. Protection of fundamental human rights
Case 112/00 Schmidberger v Austria – freedom of expression and freedom of assemble were fundamental human rights guaranteed by the ECHR which are to be protected by the EC according to the TEU and hence the action by the claimant whose business of transporting goods was hampered by a demonstration failed.
Advantages of proceedings under Article 226 are that the ECJ will pronounce directly on the compatibility of a Member State’s conduct with Community law compared to a preliminary reference from a national court under Article 234 where the ECJ will only give a ruling on the interpretation of Community law leaving it for the national court to spell out the implications of that ruling in the particular case.
The Francovich judgement established the principle of state liability to pay compensation for failure to transpose Community obligations into national law as outlined by Article 10. Francovich signaled the beginning of member state liability where member states can be held liable for non-implementation of a directive. This decision has paved the way for individuals to outflank the no horizontal direct effect ruling and to sue the State in damages where the state has failed to implement a directive. Three conditions were required to be fulfilled :-
1. Objective sought by the directive must include the creation of individual rights
2. The content of the rights must be ascertainable from the provision of the directive
3. There must be a causal link between breach of duty on the part of the State and the losses incurred by individuals
De Burca has additionally suggested that the case for direct enforcement against the state appears to be based on a concept of estoppel thereby the state may not rely upon its own failure to implement a directive properly.
However it has also been argued that the State should not be held liable as the State did no wrong to the claimants and the decision has blurred the distinction between private law rights and public law rights.
The correct course of action should have been by way of Article 226 which allows the Commission to take action against Member States which the Commission believes to be in breach of Community law and to ensure that Member States comply with their Community law obligations and procedure which includes implementing a directive. If the Commission considers that a Member State has failed to fulfill an obligation under the Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations.This will result in a Declaration by the court to that effect. This stage ends with the Commission issuing a reasoned opinion which forms the bases of the judicial stage of the proceedings before the ECJ. Art 228 was introduced by Treaty of the European Union in order to add a financial penalty to ensure Member States complied with Art 226 judgements. Art 228 is a separate action to impose fines to have a further deterrent effect depending on the seriousness of the breach and duration of the breach.
However Francovich was deemed necessary in light of the fact an action under Art 226 can be a long process. There are also limits to the effectiveness of Article 226 in ensuring compliance of Community law on the part of Member States :-
1 .The Commission has absolute discretion on whether to start the Art 226 EC procedure and as to whether to take a case to the ECJ : Commission v Belgium. The decision not to make a reasoned opinion and the decision not to submit a case to the ECJ have been held to be not reviewable under Art 230 EC as they are not acts that have legal effects : Alfons Lutticke. The discretion of the Commission to bring proceedings under Article 226 is excessively arbitrary.
2. The process is ineffective. The process is delicate, secret and often protracted - the effectiveness of an Art 226 action is diminished by the length of time the process takes and the lack of a serious penalty.
3. There is no genuine sanction against a member state which refuses to abide by the court’s ruling. The only result of a finding by the ECJ under Art 226 is that the Member State is in breach is a declaration to that effect. The Member State can continue to avoid complying with Community law obligations. The individual has no say in determining whether or not the Commission actually initiates proceedings against a Member State : Star Fruit v Commission – Commission was not bound to take action but had a discretion also Commission had a right but not a duty to initiate proceedings before the ECJ following non-compliance with the reasoned opinion. Although documents related to the infringement proceedings is available a major source of frustration is difficulty in obtaining access to documents related to infringement proceedings.
4. The Commission does not have enough resources to bring enforcement proceedings against member states under Article 226. By introducing the concept of direct effect of EC law as well as indirect effect or in action for damages on the basis of the state liability doctrine, the ECJ enabled individuals and companies throughout the EU to become enforcers of Community law in the Member States without the need for Commission involvement. An Art 226 declaration that a member state in breach will facilitate a state liability action by an individual.
There are also limited defences :-
1. Reciprocity
Argument of reciprocity was not applicable in the context of Community law as it was a new legal order which was not limited to creating reciprocal obligations as under international law.
2. Other Member States in breach
Grounds have been pleaded numerous time by Member States without success C266/03 Commission v Luxembourg
3. Force majeur
Difficulties in parliamentary procedures or problems with the separation of powers within their systems to explain delay in compliance with EC law – rejected by the ECJ. However could be pleased where a bomb attack presented insurmountable difficulties rendering compliance with the Treaty impossible : Case 33/69 Commission v Italy (Re Transport Statistics) – data processing centre had been bombed however ECJ held that “time will erode the validity of the excuse.”
4. Internal difficulties
Internal difficulties not the Commission’s concern : C128/78 Commission v UK (tachographs)
5. Non-applicability of the offending law
C167/73 Commission v France (French Merchant Seamen) – rule in French code maritime was not enforced in practice against EU nationals but was not accepted because it gave rise to uncertainty about legal rights.
6. Community measure is illegal
C226/87 Commission v Greece – defence rejected because the appropriate remedy within the system of remedies set up by the Treaty was an action for judicial review under Art 230 EC.
