Editors–in–Chief
Matthias Goldmann; Russell Miller; Jule Mulder; Emanuel Towfigh; Floris de Witte
Senior Editors
Matej Avbelj; Betsy Baker; Jürgen Bast; Gralf-Peter Calliess; Patrycja Dabrowska;
Jen Hendry; Elisa Hoven; Agnieszka Janczuk-Gorywoda; Malcolm MacLaren;
Stefan Magen; Nora Markard; Ralf Michaels; Anna Katharina von Oettingen;
Emanuela Orlando; Niels Petersen; Christoph Safferling; Karsten Schneider
www.germanlawjournal.com
© Copyright 2000 – 2017 by German Law Journal, Inc. All rights reserved.
ISSN: 2071-8322 / ISSNL: 2071-8322
Vol. 18 No. 01
Pages 1-232
01 January 2017
Table of Contents
Articles
Peter O. Mülbert & Alexander Sajnovits
The Element of Trust in Financial Markets Law
1-38
Alessandro Rosanò
Ne Bis Interpretatio In Idem? The Two Faces of the Ne
Bis In Idem Principle in the Case Law of the European
Court of Justice
39-58
Roda Mushkat
Counterfactual Reasoning: An Effective Component of
the International Law Methodological Armor?
Table of Contents
59-98
Table of Contents, cont.
David Yuratich
Article 13(2) TEU: Institutional Balance, Sincere CoOperation, and Non-Domination During Lawmaking?
99-126
Michael Nesbitt
Due Process in UN Commissions of Inquiry: A Legal
Analysis of the Procedures of Goldstone’s Gaza Inquiry
127-188
Developments
Thomas Kliegel
Freedom of Speech for Public Officials vs. the Political
Parties’ Right to Equal Opportunity: The German
Constitutional Court’s Recent Rulings Involving the
NPD and the AfD
189-212
Asteris Pliakos & Georgios Anagnostaras
Saving Face? The German Federal Constitutional Court
Decides Gauweiler
Table of Contents
213-232
Articles
The Element of Trust in Financial Markets Law
By Peter O. Mülbert and Alexander Sajnovits*
Abstract
Trust is an essential element for the functioning not only of ancient societies but also of
modern societies. This article explores the different dimensions of trust in general and
the different dimensions of the relationship between trust and the law, in particular.
More specifically, we distinguish three different levels of interaction between trust and
the law: (1) trust in the law; (2) trust through the operation of law, and (3) trust as
defined by the law. Building on these categories, we finally turn to the “tsunami of
regulation” (“Regulierungstsunami”) in the area of EU financial market law that has
occurred in the wake of the financial crisis of 2008. As will be shown, trust can serve as
a legal concept for making sense of this flood of legislative acts and of shaping these into
a coherent framework. A different question yet to be answered is whether the flood of
legislation already resulted in providing for an excess level of trust.
*
Prof. Dr. Peter O. Mülbert is the holder of the Chair of Civil Law, Commercial Law, Business Law and Banking
Law and the Director of the Center for German and International Law of Financial Services at the University of
Mainz, Germany. Alexander Sajnovits is a research assistant for the Chair of Civil Law, Commercial Law,
Business Law and Banking Law at the University of Mainz, Germany.
This article is an abridged and updated version of a more German law-oriented article. See Peter O. Mülbert
& Alexander Sajnovits, Vertrauen und Finanzmarktrecht, 2 ZEITSCHRIFT FÜR DIE GESAMTE PRIVATRECHTSWISSENSCHAFT
(ZfPW) 1-51 (2016). The authors are deeply grateful to Ciara McGarry for her outstanding work in translating
the German text. The usual caveat applies.
2
German Law Journal
Vol. 18 No. 01
A. Introduction
Trust is of great importance, even in the commercial context. Kenneth Arrow in 1972
succinctly gave expression to this observation as follows: “Virtually every commercial
transaction has within itself an element of trust, certainly any transaction conducted
over a period of time.”1 This perception applies particularly to the financial markets as
the repercussions of the collapse of the US investment bank Lehman Brothers in
September 2008 emphatically demonstrate. The banking and financial crisis triggered
by this event, which itself precipitated a general economic crisis, and the resulting
ongoing European sovereign debt crisis are often attributed to a loss of trust on a grand
scale. The financial markets crisis saw banks losing the trust of their peers and other
market participants.2 In the subsequent economic crisis it was the trust placed in the
financial sector and the economy as a whole that could be seen to dwindle. 3 In the
European sovereign debt crisis investors’ ability to trust in the long-term solvency of
certain EU Member States has, in turn, been severely undermined. 4
This perceived crisis of confidence has prompted individual members of academic legal
circles to demand trust-building reforms in financial markets law.5 It has also, and above
all, prompted corresponding action in the political sphere. 6 Reinforcing trust in the
1
Kenneth Arrow, Gifts and Exchanges, 1 PHILOSOPHY AND PUBLIC AFFAIRS 343, 357 (1972).
2
Roman Tomasic & Folarin Akinbami, The Role of Trust in Maintaining the Resilience of Financial Markets, 11
JOURNAL OF CORPORATE LAW STUDIES 369 (2011); ALEXANDER THIELE, FINANZAUFSICHT: DER STAAT UND DIE FINANZMÄRKTE
79 (fn. 93) (2014); Frens Kroeger, The Development, Escalation and Collapse of System Trust: From the financial
Crisis to Society at Large, 33 EUROPEAN MANAGEMENT JOURNAL 431 (2015); Joan Loughrey, Smoke and Mirrors?
Disqualification, Accountability and Market Trust, 9 LAW AND FINANCIAL MARKETS REVIEW 50, 52 (2015); Raymond
H. Brescia, Trust in the Shadows: Law, Behavior, and Financial Re-Regulation, 57 BUFFALO LAW REVIEW 1361,
1372 (2009); Ronald J. Colombo, The Role of Trust in Financial Regulation, 55 VILLANOVA LAW REVIEW 577-602
(2010); Fran Tonkiss, Trust, Confidence and Economic Crisis, 44 INTERECONOMICS 196, 200 (2009); Timothy C.
Earle, Trust, Confidence, and the 2008 Global Financial Crisis, 29 RISK ANALYSIS 785-792 (2009).
