Friday, 19 September 2014

The Essent judgment: Another revolution in the case law on free movement of goods?

Filippo Fontanelli, Lecturer in International Economic Law, University of Edinburgh


On 11 September 2014, the Court of Justice of the EU delivered the judgment in the Essent case (Joined Cases C-204 to C-208/12, not to be confused with Case -91/13, also named Essent, of the same day). The judgment contains a delicate assessment of proportionality involving several interlaced interests: promotion of free energy trade, protection of the environment and human health, compliance with international commitments on emission-reduction, promotion of local employment, and incentives to achieve energy self-sufficiency.

If this maelstrom of values were insufficient to raise the interest of the readership, the judgment has also a purely doctrinal undertone. Indeed, the Court appears to ignore – deliberately – the summae divisiones which it itself has maintained for decades between distinctly and indistinctly applicable measures, as well as between justifications under Article 36 TFEU (which set the explicit Treaty-based grounds for restricting the free movement of goods) and other mandatory requirements (the other grounds for restricting such free movement). Thousands of EU law academics might now need to finally drop the standard exam-questions on “Measures equivalent to a quantitative restriction (MEQRs) from Cassis to Keck and beyond” yearly rephrased and administered since time immemorial: it might turn out that, after all, Cassis is no longer good law.

The case

The facts of the main proceedings relate to a complex domestic regulatory regime which, in turn, implements devilishly detailed EU acts. However, the crux of the dispute is easily summarised: a Flemish Regional scheme requires energy suppliers connected to the electricity grid to demonstrate the use of a certain amount of renewable energy, on pain of a hefty penalty. Only locally produced green energy counts toward that quota, hence suppliers cannot use green energy produced abroad to prove compliance.

Essent could have met or at least approached the quota had it been allowed to factor in the calculation renewable energy that it had sourced from Norway, Denmark, Sweden and the Netherlands, but it was not. It then incurred a series of yearly sanctions, and challenged them repeatedly before the Belgian courts. The Belgian judges raised a preliminary question to the Court of Justice asking, essentially, whether the discriminatory treatment of foreign green energy towards the fulfilment of the compulsory quota is in violation of the treaty obligations regarding freedom of movement of goods and the prohibition of discrimination based on nationality.

[Skip to the next section if you arrived to this post by Googling “mandatory requirements” and you must submit your essay three hours from now. For the others, a few words on the legal context of the dispute.]

Directive 2001/77 (governing the facts of the main proceedings, now replaced by Directive 2009/28) recognizes that renewable energies are underused in the Union, an unfortunate circumstance given that the development of a green energy industry could, at once, alleviate the dependence of EU countries from foreign supply, contribute to the fulfilment of the climate-change commitments entered into under the Kyoto protocol, and foster local employment policies. Therefore, the EU encourages national schemes supporting the consumption of renewable energy, without harmonising them. Better, “until a [Union] framework is put into operation”, which is presumably in the works (see recital 14 of the Preamble of Directive 2001/77).

In order to facilitate the trade in green energy, the Directive established a compulsory system of certification, whereby energy derived from renewable sources is entitled to a “guarantee of origin”. Guarantees of origin issued in EU members are mutually recognized across the Union.

National support schemes can provide various incentives to facilitate the production and consumption of green energy. Typically, benefits are available only to producers and suppliers handling green energy, which necessarily hold the relative guarantees of origin. However, member states are not required to make the specific benefits dependent on the possession of the guarantees. The Preamble of the Directive is clear in this sense: “[s]chemes for the guarantee of origin do not by themselves imply a right to benefit from national support mechanisms established in different Member States”. Guarantees of origin are therefore necessary but possibly insufficient conditions to enjoy national incentives.

The Flemish scheme implementing the Directive, for instance, is premised on the possession (and periodic surrendering) of “green certificates”. Green certificates are granted to producers of green energy based in the Flemish region, which sell them alongside the energy. Suppliers are under an obligation to surrender a certain quota of green certificates to avoid sanctions. At the stage of surrendering, guarantees of origin attached to green energy purchased abroad cannot substitute for the missing green certificates to fill the quota.

A provision of the relevant Flemish Decree envisages the possibility for the Flemish government to accept non-Flemish certificates for the purpose of filling the quota, but no implementing act has been adopted to regulate this possibility, which therefore remained wishful thinking.

The Flemish scheme was challenged under the Directive, under Article 34 TFEU prohibiting measures equivalent to quantitative restrictions (MEQRs), and under Article 18 TFEU prohibiting discrimination based on nationality.

The Directive clearly does not require Member States to link support schemes to guarantees of origin. It simply requires States to issue them and recognize them across the Union, so that consumers are always informed of the green-ness (or lack thereof) of the energy they purchase.

The real challenge to the Flemish scheme was brought under Article 34 TFEU. The domestic measure encourages suppliers operating in the Flemish regions to buy renewable energy from local producers, as equally green foreign energy is unusable towards fulfilment of the quota. Local green energy is artificially made more precious, because of the green certificates it is associated with, which rational producers must crave, to avoid fines. The restrictiveness of the scheme was plainly acknowledged by the Court (para. 83), although it focused on the trade of electricity rather than the trade of guarantees of origin, an impossibly murky issue that would have required determining whether intangible guarantees qualify as “goods”.

The Court therefore examined whether the scheme was justifiable “on one of the public interest grounds listed in Article [34 TFEU] or by overriding requirements” and whether it satisfied the test of proportionality (para. 89).

The purpose of the scheme was found in the promotion of the use of renewable sources for producing energy (para. 95). This legitimate purpose does not feature in Art. 36 TFEU and therefore, by exclusion, was provisionally accepted by the Court under the doctrine of the rule of reason. Under this principle, domestic measures setting mandatory requirements on goods, which restrict inter-state trade, are justified if they pursue a reasonable policy objective and the restriction entailed is not disproportionate to the contribution made towards that objective. Mandatory (or “overriding”) requirements are not limited to the values listed in Art. 36 TFEU, and routinely include objectives such as consumer interests and environmental protection. In its customary incarnation, the rule of reason can only be used to justify rules that do not discriminate according to the origin of the goods.

The reasoning of the Court on the proportionality of the Flemish scheme is not linear, but proceeds by accumulation. It essentially lists the reasons why the scheme is not as vicious as Essent would claim, invoking contextual elements, policy considerations and semantic tricks. In short, the Courts makes the following remarks, which I briefly assess in the brackets.

