ECJ bans patents on transplantation of embryo cells, Brüstle, C-34/10

Professor Olivier Brüstle got the German patent related to neural precursor cells and the processes for their production from embryonic stem cells for therapeutic purposes, but was attacked by Greenpeace and finally lost proceedings before the Grand Chamber of the ECJ.

Professor Brüstle tried to argue that, in fact, he does not work with “embryo”, but the ECJ replied that “embryo” is an autonomous concept of the EU law and gave it the widest sense possible – thus, covering any human ovum after fertilisation, any non-fertilised human ovum into which the cell nucleus from a mature human cell has been transplanted and any non-fertilised human ovum whose division and further development have been stimulated by parthenogenesis (§§ 26, 38).

Professor Brüstle then argued that he does not use embryos for “industrial or commercial purposes” but for “purposes of scientific research” only. The ECJ replied that the word “patent” implies its industrial or commercial application (§§ 41-42). Therefore, according to the Grand Chamber, “industrial or commercial purposes” cover “scientific” ones (§ 46).

Thus, the transplantation of embryo cells became unpatentable.

ECtHR: contradictions between judgments of 2 national supreme courts must be tolerated, Şahin v Turkey, 13279/05

On 16/05/2011, a Turkish military plane crashed on return from an anti-terrorist operation in Iraq (§ 10). Families of 14 victims addressed the Ankara Administrative Court/Turkish Administrative Court and got pensions due to the death of relatives during an anti-terrorist operation (§ 64). However the Şahin family appeared before the 4th Chamber of the Ankara Administrative Court that found that the case shall be forwarded to the Turkish Supreme Military Administrative Court. The latter concluded that this was not a death during an anti-terrorist operation (§ 65). Yesterday, on 20/10/2011, the Grand Chamber of the ECtHR found on appeal that this case law contradiction must be tolerated, that it does not violate the right to fair trial.

The Şahin family tried to argue that this contradiction violates the principle of the consistency of the law, and the principle of legal certainty (§§ 40-41). The 10 v 7 ECtHR majority replied that this conflict of the Turkish Administrative Court and the Military Administrative Court must be tolerated, that it does not undermine legal certainty, that the principle of good administration of justice cannot impose a strict requirement of case law consistency, that one must respect the autonomy and independence of the 2 Turkish Courts, that it is not the ECtHR role to intervene simply due to a conflict of judgments (§§ 83-84, 88).

The minority of 7 judges held that the conflict of judgments gives an impression of “arbitrariness”, that this is contrary to the legal certainty, that consistency is necessary to preserve public confidence in the administration of justice (§§ 3-4, 6 of the dissenting opinion).

I like this kind of cases because it shows the extent of unknowability we live in, and supports the general Critical Legal Studies perspective on indeterminacy of law in slightly more complex cases.

ECJ: contractual clause prohibiting Internet trade is illegal, Pierre Fabre, C-439/09

Pierre Fabre Dermo-Cosmétique SAS manufactures and markets cosmetics and personal care products under brands Avène, Galénic, Ducray and Klorane. Their general contractual clause imposed an obligation on distributors was that the products have to be sold in a “physical space” in the presence of a person with a diploma in pharmacy, which de facto excluded internet trade (§§ 13-14).

Pierre Fabre tried to justify the clause with an intention to provide a personalized advice in order to ensure “cosmetovigilance” (§§ 17, 25), avoiding the risks of counterfeiting and free-riding between authorized pharmacies (§ 23), need to maintain the prestigious image of the products (§ 45). The French Competition Authority decided that the real aim of the clause is to prevent selling the goods to non-authorised distributors, to reduce considerably the ability of an authorized distributor to sell the contractual products to consumers outside its contractual territory, and to restrict competition (§§ 19, 38). Pierre Fabre got a fine of € 17 000.

The ECJ adjudicated that the reasons given by Pierre Fabre did not have a legitimate aim for restricting competition (§§ 44, 46).

