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Márton BALOGH: How Did the Rosneft Case Shape the Judicial Practice of the Common Foreign and Security Policy?

The Common Foreign and Security Policy (CFSP) is the only (or the last, depending on the approach)intergovernmental policy of the European Union. The intergovernmental decision-making process itself is present in many areas of the EU, however, the CFSP is the only in nature intergovernmental EU policy. Given its intergovernmental characteristics, “The common foreign and security policy is subject to specific rules and procedures.” [Treaty on the European Union, Article 24]. One of the most important distinctions between intergovernmentalism and supranationalism in the European Union is that the competence of the Court of Justice of the European Union (CJEU) is highly restricted.

Article 24 of the TEU defines two exceptions from the limited CJEU jurisdiction in the CFSP, these two exceptions are the so-called claw-back clauses. The first claw-back clause defines the competence of the Court to monitor compliance with Article 40 of the TEU, the second claw-back clause outlines the review of the legality of restrictive measures against natural and legal persons. On 28 March 2017, the grand chamber of the European Court of Justice (ECJ) ruled in the Rosneft case [Judgment: C-72/15.]. In the Rosneft judgment, the Court essentially established its view towards its restricted competence, and to that end, it utilized the second claw-back clause.

The ring-fencing of the CFSP in European law

To understand the meaning of the Rosneft judgment, firstly, the ring-fencing of the CFSP shall be introduced. In general overview, the CFSP can be observed as an intergovernmental cooperation between member states in foreign affairs without the firm supranational oversight of the EU institutions — one institution especially, the Court of Justice of the European Union. The original reason for disconnecting the CFSP from the constitutional order of the general EU competences (it should be noted that de jure the CFSP was never a supranational policy) was to prevent CJEU from extending the supranational EU legal principles to the CFSP. In the words of Paul James Cardwell, professor of law at King’s College London “ […] the Member States’ fear of the encroachment on their sovereignty if the Court of Justice was able to extend supranational EU legal principles to foreign policy.”

The “fear” of the member states is not unfounded: the CJEU is infringing the CFSP with the founding legal principles of the EU. In order to ascertain this hypothesis, the Rosneft judgment shall be examined, and other cases shall be explored where the CJEU draws a conclusion in its own right.

How restricted is the jurisdiction of the CJEU? Analysis of the Rosneft case

Rosneft is a Russian oil company that undertook severe sanctions by Decision 2014/512/CFSP. The company turned to the High Court of Justice (England & Wales) because of the restrictive measures imposed on it. The High Court of Justice then asked for a preliminary ruling on the validity of the 2014/512 Decision from the CJEU.

What is the importance of the preliminary ruling? The CJEU can ensure an uniform application of the EU law by giving answers to questions posed by the national courts of the member states. The problem is, the Court does not seem to have this competence in the CFSP according to the second claw-back clause. Moreover, by the notion of the ring-fencing the member states had no intention of extending the powers of the CJEU in the CFSP. However, the approach of the Court was rather different in the judgment of the case.

Pursuant to Article 19 of the TEU the general rule of the CJEU is to ensure that in the interpretation and application of the Treaties the law is observed”. Accordingly, the referring court stated that Article 19 TEU ensures effective judicial protection in the fields covered by EU law [Rosneft judgment para. 54]. If, however, the Court cannot examine the validity of the Decision in a preliminary ruling, it undermines the fundamental right of access to justice, therefore it weakens the general rule of the CJEU to ensure effective judicial protection. In that sense, the complete system of legal remedies and procedures designed to ensure judicial review of the legality — a notion created by the Les Verts case — inherently means that “persons bringing proceedings must have the right to challenge the legality of provisions contained in European Union acts” [Rosneft judgment para. 67].