3
See Paolo Sapienza & Luigi Zingales, A Trust Crisis, 12 INTERNATIONAL JOURNAL OF FINANCE 123, 130 (2012);
Friedrich Sell & Marcus Wiens, Warum Vertrauen wichtig ist – der ökonomische Blickwinkel, 89
WIRTSCHAFTSDIENST 526-533 (2009). See also Holger Stelzner, Der Kern der Krise – Vertrauen, FRANKFURTER
ALLGEMEINE ZEITUNG (Dec. 23, 2012), abvailale at http://www.faz.net/aktuell/wirtschaft/der-kern-der-krisevertrauen-12004848.html.
4
ANDREAS DOMBERT, EUROPÄISCHE STAATSSCHULDENKRISE - URSACHEN UND LÖSUNGSANSÄTZE 3, available at
https://www.bundesbank.de/Redaktion/DE/Downloads/Presse/Reden/2011/2011_12_20_dombret_europa
eische_staatsschuldenkrise.pdf?__blob=publicationFile; Adalbert Winkler, Ordnung und Vertrauen –
Zentralbank und Staat in der Eurokrise, 14 PERSPEKTIVEN DER WIRTSCHAFTSPOLITIK 198, 202 (2013). Some
commentators have posited an opposing theory as to the culprit responsible for the crisis: excessive and
misplaced trust. See Brescia, supra note 2, at 1364. But Brescia also conceded that the loss of trust materially
contributed towards the deepening of the crisis. See id. at 1373.
5
Frank Partnoy, Financial Systems, Crises, and Regulation, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION 68,
80 (Niamh Moloney et al. eds., 2015); Chris Brummer & Matt Smallcomb, Institutional Design, The
International Architecture, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION 129, 138, 151 (Moloney et al. eds.,
2015); Tomasic & Akinbami, supra note 2, at 393. See also CAPITAL FAILURE – REBUILDING TRUST IN FINANCIAL
SERVICES (Nicholas Morris & David Vines eds., 2014).
6
Wolfgang Schäuble, Mit einem neuen Ordnungsrahmen Vertrauen schaffen, BÖRSEN-ZEITUNG (Feb. 27, 2009)
(“The functioning of a financial centre is inextricably intertwined with the trust which it enjoys. We will
2017
Trust in Financial Markets Law
3
financial markets is the stated goal of a series of legislative acts adopted at the EU level
since the outbreak of the financial markets crisis. 7
At the same time, a legislative approach adopting a completely different line of attack
has also been apparent. To begin with, credit ratings and credit rating agencies have
been divested of some of their relevance. Even more notably is the attempt at providing
an institutional framework allowing for the resolution of even systemically significant
financial market actors in a manner that does not destabilise the financial markets or
the economy as a whole, as a means of undermining the basis of actual trust in implicit
government guarantees.8 Moreover, in view of the rapid encroachment of the
compliance-based approach, originally developed as a means of regulating providers of
securities-related services, into ever more areas of social and economic life, the
importance of trust as a mechanism may be described as having suffered quite a blow
across the board. The expression “Trust, but verify,” reputedly coined by Lenin, seems
to neatly capture the mood in today’s post-modern, fragmented, and (thus) increasingly
juridified society.
With all of this in mind, this article takes up the question of trust in financial markets
law. We begin with an introduction to the inter-disciplinary concept of trust as a
mechanism for reducing complexity (B.). We then identify three manifestations of the
correlation between trust and (financial markets) law: trust in the law; trust through the
operation of law; and trust as defined by the law (C.). We then turn our attention to the
impact of core elements of financial markets law in shaping attitudes of trust (“through
the operation of law”) (D.). The article ends with a few words by way of conclusion (D.).
reinforce the trust placed in Germany as one such financial centre by once more according greater significance
to the fundamental principle of liability.)” (authors’ translation). See Mark Carney, Governor of the Bank of
England,
Speech
on
17
November,
2004,
available
at
www.bankofengland.co.uk/publications/Pages/speeches/default.aspx;
European
Commission,
Communication: Single Market Act Twelve Levers to Boost Growth and Strengthen Confidence, “Working
together to create new growth,” COM(2011) 206 final.
7
Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013 on European
venture capital funds: Recital 3; Regulation (EU) 2016/1011 of the European Parliament and of the Council of
8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the
performance of investment funds: Recital 1; Directive 2014/57/EU of the European Parliament and of the
Council of 16 April 2014 on criminal sanctions for market abuse (market abuse directive): Recital 1 and 7;
Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial
instruments and amending Directive 2002/92/EC and Directive 2011/61/EU: Recital 4; Regulation (EU) No
462/2013 of the European Parliament and of the Council of 21 May 2013 amending Regulation (EC) No
1060/2009 on credit rating agencies: Recital 20; Directive 2014/17/EU of the European Parliament and of the
Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property
and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010: Recitals 3, 31 and
35.
8
Regulation (EU) No 462/2013 (supra fn. 7) and Regulation (EU) No 806/2014 of the European Parliament and
of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit
institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single
Resolution Fund and amending Regulation (EU) No 1093/2010.
4
German Law Journal
Vol. 18 No. 01
B. Trust: An Inter-Disciplinary Concept
Trust is of crucial importance for the functioning of the economy and society. In the
wake of the pioneering work of Georg Simmel 9 and, above all, Niklas Luhmann,10 trust
has become the focus of some interest. This is true for sociologists. 11 It is also true for
psychology,12 political science,13 and jurisprudence.14 Over the last 20 years the subject
has even attracted the attention of a number of distinguished economists.15
I. Concept
Trust is defined as a “Firm belief in the reliability, truth, or ability of someone or
something; confidence or faith in a person or thing, or in an attribute of a person or
9
GEORG SIMMEL, THE PHILOSOPHY OF MONEY 1907 (Routledge 3rd edition 2004); GEORG SIMMEL, SOZIOLOGIE:
UNTERSUCHUNGEN ÜBER DIE FORMEN DER VERGESELLSCHAFTUNG 346 (1st ed. 1908). Simmel was preceded by Thomas
Hobbes, John Locke, and John Stuart Mill. See Brescia, supra note 2, at 1366; Annette Baier, Trust and
Antitrust, 96 ETHICS 231-260 (1986).
10
NIKLAS LUHMANN, TRUST AND POWER, PART 1 – TRUST (1979) (first published as VERTRAUEN – EIN MECHANISMUS DER
REDUKTION SOZIALER KOMPLEXITÄT (1968)).
11
See, e.g., JAMES S. COLEMAN, FOUNDATIONS OF SOCIAL THEORY (1990); J.M. Barbalet, Social Emotions: Confidence,
Trust and Loyalty, 16 INTERNATIONAL JOURNAL OF SOCIOLOGY AND SOCIAL POLICY 75-96 (1996).