Essent claimed that the Flemish scheme does not encourage the consumption of green energy, but only its production. The Court objected (para. 98) that this is normal, as the greenness of energy relates precisely to its method of production (This is a massive non sequitur. If taken seriously, this would mean that green energy might as well be wasted after production, as the benefit to the environment was done already. To the contrary, the only raison d’être of renewable energy is that it is supposed to supplant the consumption of non-renewable energy).

The Court also noted that Member States are allowed by the Directive to set national targets of production of green energy (para. 99), suggesting perhaps that the discrimination inherent in the support scheme was dictated by the concern to achieve these targets (This suggestion is misleading. Whether its motivation is allowed or not by EU law has nothing to do with the EU-compliance of the Flemish measure).

The Court answered also the most difficult question. If the Flemish scheme genuinely aims to increase the production of green energy for environmental purposes, how come it does in fact discourage the purchase of green energy produced abroad, by refusing to accept foreign guarantees of origin as substitutes of Flemish green certificates? The brief answer is worthy of a Sibyl: “it should be observed that the starting points, the renewable energy potential and the energy mix of each Member State vary” (para. 100) (This is too obscure to attempt a reading. Suffice it to say that because guarantees of origin are subject to mutual recognition under the Directive, one would presume that these alleged variations are capable of being taken into account to certify the green nature of the energy, therefore an equivalence between Flemish certificates and any other guarantee is arguably possible to concoct).

Finally, the Court noted (para. 101) that national support schemes are important to achieve the objectives of the Directive (irrelevant per se) and that “it is essential that Member States be able to control the effect and costs of their national support schemes according to their potential, whilst maintaining investor confidence” (para. 102) (With a bit of effort, one can see why discrimination is justified: Member States do not want to make available to all EU producers subsidies whose cost is “ultimately [borne] by the [local] consumers” (para. 107). Also, they cannot suddenly withdraw support schemes when it turns out that they operate mainly for the benefits of foreign producers: investor claims would follow and hit hard).

“In the light of the foregoing,” the Flemish scheme was found to be proportionate, and therefore compliant with Article 34 TFEU (para. 103).

The Court then extended the proportionality analysis to other accessory elements of the schemes. It considered the penalties imposed, leaving it to the national judge to assess their proportionality to the sought objective (para. 114). It also speculated on the fairness of the market of green certificates that can fulfil the compulsory quotas, whose supply is artificially restricted. The Court therefore advocated the establishment of mechanisms under which these certificates can be traded “under fair terms” (para. 111). The irony of the last remark is highlighted in the comments below.


The Court nonchalantly applied a mandatory requirement to a facially discriminatory measure, sending Cassis to the museum of judge-made law no longer in force, and tacitly ignoring the exhaustiveness of Article 36 TFEU. It conflated overriding requirements and values listed in Article 36 TFEU into a single pool of excuses.

The passing reference to the contribution of reduced emissions to human health (para. 93) should not mislead: if human health hat were indeed the relevant objective of the Flemish scheme, it would have been at the centre of the ensuing proportionality test (just to mention one element, there should have been an analysis of the Flemish scheme’s contribution to increased health protection). That the quota has discriminatory effects which hinder trade was also undoubtable.

Therefore, a distinctly applicable measure was justified on the basis of a public interest other than those listed in Article 36 TFEU. This had also been the case in the parallel case of Ålands Vindkraft, C573/12, on which the Court delivered its judgment on 1 July 2014; see paras. 76-77 (the Opinion of this case was also prepared by Bot, and delivered shortly after his Opinion in Essent). Indeed, the Court has seemingly lost interest in making a big deal of the difference between discrimination de jure and discrimination de facto.

Advocate Bot had suggested the Court to abandon the distinction and expressly overturn its previous case-law. The Court did the former but not the latter, suddenly dropping a carefully constructed judicial test that it itself had devised in the wild years of Article 34 TFEU to accommodate reasonable policies which fell outside the scope of Article 36 TFEU.

That direct and indirect discrimination should be treated alike makes perfect sense. This is, for instance, the practice in the GATT, the agreement regulating the removal of trade barriers for trade in goods in the WTO regime. Treating them differently, for instance allowing one to be justified by excuses that do not apply to the other, is irrational: the hindering effect of de jure or de facto discriminatory measures can be identical in the facts, and a harsher treatment of direct discrimination serves only as an incentive for Member States to disguise discrimination on the basis of nationality within the folds of maliciously designed neutral measures.

However, there was some intuitive value to the bygone distinction: direct discrimination is prima facie illegal and must be hard(er) to justify. Think of the judgment in Test-Achats, which does not even attempt to look at a justification for gender-based direct discrimination. In fact, as registered by AG Kokott in the Opinion to that case (para. 59), justifications based on statistical data can support a proportionality assessment of indirect discrimination but cannot suffice to excuse direct discrimination.

In his proposal, AG Bot had reflected this concern, calling for a reinforced test of proportionality applicable to distinctly applicable measures: the reasons advanced to justify direct discrimination must be of particular weight. See at para. 94: “I think that discriminatory measures, particularly those which infringe a principle as fundamental as that of the prohibition of direct discrimination on grounds of nationality, ought to be subject to a strict requirement of proportionality” (emphasis added).

The Court did not deem it necessary to devise a reinforced (“strict”) proportionality test and, in my view, this might have contributed to a puzzling proportionality analysis, which features several controversial passages.

In short, by applying the routine test of proportionality the Court focused on the pursued objective (protection of the environment through increased production of green energy). In so doing, the discriminatory (and trade-restrictive) nature of the Flemish scheme was side-lined in the analysis. Once a decent contribution to the environment was somewhat found, it was downhill from there. The happy run of proportionality apparently skipped the stop of necessity: was there a less restrictive measure available for Flemish authorities to encourage the consumption and production of green energy? Yes there was: the interchangeability of green certificates and foreign guarantees of origin would have averted trade-restriction and promoted environmental protection even more than the Flemish scheme could possibly do.

The measure can only appear proportionate if the elective purpose is another unconfessed one, which is itself somewhat discriminatory. For instance, it could be argued that the growth and operation of a local green-energy industry is the real purpose, and therefore no alternative policy is available: any infant industry policy inherently involves some deal of temporary protectionism, but is for a good cause. The Court, however, did not resort to this “lesser-evil” reasoning, and pretended that discrimination is fully justified by the environmental purpose of the measure at large.

