International Law

Infringements, Judicial Decisions and a National Supreme Court: Case C-154/08

By Bartolus

The Court of Justice recently handed down a significant judgment in Case C-154/08 Commission v. Spain making clear that an error of law made by a national Supreme Court can constitute an infringement of EU law. Consequently, the Commission can institute proceedings on the basis of Article 226 EC against that member State.

Unfortunately, the judgment is not yet available in English.

The actual substance of the case need not detain us: It concerns the interpretation of the Sixth VAT Directive, Directive 77/388/EEC, which is rather technical and probably best left to the tax mavens to look into.

What is important for our purposes is that the Spanish Supreme Court had handed down a judgment on July 12th 2003 interpreting the Sixth VAT Directive in a particular manner, upholding the case law of a lower court, the Tribunal Superior de Justicia de Castilla-Léon. The Supreme Court, even though it was a court of last resort had no doubt about what interpretation it should give and did not refer the matter to the Court of Justice for a ruling. The Spanish national tax administration subsequently abided by the ruling of the Supreme Court.

The Commission, for its part, considered that the Spanish Supreme Court had got it wrong and commenced infringement proceedings against Spain on the basis of Article 226 EC.

During the course of the proceedings, Spain submitted that it was placed in a difficult position as defendant in infringement proceedings in such a case: Its Supreme Court's independence was protected by the constitution. As a consequence, it was difficult for the state to remedy the situation if the judicial branch committed errors in interpreting EU law.

The Court of Justice disagreed and recalled its earlier case law - Case C-129/00 Commission v. Italy [2003] ECR I-14637, at paragraph 29 - according to which a member State's failure to fulfill its obligations may, in principle, be established under Article 226 EC whatever the agency of that State whose action or inaction is the cause of the failure to fulfill its obligations, even in the case of a constitutionally independent institution, such as a court.

In the present case, the Court of Justice held that Spain was indeed in breach of EU law because of the ruling of its Supreme Court. It makes clear that a judgment of a supreme court can constitute a breach of EU law while it admits that isolated decisions of lower courts may not necessarily be of sufficient weight to do so.

It thus goes further in this case than in Case C-129/00 Commission v. Italy because in that case the Court concentrated on the conduct of the administration based on the court ruling involved rather than the ruling of the national court itself.

Full post as published by EU Law Blog on November 14, 2009 (boomark / email).