12
See, for example, Julian B. Rotter, Generalized expectancies for interpersonal trust, 26 AMERICAN
PSYCHOLOGIST, 443-452 (1971).
13
See, e.g., Russell Hardin, Do We Want Trust in Government?, in DEMOCRACY AND TRUST 22 (Mark E. Warren
ed., 1999); Russell Hardin, Trustworthiness, 107 ETHICS 26-42 (1996); Russell Hardin, The Street-Level
Epistemology of Trust, 21 POLITICS AND SOCIETY 505-529 (1993); BARBARA MISZTAL, TRUST IN MODERN SOCIETIES – THE
SEARCH FOR THE BASES OF SOCIAL ORDER (1996).
14
Charles J. Goetz & Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 THE YALE
LAW JOURNAL 1261 (1980); Thomas Wischmeyer, Generating Trust Through Law? Judicial Cooperation in the
European Union and the “Principal of Mutual Trust”, 17 GERMAN LAW JOURNAL 339-382 (2016); Lawrence E.
Mitchell, Fairness and Trust in Corporate Law, 43 DUKE LAW JOURNAL 425-491 (1993); Lawrence E. Mitchell, Trust
and Team Production in Post-Capitalist Society, 24 JOURNAL OF CORPORATION LAW 869 (1999); Bruce Ian Carlin et
al., Public Trust, the Law, and Financial Investment, 92 JOURNAL OF FINANCIAL ECONOMICS 321-341 (2009); Larry E.
Ribstein, Law v. Trust, 81 BOSTON UNIVERSITY LAW REVIEW 553-590 (2001); KARL LARENZ, ALLGEMEINER TEIL DES
DEUTSCHEN BÜRGERLICHEN RECHTS § 2 IV. (43 et seq.) (7th ed. 1989); CLAUS-WILHELM CANARIS, VERTRAUENSHAFTUNG IM
DEUTSCHEN PRIVATRECHT (1971); HANS CHRISTOPH GRIGOLEIT, VORVERTRAGLICHE INFORMATIONSHAFTUNG 21 (1997);
CHRISTIAN KERSTING, DIE DRITTHAFTUNG FÜR INFORMATIONEN IM BÜRGERLICHEN RECHT 167 (2007).
15
See, e.g., George J. Stigler, The Economics of Information, 3 JOURNAL OF POLITICAL ECONOMY 213-225 (1961);
Oliver E. Williamson, Calculativeness, Trust, and Economic Organization, 36 JOURNAL OF LAW AND ECONOMICS 453486 (1993); Louis B. Barnes, Managing the Paradox of Organizational Trust, 59 HARVARD BUSINESS REVIEW 107116 (1981); TRUST: MAKING AND BREAKING COOPERATIVE RELATIONS (Diego Gambetta ed., 1988); Larue Tone
Hosmer, Trust: The Connecting Link between Organizational Theory and Philosophical Ethics, 20 ACADEMY OF
MANAGEMENT REVIEW, 379-403 (1995); Ernst Fehr, On the Economics and Biology of Trust, 7 JOURNAL OF THE
EUROPEAN ECONOMIC ASSOCIATION 235-266 (2009); Ernst Fehr & John A. List, The Hidden Costs and Returns of
Incentives – Trust and Trustworthiness among CEOs, 2 JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION 743-771
(2004); TANJA RIPPERGER, ÖKONOMIK DES VERTRAUENS (2nd ed. 2003); Marek Korczynski, The Political Economy of
Trust, 37 JOURNAL OF MANAGEMENT STUDIES 1-21 (2000); Paul S. Adler, Market, Hierarchy, and Trust: The
Knowledge Economy and the Future of Capitalism, 12 ORGANIZATION SCIENCE 215 (2001); Horst Albach, Vertrauen
in der ökonomischen Theorie, 136 JOURNAL OF INSTITUTIONAL AND THEORETICAL ECONOMICS 2-11 (1980).
2017
Trust in Financial Markets Law
5
thing.”16 Confidence is defined as “the mental attitude of trusting in or relying on a
person or thing,”17 and reliance as “dependence on or trust in someone or something.” 18
The concept of trust—in our everyday use of the term as an expression of belief in the
dependability and reliability of a person or thing—encompasses a range of complex and
diverse manifestations of trust. For example, we speak of trust that is well-founded,
justified, blind, irrational, etc. It is therefore in need of a precise definition that reflects
the different knowledge objects, interests, and objectives of the various disciplines in
the (social) sciences.
It is thus entirely in line with our everyday use of this term to talk of trusting in the
occurrence of a random event. Nevertheless, the expectation that share prices will
develop in a certain manner in the future19 – in any case to the extent that their
development may be likened to a “random walk down wall street”, a metaphor made
popular by the 1973 book of the same name – does not, from an economic perspective,
have anything to do with trust, nor could such an expectation ever, from a legal
perspective, be accorded the status of one warranting protection. Rather, it is, from a
legal and economic standpoint, more akin to a mere “hope” or “aspiration.” 20 Random
events in the narrower sense are indeed rare occurrences, at least outside of the context
of radioactive decay. But expectations as to the (non-)occurrence of highly improbable
events—whether these involve winning the lottery or exposure to risk of loss in the form
of what have most recently come to be known as “black swan” 21 or “tail risk” events—
will not, from a legal and economic standpoint, be a matter of “trust.” The rationality of
trusting in the occurrence or non-occurrence of a certain event will also depend on the
extent of the loss that the party acting on trust would be likely to incur should his or her
trust have been misplaced.
Trust may therefore be understood, in the context under consideration here, as an
expectation as to the future conduct of a person or an organisation or as to the
functionality of a system, whereby the trustee or the system in question must
fundamentally be capable of acting or functioning in fulfilment of said expectation.
II. Function
In these modern times the individual necessarily finds himself or herself in situations
that he or she is unable to fully grasp, faced with a degree of complexity that must be
16
Oxford English Dictionary.
17
Oxford English Dictionary.
18
Oxford English Dictionary.
19
BURTON G. MALKIEL, A RANDOM WALK DOWN WALL STREET (10th ed. 2012).
20
Ripperger also refers to hope as the antonym of trust. RIPPERGER, supra note 15, at 38.
21
See NASSIM NICHOLAS TALEB, THE BLACK SWAN (2nd ed. 2010).