The irony of the finding is the after-thought of the Court with respect to the fairness of the market for green certificates. By virtually banning substitutable foreign certificates, the Flemish government is providing absolute protection to local producers, which might be few in number and, by definition, have the luxury of setting a higher price than they could if an undistorted transnational market were in function. Formally, there is no ban, but the value of local certificates is artificially inflated by the Flemish schemes, and makes it inconvenient for energy-suppliers to purchase green energy from abroad. This is a textbook example of a market distorted by protectionism, where demand is forced to opt for the local product, and foreign competitors are treated much less favourably. The Court concedes that buyers of green certificates, which need to comply with a compulsory quota, might find it unfair that the supply of certificates is artificially restricted to the collective monopoly of local producers, which can charge above-market prices. Local content requirements such as those envisaged by the Flemish scheme constitute a prototypical instrument of protectionism, and not surprisingly they are included, for instance, among the measures prohibited in the WTO Agreement on Trade-Related Investment Measures. It does not get any more protective and trade-distorting than that.

However, the Court limits itself to elegantly call for some “mechanisms” to ensure that suppliers can purchase green certificates “under fair terms” (para. 111), a puzzling statement in light of the previous validation of a protectionist scheme which is trade unfairness incarnated.

Ultimately, this is a memorable case, because it seemingly puts to bed the rule of reason as we knew it. Also, the reasoning on the merits is very hard to decode because the dropping of direct discrimination as a crucial element of the analysis resulted indeed in a confusing assessment of proportionality, which often loses sight of the differential treatment at stake and forgets about the necessity test altogether.

Barnard & Peers: chapter 12, chapter 16, chapter 22

Friday, 12 September 2014

Civil liability for Internet publishing: the CJEU clarifies the law

Professor Lorna Woods, co-author of Steiner & Woods, EU Law


Yesterday’s CJEU judgment in Papasavvas is the most recent in a line of cases seeking to trace the edges of the concept of ‘intermediary’ for the purposes of EU information technology law, a question that has become rather more problematic than when the eCommerce Directive was first drafted in 2000. Then, the role of intermediaries was much more technical and related to transmission and technical access. Since then the market has moved on with the development of many services that are now viewed as important for the access and use of content on the Internet. Many of these services blur the boundaries between transmission services and content services. To what extent are those services neutral intermediaries? While in many respects this case could be seen as quite straightforward, it hints at still yet unresolved questions and highlights difficulties about reliance on EU law in national courts.


Mr Papasavvas (‘P’) brought an action for defamation in respect of articles published in the daily national newspaper O Fileleftheros, on 7 November 2010, which were published online on two websites. He sought damages and an injunction. The national court referred the following questions:

(1)      Bearing in mind that the laws of the Member States on defamation affect the capacity to provide information services by electronic means both at national level and within the European Union, might those laws be regarded as restrictions on the provision of information services for the purposes of applying Directive 2000/31 …?

(2)      If the answer to Question 1 is in the affirmative, do the provisions of Articles 12, 13 and 14 of Directive 2000/31 …, on the question of liability, apply to private civil matters, such as civil liability for defamation, or are they limited to civil liability in matters concerning business to consumer transactions?

(3)      Bearing in mind the purpose of Articles 12, 13 and 14 of Directive 2000/31 … relating to the liability of information society service providers and the fact that, in many Member States, an action must exist in order for a prohibitory injunction to be granted which will remain in force pending full completion of the proceedings, do those articles create individual rights which may be pleaded as defences in law in a civil action for defamation, or must they operate as an obstacle in law to the bringing of such actions?

(4)      Do the definitions of “information society service” and “service provider” in Article 2 of Directive 2000/31 … and Article 1(2) of Directive 98/34 … cover online information services the remuneration for which is provided not directly by the recipient, but indirectly by means of commercial advertisements posted on the website?

(5)      Bearing in mind the definition of “information service provider”, laid down in Article 2 of Directive 2000/31/EC and Article 1(2) of Directive 98/34 … could the following, or any of them, be regarded as a “mere conduit” or “caching” or “hosting” for the purposes of Articles 12, 13 and 14 of Directive 2000/31:

(a)      a newspaper that operates a free website on which the online version of the printed newspaper, with all its articles and advertisements, is posted in pdf format or another similar electronic format;

(b)      an online newspaper which is freely accessible but the provider obtains money from commercial advertisements posted on the website, where the information contained in the online newspaper comes from the newspaper’s staff and/or freelance journalists;

(c)      a website which provides (a) or (b) above for a subscription?’


The Court dealt first with queries raised regarding admissibility.  P raised questions about timing: the proceedings at national level are at an early stage, to the point that the defendants in the national action have not yet filed a defence.  On this basis, P argued that the questions referred must be hypothetical as the nature of the dispute had not yet been defined. The Court did not address this argument directly but instead stated that ‘the description of the legal and factual framework of the proceedings in the order for reference seems to suffice so as to permit the Court to make a ruling’. 

P had also argued that the defendants did not fall within the scope of the e-Commerce directive and therefore questions relating to its interpretation were unnecessary. This is of course a little circular and the Court rejected the argument, pointing out that the scope of the Directive and the applicability to the defendants was one of the main issues that needed to be resolved. Having determined that, the Court re-ordered the questions referred and started with question 4 on the application of the Directive.

The Court reformulated the question, asking whether ‘information society services’ (ISS) as defined in the directive ‘covers the provision of online information services for which the service provider is remunerated not by the recipient, but by income generated by advertisements posted on a website (para 26).’ The Court re-iterated that the definition of ISS has four elements:

·         ‘normally provided for remuneration’;
·         at a distance;
·         by electronic means; and
·         at the individual request of a recipient of services.

The final three seemed non-contentious, but what concerned the national court was the issue of remuneration, as the user did not pay to access the website.  The Court then referred to recital 18 of the Directive, which expressly excludes the possibility that a service will fall outside the directive merely because payment is indirect.  In this there is a similarity to the CJEU’s reasoning in Bond van Adverteerders and Others (paragraph 16).

Having determined that the directive could apply to information services such as those in issue here, the Court then considered question 1 in which the referring court is effectively asking whether the directive precludes the application of rules of civil liability for defamation to ISS providers.  The directive applies the principle of home country rule to service providers, with the corollary that Member States should not impose additional rules on services coming from other Member States.  Given that the defendants in the domestic proceedings were based in the same Member State as P, the issue of whether the civil defamation rules constituted a restriction did not apply, though the Court noted that such rules fall within the scope of the directive (at Article 2(h)).

