Did the court of last resort apply the CJEU preliminary ruling correctly? In case of EU law breach, what to do in the absence of domestic remedy? – A first appraisal of the pending case F. Hoffmann-La Roche and Others

Cinzia Peraro  (Senior Researcher of European Union Law, University of Bergamo - Italy)
 

I. Background

The Italian administrative judge of last resort (Consiglio di Stato) submitted on 21 April 2021[1] a request for a preliminary ruling in the case F. Hoffmann-La Roche Ltd and Others v Autorità Garante della Concorrenza e del Mercato (C-261/21).

This case falls within the long-running Avastin-Lucentis affair that concerns an agreement restricting competition concluded in breach of Article 101 TFEU between certain companies operating in the pharmaceutical sector. The Italian Antitrust Authority prohibited the continuation of the contested conduct and imposed administrative fines. The companies appealed against this measure before the administrative judge, who rejected them. Within the proceedings at second instance, the Council of State referred a number of preliminary questions of interpretation to the Court of Justice. After the preliminary ruling delivered on 23 January 2018 (C-179/16), the Italian administrative judge dismissed the appeals, thus upholding the decision at first instance and, accordingly, the contested measure. However, the parties asked the Council of State to revoke its appeal judgment, alleging, inter alia, a manifest breach of the principles of law affirmed by the Court of Justice in the previous preliminary ruling and asking to make a new referral to Luxembourg. The administrative judge thus suspended the proceedings and, for a second time, referred to the Court of Justice other three questions.

In substance, the request for interpretation is twofold: (i) whether the final judgment of the administrative judge of last resort is in violation of the previous CJEU preliminary ruling; and (ii) if the Italian procedural system is in compliance with EU law principles to the extent that it does not provide for a judicial remedy to challenge a judgment issued by an Italian last instance court clearly in breach of EU law.

The CJEU judgment in this pending case is highly anticipated under both aspects, on which some considerations can be advanced.

II. Interpretation vs application of EU law

In relation to the first issue mentioned above, the referring judge asked:

“[i]n a case where a party’s application seeks directly to assert an infringement of the principles expressed by the Court of Justice in that case in order to secure the setting-aside of the judgment under appeal, can the national court, against whose decisions there is no judicial remedy under national law, determine whether the principles expressed by the Court of Justice in the same case have been appliedcorrectly in that specific case, or is that determination a matter for the Court of Justice?”

Has judgment No 4990/2019 of the Council of State infringed, in the sense asserted by the parties, the principles expressed by the Court of Justice in the judgment of 23 January 2018 [in Case C-179/16] in relation (a) to the inclusion in the same relevant market of the two medicinal products without taking account of the views of authorities which had held that the off-label demand and supply of Avastin was unlawful; and (b) to the failure to verify the allegedly misleading nature of the information disseminated by the undertakings?”.

The problem regards whether the Council of State in adopting its final decision, against which no other remedies can be lodged, correctly followed the interpretation provided by the Court with its first preliminary ruling, and who shall determine it, the referring judge itself or the Court of Justice.

As observed, the reference for a preliminary ruling at hand has been submitted within a further appeal, in the same proceedings, instituted with an extraordinary remedy for revision before the same Council of State. This particular remedy is aimed at obtaining a new assessment of the dispute by the same judge who adopted the contested judgment in presence of factual grounds which were not or not correctly assessed at the time of the decision (pursuant to Arts 395 and 396 of the Italian Civil Procedure Code and 106 of the Administrative Procedure Code). However, as also complained by the parties in the present appeal, this remedy does not include a special ground for revision of the final judgment in case of manifest breach of the principles of law established by the Court of Justice with the preliminary ruling. This is the reason why the Italian administrative judge wondered, in cases where the parties can no longer contest the final decision in accordance with the domestic law, who can verify the correct application in the specific case of the interpretation expressed by the European judges.

The Court of Justice could consider such reference inadmissible. Indeed, in light of the purpose of the preliminary ruling mechanism, the submitted questions do not actually relate to the uniform interpretation of EU law, but rather to the application of a principle of law to the specific case.