6
German Law Journal
Vol. 18 No. 01
overcome.22 The more complex a social system is, then the more difficult it is for the
individual to function autonomously within its bounds. Deciding upon one of a number
of available options is a process that is rife with uncertainty. There are a number of
possible means, most of which can be cumulatively deployed, for overcoming this
uncertainty and thus reducing the complexity faced by the individual, at least according
to his own perception. First, one can increase his or her ability to assimilate, process
and interpret information. Second, one can conclude explicit contracts.23 Third, one can
choose to trust in a given outcome.
Trust therefore constitutes an essential mechanism for reducing complexity. 24 It is not
only of relevance in cases in which an explicit contractual agreement is lacking. 25 Rather,
trust generally serves as a “functional equivalent”26 of rational predictive ability and
information.27 Instead of coming to terms with the existing complexity, the trusting
party deliberately forgoes the possibility of unlimited predictive ability and thus of
command of and control over a given situation. This allows the trusting actor to actually
participate in the system.28 Such deliberate forbearance may result in a reduction in
transaction costs, and it is not least for this reason that the mechanism of trust has
piqued the interest of proponents of New Institutional Economics. 29
22
See LUHMANN, supra note 10.
23
Explicit contracts might serve as a means of reducing complexity. See RIPPERGER, supra note 15, at 27; Horst
Eidenmüller, Vertrauensmechanismus und Vertrauenshaftung, ARCHIVES FOR PHILOSOPHY OF LAW AND SOCIAL
PHILOSOPHY (Beiheft 74) 117, 121 (2000).
24
See LUHMANN, supra note 10. See also PAUL MILGROM & JOHN ROBERT, ECONOMICS, ORGANIZATION AND
MANAGEMENT 139 (1991) (“In a world of costly and incomplete contracting, trust is crucial to realizing many
transactions.”); JAMES S. COLEMAN, 1 FOUNDATIONS OF SOCIAL THEORY 91 (1990); HOLGER FLEISCHER,
INFORMATIONSASYMMETRIE IM VERTRAGSRECHT 106 (2001); Christoph Engel, Das schwindende Vertrauen in die
Marktwirtschaft und die Folgen für das Recht, in FESTSCHRIFT HOPT 2733, 2742 (2010).
25
See KERSTING, supra note 14, at 176. Ackermann addresses the possibility of an express “promise,” i.e.
trusting in conduct being in compliance with one’s contract. THOMAS ACKERMANN, DER SCHUTZ DES NEGATIVEN
INTERESSES 141 (2007).
26
Dirk U. Gilbert, Vertrauen als Gegenstand der ökonomischen Theorie: Ausgewählte theoretische
Perspektiven, empirische Einsichten und neue Erkenntnisse, 2 ZEITSCHRIFT FÜR MANAGEMENT (ZfM) 60, 71 (2007).
27
See, also, Wischmeyer, supra note 14, at 347; HANS-BERND SCHÄFER & CLAUS OTT, LEHRBUCH DER ÖKONOMISCHEN
ANALYSE DES ZIVILRECHTS 5 (5th ed. 2012).
28
Gilbert, supra note 26, at 71; Katharina Beckemper, “Das Rechtsgut Vertrauen in die Funktionsfähigkeit der
Märkte”, 6 ZEITSCHRIFT FÜR INTERNATIONALE STRAFRECHTSDOGMATIK 318, 319 (2011); LUHMANN, supra note 10, at 50.
29
Stephen Knack & Philip Keefer, Does Social Capital Have an Economic Payoff? A Cross-Country Investigation,
112 THE QUARTERLY JOURNAL OF ECONOMICS, 1251, 1252 (1997); T.K. Das & Bing-Sheng Teng, Trust, Control, and
Risk in Strategic Alliances: An Integrated Framework, 23 THE ACADEMY OF MANAGEMENT REVIEW 491-512 (1998);
Beckemper, supra note 28, at 320. Blair and Stout have considered this from a corporate law perspective.
Margaret M. Blair & Lynn A. Stout, Trust, Trustworthiness, and the Behavioral Foundations of Corporate Law,
149 UNIVERSITY OF PENNSYLVANIA LAW REVIEW 1735, 1753 (2001).
2017
Trust in Financial Markets Law
7
III. Object
The object in which trust is placed is the past, present, or future conduct of persons or
organisations. Or, in the case of a (technical) system, trust is placed in the functionality
of that system. The object of trust may therefore be a recommendation given by an
individual, the future actions of the legislature (e.g. dealing with tax matters), or the
proper processing of transactions via securities trading systems in addition to the
clearing and settlement of those transactions. 30
This also applies in principle to the context in which one places trust in information that,
at least from an economic and legal perspective, involves trust being placed not in an
abstract piece of information but in information ascribed to a certain author or source,
i.e. also in the latter’s conduct in providing that information. Rationally speaking, one
will only be able to rely on information to the effect that the annual profits of a certain
listed company are set to increase by 200% if one is familiar with the source of that
information.
The position with regard to the market price on organised markets is a singular one,
namely, there is no way of ascribing such information to any particular person or
organisation. Information relating to the market price is rather more the result of pricing
activity, i.e. the product of a pricing mechanism comprising numerous individual
elements or, in systemic terms, the output of the pricing system in place.
IV. Basis
The key phrase “basis for trust” raises the question as to why trust is placed in persons
or organisations conducting themselves, or in systems functioning, in a certain way. In
the case of the provision of information, for example, the object of trust is information
ascribable to a certain person/organisation. The reason for placing trust in the
information relates to the person/organisation, or to the legal norms regulating their
conduct. Consequently, the basis for trust may be provided by individuals (trust in
persons), organisations (trust in organisations), and also systems (trust in systems). An
example of the latter would be the trust extended to particular trading systems
governed by rules.31 The issue of the basis for trust is often discussed, particularly in
Anglo-American texts, in conjunction with the concept of trustworthiness, with the
focus turning to the trustee and the identification of those attributes that are
particularly conducive to a finding of trustworthiness. 32
30
In this regard, see infra D.II.2.2.
31
Other have taken a somewhat similar approach. See Adler, supra note 15, at 218; Korczynski, supra note
15, at 4; Friederike Welter, Vertrauen und Unternehmertum im Ost- West- Vergleich, in VERTRAUEN UND
MARKTWIRTSCHAFT 7, 8 (J. Maier ed., 2004); HANS-DIETER HAAS & SIMON MARTIN NEUMAIR, INTERNATIONALE
WIRTSCHAFT 780 (2006); JEANETTE HEDWIG MÜLLER, VERTRAUEN UND KREATIVITÄT 161 (2009).