The Court then went on to consider whether the defendants could benefit from the intermediary immunity provisions in Articles 12-14 of the Directive. The Court considered the role of these provisions, and relying on its reasoning in Google France and Google  (paragraph 113) and L’Oréal and Others (paragraph 113) stated that they applied to intermediaries and activities which are of ‘a merely technical, automatic and passive nature’, that the ISS provider has neither knowledge of nor control over the information which is transmitted or stored and takes a neutral approach to content. The Court highlighted factors such as assisting clients in drafting commercial messages, or in optimising presentation of content.  It concluded:

Consequently, since a newspaper publishing company which posts an online version of a newspaper on its website has, in principle, knowledge about the information which it posts and exercises control over that information, it cannot be considered to be an ‘intermediary service provider’ within the meaning of Articles 12 to 14 of Directive 2000/31, whether or not access to that website is free of charge. [45]

So, in such a circumstance, a newspaper cannot claim exemption from civil liability.  Given this answer, it was not apparent that the Court needed to address question (2). Nonetheless, it confirmed that it made no difference whether the case involved business to consumer or consumer to consumer cases. [50]

The final issues dealt with were those raised by question (3), though again the Court noted that answers to this question might not be necessary given that Articles 12-14 did not apply.  The Court summarised this question as asking whether Articles 12-14 preclude the adoption of interim measures (such as the injunction prohibiting publication) or whether those articles create individual rights which the ISS provider may plead as defences in law in the context of legal proceedings such as those in the main proceedings. As regards the first element, the Court noted that – subject to the principles of equivalence and effectiveness, matters as to conditions under which remedies might be available were matters for national law. [53]

The second element effectively concerns the direct effect of the immunity provisions: can they be relied on in the context of a dispute between private parties. The Court returned to the general case law on horizontal direct effect of directives, arguing that ‘with regard to proceedings between individuals, such as those at issue in the main proceedings, the Court has consistently held that a directive cannot of itself impose obligations on an individual and cannot therefore be relied on as such against an individual’ [54] but that indirect effect/doctrine of consistent interpretation from Von Colson would apply. [56]


While this case at the headline level came to the right answer - people who write or (first) publish content on the Internet are not intermediaries - the case raises a couple of issues worth pondering further.

First off, there was no Advocate-General’s opinion.  Querying this might seem churlish, given that I’ve just said the Court got to the right answer, and on the facts the judgment is a straightforward application of the Court’s existing law on Articles 12-14 in Google and L’Oreal.  It is, however, a sensitive area: currently a case, Delphi, concerning a news site and the self-same provisions is awaiting a judgment from the Grand Chamber of the European Court of Human Rights on whether there was a breach of freedom of expression in finding the journalists liable for defamation (see the Chamber judgment here).  While there is a crucial factual difference between the two cases (Delphi concerns liability for user generated content, not journalism), it is noteworthy that although Recital 9 recognises the significance of ISS for freedom of expression, Papsavvas did not even consider whether there was a freedom of expression argument in issue.

To some extent most of the questions referred by the national court seem to reflect a lack of familiarity with the internal market system generally. So, the application of the rules in this case might seem straightforward, but they might not always be so.  While it should come as no surprise that national rules imposing civil liability on a service ‘import’ could be a restriction, nor that ‘home’ regulation should not be circumvented by reliance on provisions aimed at cross-border services, the determination of the place of establishment may in itself be problematic, as cases on cross-border television services have shown.  The eCommerce Directive seems to refer to the Court’s general case law on this point (Article 2(c), Recital 19): the Court accept the establishment point as proven here in Papasavvas

There is a risk of forum shopping and, by contrast to the Audiovisual Media Services Directive (which deals with television), the eCommerce Directive has no ‘anti-abuse’ clause, although Member States may derogate on limited grounds (article 3(4), Recital 24). In this case, the Court did not address the question of whether rules relating to defamation could be seen as being justified under the protection of human dignity in Article 3(4)(a)(i).  Of course, a system which allows or even encourages delocalisation to another Member State has the consequence of adversely affecting would be plaintiffs under the national rules, especially private persons and small businesses. Even in rules of conflicts allow action in the injured party’s home state, there may be questions as to applicable law in the light of the home country regulatory principle (see eDate and Martinez). So, while the eCommerce Directive claimed not to affect rules on conflicts of law (Article 1(4)), there is an interrelationship there and one which may affect the effectiveness of remedies for users. 

Similarly, and as the Court itself noted, remuneration has typically been widely interpreted.  The Court referred to Bond van Adverteerders, a case concerning free-to-air commercial television – a set-up which has clear parallels with free to user internet services.  In its case law on Article 56 TFEU (freedom to provide services), the Court has gone further, even suggesting (in Deliege) that an amateur judoka was remunerated because she took part in competitions which carried advertising and which were televised.  Essentially the Court seemed to be saying, ‘there’s money there somewhere….’. Of course, there will be hard questions in some cases- ‘amateur’ content available freely: is that an ISS, and does the answer to the question change if the platform carries advertising entirely separately? In Delphi, it was the user generated content that was problematic. This question did not arise, however, as it was the underlying website that was sued, and it clearly was a commercial entity for the same reason that the newspaper in Papasavvas was.

Perhaps the interesting questions are those which deal with the interface between the immunity provisions and national law.  The purpose of these provisions is to encourage the development of the digital environment, particularly cross border services (recital 40). It should therefore make no difference if the service the intermediary carries is between businesses, or business to consumer, as indeed the Court ruled. The national court also questioned whether injunctions were permissible. The Court handed this one off to national procedural autonomy, but it is arguable that the terms of the directive suggest that injunctions are in principle permissible: each of the intermediary exceptions state that the exemption from liability does not affect the possibility of the Member State’s legal system requiring the intermediary to terminate the offending activity.

Finally, we come to the question of whether intermediaries can rely on the exemption directly before national courts: in effect, do these provisions have horizontal direct effect? The Court dealt with this by returning to basic principles precluding such an effect, but in doing so it argued that Union law precludes the imposition of an obligation on an individual. Of course, in this case the directive is not imposing an obligation on an individual but rather removing it. In this sense, although for different reasons, the position is closer to that in cases such as CIA Security International or even Wells, where a national obligation is disapplied. This area of law is problematic generally. Suffice it to note here that this approach knocks a potentially large hole in the protection of intermediaries if the Member State has not implemented, or not implemented correctly, indirect effect notwithstanding.

Barnard & Peers: chapter 6, chapter 14

Wednesday, 10 September 2014

Back to school: the CJEU confirms that third-country national students have a right of entry

Steve Peers

Around the EU, with emotions ranging from excitement to dread, university and college students are now (or shortly) starting or returning to their courses. Most of them will struggle with studies, finance, hygiene, romance and alcohol – though perhaps not in that particular order. In addition, third-country nationals resident outside the EU have the further burden of satisfying immigration conditions.

Those conditions are harmonised by the EU’s students’ Directive, as adopted back in 2004.  But how much did this Directive actually harmonise these rules?  Do Member States still have the right to add further conditions for entry? In short, do third-country national students have a right of admission to the territory of the EU, if they meet the relevant criteria for admission in the Directive? The CJEU has ruled today that they do, in its judgment in Ben Alaya.