ECtHR supports squatters, Rhino v Switzerland, 48848/07

About 100 squatters (mostly art students) occupied 3 buildings in the center of Geneva in 1988, and established the squat association “Rhino” (acronym for “Retour des habitants dans les immeubles non occupés” or “Return of inhabitants to non occupied buildings” in English). On 10/05/2007 the Swiss Federal Tribunal prohibited the association due its “illegal aims”, i.e. “subtract the buildings that they occupy from the market and speculation” (§ 45), and on 23/07/2007 police expelled the squatters (§ 28). However on 11/10/2011 the European Court of Human Rights adjudicated that the liquidation of the squatters association violated the freedom of association (Article 11 of the Convention).

The Swiss Government argued that the liquidation of the squatters association was necessary, since they had illegal aims and were implementing those aims with illegal actions (occupying buildings). It was necessary to forbid the association in order to re-establish the rights of the owners of the buildings. The ECtHR replied that there is no link between the protection of property rights and the liquidation of the association (§ 63).

The Court dismissed the argument that the dissolution was necessary in order to preserve public order (§ 64). Chairwoman of the squat association M. Kerchenbaum, secretary M. Pier and treasurer O. Connolly were awarded € 65 651 for pecuniary damage and € 21 949 to cover the lawyers.

Wikileaks proves that MEP Uspaskich is persecuted for political reasons

The European Parliament never saw such a striking case of political persecution as that of Viktor Uspaskich, Member of the EP, Chairman of the Lithuanian Labour Party. His political party was accused of non-payment of certain taxes, and last year the European Parliament waived his immunity. However the question is now re-opened due to the disclosure of secret notes of the US Embassy in Vilnius by Wikileaks:

1. It is stated in the 1st secret document that the State Secretary of the Lithuanian Government told to USA diplomats that it was the Government who “engineered the departure” (or expel) of Mr Uspaskich from Lithuania. It also follows that he also confessed that the real reason of the attack by the State was quite different from the formal one: the suspicion of Ministers that he might be related to Russian secret services. However there is no even a single proof of such a relationship. Therefore, he is formally accused of something else. As a Lithuanian, I would add that we, Lithuanians, have a general cultural-historic tradition to accuse Russians of all possible problems.
2. The 2nd secret document discloses that the Defense Minister of Lithuania told to the US Ambassador that the aim of the Governing Political Party was to remove the opposition leader Uspaskich from the post of head of the Labour Party and to put there someone else. By the way, the 2nd and 3rd Chairmen of the Party signed the final fiscal declarations for 2004 and 2005. Uspaskich (1st chronological Chairman) did not sign them. However nor the 2nd, neither the 3rd leader of the Party are even suspected of anything. Doesn’t it go in line with this secret document?

The scope and danger of this political persecution is much wider than any of the persecutions in cases Blumenfeld, 1-123/84, Amadei, A2-0034/86, Gaibisso, A2-0101/86, Valenzi, A2-0220/86 and A2-0221/86, Herklotz, 1-321/81, Marciani, A5-0422/03, or Brok, A7-0047/2011. The Committee of Legal Affaires of the European Parliament will consider this issue on Monday.

ECHR: Standard of “increased prudence” in a retrospective application of criminal law, Soros v France, 50425/06

Today George Soros lost his case in Strasbourg. In 1998 his investment fund Quantum Fund acquired 160 000 shares of the French bank Société Générale, and sold them several days later. This looked as a participation in a takeover attempt. The operation brought the profit of $ 2.28 million ($ 1.1 million at the French market, §§ 10-11). However in 2007 the Paris Appellate Court convicted Soros of buying shares based on insider information (Mr. P), and imposed a fine of € 940 507.22 (§ 30).

George Soros argued before the European Court of Human Rights that the French judgment had violated Article 7 of the Convention (nulla poena sine lege). The classic understanding of “insider trading” was that it is a use of “privileged information” by a person employed by the respective company or otherwise contractually related (§ 54). Does this conception cover Mr. Soros? The report of the French Commission of Stock Exchange Operations stated that it had been impossible to appraise whether the French law had forbade this kind of operations at the respective time (§ 14). However later the French law was amended in a manner making that operation clearly illegal.