32
See Loughrey, supra note 2, at 51; Brescia, supra note 2, at 1378; Avner Ben-Ner & Freyr Halldorsson,
Trusting and Trustworthiness: What are They, How to Measure Them, and What Affects Them, 31 JOURNAL OF
ECONOMIC PSYCHOLOGY 64 (2010).
8
German Law Journal
Vol. 18 No. 01
1. Trust in Persons
1.1 Personal Attributes and Experience
A well-founded decision to place trust in one particular person on personal grounds, will
be sufficient to do away with complexity in in less complex systems. But in the financial
markets context, outside of the bank adviser-customer relationship,33 personal trust will
only be of minor importance.34 To the degree that it matters in this context, personal
trust will usually be based on experience gathered and evaluations carried out at an
interpersonal level.35 Therefore, personal reputation will be a particularly important
factor from the perspective of a trustor forming expectations as to the future conduct
of a trustee in accordance with the principle of extrapolation, i.e. on the basis of the
latter’s past conduct.36
1.2 Transference of Trust in Systems
In addition to an individual’s personal attributes, which are then reflected in the
trustor’s experience and evaluations at the interpersonal level, his or her role within an
organisation or a system will often also have a role to play in building trust. But the trust
placed in an individual as a result of his or her position will be derived directly from the
trust placed in the system in question.37 The trustee profits from his or her role/position
within the system, but that position is not the true point of reference for the trust placed
in him or her by the trustor. It is his position that enables him or her to come into contact
with the trustor in the first place. This contact then enables the trustee to also build a
personal relationship of trust with the trustor on the basis of the trust inspired by his
position (trust in systems).38 The transference of the trust in the system to the trustee’s
position will thus often be the factor that enables the latter to develop personal
relationships of trust in the first place, and may therefore be taken to be a condition for
the establishment of such trust. This can be seen in practice in the context of the
provision of investment advisory services, which is characterised by the phenomenon of
personal investment advisers leaving one bank to work at another and taking their
existing customers with them. This is a testament to the fact that once a personal
33
Susan P. Shapiro, The Social Control of Impersonal Trust, 83 AMERICAN JOURNAL OF SOCIOLOGY 623, 632 (1987).
34
Luigi Guiso et al., Trusting the Stock Market, 63 JOURNAL OF FINANCE 2557, 2586 (2008).
35
Luhmann and Adler have addressed aspects of personal trust. See LUHMANN, supra note 10, at 39; Adler,
supra note 15, at 217. Kosfeld has written regarding the biochemical aspects of reputation and trust in the
context of personal contact. See Michael Kosfeld et al., Oxytocin Increases Trust in Humans, NATURE 673, 674
(2005).
36
See SCHÄFER & OTT, supra note 27, at 546.
37
Roderick M. Kramer, Trust and Distrust in Organizations: Emerging Perspectives, Enduring Questions, 50
REVIEW OF PSYCHOLOGY 569, 575 (1999). See, e.g., Adler, supra note 15, at 218; Nancy Kurland, Trust,
Accountability, and Sales Agents' Dueling Loyalties, 6 BUSINESS ETHICS QUARTERLY 289, 295 (1996).
38
BART NOOTEBOOM, TRUST: FORMS, FOUNDATIONS, FUNCTIONS, FAILURES AND FIGURES 8 (2002).
2017
Trust in Financial Markets Law
9
relationship of trust has been established, then it may come to override the trust placed
in the system.
The link between the trust placed in a particular position and that placed in the system
as a whole becomes particularly evident in the case of the application of rules of
professional conduct, such as prerequisites for admission to a profession or substantive
requirements relating to the practice of a profession. National legislation in the form of
prerequisites for admission to a profession or substantive requirements relating to the
practice of a profession have the effect of increasing the extent to which that individual
is prepared to trust in the reliability of his counterpart without having any actual
knowledge of the latter’s personal attributes. This is true as a matter of fact and
according to the individual’s own perception. These regimes foster the establishment
of interpersonal relationships of trust. Sanctioning mechanisms, whether these involve
rules providing for civil/criminal liability or the imposition of other penalties, additionally
serve to increase the probability of compliance with rules and regulations, which also
indirectly supports the reinforcement of trust at the personal level. A regime of
sanctions will further remove the focus of the trust being placed in a person from the
actual person concerned, transferring the point of reference for that trust to the
effectiveness of the law enforcement mechanism in place, such that it is again the trust
placed in the system that is of material relevance here.
2. Trust in Organisations
The trust placed in organisations, i.e. in institutions whose (board) members are
individuals, is a sort of hybrid of the trust placed in persons and that originating in the
context of systems.39 On the one hand, organisations (in particular corporate bodies and
other legal entities) act as a single unit in their dealings with the world at large, much as
an individual does. In this way they become the point of reference for attitudes of trust
on the part of third parties. On the other hand, as a general rule trust in organisations is
not founded on experience gathered and evaluations carried out at the interpersonal
level.40 Instead, for example, with regard to specific managers, trust is based on the
fact that the prevailing legal system provides for more or less comprehensive monitoring
and sanctioning mechanisms that ensure that each organisation as a whole acts in
accordance with a particular body of rules and regulations. In this respect, the trust
placed in organisations can be said to be akin to the trust placed in systems.
3. Trust in Systems
Where a multitude of participants interact with each other within complex systems
without actually coming into close contact with one other, trust at the personal level will
generally not be sufficient to overcome the complexity of a given situation. This is due
to the fact that, overall, the market may be described as the most impersonal
39
See GUSTAV SCHMOLLER, GRUNDRIß DER ALLGEMEINEN VOLKSWIRTSCHAFTSLEHRE 61 (1900); EIRIK FURUBOTN & RUDOLF
RICHTER, INSTITUTIONS & ECONOMIC THEORY 10 (2nd ed. 2005).
40
Nooteboom use similar terminology. See NOOTEBOOM, supra note 38, at 8.
