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Thursday, March 10, 2011

The Arbitrary World of EU judges

As we've noted before, the EU is in desperate need of a single patent - virtually overnight, such a patent would boost competitiveness and growth and attract innovation, not least by cutting costs for SMEs. It's currently around 15 times more expensive to obtain a patent across the EU than obtaining patent protection in the US. Or to illustrate using other estimates: a patent validated in 13 EU countries costs as much as €20,000, of which nearly €14,000 arises from translation alone (according to the European Commission).

So it was welcome news when EU leaders agreed to press ahead with an EU patent, despite the silly opposition from Spain and Italy.

But apparently, the ECJ - the omnipotent (or so it thinks) EU court seated in Luxembourg - has different ideas. It now says that establishing a new court to judge patent litigations - which was part of the proposal for a single EU patent - is incompatible with EU law.

The ECJ is worried that giving some judiciary powers over patents to a 'non-EU institution' raises questions over....wait for it...checks and balances.

We don't suggest that EU law is arbitrary (not that we would), but let's see if we got this straight. Establish three new EU financial supervisors - through a qualified majority vote - with binding powers over national supervisors in seven broad areas, and the mandate to interpret (i.e. quasi-judicial powers), apply and enforce provisions in over 20 separate EU laws (including initiating dawn raids against individual firms in the case of credit rating agencies) is no problem. But it's not okay to establish a Court looking only at patents? Meanwhile, it's okay to switch legal bases in various ways (data retention magically becomes a Single Market issue, eliminating national vetoes, working time becomes a health & safety provision, etc.).

There's a huge amount of arbitrary government in the ECJ's reasoning. If the Luxembourg judges were consistent, we would applaud their new found appreciation for checks-and-balances, but they're quite clearly not.

Sadly, it's the European economy and recovery that will suffer.

Now, if it is indeed the case that the ECJ is concerned about a body whose status as a non-EU institution is unclear, and about the absence of clear guarantees about how it would be bound by EU law and what kind of checks and balances would apply to it - which were all concerns flagged by the ECJ - then such concerns must apply to other bodies with similar a status as well, correct?

As it has turns out, the European Financial Stability Facility - the eurozone's €440 billion bail-out fund - is a non-EU institution, it's unclear whether it's bound by EU law (i.e. the no bail-out clause) and it's even more unclear what checks and balances apply to it (for certain no Parliamentary control).

So the EFSF must be illegal too right? Or are we missing something?

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