Effectiveness and Primacy of EU Law v. Higher National Protection of Fundamental Rights and National Identity

• Date: 01 June 2018
• Year: 2018
• Author: Costanza Di Francesco Maesa
• Pages: 52
• DOI: https://doi.org/10.30709/eucrim-2018-003

I. Introduction

On the 5th of December 2017, the European Court of Justice (hereinafter “ECJ”) finally delivered a judgment that put an end to the so-called Taricco saga − at least for the time being. More importantly, the judgment (called the Taricco II) deals with the relationship between the principles of primacy, effectiveness, and the direct effect of EU law and the concept of national (and particularly constitutional) identity of the Member States (hereinafter “MS”). It also addresses the extent of the possibility for MS not to apply EU law if it conflicts with an overriding principle guaranteed by their national constitution. The solution adopted by the Court is a compromise, which has settled a longstanding dispute with the Italian courts, transforming what could have been a war between courts into a dialogue between them.

In this context, the present article aims at analysing the tension between the primacy and effectiveness of EU law, on the one hand, and the (higher) protection of fundamental rights guaranteed by the national constitutions and respect for the national identity of the MS, on the other hand, through the lens of the Taricco II judgment. In order to address these issues, the Taricco saga is outlined in the following section (II), in order to understand how the tension between the effectiveness of EU law and the national protection of fundamental rights raised. Section III offers an assessment of Taricco II, by analysing whether the ECJ decided to overrule its Melloni doctrine and whether the ECJ answered the problematic question as to who is the ultimate judge responsible for assessing whether an obligation deriving from EU law undermines the principles inherent to the national identity of a Member State. Some conclusions are drawn in the last section (IV).

II. Tension between Effectiveness and Fundamental Rights in the Taricco Saga

The Taricco II judgment is the last in a back-and-forth between the ECJ and the Italian courts. It is, in particular, the decision taken by the ECJ in response to the question referred to it for a preliminary ruling by the Italian Constitutional Court (hereinafter “ItCC”), which originated by the ECJ’s findings in the first Taricco judgment. The latter was delivered in 2015 by the ECJ upon request for a preliminary ruling by an Italian criminal court. The Italian court questioned the compatibility of national rules on limitation periods, such as the fourth paragraph of Art. 160 of the Italian Criminal Code as amended by Law No 251/2005,¹ with Directive 2006/112. According to the above-mentioned Italian provision, the limitation period applicable to value added tax (hereinafter “VAT”) offences, if interrupted, can be extended by only one quarter of its initial duration, after which the proceedings are definitely to be considered time-barred. The referring court asked whether this provision introduced a VAT exemption not laid down in Art. 158 of Directive 2006/112. The ECJ reformulated the referred question in such a way as if the referring court was seeking to ascertain whether the national rule at issue impeded the effective fight against VAT evasion in the MS concerned. As it stood, the national rule had the effect of leading to the de facto impunity of the persons accused of VAT fraud in a large number of cases as a result of the expiry of the limitation period. If the rule amounted to such an impediment, it would be incompatible with Directive 2006/112 and, more generally, with EU law²

The ECJ stated that the national authorities should consider the Italian provisions at issue incompatible with EU law (in particular, with Art. 325(1) TFEU, Art. 2(1) of the PFI Convention as well as Directive 2006/112, read in conjunction with Art. 4(3) TEU), if the application of these provisions on the interruption of limitation period had the effect of ensuring the impunity of the perpetrators of serious VAT fraud offences.³ EU law, and specifically Art. 325 (1) and (2) TFEU, in fact obliges the MS to ensure that cases of serious fraud

“are punishable by criminal penalties which are, in particular, effective and dissuasive,” the ECJ argued. Moreover, “the measures adopted in that respect must be the same as those which the Member States adopt in order to combat equally serious cases of fraud affecting their own financial interests.”⁴

The need to ensure the effective fight against VAT fraud led the ECJ to equally affirm that “criminal penalties may nevertheless be essential to combat certain serious cases of VAT evasion in an effective and dissuasive manner.”⁵ It did so despite MS being free to choose the form of the penalties used (at least in theory) in order to effectively protect the Union’s financial interests.