10
German Law Journal
Vol. 18 No. 01
relationship of a practical nature that people may establish with other people. 41 In the
absence of any trust at the personal level, trust placed in systems will come into play. 42
For example, anyone who places trust in the stability of the value of money and the
continued availability of a wide range of possible uses for his money does so solely on
the basis of his trust in the functioning of this system, and without actually having any
personal connection with someone within that system.43 Here, it is immaterial whether
the trust placed in the system is continually reflected onto a particular person and
brought to the trustor’s attention by that individual. In fact, it may be said, in line with
our understanding of the concept of trust, that someone who is not constantly aware of
the extent of his own reliance and vulnerability will tend to be particularly trusting. 44
This welfare-fostering aspect of the placing of trust in systems is contingent upon the
existence of institutions established to facilitate interactions between individuals in
cases not involving any personal contact. 45 Thus, a structure of institutional
arrangements must be in place that is recognized and complied with by the individuals
participating in the system in question. These individuals are also able to anticipate its
impact in terms of the regulation of their conduct,46 thereby ensuring that any trust
placed in the system does not prove to be misplaced, and ultimately fostering conduct
on the part of all of the participants that justifies the trust placed in them. These
institutions, which effectively govern the conduct of the actors within a system by means
of regulatory requirements and incentive programmes, are established pursuant to
legislative provisions, contractual regulations, but also customary business practice. 47
They stipulate the expectations that an individual may cultivate with regard to the
conduct of other participants in the system, and the degree of trust that he will
ultimately place in those participants.48 An example of this is provided by the regulation
of the banking sector, comprising as it does requirements as to the maintenance of
equity capital, liquidity, risk management, and corporate governance mechanisms. The
ultimate purpose of these requirements is to foster trust in the banking system as a
whole by first fostering trust in its individual institutions. 49
The regime of sanctions (including its enforcement mechanisms) that applies to a
particular system will be of crucial importance for establishing trust in that system.
41
MAX WEBER, ECONOMY AND SOCIETY 636 (1978).
42
Shapiro has commented on the necessity of “impersonal trust.” See Shapiro, supra note 33, at 634.
43
See LUHMANN, supra 10, at 50.
44
See CLAUS-WILHELM CANARIS, supra note 14, at 503.
45
Shapiro, supra note 33, at 634.
46
Gilbert, supra note 26, at 90; FURUBOTN & RICHTER, supra note 39, at 86.
47
Guiso et al., supra note 34, at 2559..
48
Paola Sapienza, Trust and Financial Markets, in THE FIRST CREDIT MARKET TURMOIL OF THE 21ST CENTURY 29, 34
(Evanoff et al. eds., 2009); Sapienza & Zingales, supra note 3, at 124; Blair & Stout, supra note 29, at 1746.
49
Infra D.III.1.
2017
Trust in Financial Markets Law
11
Effective regulations governing liability and other penalties are not only intended to
ensure that the participants in the system conduct themselves in a manner that is
consistent with the rules of that system. They are also a signal from the legislature that
each market participant may expect the others to conduct themselves in a manner that
is consistent with those rules.50
V. Motivation
1. Trustor
The trustor will necessarily be exposed to certain risks in relying upon his or her
predictions as to the conduct of other individuals or of corporate bodies, or the expected
development or functioning of certain systems. In this posture, the trustor will not be
able to exert any influence on, much less any control over, the expected developments
and thus the degree of personal benefit which he will derive from them (trust
dilemma).51 One speaks of the risk involved in the trustor unilaterally effecting
performance as being the constitutive feature of a situation of trust and one that
constitutes an expression of the trustor’s freedom to choose to be either trusting or
mistrustful.52 Where no such risk exists, there will also be no need for any decision as to
whether or not to adopt an attitude of trust and, conversely, placing one’s trust in a
certain expected conduct or functionality will always entail the risk of one has misplaced
his or her trust. Still, trust is often the only means available for overcoming complex
structures.53 Thus, the trustor will decide in favour of trusting as a means – albeit a risky
one – of enabling his own participation in a particular situation. An individual’s
willingness to trust is directly linked to his personal willingness to take risks. 54
2. Trustee
One motivation for a particular trustee to conduct himself in a manner that earns others
trust may lie in his or her personal sense of integrity, i.e. in his or her determination not
to fall short of the trustor’s expectations (intrinsic trustworthiness). 55 This is likely to be
the material factor in many interpersonal relationships of trust, but less so in cases
involving complex and anonymised systems such as the financial markets. 56
50
See Peter O. Mülbert & Steffen Steup, 59 ZEITSCHRIFT FÜR WIRTSCHAFTS UND BANKRECHT 1633, 1639 (2005). See
also Blair& Stout, supra note 29, at 1746; Adler, supra note 15, at 217.
51
Williamson, supra note 15, at 463; Guiso et al., supra note 34, at 2558; COLEMAN, supra note 11, at 99.
52
See LUHMANN, supra note 10, at 24, 35.
53
RIPPERGER, supra note 15, at 5.
54
See Guiso et al., supra note 34, at 2558; Peter Smith Ring & Andrew H. van de Ven, Structuring Cooperative
Relationships between Organizations, 13 STRATEGIC MANAGEMENT JOURNAL 483, 489 (1992).
55
See Loughrey, supra note 2, at 53; Stout & Blair, supra note 29, at 772; Brescia, supra note 2, at 1370;
Colombo, supra note 2, at 580. See also Carlin et al., supra note 14, at 321.
56
See Williamson, supra note 15, at 482.
12
German Law Journal
Vol. 18 No. 01
On the other hand, most trustees operating within complex anonymised systems will be
able to anticipate the advantages of conducting themselves in a manner that justifies
the trust placed in them, with those advantages being founded upon a desire to avoid
the incurrence of penalties.57 But the trustee also (perhaps even primarily) acts in a
manner that inspires trust on the general expectation that all of the participants in the
system will conduct themselves in this way (calculative trustworthiness). 58 An additional,
financial, motivation for trustees is the prospect of a so-called “trust premium,” which,
in many cases, will take the form of a mark-up on prices, or the enhancement of one’s
reputation.59 This particular aspect is likely to prove problematic in the context of the
voluntary provision of information, a situation in which the amount of any trust
premium typically will not be on the same scale. 60
C. Trust and the Law
I. Trust: “In the Law,” “Through the Operation of Law,” and “As Defined by the Law”
There are a number of very different views of the relationship between trust and the
law: Some commentators see the law as serving as a substitute for trust, and trust itself
merely as a necessary mechanism for the reduction of complexity only in cases that are
not governed by regulatory legislation (or contractual arrangements). 61 In contrast,
another and broader interpretation of the concept of trust – also considered here –
states that the adoption of regulatory legislation will not generally render trust obsolete,
rather will itself constitute, on the one hand, the object of trust (trust in the law) and,
on the other hand, an essential factor in establishing trust and thus the actual basis for
57
See LUHMANN, supra note 10, at 35 (“trust cannot be reduced to trust in the law and in the sanctions which
the law makes possible.”).