The students’ Directive (which the UK, Ireland and Denmark opted out of) also applies to the admission of school pupils on exchange programmes, volunteers and unpaid trainees. However, Member States have an option to apply the Directive’s rules as regards the latter three categories of persons. According to the Commission’s report on the application of the Directive, most Member States have not taken up this option.

In 2013, the Commission proposed a new version of the Directive, which would incorporate the parallel Directive on admission of researchers, add further categories of persons (paid trainees and au pairs), make all the provisions of the Directive mandatory, and change some of the rules on admission. The European Parliament adopted its opinion on this proposal in spring, but negotiations seem to be moving slowly in the Council.

The CJEU has ruled once before on the interpretation of this Directive. In the judgment in Sommer, it gave a liberal interpretation of the rules governing students’ access to employment, on the grounds that (according to the Directive’s preamble) it aimed to ‘promote Europe…as a world centre of excellent for studies and vocational training’.

According to the Directive, the mandatory conditions for admission of students are: possession of a valid travel document; parental authorisation, if they are a minor (this condition obviously won’t apply to most students); holding sickness insurance; not being a threat to public policy, public security or public health; paying the application fee; being accepted by a higher education establishment; having sufficient resources; knowing the language of the course of study; and paying fees to the university or college concerned. In fact, Member States can waive the requirements of paying application or admission fees, and of knowing the language.


Mr. Ben Alaya, a Tunisian man resident in Tunisia, had several times applied to German universities to study math (in conjunction with a preparatory language course) and been accepted. However, the German authorities repeatedly turned him down. He challenged before the German courts the most recent refusal, which was based on the alleged inadequacy of his grades, his weak knowledge of German, and the lack of connection between his course of study and his chosen career. The relevant rule in German immigration law (as quoted in the judgment) sets out instead only a more nuanced rule on language requirements (waiving the requirement if the student will take a prior language course), with no reference to academic qualifications or the link with a planned career.

The national court referred to the CJEU the single question of whether there was a right to admission of students if the criteria in the Directive were satisfied.

According to the Court, first of all the mandatory nature of the admissions rules for students, as compared to the discretionary application of the rules on other categories of persons, justified the conclusion that the admissions rules were an exhaustive list. Secondly, this interpretation was consistent with the purpose of the Directive (promoting mobility to the EU, so that it would be a global centre of excellence for education) as set out in the preamble and referred to previously in Sommer. Thirdly, the Directive expressly allowed Member States to set more favourable standards, so it made no sense to interpret it to mean that they could also set less favourable standards.

The Court did note that Member States had some general discretion when applying the exhaustive EU rules: they could ask for the evidence needed to ‘assess the coherence’ of the application, ‘in order to fight against abuse and misuse’ of the admission procedure. Finally, the Court went on to reach a conclusion on the facts of the case, noting that Mr. Ben Alaya appeared to satisfy the conditions for admission, and that he therefore ‘ought’ to have been given a residence permit.


First of all, it is striking that the CJEU effectively allocated responsibility as between the educational institutions and the immigration authorities. While of course students should satisfy the relevant educational criteria for admission, the Directive implicitly leaves it to the educational institution to apply the relevant criteria. It is up to each Member State (or perhaps its constituent states, in federal countries like Germany) to decide if it wants to set minimum educational criteria for university entry by law, or allow the higher education sector to set those criteria (or to set higher criteria than the national minimum).

It certainly looks odd in this case that although the educational institution thought the applicant’s grades were sufficient, the immigration officials thought they knew better than the university how to apply its admissions criteria. Then again, the Court of Justice judges also thought they were competent to examine this issue.

It is also odd that the immigration officials rejected the applicant on language grounds when he was willing to attend the pre-course language studies referred to by national law. And the idea that immigration officials can judge whether there is enough of a link between study and future career is peculiar (and not provided for in national law or the Directive). More fundamentally, it’s an absurd criterion for admission to higher education courses: students often change their mind as to what career they wish to have, or obtain jobs in different areas from their field of study due to developments on the job market. 

The judgment also raises some general points. As regards education policy, it should be stressed that the Directive does not affect the ability of Member States to determine what fees to charge to third-country nationals coming from third countries, or to regulate whether they have access to study finance. This is obviously different from the internal market rules applying to EU citizen students who move between Member States, who have the right to equal treatment as regards tuition fees and admission criteria or quotas, and (if they are already residing in the Member State concerned, in most cases) equal treatment as regards study finance.

For nationals of Turkey, the judgment has a particular importance. They have the right to admission, then the right of access to employment (Sommer), which gives rise in turn to a right to stay on the territory as a Turkish worker (Payir).

As regards immigration policy more generally, last year the CJEU ruled that the EU rules on grant of a short-term visa are exhaustive (Koushkaki). Just last week, it ruled that the rules on admission at the external borders in the Schengen Borders Code are exhaustive (Air Baltic). Now it has confirmed that at least some of the rules on longer-term migration are exhaustive too. While this judgment as such only applies to the students’ Directive, it must surely give rise to a presumption that the other EU immigration law Directives regulating the grounds of admission create a right of entry to: the Blue Card Directive, the researchers’ Directive, the seasonal workers’ Directive and the intra-corporate transferees Directive. As for the other Directives on legal migration, the single permit Directive does not set out grounds for admission, the CJEU confirmed years ago that the family reunion Directive confers a right of entry, and the long-term residents Directive presumably confers a right to obtain a long-term residents’ permit and to move to another Member State if the conditions in the Directive are satisfied.

In light of this broader impact, like the earlier judgments of Koushkaki and Air Baltic, this is a welcome judgment by the Court, which strengthens the rule of law in immigration proceedings and makes clear that the EU rules on immigration law aim toward harmonisation of national rules.

Barnard & Peers: chapter 26

The new Commission: first thoughts on Justice and Home Affairs issues

Steve Peers

Today’s list of jobs for the next European Commission – and the accompanying major restructuring of the Commission – has major implications for every area of EU policy. But here are my initial thoughts about the impact upon Justice and Home Affairs (JHA) issues.

Of course, the next European Commission still has to be confirmed by the European Parliament (EP). The EP insisted on changes to the planned list of Commissioners in 2004 and 2009, so it might well do so again. But nevertheless, it’s an opportune moment to examine the new Commissioners who will have responsibility for JHA issues – as well as the revised structure of the Commission as it affects such issues.

