Final Report Summary - DEANDEUPL (Distributive Effects and EU Private Law: Justificatory Practices of EU Institutions in a Constitutional, Methodological and Communicative Perspective)
The purpose of the project was to explore the justificatory function of the presence or absence of distributive effects in EU private law by drawing connections between explicit and implicit Union values, and the constitutional set-up of the European Union, on the one hand, and the methodological difficulties of distributional analysis and its rhetorical effects, on the other. The project was based on the assumption that areas of EU law under investigation belong to ‘private law’, i.e. they concern transactions between private parties. EU private law has been examined as a discourse within which only selected arguments can be effectively presented. This has led the researcher to explore EU law as possessing a relatively closed catalogue of ‘good’ arguments, i.e. arguments which could be used in the process of law formation, judicial review and law interpretation. It was also assumed that there existed a close connection between the constitutional layer of EU law and its ‘private law’ sphere.
The working hypothesis of the project was that there were four groups of factors capable of offering an explanation for the current role of distributional analysis in EU private law: 1) factors relating to Union values expressed through Treaties and constitutional and private law case law of the Court of Justice of the EU; 2) factors concerning the constitutional set-up of the EU, in particular those stemming from the principle of conferral, limited competences and the principle of proportionality; 3) factors relating to the methodology of distributional analysis and the possibility to assess the actual distributive effects of a particular regulatory change in EU private law, and consequently its fairness; 4) factors relating the rhetorical ambitions of EU law-making institutions and the desire to ensure acceptance for EU private law harmonisation. In the first year of the fellowship the research focused on the first two groups of factors.
The main results achieved during the first year of the project were the following:
Distributive justice was taken to be an inherent element of the political discourse. The research has established how it could be determined that the political discourse of distributive justice, if at all, is translated into a legal discourse. The research has identified that the best method is to look at the formation of concepts and principles which affect constitutional validity of EU law or its interpretation by the Court of Justice of the EU (CJEU). Using this methodology the researcher could assess to what extent EU law’s catalogue of ‘good’ arguments was open to arguments of distributive justice or arguments about fairness of the distributive effects of the proposed policies. The researcher has established that, according to the Court’s judgment in Vodafone, the goal of consumer protection is taken to include the objective of the lowering of prices for consumers.
Secondly, the research has established that when discussing the role of distributive justice claims in the EU legal discourse it is useful to distinguish two questions. The first question concerns the existing legal possibility within the current structure of EU law of preventing and challenging policies which lead or might lead to regressive redistribution (‘negative’ distributive justice). The researcher has concluded that for such a legal possibility to exist it would have to be necessary for EU law to impose a legal obligation on the law-making institutions to analyse the costs and benefits of particular policy solutions for different groups. These groups would have to be correctly identified by reference to the relevant characteristic (income, vulnerability, need). More importantly, however, EU law would need to possess a principle by the operation of which acts with respect to which the analysis had not been carried out had to be regarded as illegal or unconstitutional. The research has shown that there are various candidates among EU constitutional principles which could potentially be a source of such a legal obligation. The most promising one, which also constitutes a standard of validity review in EU law, is the principle of proportionality. However, the investigation of the existing case law on proportionality has revealed that the potential of the principle as a discursive space where arguments of distributive justice could be presented is not effectively utilised. As the CJEU’s judgment in Nelson shows, proportionality is a principle protecting in the first instance economic operators, not consumers, against substantial negative economic consequences of EU legislation. The Court’s approach has been contrasted with the Protocol on Subsidiarity and Proportionality. There, the effect of EU acts for citizens is already an element of the proportionality assessment. Therefore, the researcher intends to argue that not only individual autonomy (or economic freedom, as the substantive aspect of proportionality in EU law has been conceptualised so far) but also implications for citizens’ wealth should be taken into account as part of the Court’s proportionality assessment. The second aspect of the principle of proportionality which the researcher investigated in relation to distributive justice claims was the scope of discretion left to EU law-making institutions by the review practices of the CJEU. The research has identified the conceptual techniques which would enable the Court of Justice of the EU to steer the principle of proportionality in the direction of examining the desirable and undesirable distributive effects of EU policies.
The second question of distributive justice in EU private law concerns the possibility of effectuating progressive redistribution through EU private law (‘positive’ distributive justice). The research has made it apparent that while the policy of progressive redistribution may be indirectly carried out by EU legislative initiatives granting consumers and employees new rights, it is not the case that a duty to promote progressive redistribution is a principle of EU private law.
