The question of whether a third State has standing in the EU Courts to challenge EU acts has been the subject of a long-standing debate. In its Grand Chamber judgment of 22 June 2021 in Bolivarian Republic of Venezuela v Council, the Court has definitely settled the matter and held that third States have standing to bring an action for annulment of an EU measure in the EU Courts under the same conditions as legal persons. The judgment opens up access to the EU Courts for third States whose interests are affected by the global reach of EU acts and provides a clear alternative for traditional methods of inter-State dispute resolution.
Facts
The State of Venezuela brought an action for annulment in the EU General Court against the Council to have restrictive measures taken with regard to the situation in Venezuela annulled. These measures encompassed inter alia a prohibition on undertakings to provide the State of Venezuela with assistance or services related to goods and technology of a military nature and a prior authorisation procedure for the provision of financing and assistance related to material intended for crisis-management operations of regional and sub-regional organisations. The action was dismissed by the General Court because the State of Venezuela was not directly concerned by the restrictive measures.
Argument
Upon appeal, the question had arisen whether the State of Venezuela could be considered a “natural or legal person” within the meaning of Article 263 TFEU, which provides the conditions under which actions for annulment can be brought against EU acts.
The Council defended the position that relations between the EU and third States are governed by public international law, which is based on consent and excludes an automatic right for sovereign States to a judicial remedy before the courts of other States. In light of this, third States could not be allowed, by presenting themselves as individual applicants, to use the EU Courts as a backdoor for resolution of international disputes between subjects of public international law.
This line of defence was further developed by a number of Member States, which relied on the public international law principle of reciprocity to argue that third States could not be granted access to EU Courts where it was not certain that the European Union would be able to challenge the national measures of those States.
The majority of the intervening Member States, supported by the European Commission, disagreed with this position and submitted that a third State is covered by the concept of “legal person” within the meaning of Article 263 TFEU.
Decision
The Court sided with the latter position. It relied heavily on the principle of effective judicial protection and the rule of law in order to give a reading to the notion of “legal person” that encompasses third States. In particular, the Court held in para. 52 of its judgment that “the obligations of the European Union to ensure respect for the rule of law cannot in any way be made subject to a condition of reciprocity as regards relations between the European Union and third States”.
After clearing this hurdle, the Court reversed the decision of the General Court that Venezuela was not directly concerned by the restrictive measures, held that the action for annulment was admissible and sent the case back to the General Court for final judgment on the substance.
Consequences for inter-State dispute resolution
The judgment is of great importance for third States seeking to challenge EU acts that harm their interests. While third States still have to meet the other conditions for standing (interest, direct and individual concern), the Court shows that it is prepared to hear disputes between the EU and third countries when the latter submit to its jurisdiction. By doing so, the Court has put itself forward as alternative forum for traditional methods of inter-State dispute resolution, which was also a reason for the European Commission to argue for a broad notion of “legal person”.
Compared to traditional forms of inter-State dispute resolution, direct access to the EU Courts to challenge EU acts brings tremendous advantages for third States in terms of efficiency and effectiveness: procedures are multilingual, relatively swift and automatically enforceable in the European Union. These benefits might be more important than the formal loss of a complete impartial adjudicator.
Given that annulment proceedings in the EU Courts are politically less charged, third States should consider this route as a viable option to settle their disputes with the European Union.
Please contact Pierre de Bandt or Raluca Gherghinaru for further information about this case and/or for general legal advice relating to EU litigation.