Joined Cases C-129/13 and C-130/13 Kamino: EU law, national law and rights of the defence

The Court of Justice’s recent judgment in Joined Cases C-129/13 and C-130/13 Kamino International Logistics EU:C:2014:2041 deals with three important aspects of how national and EU law interact:

  •  Whether the principle of respect for the rights of the defence by the national authorities and the resulting right of every person to be heard before the adoption of any decision liable adversely to affect his interests, when those national authorities act as required by EU law, may be relied on directly by individuals before national courts.
  •  Whether the principle of respect for the rights of the defence and, in particular, the right of every person to be heard before the adoption of an adverse individual measure means that the rights of defence of the addressee of an adverse decision, are infringed if he has not been heard by the authorities before the adoption of the decision, even though he may express his views during a subsequent administrative objection stage.
  • Whether the legal consequences of infringements by the authorities of the principle of respect for the rights of the defence are governed by national law and what circumstances may be taken into account by the national court in the context of its review. In particular, may the national court take into consideration whether the result of the decision-making process would have been the same, had the right to be heard before it been observed ?

The issues arose in the context of EU customs law but they are of general application and not confined to that particular area of law.

What happened was this. Two customs agents declared some goods to the Dutch customs authorities. The Dutch tax authorities later conducted an inspection and found that the goods had been declared under the wrong customs heading which attracted a lower rate of duty than the correct classification. Consequently, they sent a demand for payment of the unpaid duty. But the customs agents had not had the opportunity to make comments or be heard before the final demand was sent to them. They challenged the final demand before the Dutch courts which then referred a number of questions on the principle of the right to be heard in such circumstances to the Court of Justice.

Reliance by individuals on the right to be heard in national courts

The Court of Justice held that yes,  the principle of respect for the rights of the defence by the national authorities and the resulting right of every person to be heard before the adoption of any decision liable adversely to affect his interests, when those national authorities act as required by EU law, may be relied on directly by individuals before national courts.

The Court recalled that observance of the rights of the defence is a fundamental principle of EU, in which the right to be heard in all proceedings is inherent (Sopropé, C-349/07 EU:C:2008:746, paragraphs 33 and 36, and M, C‑277/11, EU:C:2012:744, paragraphs 81 and 82).

The right to be heard in all proceedings is now affirmed not only in Articles 47 and 48 of the Charter of Fundamental Rights, which ensure respect for both the rights of the defence and the right to fair legal process in all judicial proceedings, but also in Article 41 of the Charter, which guarantees the right to good administration. Article 41(2) provides that the right to good administration includes, inter alia, the right of every person to be heard before any individual measure which would affect him adversely is taken (M, EU:C:2012:744, paragraphs 82 and 83). However, as the Charter entered into force on 1 December 2009, it does not apply to the proceedings in issue in this case (which were dated  2 and 28 April 2005) (Sabou, C‑276/12, EU:C:2013:678, paragraph 25).

In accordance with that principle, which applies where the authorities are minded to adopt a measure which will adversely affect an individual (Sopropé, EU:C:2008:746, paragraph 36), the addressees of decisions which significantly affect their interests must be placed in a position in which they can effectively make known their views as regards the information on which the authorities intend to base their decision (Sopropé, EU:C:2008:746, paragraph 37).

The authorities of the Member States are subject to that obligation when they take decisions which come within the scope of EU law, even though the EU legislation applicable does not expressly provide for such a procedural requirement (Sopropé, EU:C:2008:746, paragraph 38; M, EU:C:2012:744, paragraph 86; and G and R, C‑383/13 PPU, EU:C:2013:533, paragraph 32).

Clearly therefore not only are the national authorities required to respect the rights of the defence when they take decisions falling within the scope of EU law, but also interested parties must be able to rely on them directly before the national courts.

Whether the right of subsequent appeal complies with the principle

The Court held that the principle of respect for the rights of the defence and, in particular, the right of every person to be heard beforethe adoption of an adverse individual measure means that, where the addressee of an adverse decision taken by the national authorities pursuant to EU law has not been heard by the authorities before the adoption of the decision, his rights of defence are infringed even though he can express his views during a subsequent administrative objection stage, if national legislation does not allow the addressees of such demands, in the absence of a prior hearing, to obtain suspension of their implementation until their possible amendment.

It recalled that the purpose of the rule that the addressee of an adverse decision must be placed in a position to submit his observations before the decision is adopted is to enable the competent authority effectively to take into account all relevant information. In order to ensure that the person or undertaking concerned is in fact protected, the purpose of that rule is, inter alia, to enable them to correct an error or submit such information relating to their personal circumstances as will argue in favour of the adoption or non-adoption of the decision, or in favour of its having a specific content (Sopropé, EU:C:2008:746, paragraph 49).