The use of criminal sanctions is thus interpreted by the ECJ in the Taricco case − as in its “environment judgments” of 2005 and 2007⁶ − in a functional way.⁷ This means, as Mitsilegas wrote, that “criminal law is not viewed as a self-standing EU policy or field of competence, but rather as a means to an end enabling the Union to achieve effectiveness with regard to its policies and objectives.”⁸ The specific Union policy in this case, the implementation of which should be ensured by the MS, was the protection of the Union’s financial interests and the relevant provision was a primary EU law provision, i.e., Art. 325 TFEU. To this end, the ECJ affirmed the direct effect of Art. 325 TFEU⁹ insofar as it obliges the MS to “counter illegal activities affecting the financial interests of the European Union through dissuasive and effective measures” and “to take the same measures to counter fraud affecting those interests as they take to counter fraud affecting their own financial interests.” It concluded that national provisions unable to give full effect to Art. 325 TFEU are to be disapplied.¹⁰

However, provided that the EU is a union of law in which fundamental rights have a prominent role,¹¹ national authorities must also ensure that the fundamental rights of the persons concerned are protected, if they decide to disapply national provisions conflicting with EU law.¹² Despite stating that it is up to the national authorities to ascertain whether fundamental rights (especially the principle of legality) are violated by disapplication of the national provisions at issue, the ECJ, in its first Taricco judgment, assigned itself the task of determining whether disapplication of the limitation period provisions at issue would infringe the principle of legality, as interpreted by itself and by the ECtHR. In this regard, the ECJ played the role of a “quasi-constitutional” court,¹³ acting not only as the judicial authority competent to assess the validity of EU law or deciding on the interpretation of EU law but also as the judicial authority competent to assess the consequences of disapplication of national law to the fundamental rights protected at the EU level.

The performance of this role has been eyed by the ItCC, which affirmed that the ultimate control of compliance of EU law with the supreme principles of national legal orders should be entrusted to the national Supreme Courts.¹⁴ Thus, the ItCC submitted a request for a preliminary ruling to the ECJ asking whether the obligation deriving from Art. 325 TFEU, as interpreted in the first Taricco judgment, should be applied even if such an obligation conflicts with an overriding principle of the Italian legal system.¹⁵ The ItCC particularly affirmed that, in order for the ItCC not to exert the “counter-limit” doctrine, the ECJ should afford national authorities the possibility to continue applying national provisions, even if they are incompatible with the EU law, in case their disapplication is in contrast with an overriding principle of the national constitutional order and therefore jeopardises the national identity of a given MS.¹⁶ In fact, in the ItCC’s view, the competence to ascertain whether EU law, as interpreted by the ECJ, conflicts with principles pertaining to a MS’ “constitutional identity,”¹⁷ referred to in Art. 4 (2) TEU,¹⁸ belongs to the relevant national authorities.¹⁹

The compromise solution adopted by the ECJ in the Taricco II case nevertheless gives only a partial answer to the questions posed by the ItCC. In fact, in its judgment of 5 December 2017, the ECJ neither refers to Art. 4 (2) TEU, nor expressly addresses the issue of compatibility of the rule set out in the Taricco judgment with the overriding principles of the Italian constitutional order. Instead, “Luxembourg” confirms the main findings following from its previous Taricco judgment, at least as far as interpretation of Art. 325 TFEU is concerned. Even if not contested by the ItCC, the ECJ particularly reiterates, first, that Art. 325 TFEU is an EU primary law provision that has direct effect.²⁰ Secondly, the Court reaffirms that “it is for the Member States to ensure that the Union’s financial interests are protected²¹ and that, in order to achieve this objective, MS “are free to choose the applicable penalties”; however, at the same time, it stresses that “criminal penalties may be essential to combat certain cases of serious VAT fraud in an effective and deterrent manner.”²² As a result, the Court reaffirms that MS shall be considered “in breach of their obligations under Article 325(1) and (2) TFEU if the criminal penalties adopted to punish serious VAT fraud do not enable the collection in full of VAT to be guaranteed effectively” or if “the limitation rules laid down by national law do not allow effective punishment of infringements linked to such fraud.”²³

As regards the consequences of the incompatibility of national provisions with EU law (in particular with Art. 325(1) and (2) TFEU), the ECJ, in the first place, reiterates that it follows from its case law that it is

“for the competent national courts to give full effect to the obligations under Article 325(1) and (2) TFEU and to disapply national...