7. Adequate implementation of the relevant community law by administrative measures
C29/84 Commission v Germany (Re Nursing Directives) – administrative measures widely publicized and not easily subject to alteration
8. Protection of fundamental human rights
Case 112/00 Schmidberger v Austria – freedom of expression and freedom of assemble were fundamental human rights guaranteed by the ECHR which are to be protected by the EC according to the TEU and hence the action by the claimant whose business of transporting goods was hampered by a demonstration failed.
Advantages of proceedings under Article 226 are that the ECJ will pronounce directly on the compatibility of a Member State’s conduct with Community law compared to a preliminary reference from a national court under Article 234 where the ECJ will only give a ruling on the interpretation of Community law leaving it for the national court to spell out the implications of that ruling in the particular case.
Direct action
Direct action provides an inadequate remedy against the protection of the individual. - Justin Santiago
Direct action comes under the broad area of judicial review of Community legislation. Specifically it means the ability to challenge the legality of a particular legislation directly to the European Court of Justice. The relevant law is Article 230 which states that the ECJ has the power to review the legality of acts intended to produce legal affects vis-à-vis third parties.
There are several constraints to Article 230. The reviewable acts must have legal effect for it to be subject to judicial review. Although the ERTA case held that the meaning of 'acts' was not restricted to the secondary legislation of the Community under Art 249 - Regulations, Directives and Decisions - but could include any act which had legal effects, Recommendations and Opinions as well as statements of objections raised by the Commission : Case 60/81 IBM.
Additionally for the action to succeed, the petitioner must show three things. First, the petitioner must have standing to bring the action. Second, the action must be against some institution over which the Court has jurisdiction. Third, the petitioner must show that the provision falls within one of the defined grounds for annullment. In addition, the action must be brought inside the strict time limit of two months.
Individuals come under the category of "non privileged applicants" distinct from privileged applicants such as Member States, the Council and the Commission. Under Article 230 as “non privileged applicants”, individuals can challenge an act where :-
1. the decision is addressed to the applicant
2. the decision is in the form of a Regulation
3. the decision is addressed to another person
In situation 1 where the decision is directly addressed to the applicant there is usually no problem. In situation 2 and 3 the applicant must show that the contested measure is of direct and individual concern to him or her.
Direct concern - it is necessary to show that there has been no exercise of discretion on the part of national authorities : Toepfer cases
Individual concern – Plaumann & Co v Commission – certain attributes which are peculiar and the number of persons identified are fixed. Class of people is closed on the date of adoption, identity of its members are unalterably fixed and therefore ascertainable : Piraiki- Patraiki.
However there have been criticisms which have led to AG Jacobs' opinion in UPA v Council which proposed a new test for individual concern - an applicant is individually concerned by a measure where by reason of his particular circumstances, the measure has, or is liable to have, a substantially adverse effect on his interests
The CFI suggested a new test in Jego-Quere et Cie SA v Commission a person is individually concerned if the measure affects his legal position in a manner which is both definite and immediate, by restricting his rights or be imposing obligations on him.
Direct action comes under the broad area of judicial review of Community legislation. Specifically it means the ability to challenge the legality of a particular legislation directly to the European Court of Justice. The relevant law is Article 230 which states that the ECJ has the power to review the legality of acts intended to produce legal affects vis-à-vis third parties.
There are several constraints to Article 230. The reviewable acts must have legal effect for it to be subject to judicial review. Although the ERTA case held that the meaning of 'acts' was not restricted to the secondary legislation of the Community under Art 249 - Regulations, Directives and Decisions - but could include any act which had legal effects, Recommendations and Opinions as well as statements of objections raised by the Commission : Case 60/81 IBM.
Additionally for the action to succeed, the petitioner must show three things. First, the petitioner must have standing to bring the action. Second, the action must be against some institution over which the Court has jurisdiction. Third, the petitioner must show that the provision falls within one of the defined grounds for annullment. In addition, the action must be brought inside the strict time limit of two months.
Individuals come under the category of "non privileged applicants" distinct from privileged applicants such as Member States, the Council and the Commission. Under Article 230 as “non privileged applicants”, individuals can challenge an act where :-
1. the decision is addressed to the applicant
2. the decision is in the form of a Regulation
3. the decision is addressed to another person
In situation 1 where the decision is directly addressed to the applicant there is usually no problem. In situation 2 and 3 the applicant must show that the contested measure is of direct and individual concern to him or her.
Direct concern - it is necessary to show that there has been no exercise of discretion on the part of national authorities : Toepfer cases
Individual concern – Plaumann & Co v Commission – certain attributes which are peculiar and the number of persons identified are fixed. Class of people is closed on the date of adoption, identity of its members are unalterably fixed and therefore ascertainable : Piraiki- Patraiki.
However there have been criticisms which have led to AG Jacobs' opinion in UPA v Council which proposed a new test for individual concern - an applicant is individually concerned by a measure where by reason of his particular circumstances, the measure has, or is liable to have, a substantially adverse effect on his interests
The CFI suggested a new test in Jego-Quere et Cie SA v Commission a person is individually concerned if the measure affects his legal position in a manner which is both definite and immediate, by restricting his rights or be imposing obligations on him.
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