The aim of the reference for a preliminary ruling is, in fact, to ensure within the Union a uniform interpretation of its rules to be applied by national judges. The interpretation of an EU provision has to do with its scope and purpose. In contrast, the application of EU law is a task of the national judges, that consists in the subsumption of the facts under a specific concept and thus it has to do with the correctness of the outcome of the particular case[2].

In light of the above, should the Court of Luxembourg declare the question inadmissible, the referring court may in turn confirm the contested decision, even though it is contrary to EU law. Therefore, the parties could only claim damages.

III. Intangibility of res judicata vs effective protection

With the last question, concerning the second issue identified above in the introduction, the referring judge asked:

“[d]o Articles 4(3) and 19(1) TEU and Articles 2(1) and (2) and 267 TFEU, read also in the light of Article 47 of the Charter of Fundamental Rights of the European Union, preclude a system (…), inasmuch as that system does not permit the use of the remedy of an application for revision to challenge judgments of the Council of State that conflict with judgments of the Court of Justice, and in particular with the legal principles asserted by the Court of Justice in a preliminary ruling on questions referred to it?

In other terms, in case of breach of EU law by the final decision of the court of last resort, what to do in the absence of domestic remedy?

The doubts concern the consequences of final judgments in breach of Union law where, as in the Italian legal system, a remedy to challenge such judgment is absent. The problem thus relates to the need to avoid the consequent consolidation of the alleged infringement of EU law. This is a question regarding the intangibility of res judicata and effective domestic remedies.

In the specific case, as observed above, the applicant lodged an extraordinary remedy for revision against the decision of the Council of State that may only be based on factual grounds, thus excluding any allegation concerning the violation of EU law. The possibility to invoke a breach of EU law is thus subject to national procedural rules, which nevertheless can be considered in compliance with EU law to the extent that they respect the principles of equivalence and effectiveness, as repeatedly held by the Court of justice in its case-law on procedural autonomy of the Member States. Indeed, the domestic remedy at hand limits the possibility to challenge final decisions. Nevertheless, it is compatible with the EU criteria, since it applies equally to violations of national and Union law, as well as it safeguards principles governing the legal system, i.e., intangibility of res judicata, legal certainty, stability of legal relationships and sound administration of justice.

In this regard, the considerations of Advocate General Bobek in the Călin case (C-676/17) are quite significant. He specified that

[t]he balancing and weighing of those values [legal certainty and the importance of res judicata] at the EU level led the Court to state clearly that the importance of legal certainty of final judgments and legal stability is so high that the requirement of effectiveness of EU law cannot override it, even if mistakes in the national application of EU law could thereby be corrected. Final judgments are not final because they are necessarily flawless. They are final because, at a certain stage, a case must end” (point 91).

It follows that at the interpretative level, at present, widening the scope of the domestic regime is not possible. It is up to the legislator to intervene in order to include allegations of breaches of law by courts of last resort, so to avoid the consolidation of misapplications of Union law and offer an effective protection at the substantial level, in addition to merely restorative claims. Recently, the Italian legislator has proposed by Law No. 206 of 26 November 2021 the introduction of a new ground for revision relating to the incompatibility with judgments of the European Court of Human Rights, which might be further extended to the CJEU rulings.

Actually, as described in the Research Note of the Court of Justice on the application of the Cilfit case-law, some Member States already provide for such a possibility whenever the courts adjudicating at last instance refuse to refer a matter to the Court of Justice and there has been a conscious or inadequately reasoned deviation from the interpretation given by the CJEU.

IV. Final remarks: another Italian case…

The Court of Luxembourg is called to intervene – once again – in support of the Italian judges to clarify the compatibility of the national procedural regime with EU principles vis-à-vis the correct application of Union law and the effective protection of rights deriving therefrom.

On the one hand, in relation to the issue regarding the correct application of Union law in the specific case, the Court may reaffirm the main purpose of the reference for a preliminary ruling. This system does not impede further referrals within the same proceedings whenever any doubts on the interpretation of EU law still exists, but not regarding the correct solution of the dispute.