The ECHR majority (4 versus 3) ruled on introduction of additional tests.

1. The 4 judges stated that he had “to doubt” about that operation, since previously the French first instance tribunals had ruled that an insider employed by a company could not use privileged information for such a personal benefit (§§ 56-58). Note: this question never went to appeal or cassation stage.
2. They qualified George Soros as “institutional investor”, and since he was this kind of person, he had to bring a “proof of increased prudence” (§ 59).

The minority opinion of 3 judges insists that the criminal law interpretation must be strict. The very fact that after the operation the French Government had to amend the written law shows that it was not precise at the respective time. The minority underlines the difference between “unavoidable imprecision” and “avoidable imprecision” of criminal law, and proposes to use this as a judiciary test.

Competition law policy of the ECHR

ECHR adjudicated that the competition law must be assimilated with the criminal law for the purposes of the European Convention of Human Rights in case A. Menarini Diagnostics SRL v Italy, 43509/08, § 44. This Florence company was subjected to a fine of € 6 million by the Italian competition authorities for a participation in a cartel fixing prices and dividing the market of tests for diagnosis of diabetes.

A. Menarini Diagnostics insisted on violation of the right to court, i.e. the right to a full review of the competition authority decision: as the Administrative Tribunal of Latium had recognized, the judicial control of competition cases is “weak”, “it is prohibited to the judge to exercise an in-depth control”, the judge cannot substitute its appraisal to that of the competition authority, the judge can only apply the legal norms identified by the competition authority, cannot modify the elements of the investigation and the very decision. The judicial control is limited to the verification of legality, of the logic and coherence of the decision (§ 52).

Nonetheless, the ECHR considers that the Italian Courts have a full jurisdiction in competition cases, since they can examine the elements of proof, verify whether the administration used the powers in an appropriate manner (§ 63), verify the reasonableness and proportionality of the choices within a decision, verify the technical things (§ 64), and change the sanction (§ 65).

ECHR: company tax litigation is a criminal and property case

Moldovan company Agurdino SRL producing chemical products was ordered to pay Value-Added Tax of € 126 000, and a fine of € 101 000. The Moldovan Supreme Court of Justice found in favour of the company, since it was operating in the Expo-Business- Chişinău Free Economic Zone, and therefore hadn’t been obliged to pay VAT (§§ 6-7). However then the Moldovan Parliament adopted an Act on Interpretation of the Act on the Free Economic Zone (§ 8). On the basis of this Act, the Supreme Court of Justice re-opened the case and ordered the Agurdino SRL to pay the money (§ 11).

Since the fine of € 101 000 has the purpose to deter re-offending rather than merely imposing a pecuniary compensation, the tax litigation must be qualified as “criminal” (§ 23). The money that could be kept after the first Supreme Court of Justice judgment is covered with the category of “possession” (§ 40).

The ECHR qualified re-opening the file after issuing a legislative interpretation as “appeal in disguise” violating the principle of legal certainty and property rights.

ECJ: in the absence of “complementary elements”, controlling 98 % of shares does not presume liability of the mother company, Elf Aquitaine, C-521/09 P

The ECJ annulled the decision of the European Commission ordering mother company Elf Aquitaine SA to pay the fine of € 45 million jointly with its daughter company Arkema SA for a participation in cartel AMCA at the monochloroacetic acid market. The EU General Court held the mother company liable due to the fact that it controls 98 % of the daughter’s shares (§ 158). The ECJ set aside this judgment and dismissed the conclusions of its own Attorney General.

Elf Aquitaine argued that she is a “pure holding” without operational functions, the daughter company never got any instructions from the mother company, the daughter company did not inform the mother company, the daughter company was financially autonomous and could act without any authorization, and the daughter company was perceived as autonomous by the third parties (§ 160).

The ECJ adjudicated that the right to motivation required the European Commission to bring “complementary elements” showing an interference of the mother company into the commercial behavior of the daughter company.