In accordance with established case-law, the right to be heard guarantees every person the opportunity to make known his views effectively during an administrative procedure and before the adoption of any decision liable to affect his interests adversely (M, EU:C:2012:744, paragraph 87 and the case-law cited). That right is required even where the applicable legislation does not expressly provide for such a procedural requirement (see G and R, EU:C:2013:533, paragraph 32).

There was no dispute in this case that the addressees of the demands for payment were not heard prior to the adoption of the decisions adversely affecting them.

The Court did point out it is apparent from its case-law that, in the context of an appeal lodged against an adverse decision, a subsequent hearing may, under certain conditions, be able to ensure observance of the right to be heard (Texdata Software, C-418/11, EU:C:2013:588, paragraph 85). That would be the case where a challenge or objection against a decision imposing a penalty renders that decision immediately inoperable and triggers an ordinary procedure under which there is a right to be heard.

The Court continued with an important qualification: fundamental rights, such as respect for the rights of the defence, are not unfettered prerogatives, but may be restricted, provided that the restrictions in fact correspond to objectives of public interest pursued by the measure in question and that they do not constitute, in the light of the objectives pursued, a disproportionate and intolerable interference which impairs the very substance of the rights guaranteed (G and R, EU:C:2013:533, paragraph 33, and Texdata Software, C‑418/11, EU:C:2013:588, paragraph 84). In this case, EU customs law provides that the lodging of an appeal against a demand for payment has the effect of suspending implementation of that demand only when one or two conditions is met : where there is good reason to believe that the disputed decision is inconsistent with customs legislation or that irreparable damage is to be feared for the person concerned.

There was an additional problem in this case: the undertakings involved had not been heard and thus had not had the possibility to plead that one of the conditions for suspension had been met. The Court recalled that provisions of EU, such as those of the Customs Code, must be interpreted in the light of the fundamental rights which, according to settled case-law, form an integral part of the general principles of law whose observance the Court ensures (Österreichischer Rundfunk and Others, C‑465/00, C‑138/01 and C‑139/01, EU:C:2003:294, paragraph 68, and Google Spain and Google, C‑131/12, EU:C:2014:317, paragraph 68) (For Maria’s earlier post on Google Spain go here).

In such circumstances, the national administrative procedure implementing the conditions laid down in EU law for the grant of suspension of implementation should, in the absence of a prior hearing, ensure that those conditions, namely the existence of good reason to believe that the disputed decision is inconsistent with customs legislation or that irreparable damage is to be feared for the person concerned, are not applied or interpreted restrictively.

The legal consequences of infringements by the authorities of the principle of respect for the rights of the defence

The Court held that the conditions under which observance of the rights of the defence is to be ensured and the consequences of the infringement of those rights are governed by national law, provided that the rules adopted to that effect are the same as those to which individuals in comparable situations under national law are subject (principle of equivalence) and that they do not make it impossible in practice or excessively difficult to exercise the rights of defence conferred by the EU legal order (principle of effectiveness). The national court, which must ensure that EU law is fully effective, may, when assessing the consequences of an infringement of the rights of the defence, in particular the right to be heard, consider that such an infringement entails the annulment of the decision taken at the end of the administrative procedure at issue only if, had it not been for such an irregularity, the outcome of the procedure might have been different.

The Court recalled that it has previously stated that, where neither the conditions under which observance of the rights of the defence is to be ensured nor the consequences of the infringement of those rights are laid down by European Union law, those conditions and consequences are governed by national law, provided that the rules adopted to that effect are the same as those to which individuals in comparable situations under national law are subject (principle of equivalence) and that they do not make it impossible in practice or excessively difficult to exercise the rights of defence conferred by the EU legal order (principle of effectiveness) (see G and R, EU:C:2013:533, paragraph 35).

None the less, while the Member States may allow the exercise of the rights of the defence under the same rules as those governing internal situations, those rules must comply with EU law and, in particular, must not undermine the effectiveness of the Customs Code (G and R, EU:C:2013:533, paragraph 36).

However, the Court made an important proviso as regards the consequences of the breach of the rights of the defence. It stated that the obligation of the national court to ensure that EU law is fully effective does not have the effect of requiring that a disputed decision, because it has been adopted in infringement of the rights of the defence, in particular the right to be heard, must be annulled in all cases.

According to EU law, an infringement of the rights of the defence, in particular the right to be heard, results in the annulment of the decision taken at the end of the administrative procedure at issue only if, had it not been for such an irregularity, the outcome of the procedure might have been different (France v Commission, C‑301/87, EU:C:1990:67, paragraph 31; Germany v Commission, C‑288/96, EU:C:2000:537, paragraph 101; Foshan Shunde Yongjian Housewares & Hardware v Council, C‑141/08 P, EU:C:2009:598, paragraph 94; and G and R, EU:C:2013:533, paragraph 38).

Consequently, an infringement of the principle of respect for the rights of the defence results in the annulment of the decision in question only if, had it not been for that infringement, the outcome of the procedure could have been different.

 

 

 

 

 

 

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