Migration and Home Affairs

As before, the area of immigration and home affairs (ie policing and internal security) is assigned to a separate Commissioner. Therefore the suggestion in some quarters that there’s a new ‘Commissioner for immigration’ is just not true. There is also still a separate Directorate-General (DG) dealing with these issues. DG Home picks up responsibility for anti-drug policy and security research, and does not lose any policy responsibilities.

The new Commissioner is Dimitris Avramopolous. He has no background in this field, and his current job is Greek defence minister. But that’s misleading: he started out his career as a diplomat, became a popular mayor of Athens and was also an MP (for the conservative New Democracy party), holding ministerial posts for tourism, health and foreign affairs before becoming defence minister. So he has a broad diplomatic and political background.

The most striking thing about his appointment is his nationality. Greece is, of course, at the centre of the debate about the effectiveness of the EU’s ‘Dublin’ policy, which assigns responsibility for asylum applications to (in effect, in most cases) the first country which they enter. That is frequently Greece. So partly as a result of the Dublin rules, the Greek asylum system has broken down in recent years, and both the CJEU and the European Court of Human Rights have ruled that sending asylum-seekers to Greece would violate their fundamental rights.

Since Avramopolous never previously held a job relating to immigration policy, he can’t be blamed directly for these problems. Also, it must be recalled that because Commissioners are independent of the government which appointed them (although Commissioners have been known to forget this), it will not be his job to defend the Greek government, but rather to articulate and enforce EU policy in this area. Hopefully it will be an advantage, not a detriment, to have an immigration Commissioner from a Mediterranean state, given the crucial role which sea crossings play in EU immigration policy.

In light of the external impact of EU immigration policy, it also useful that the new Commissioner has diplomatic experience. In particular, it’s potentially significant that he is credited as one of the authors of the recent Greek-Turkish rapprochement. Migrants who come from Turkey and refugees who travel via Turkey are a significant part of those who come to the EU, and the EU/Turkey readmission agreement will come into force on 1 October. One of his chief tasks will be to ensure EU visa liberalisation for Turkey, as a quid pro quo for the readmission agreement and other changes in Turkish policy. On paper at least, he is the right man for this job.


Until the last moment, the next Justice Commissioner was going to be the outgoing Home Affairs Commissioner, Cecilia Malmstrom. Instead, Malmstrom has been thrown into the maelstrom (I couldn’t resist) of EU trade policy, being responsible in particular for negotiating the EU/USA free trade agreement (TTIP).

The new Justice Commissioner will instead be Vera Jourova, the Czech minister for regional development, who has a background in that field. Unlike Avramopolous or Malmstrom, there’s nothing in her history which suggests that Jourova is particularly well suited to this job. But there are plenty of historical examples of politicians who did a good job despite not having a background in a relevant field. Let's hope this proves to be another such case.  

In terms of structure, DG Justice first of all loses two roles: anti-drug policy (moved to DG Home, as noted already) and equality policy – apart from gender equality – moved to DG Employment and Inclusion.

The first of these changes makes some sense, since anti-drug policy is not exactly a Justice issue. But that policy is even less well-placed in DG Home, since that wrongly identifies anti-drug policy is primarily a law enforcement issue, rather than a health and social problem.

But the changes to the equality responsibilities make no sense at all. If those responsibilities have to be moved, it would be better to move them all, rather than all except gender equality. True, there’s a good argument for a woman to be in charge of gender quality – but the next Commissioner for employment will be a woman (Marianne Thyssen) as well.  

In any event, those responsibilities shouldn’t have been moved, since there is a better case for keeping equality issues either as part of the Justice DG or assigning them to the new Vice-President dealing with human rights (more on him in a moment). The problem is that the effect of the move might be to focus attention too much on discrimination in employment, whereas discrimination occurs in other fields too. Indeed, a proposal for a Directive to tackle discrimination in other fields has been under discussion for six years. Admittedly, DG Employment is now DG Employment and Inclusion; but that DG is always likely to retain a focus on employment issues.

DG Justice has also picked up some new responsibilities: most consumer affairs issues, as well as social responsibility (corporate governance). The first of these changes takes account of the de facto reality, as the outgoing Commissioner, Viviane Reding, already took a big role as regards consumer legislation.  The second change risks corporate social responsibility becoming detached from the rest of substantive company law. Again, it’s a role that could have been better suited to the Vice-President responsible for human rights.

Fundamental Rights

The new Vice President (VP) responsible for better regulation, inter-institutional relations, the rule of law and the Charter of Fundamental Rights is Frans Timmermans. He is the outgoing Dutch minister for foreign affairs. Like Avramopolous, he began his career as a diplomat, and then became a politician. He held ministerial posts in the Dutch government, including the minister for European affairs. Also, he was a member of the ‘Convention on the Future of Europe’ which drafted the ill-fated Constitutional Treaty, later approved in a decaffeinated form as the Treaty of Lisbon.

While Timmermans is meant to steer the work of the Commission generally on these issues, and particular the Commissioners for Justice and Home Affairs, he has no specific responsibilities, and no dedicated bureaucracy. So his post is one of President Juncker’s great innovations in the design of the Commission: creating five Vice-Presidents in charge of thematic issues, who don’t have specific tasks. (Two other Vice-Presidents – the High Representative for EU foreign policy and the VP in charge of budgets – do have specific tasks).

Time will tell whether this innovation is a brainwave or a foolish gimmick. The risk is that it replicates the problems of the US Vice-Presidency, which also comes with no specific tasks (besides waiting for the President to die). As one US Vice-President didn’t quite say, the job was ‘not worth a bucket of warm spit’. And now the Commission will have five such jobs.

Having said that, at least some of the new VPs might be able to make the job work. Much will depend on their personalities and the clout of the senior officials in their cabinet. Timmermans might be in a better position to make it work than others, being designated as the ‘First Vice President’ and the President’s ‘right-hand man’, and having fewer (and less high-profile) other Commissioners to supervise.

Certainly, it seems like a good idea to designate a Commissioner specifically responsible for human rights and the rule of law, given their overarching importance and application to all fields of EU law. The original plan (dropped at a late stage) was to give these responsibilities to the home affairs Commissioner, but this was a bad idea. It would have been awkward to mix up the responsibility for carrying out a specific policy with the role of ensuring that human rights are respected in all areas of EU law. Moreover, human rights are too important an issue to entrust to any of the (de facto) junior Commissioners.

Some wanted a Commissioner purely concerned with human rights, but we did not get that. What about Timmermans’ other two responsibilities? First of all, in principle the ‘better regulation’ task logically falls instead within the scope of the activities of the new VP for Jobs, Growth and Competitiveness. This task may well have been handed to Timmermans because of the Dutch government’s particular interest in this issue. Giving this task to him could have the positive result of reminding  everyone that some parts of Justice and Home Affairs law, just like EU economic law, is also a morass of overlapping and confusing legislation that ought to be cleaned up.