There is a visible teleological approach of the Court towards the principle of effective judicial protection. Given the constitutional nature of the intergovernmental CFSP, it was established that the Court cannot rule in CFSP cases except the claw-back clauses. The Rosneft case could fall within the second claw-back clause, however, according to Articles 256 and 263 of the Treaty on the Functioning of the European Union (TFEU), to review the legality of a decision that imposes restrictive measures against natural or legal persons, an action for annulment shall be brought before the General Court. To make ends meet, the Court argued that “Neither the EU Treaty (TEU) nor the FEU Treaty (TFEU) indicates that an action for annulment brought before the General Court constitutes the sole means for reviewing the legality of decisions”. The Court claimed that in determining its jurisdiction what matters is the type of decisions, not the type of procedure [Rosneft judgment para. 70]. This can be considered as the archetype of a “more proactive stand” of the ECJ.

Where does it all come together?

The end — to ensure the rights of persons — is ambiguously justified by the means. The duty of the Court under Article 19 of the TEU is to protect the coherence of the European law, therefore it could be interpreted that it implies that the specific rules and procedures of the CFSP are “just” exceptions from Article 19. This is why the Rosneft case had a remarkable role in shaping the competence of the CJEU: the Court changed the legal basis from which it originates its jurisdiction. “[…] the principle of effective judicial protection nonetheless implies that the exclusion of the Court’s jurisdiction in the field of the CFSP should be interpreted strictly.” [Rosneft judgment para. 74]. Furthermore, the Court also found that effective judicial protection originates from the rule of law. “[…] Article 47 of the Charter, which constitutes a reaffirmation of the principle of effective judicial protection, requires, in its first paragraph, that any person whose rights and freedoms guaranteed by EU law are violated should have the right to an effective remedy before a tribunal in compliance with the conditions laid down in that article. It must be recalled that the very existence of effective judicial review designed to ensure compliance with provisions of EU law is of the essence of the rule of law […] ” [Rosneft judgment para. 73].

This reasoning leads back to the ring-fencing of the CFSP. The Court in its Rosneft judgment does not distinguish the difference between its legal basis to rule in the CFSP (Article 24), and the legal basis to rule in other policies (article 19). On the contrary, by complying with the founding principles of the European Union, such as the rule of law, the CFSP is established in the practice of the CJEU inside the constitutional order of the EU and not as a separate policy.

The future of the CFSP

The Court seems to agree with Professor Peter Van Elsuwege from Ghent University who claims in his publication that “ […] EU Treaty provisions relating to the CFSP – including the part on the limits to the Court’s jurisdiction – cannot be interpreted in isolation from the general structure and logic of the Treaties.” This idea aligns with the teleological interpretation of the Court and supports the practice of the CJEU. However, it also leads to an unpredictable power given to the Court to decide its own competence on a case-by-case basis.

Since the Rosneft judgment, the Court proved its competence in a seemingly not-in-its-competence question in the Bank Refah Kargaran case [Judgment: C-134/19 P]. (More on the Bank Refah case: [here] and [here].) Furthermore, there is a referral on the interpretation of the 2014/512 CFSP Decision which relies heavily on the Rosneft judgment.

In conclusion, the Court vaguely encroached on the interpretation of the claw-back clauses of the CFSP. The Court established its competence with general legal principles and ignored the constitutional nature of the CFSP. Where does it lead the CFSP? Will it become a supranational policy? That is highly unlikely because the member states prefer to hold the foreign policy in their sovereign powers. Instead, it is reasonable to assume that the CJEU will continue to silently constitutionalize the position of the CFSP in its case-by-case rulings. This way, the Court fulfills its duty to comply with Article 19 of the TEU and the member states will not lose their powers in the CFSP. Is it a good solution? Not really, but it is a viable legal status quo.

Márton Balogh is a law student in his fourth undergraduate year at the University of Pécs, Hungary, and a student at the MCC Law School. As of this year, he is a holder of the graduate scholarship of the Aurum Foundation. He is mostly interested in European law. His current study and research interests include the practice of the European Court of Justice in the Common Foreign and Security Policy, the primacy of European law, and migration and asylum law in the European Union. He envisions his future working in the European Union, where he currently interns at the European Parliament.

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