European Union (Amendment) Bill

In our previous proceedings, the noble Lord, Lord Owen, asked the very important question: what are the limits on the powers of the European Court of Justice? By way of answering that question, I shall put in your Lordships’ Library a brief two-page article written by the well known constitutional lawyer, Mr Martin Howe, which shows that there are in fact no limits on the power of that court and therefore no limits on the way the court will eventually interpret the Charter of Fundamental Rights. For the purposes of this debate it might be worth putting on the record a few very short quotations from the court over the years which show how the court has advanced its own powers beyond the powers conferred in the treaties. Mr Howe makes the very important point that the feature which sets the European treaties apart from all other international treaties is that it is a system of law which penetrates inside the member states and takes precedence over the national laws in the domestic courts of the member states. It is that internal penetration of the treaty of Rome which sets it apart. One of the key points is that the treaty articles having direct effect inside the member states are not actually stated in the treaties. This was decided by the European Court in the Van Gend en Loos case in 1963, which has already been mentioned by the noble Lord, Lord Kingsland, in his opening remarks. It is worth citing the judgment in that case. The court said that, "““this Treaty is more than an agreement which merely creates mutual obligations between the contracting states.  This view is confirmed by the preamble to the Treaty which refers not only to governments but to peoples … The Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only Member States but also their nationals””." So in 1963, although the court is beginning to advance its jurisdiction. It does say that it is within limited fields. That will change, as we shall see. We then go on to the Costa v ENEL case in 1964, when the court said: "““The transfer by the States from their domestic legal system to the Community legal system of the rights and obligations arising under the Treaty carries with it a permanent limitation of their sovereign rights””." That is what the court said; it is not in the treaty. By 1970, in the Internazionale Handelsgessellschaft case the European Court declared its view that Community law should take precedence even over the constitutional laws of the member states, including basic entrenched laws guaranteeing fundamental rights. In 1987, in the Foto-Frost case, the court ruled that national courts had no power to question the validity of Community measures and reserved that power exclusively to itself, even though there was nothing in the treaty or in general principles of international law that would require states to recognise the validity of acts which are outside the powers conferred by the treaty. Judicial activism again. So the story goes on. In 1992, in the European Economic Area Agreement, the court made it clear that the objective of all the community treaties was to contribute together to make concrete progress towards European unity. It went so far as to say that the provisions of the treaty of Rome on free movement and competition, which is what that particular judgment was about, far from being an end in themselves, "““are only a means for obtaining those objectives””." By now, those objectives were to be enforced in ““ever wider fields,”” no longer the limited fields that we had before. The story continues. In the 1998 Silhouette case, when the court dealt with trademarks and in the 1999 agrochemical case. I will not try the Committee’s patience with quotations from those cases, but it all continues in the same direction. We come now to the recent tax cases. I asked the Minister at our last sitting whether the Lisbon treaty could lead to the harmonisation of direct tax. The treaty has been silent on direct tax, but refers to indirect tax. The answer is that the court is already there. It has already invaded corporation tax and invoked the general clauses of the treaty on non-discrimination to strike down national tax legislation. An important example is the 2002 Lankhorst-Hohorst case on tax credits on payments by a subsidiary to its parent company in a member state. I mentioned that in our previous proceedings; it denudes national treasuries of huge sums of money, although it is quite favoured by the finance directors of international companies. Then we come to the court setting up its own criminal areas, such as in 2005, with the environmental protection case. The court decided that the EU can specify and impose criminal offences and penalties in the very wide fields where the EC has existing competence. If that was right, the court had these powers over criminal law from the day the treaty of Rome was signed on 25 March 1957. Yet if anyone had said that in 1957, they would have been laughed at. As the noble Lord, Lord Kingsland, mentioned, we saw how the opt-out from the 48-hour week, which was negotiated at Maastricht, was circumvented because the Commission said that it did not come under social policy but under health and safety at work. The court agreed and the United Kingdom lost. In our previous proceedings I read out the resultant letter from Mr Major to Mr Santer complaining about what had happened. It does not help, therefore, if noble Lords say that there is nothing new in this. The process will go on as before. The court is free to interpret the treaties in the way it wants and nothing that is put in the treaty— certainly nothing in the charter—can be safely relied on. It will, I am afraid, be reinterpreted by the court to expand those powers ever further. I therefore support the amendment.