58
Colin Mayer, Trust in Financial Markets, 14 EUROPEAN FINANCIAL MANAGEMENT 617, 630 (2008); COLEMAN, supra
note 11, at 104; Adler, supra note 15, at 217. But see Michael Baurmann, Vertrauen und Anerkennung, in
Neuer Institutionalismus 107, 111 (Andrea Maurer & Michael Schmid eds., 2002).
59
SCHÄFER & OTT, supra note 27, at 559; KERSTING, supra note 14, at 205.
60
Bishop offered a similar assessment. See William Bishop, Negligent Misrepresentation through the
Economists' Eyes, 96 LAW QUARTERLY REVIEW 360, 364 (1980).
61
See Shu Yu et al., Trade, Trust and the Rule of Law, 37 JOURNAL OF POLITICAL ECONOMY 102, 103 (2015) (“Trust
and formal institutions are considered to be two different transaction cost reducing channels and as such
serve as substitutes.”); Beckemper, supra note 28, at 321. Luhmann had a more nuanced approach. See
LUHMANN, supra note 10, at 34 (“Legal arrangements which lend special assurance to particular expectations,
and make them sanctionable, are an indispensable basis for any long-term considerations of this nature; thus,
they lessen the risk of conferring trust. This collated development is the only plausible meaning one can attach
to the notion occasionally advanced that law is a substitute for trust.”); ID. at 41 (note 5) (“In all more sharply
differentiated, more complex social orders, on the contrary, it is inevitable for law and trust to become
separate in this way.”). Some scholars go so far as to suggest that legal regulation undermines, and prevents
the establishment of, trust. See FRANCIS FUKUYAMA, TRUST: THE SOCIAL VIRTUES AND THE CREATION OF PROSPERITY 27
(1995); Ribstein, supra note 14 at 580; David T. Llewellyn, Trust and Confidence in Financial Services: A
Strategic Challenge, 13 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE 333, 336, 341 (2005).
2017
Trust in Financial Markets Law
13
trust (trust through the operation of law).62 A further area of overlap between the law
and the concept of trust is the category of “trust as defined by the law,” which relates
to existing legal concepts of trust.
II. Trust in the law
1. Trust in the Legal System
Sanctioning a failure by trustees to conduct themselves in a manner that justifies the
trust that has been placed in them is a way for the legislature to also ensure and foster
the establishment of relationships of trust (including those of an interpersonal nature)
because sanctions provide an additional incentive for those trustees to conduct
themselves in the desired manner (general deterrence). Trust is then placed in both the
individual person and the legal system, or more precisely: trust is placed in the quality
of the substantive law in force, on the one hand, and in the effectiveness of the law
enforcement mechanism, on the other hand.63
But the law’s function in this regard is not only to foster trust. To a large extent the law
might serve to replace trust as a mechanism for overcoming complexity. Contractual
arrangements can be used as a means of addressing any uncertainty arising in the
decision-making context as a result of inadequate procurement or processing of
information, or even the risk of opportunistic conduct on the part of other market
actors.64 Of course, this will not always provide an ideal solution, given the impossibility
of specifying contractual arrangements to cover every possible eventuality.65
One might well think that a perfect legal system – even if the notion is entirely Utopian 66
– in the form of an exhaustive body of dispositive and mandatory legal rules would go
so far as to render the concept of trust, as a mechanism for overcoming complexity,
entirely superfluous.
62
Wischmeyer, supra note 14, at 344; Loughrey, supra note 2, at 53. This perception of the possible role of
the law in fostering trust also forms the basis of those theories that identify a correlation between regulation
and trust within a society. See Knack & Keefer, supra note 29, at 1251 (Attempting to gauge the prevailing
level of trust by reference to the findings of the World Values Survey (WVS), in which participants are asked,
among other things, the following question: “Generally speaking, would you say that most people can be
trusted or that you need to be very careful in dealing with people?”). See also Brescia, supra note 2, at 1401.
Others have pursued a more nuanced approach. See Carlin et al., supra note 14, at 321; Philippe Aghion et
al., Regulation and Distrust, 125 THE QUARTERLY JOURNAL OF ECONOMICS 1015-1049 (2010) (Explaining that a
“cross section of countries, government regulation is strongly negatively correlated with trust.”).
63
Supra B.IV.1.2. and B.IV.3.
64
RIPPERGER, supra note 15, at 27.
65
See Shapiro, supra note 33, at 633; Katharina Pistor, Law in Finance, 41 JOURNAL OF COMPARATIVE ECONOMICS
315, 326 (2013) (With further references to the “incomplete contract theory.”).
66
See, generally, Baurmann, supra note 58, at 109 (With further references.).
14
German Law Journal
Vol. 18 No. 01
Such optimism with regard to the reach of the law must, upon closer consideration, be
tempered. After all, even a perfect legal regime would only be able to bring about a shift
in the object of trust, albeit a far-reaching one. For example, in the case of a legal
transaction, the shift would be from the need to trust the other party to a contract and
instead to trusting in the functioning of the legal regime in force. This is particularly
apparent in the context of the law governing the formulation of general terms and
conditions of business. Pursuant thereto, an individual is not required to judiciously take
note of the T&Cs or even to trust in the user’s stipulations taking his or her interests into
account, but the consumer will – at least, as someone who is not a lawyer – have to
place his or her trust in the relevant mandatory legislative provisions providing adequate
protection, and also in the functioning of the state law enforcement mechanisms. The
same will apply in the case of (other) consumer protection standards and investor
protection legislation. While mandatory protective rules reduce the risk of exposure for
consumers and investors, the latter must still rely on the functioning of the state
legislative, supervisory, and law enforcement mechanisms. 67
2. Trust in Persons as an Extension of Trust in the Legal System
In addition, the use of compulsory execution orders as a means of law enforcement by
the state is subject to some limitations. While execution orders pertaining to the
settlement of monetary claims should only prove ineffective in insolvency cases, the
effectiveness of execution orders for performance will necessarily be limited in some
cases. Where a creditor has an interest in the debtor taking certain action, and that
interest cannot be entirely served by other means, then he or she will ultimately have
to trust that the latter will remain able to effect performance – i.e. not falling victim to
disability, dementia or death – and will remain willing to do so.68
Furthermore, even a perfect legal system will be unable to eliminate the risk of
insolvency on the part of a counter-party. Where the latter does not have sufficient
assets to satisfy creditors’ monetary claims, even an optimally structured legal
framework will prove ineffective. Thus, placing one’s trust in the future solvency of a
counter-party will be of fundamental importance. In these circumstances, a third party’s
promise of collateral merely serves to bring about a shift in the object of that trust.