Thirdly, the research focused on the developing of an understanding of claims of distributive justice within EU private law. It was necessary first to establish to what extent ‘justice’ was an element of the conceptual structure of EU law and whether the notion of justice was concerned only with distributions according to rights (EU law as a system granting and recognising rights) or whether it also encompassed claims about distribution according to need and dessert. The research has established that certain reasoning practices of EU institutions did in fact divide the addressees of EU regulation into groups whose members may be distinguished according to their varying needs. Two particularly clearly identified groups are constituted by consumers and employees, both recognised by the CJEU to be ‘weaker parties’ of the contractual relationships in which they gain their group-identifying identity. However, the ‘weakness’ of consumers and employees is traditionally associated with their unequal contractual position (unequal bargaining power, unequal economic power), and not with their more substantive needs as ‘poorer’ groups. The research has also established that framing the discussion in terms of ‘access’ or ‘capabilities’ of consumers and employees to participate in the market, present in the scholarly literature on the topic (Micklitz, ‘Social Justice and Access Justice in Private Law’; Deakin ‘Capacitas: Contract Law, Capabilities and the Legal Foundations of the Market’) does not address the question of distributive justice because consumers and employees, as groups, do already participate in the market. It is only when access is required on the basis of ‘reasonable’ or ‘affordable’ prices that 'access justice' engages with issues of distributive justice (see Directive 2009/72/EC concerning common rules for the internal market in electricity; Directive 009/73/EC concerning common rules for the internal market in natural gas; Directive 2002/22/EC on universal service and users ’ rights relating to electronic communications networks and services (Universal Service Directive) and Directive 2014/92/EU on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features). Thus, it has emerged that the problem lay in an unequal treatment of employees who cannot present themselves as a ‘discriminated minority’ and a large number of EU citizens who currently do not have a status of an employee because of high rates of unemployment in many Member States. Similarly, the existing conceptual structure of EU private law does not recognise that consumers are not a heterogeneous group. Within this group actual access is largely dependent on availability of financial resources and the absence of other vulnerabilities. The criterion of ‘need’ as a reference point for distributive justice shows very vividly that the categories constructed in the EU legal discourse make it difficult for those whose needs are most substantial to make enhanced legal claims. It is a characteristic feature of EU private law that it uses the instrument of ‘rights’ to improve the position of particular groups. Thus, the research used critical legal theory to arrive at a conclusion that ‘rights’ had a double effect in a system where remedial and procedural protection followed the existence of rights – unless someone is able to show that they possess a ‘right’, or at least a juridified legal interest, they are not only outside the scope of legal protection but are often ‘mute’ in the official discourse. Using this insight and connecting it with observations relating to the catalogue of ‘good’ legal arguments the research has made a contribution to explaining the conceptual incompatibility between distributive justice claims and the current discourse of EU private law.
The working hypothesis of the project was that there were four groups of factors capable of offering an explanation for the current role of distributional analysis in EU private law: 1) factors relating to Union values expressed through Treaties and constitutional and private law case law of the Court of Justice of the EU; 2) factors concerning the constitutional set-up of the EU, in particular those stemming from the principle of conferral, limited competences and the principle of proportionality; 3) factors relating to the methodology of distributional analysis and the possibility to assess the actual distributive effects of a particular regulatory change in EU private law, and consequently its fairness; 4) factors relating the rhetorical ambitions of EU law-making institutions and the desire to ensure acceptance for EU private law harmonisation. In the first year of the fellowship the research focused on the first two groups of factors.
The main results achieved during the first year of the project were the following:
Distributive justice was taken to be an inherent element of the political discourse. The research has established how it could be determined that the political discourse of distributive justice, if at all, is translated into a legal discourse. The research has identified that the best method is to look at the formation of concepts and principles which affect constitutional validity of EU law or its interpretation by the Court of Justice of the EU (CJEU). Using this methodology the researcher could assess to what extent EU law’s catalogue of ‘good’ arguments was open to arguments of distributive justice or arguments about fairness of the distributive effects of the proposed policies. The researcher has established that, according to the Court’s judgment in Vodafone, the goal of consumer protection is taken to include the objective of the lowering of prices for consumers.