The possibility to make a reference a second time within the same proceedings has been confirmed by the Court of Justice in the preliminary ruling – requested by the Italian Council of State – in the Consorzio Italian Management case (C-561/19). According to the CJEU judgment of 6 October 2021,

if that court or tribunal [of last resort] finds that the case before it does not involve any of those situations [CILFIT criteria], pursuant to the third paragraph of Article 267 TFEU it must bring before the Court of Justice any question concerning the interpretation of EU law that has been raised before it” (point 58) and “[t]he fact that that court or tribunal has already made a reference to the Court of Justice for a preliminary ruling in the same national proceedings does not affect that obligation when a question concerning the interpretation of EU law the answer to which is necessary for the resolution of the dispute remains after the Court’s decision” (point 59).

However, also in that case, the Italian administrative judge wondered whether such an obligation is subject to the national procedural rules, especially the prohibition to raise a new ground of appeal in a later stage, where it changes the subject matter of the dispute. In this regard, the Court of Justice specified that, by virtue of the principle of national procedural autonomy,

the “court or tribunal [of last resort] may refrain from referring to the Court a question for a preliminary ruling on grounds of inadmissibility specific to the procedure before that court or tribunal, subject to compliance with the principles of equivalence and effectiveness” (point 66).

On the other hand, the pending case would represent a new opportunity for the Court of Justice to reaffirm its assessment on the national procedural autonomy in the light of the EU principles. In turn, the judgment could prompt the Italian legislator to reflect on the possibility for a revision of the existing domestic remedies to challenge the final decisions of the courts of last instance in case of breach of EU law.

The correct application of Union law and, as a result, the protection of the rights at substantive level could only be granted by the intervention of the legislator with the provision of specific judicial means. This also emerges from the Grand Chamber’s judgment of 21 December 2021 in the Randstad case (C-497/20), concerning another special remedy, that can be submitted before the Corte di Cassazione against the decisions of the Council of State on grounds of jurisdiction pursuant to Article 111(8) of the Constitution. In accordance with the national case law, such remedy cannot be employed to allege violations of law, whether domestic or Union law. In the Randstad case, the Court of Cassation thus asked the European judges to verify the compatibility with Union law of the national procedural regime at hand. The Grand Chamber declared that

Article 4(3) and Article 19(1) TEU, and Article 1(1) and (3) of Directive 89/665, read in the light of Article 47 of the Charter, must be interpreted as not precluding a provision of a Member State’s domestic law which, according to national case-law, has the effect that individual parties, such as tenderers who participated in a procedure for the award of a public contract, cannot challenge the conformity with EU law of a judgment of the highest court in the administrative order of that Member State by means of an appeal before the highest court in that Member State’s judicial order” (point 81).

Again, the procedural autonomy of Member States can be weakened, but whenever the judicial remedies successfully pass the equivalence-effectiveness test, the Union – through the Court of Justice – cannot interfere with the domestic legal systems, yet remaining the risk of not ensuring the correct application of EU law.

In the light of the foregoing considerations, the Court’s ruling in the pending case F. Hoffmann-La Roche and Others will contribute in the definition of the nature of the mechanism of the preliminary ruling reference, by distinguishing the application from the interpretation of Union law. It will also add another piece to the mosaic of judgments concerning the compatibility of the Italian procedural regime with EU principles. However, a gap still persists in terms of effective protection towards final judgments allegedly in breach of Union law against which only damages claims can be actioned.


[1] Order No. 2327 of 18 March 2021.

[2] On the distinction between interpretation and application of Union law, see Advocate general Bobek, opinion of 23 February 2021, C‑923/19, Van Ameyde España, points 56-57.

Advocate general Bobek also observed that “the uniformity sought is not and has never been at the level of the single outcome of each individual case, but at the level of the legal rules to be applied. This means that, logically, while there is a reasonable degree of uniformity of the legal rules, there may be diversity in terms of specific outcomes” (opinion of 15 April 2021, C-561/19, Consorzio Italian Management, point 149).

Picture credits: Matthias_Lemm

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