Finally, his most important task as the Commissioner for inter-institutional relations will be to try again to open up the EU, by amending its legislation on access to documents. Again, it might be helpful that he is Dutch, given that country’s strong tradition of transparency. But equally it might have been thought that a Swedish Commissioner would deal with that issue well – yet Mrs. Wallstrom produced a dreadful proposal back in 2008.

Her (presumed) intention to enlarge access to documents was frustrated by Commission officials who had exactly the opposite objective, resulting in a text which would have reduced access, not increased it (by redefining a ‘document’ narrowly, for instance). We will probably only have a good proposal on this issue if it’s drafted by someone who doesn’t work for the Commission. Just for the record, Mr. Vice President, I could draft that proposal for free.

Barnard & Peers: chapter 3, chapter 9, chapter 25, chapter 26

Tuesday, 9 September 2014

EU decision-making becomes a little more open: access to background documents drafted by consultants

Steve Peers

‘[The plans were] on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying, “Beware of the Leopard”!’

Arthur Dent, The Hitch-Hiker’s Guide to the Galaxy

Much of what the EU does is controversial. Think, for instance, of the free trade negotiations with the USA (TTIP), the regulation of many items from vacuum cleaners to genetically modified food, and the supervision (or sometimes control) of Member States’ tax and spending decisions. The substantive content of the decisions the EU makes on these issues will always disappoint someone, but in addition to that, there has long been a concern that the EU decision-making system is not sufficiently transparent. This has undoubtedly contributed to the broad feeling that the EU lacks legitimacy.

Back in 2001, the EU tried to address this by adopting a Regulation on access to documents drawn up by, or held by, the Commission, Council and the European Parliament. Attempts to amend this legislation have failed so far, so its application in practice depends on the extensive case law of the EU courts.

Some of this case law is excellent, and some is (with great respect) rather problematic. Fortunately, today’s important judgment of the EU’s General Court in the Mastercard case falls within the former category. The Court ruled in favour of access to background documents for EU decision-making drawn up by consultants, and so has significantly increased access to information on EU decision-making process.


Mastercard applied to the Commission for some of the background documents drawn up by a consultant (EIM), which had been supplied to the Commission by EIM as part of the process of drafting a report on the impact of the costs and benefits for retailers of accepting different payment methods. The Commission refused access to the documents, on the grounds that it had not yet made a decision on the issues concerned (the ‘decision-making’ exception), and that the documents contained information on the commercial interests of the consultant.  

The General Court rejected both of the Commission’s arguments. On the first point, the documents in question did not relate directly to any specific Commission decision-making process as regards the application of EU competition law, but rather aimed to supply the Commission with more general information to inform it on the economic issues. Also, the Commission had not relied on this exception when initially refusing access to the documents. Furthermore, it didn’t matter for the purpose of the access to documents rules that the documents were interim, and the Commission had in any event shared most of the documents concerned with stakeholders.

On the second point (commercial interests of the consultant), the Court reiterated prior case law that the exception did not apply to any information about a business, but only to sensitive information concerning issues such as business strategy, sales figures et al. Applying that case law to the facts of this case, the Court did not accept the Commission’s argument that revealing the ‘trial and error’ in the draft documents produced by the consultant  would undermine its commercial reputation or reveal its secret methodology to its competitors.

So the Commission fully lost the case, and so the documents have to be released – although the Commission has two months to appeal to the Court of Justice if it wishes to.


While much of the case law on access to documents concerns the Commission, which has most of the administrative and executive power at EU level (except as regards aspects of external relations), this case highlights an important feature of the Commission’s work: its reliance upon third-party expertise. The facts of this case are the norm not the exception: many Commission impact assessments and reports rely upon one more reports drawn up by outside consultants. The European Parliament sometimes uses them too.

So anyone seeking to examine the Commission’s decision-making or the development of EU policies more broadly – whether they are journalists, researchers, NGOs or businesses like Mastercard – needs access to the consultant reports which the Commission relies upon to draw up its final proposals, reports and impact assessments. They usually contain very useful information and analysis which plays an important role in the analysis of the Commission’s final official documents which are based upon them.

Usually, the Commission publishes the consultants’ reports which it bases its documents upon. So what impact will today’s judgment have? First of all, it might result in public access to the consultants’ reports at an earlier date. Secondly, and more importantly, it will broaden access to the other background documents drawn up by consultants and made available to the Commission.

In fact, I have been involved in the impact assessment process myself several times, as an adviser to the main consultancy drawing up a report for the Commission.  I can’t discuss any of the details due to a confidentiality agreement, although I should clarify that I had no involvement with the report which was the subject of the Mastercard case.

However, suffice it to say that it is very common for consultancies to draw up interim reports and other background documents which might not be attached to the main impact assessment report. Of course, the consultancy, and advisers such as myself, also draw up drafts and working documents which are not disclosed to the Commission – and this judgment will not liberalise access to those. This is reasonable, for after all the Commission’s decision-making process will not have been influenced by documents which it hasn’t seen.  I’m a long-standing critic of the EU’s access to documents rules, and so I could only imagine the degree of Schadenfreude in the Commission and Council if it turned out that I am directly subject to the EU rules on access to documents. But that’s not going to happen.

What will the impact of this judgment be in practice? In principle, the judgment suggests that all background consultancy reports sent to the Commission ought to be released, unless there’s some other ground for refusal not relevant to the Mastercard case (see the discussion of the external relations exception below). The Court’s finding that the Commission’s decision-making wouldn’t be undermined by release is relevant to all other cases. So is the Court’s ruling that the commercial interest of the consultancy wasn’t damaged. It’s interesting to note that the consultancy didn’t intervene in the proceedings, which it surely would have done if it were worried about being damaged by the release of this document. With great respect to the expertise of EIM and other consultancies, their methodology for impact assessment is hardly the same sort of secret as Colonel Sanders' recipe for Kentucky Fried Chicken. 

The interim reports and other background documents drawn up by consultants may well contain information that could shed further light on the analysis in the final report. If there is a good reason not to rely upon the interim reports or background documents in some or all respect, the Commission and/or the consultant can simply explain this in its final document.

In principle, this judgment is relevant to background consultancy documents in any field of EU law. So businesses, NGOs, journalists and researchers could all rely upon it to gain access to documents which might be useful, whatever their field of interest may be. In particular, it is important that in this case the Court distinguished the line of case law (relevant to competition and state aid, for instance) allowing the Commission to refuse in principle access to all documents relating to individual decisions.