Secondly, the research has established that when discussing the role of distributive justice claims in the EU legal discourse it is useful to distinguish two questions. The first question concerns the existing legal possibility within the current structure of EU law of preventing and challenging policies which lead or might lead to regressive redistribution (‘negative’ distributive justice). The researcher has concluded that for such a legal possibility to exist it would have to be necessary for EU law to impose a legal obligation on the law-making institutions to analyse the costs and benefits of particular policy solutions for different groups. These groups would have to be correctly identified by reference to the relevant characteristic (income, vulnerability, need). More importantly, however, EU law would need to possess a principle by the operation of which acts with respect to which the analysis had not been carried out had to be regarded as illegal or unconstitutional. The research has shown that there are various candidates among EU constitutional principles which could potentially be a source of such a legal obligation. The most promising one, which also constitutes a standard of validity review in EU law, is the principle of proportionality. However, the investigation of the existing case law on proportionality has revealed that the potential of the principle as a discursive space where arguments of distributive justice could be presented is not effectively utilised. As the CJEU’s judgment in Nelson shows, proportionality is a principle protecting in the first instance economic operators, not consumers, against substantial negative economic consequences of EU legislation. The Court’s approach has been contrasted with the Protocol on Subsidiarity and Proportionality. There, the effect of EU acts for citizens is already an element of the proportionality assessment. Therefore, the researcher intends to argue that not only individual autonomy (or economic freedom, as the substantive aspect of proportionality in EU law has been conceptualised so far) but also implications for citizens’ wealth should be taken into account as part of the Court’s proportionality assessment. The second aspect of the principle of proportionality which the researcher investigated in relation to distributive justice claims was the scope of discretion left to EU law-making institutions by the review practices of the CJEU. The research has identified the conceptual techniques which would enable the Court of Justice of the EU to steer the principle of proportionality in the direction of examining the desirable and undesirable distributive effects of EU policies.
The second question of distributive justice in EU private law concerns the possibility of effectuating progressive redistribution through EU private law (‘positive’ distributive justice). The research has made it apparent that while the policy of progressive redistribution may be indirectly carried out by EU legislative initiatives granting consumers and employees new rights, it is not the case that a duty to promote progressive redistribution is a principle of EU private law.
Thirdly, the research focused on the developing of an understanding of claims of distributive justice within EU private law. It was necessary first to establish to what extent ‘justice’ was an element of the conceptual structure of EU law and whether the notion of justice was concerned only with distributions according to rights (EU law as a system granting and recognising rights) or whether it also encompassed claims about distribution according to need and dessert. The research has established that certain reasoning practices of EU institutions did in fact divide the addressees of EU regulation into groups whose members may be distinguished according to their varying needs. Two particularly clearly identified groups are constituted by consumers and employees, both recognised by the CJEU to be ‘weaker parties’ of the contractual relationships in which they gain their group-identifying identity. However, the ‘weakness’ of consumers and employees is traditionally associated with their unequal contractual position (unequal bargaining power, unequal economic power), and not with their more substantive needs as ‘poorer’ groups. The research has also established that framing the discussion in terms of ‘access’ or ‘capabilities’ of consumers and employees to participate in the market, present in the scholarly literature on the topic (Micklitz, ‘Social Justice and Access Justice in Private Law’; Deakin ‘Capacitas: Contract Law, Capabilities and the Legal Foundations of the Market’) does not address the question of distributive justice because consumers and employees, as groups, do already participate in the market. It is only when access is required on the basis of ‘reasonable’ or ‘affordable’ prices that 'access justice' engages with issues of distributive justice (see Directive 2009/72/EC concerning common rules for the internal market in electricity; Directive 009/73/EC concerning common rules for the internal market in natural gas; Directive 2002/22/EC on universal service and users ’ rights relating to electronic communications networks and services (Universal Service Directive) and Directive 2014/92/EU on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features). Thus, it has emerged that the problem lay in an unequal treatment of employees who cannot present themselves as a ‘discriminated minority’ and a large number of EU citizens who currently do not have a status of an employee because of high rates of unemployment in many Member States. Similarly, the existing conceptual structure of EU private law does not recognise that consumers are not a heterogeneous group. Within this group actual access is largely dependent on availability of financial resources and the absence of other vulnerabilities. The criterion of ‘need’ as a reference point for distributive justice shows very vividly that the categories constructed in the EU legal discourse make it difficult for those whose needs are most substantial to make enhanced legal claims. It is a characteristic feature of EU private law that it uses the instrument of ‘rights’ to improve the position of particular groups. Thus, the research used critical legal theory to arrive at a conclusion that ‘rights’ had a double effect in a system where remedial and procedural protection followed the existence of rights – unless someone is able to show that they possess a ‘right’, or at least a juridified legal interest, they are not only outside the scope of legal protection but are often ‘mute’ in the official discourse. Using this insight and connecting it with observations relating to the catalogue of ‘good’ legal arguments the research has made a contribution to explaining the conceptual incompatibility between distributive justice claims and the current discourse of EU private law.