In the field of external relations, the impact of the judgment will be limited somewhat by the possibility to refuse access to any details of the EU’s negotiating mandates for treaties like the TTIP, on the basis of the ‘external relations’ exception in the Regulation. But it should be possible to redact the negotiating mandate from the reports and release the rest of the text (on this point, see further the discussion of another recent transparency judgment here).

This increased access to documents in turn raises two important questions of accessibility and access. First of all, will the Commission make available these background documents, and if so, when?  It’s clear from the facts of this case that the Commission did release some of these documents to ‘stakeholders’, but not to the general public. Surely it’s frequently the case that the Commission doesn’t consult every entity that might want access to the documents in question.

Secondly, how will anyone (besides the Commission, the consultancy, and any special group of consultees) know that these documents exist? Arthur Dent didn’t know about the documents that concerned the destruction of his house; and this was only the precursor to the destruction of the planet Earth without sufficient consultation. There’s an uncomfortable analogy there for climate change activists.

Unfortunately, the Commission seems to have been inspired by this fictional dystopia when designing its access to documents system. When the Eur-lex system of access to EU law was recently redesigned, the Commission removed the direct link to its access to documents register. The Eur-lex staff even denied that they’d done this.

You can still find the register if you Google it – or just click here. But its removal from the Eur-lex page might mean that some people don’t even find it. And if they do find it, they probably won’t find the background documents from consultants listed in it, since the scope of coverage of the register is very narrow. The Commission doesn’t seem to have grasped that Douglas Adams was engaging in humorous mockery – not suggesting a template for the Commission’s regime for access to documents.

Barnard & Peers: chapter 3, chapter 5, chapter 8

Sunday, 7 September 2014

Scottish independence: how would it impact the UK’s relations with the EU?

Steve Peers

With the Scottish referendum on independence now imminent, and a surge in the ‘Yes’ vote now putting the pro-independence side ahead in some opinion polls, it’s a good time to re-examine the impact that Scottish independence would have on the EU – particularly as regards the EU membership of both Scotland and the remainder of the UK (the ‘rUK’).

At the outset, Scottish independence would mean that four important events would happen more or less simultaneously: Scottish/rUK negotiations on their future relationship; Scottish negotiations to (re)join the EU; UK renegotiation of its EU membership; and the UK general election. The first two events are entirely unprecedented, while the third (UK renegotiation of EU membership) has only happened once before (in 1974-5), under rather different circumstances.

The last event (the UK election) is commonplace, but again the circumstances would be profoundly different than usual. In particular the loss of 59 Scottish seats from the House of Commons would likely alter the result of the election, given that Scotland usually votes far more heavily in favour of the Labour Party than the rest of the country. But if the election goes ahead as planned in May 2015, the loss of Scottish seats would not take effect until the following year, if independence goes ahead as planned in spring 2016.

These four events are closely related to each other. For instance, the result of the UK election will determine the rUK’s negotiation position with an independent Scotland. It will also determine whether the UK attempts to renegotiate its EU membership at all. It should be recalled that renegotiation is the position of the Conservative party, but not (as things stand) of the Liberal Democrat or Labour party. So only a Conservative majority would certainly result in a renegotiation.
Further significant developments are possible, too. A ‘Yes’ vote in Scotland might result in David Cameron’s resignation, or attempts by some of his party members to remove him. The UK Independence Party is likely to win its first Commons seat in an October by-election.

So no-one can realistically predict with any certainty how things would develop after a ‘yes’ vote. The key question of whether Scotland could rejoin the EU has already been discussed in a previous blog post (as has the issue of immigration between Scotland and rUK). The focus of this post is therefore on one issue: the impact of a ‘Yes’ vote on the UK’s relations with the EU.

The starting point here is Scotland’s relations with the rUK. Trade with the rest of the UK (as well as the rest of the EU has a whole) is obviously crucial to Scotland. Indeed, a key feature of the ‘Yes’ campaign is the argument that nothing would really change in this regard, whereas the ‘No’ side has argued that relations with the rUK and the EU would likely be jeopardised after independence.

Clearly, the ‘Yes’ side seems to be winning this argument. Apparently they have been able to convince an increasing number of voters that the ‘No’ side argument is a bluff which can be called.
Is this argument a bluff? Dissecting the issue objectively, there is good reason (from its point of view) for the ‘No’ side to refer to the risks of independence up until the referendum date (although politically speaking, making this argument seems now to be backfiring for them).

But in the event of a ‘Yes’ vote, the rUK ought to consider what it in its own best interests. It seems very clear that, given the economic importance of Scotland to the rest of the UK, the rUK ought to seek to maintain as close an economic relationship with the rest of Scotland as it possibly could. That has domestic implications (as regards a currency union), but also implications for Scotland’s relationship with the EU: it will overwhelmingly be in the interests of the rest of the UK to advocate Scotland’s continued membership of the EU on terms equivalent to the UK’s current membership. Indeed, this is the crux of the ‘Yes’ side’s argument on this point: the ‘No’ side is threatening not just Scotland but also itself. That threat just isn’t credible.

It is possible, however, that the rUK will not act in its best interest. Voters in the rest of the UK may be resentful and desire to punish Scotland. Furthermore, those who wish to renegotiate the UK’s EU membership, or withdraw the rest of the UK from the EU, may not have an interest (for tactical reasons) in supporting Scottish EU membership. The first group (the renegotiators) would face a difficult dilemma, because they would have to expend their limited goodwill with the EU not just on one major project (renegotiation) but a second project (Scottish membership) at the same time.
Provided that the renegotiators genuinely want the UK to remain part of the EU, then it nevertheless makes sense for them to push for both at the same time. After all, while the rest of the EU already takes up a large portion of UK’s trade, that portion would be larger still after Scottish independence – if an independent Scotland joined the EU.

Yet this in turn explains why those who wish to withdraw from the EU might seek to block Scottish membership of it, either directly (by refusing rUK consent) or indirectly (by stirring up opposition among countries like Spain, which have their own regional independence movements to contend with). Of course, if the UK does leave the EU, it can no longer block Scottish membership of it. But in that case, Scots would no longer be as keen to join the EU, since joining the EU would then possibly impede its trade with the remaining UK (although this assessment would be depend on the terms of an EU/rUK free trade agreement – if there is one).

Indeed, some English Eurosceptics might well fantasise that Scotland might be the first country to sign a free trade agreement with the newly ‘independent’ rUK. One can only imagine Alex Salmond’s face at that signing ceremony.

Barnard & Peers: chapter 3