III. Trust Through the Operation of Law
Legislative acts might reinforce trust. They would do this by helping to optimize the aim
of trust by imposing requirements on market actors, providing for the establishment of
institutions, and establishing incentive programmes and sanctioning mechanisms. This
would stabilize expectations that have no basis in certainty.69
67
KERSTING, supra note 14, at 187.
68
Bartels and Sajnovits have commented on the position under German law. See Klaus Bartels & Alexander
Sajnovits, Die Rolle der Beschaffung beim Gattungskauf, 69 JURISTEN ZEITUNG 322, 328 (2014).
69
Wischmeyer, supra note 14, at 348.
2017
Trust in Financial Markets Law
15
Achieving this result does not depend on whether it is an explicitly stated goal of the
legislature to reinforce trust, or whether this effect is merely a by-product of the
application of the legislative act in question. It is equally irrelevant whether the
legislature is striving to foster trust in the system or trust at the interpersonal level.
But it is clear that not every legislative act will be capable of attaining the status of a
trust-building measure. This caveat applies not only in the case of far-reaching tax
legislation but also to many other areas of the law: legislative intervention in the sphere
of property rights; changes to all manner of government measures designed to subsidize
certain activities (a case in point: solar energy); and long-term decisions relating to
issues of infrastructure (an example that comes to mind here is the acceleration of the
phasing-out of nuclear power in Germany in response to the disaster in Fukushima).
Rather, it is those regulations that result in improvements in the protection afforded a
contractual party or in the functionality of systems (whether this is the stated goal or a
by-product of the legislation in question) that will have a positive, trust-building impact
at the substantive law level.
1. Fostering Trust as an Objective of Legal Policy in the Financial Markets Context
While fostering trust by means of legislative acts is not an end in itself, 70 it certainly
constitutes a legitimate objective in the case of financial markets law. Trust plays a
particularly important role in this field71 because of the need to improve efficiency in
this context.72 Improvement may result from an increased willingness on the part of
market participants to supply the market with liquidity, a lowering of transaction costs
or the prevention of market failures.
1.1 Trust in the Financial Markets
In the financial markets, trust constitutes a major factor affecting the willingness of
investors to provide necessary equity or external financing to individuals or entities in
need of funds in the primary market, and to supply liquidity as participants in the
secondary market.73 The likelihood of a financing relationship actually coming into being
will largely depend on the relationship of trust that exists between the financing party
and the would-be recipient of the funds.74
70
See supra note 7; supra note 8.
71
Julia Black, Reconceiving Financial Markets—From the Economic to the Social, 13 JOURNAL OF CORPORATE LAW
STUDIES 401-442 (2013); Llewellyn, supra note 61, at 336, 341 et seqq.
72
See also Eidenmüller, supra note 23, 117, 123.
73
See Tomasic & Akinbami, supra note 2, at 374; infra D.1.
74
See Sapienza, supra note 48, at 30.
16
German Law Journal
Vol. 18 No. 01
Moreover, the existence of greater trust in the market, one’s market counterparts, and
the quality of the legal infrastructure in place will help to lower the costs incurred by
individual market participants in connection with the procurement and processing of
information, in part by encouraging them to dispense with certain safeguards. 75
Governmental regulation as a means of further fostering trust may therefore also result
in a reduction in transaction costs – costs incurred for searches and the procurement of
information, the negotiation and decision-making contexts, and in connection with
monitoring and enforcement activities. This kind of regulation can be justified from an
economic perspective on the grounds that markets in general, and the financial markets
in particular, tend to benefit from maintaining minimal transaction costs.76
As regards the secondary market, the capital market theory supports the prohibition
against insider trading in spite of its adverse effects on the efficiency of the capital
markets on the grounds that increased liquidity will be a side effect of market
participants trusting in the fairness of the market, 77 and similar concerns were raised in
connection with (other) issues of liability affecting the secondary market. 78 In more
general terms, investors’ mistrust of the stock market is viewed as one of the reasons
why, in times of economic prosperity, the liquidity and degree of capitalisation of stock
markets does not increase in proportion to the growth experienced by the economy as
a whole.79
1.2 Trust In and Between Financial Institutions
The trust placed by the investing public (savers) in financial institutions, 80 or (more
precisely) in the latter’s solvency, and especially the trust placed by banks in each other,
is of particular importance. During the financial markets crisis, the run on banks that
many feared did not in fact materialise, partially because politicians made statements
that aimed to re-establish trust. These statements were bolstered by the prompt
creation in Europe and the US of instruments designed to stabilise the position of
75
FURUBOTN & RICHTER, supra note 39, at 57; RIPPERGER, supra note 15, at 34.
76
Mayer, supra note 58, at 630.
77
Infra D.II.3.
78
Peter O. Mülbert, Finanzmarktregulierung – Welche Regelungen empfehlen sich für den deutschen und
europäischen Finanzsektor?, 65 Juristen Zeitung 834, 842 (2010).
79
Sapienza, supra note 48, at 30; Guiso et al., supra note 34, at 2557 (with regard to the degree of
capitalization); Tomasic & Akinbami, supra note 2, at 379 (with regard to the connection between trust and
liquidity). See also Adam Ng et al., Does Trust Contribute to Stock Market Development?, 52 ECONOMIC
MODELLING 239-250 (2016).
80
See David-Jan Jansen et al., When Does the General Public Lose Trust in Banks?, De Nederlandsche Bank NV,
Working Paper No. 402 (2013); Markus Knell & Helmut Stix, Trust in Banks during Normal and Crisis Times—
Evidence from Survey Data, 82 ECONOMICA 995 (2015). Filipiak provided a comprehensive overview of current
economic research. See Ute Filipiak, Trusting Financial Institutions: Out of Reach, Out of Trust?, 59 QUARTERLY
REVIEW OF ECONOMICS AND FINANCE 200-214 (2016).
2017
Trust in Financial Markets Law
17
vulnerable institutions (SoFFIn81 and TARP82 for example).83 Thus, the emphatic
announcement made in 2008 by the German Chancellor and the German Finance
Minister insisting that the savings of the German public were safe succeeded in nipping
the public’s rising doubts as to the stability of the German banking system in the bud. 84
Mario Draghi’s subsequent assurance, in the context of a speech given in London in
2012, had a similar effect. Draghi famously declared: “Within our mandate, the ECB is
ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” 85
This succeeded, at least temporarily, in dispelling the prevailing doubts as to the survival
of the Eurosystem, thereby halting the stark rise in interest rates for government bonds
issued by the PIIGS countries as well as the growing mistrust of banks in the Eurozone,
with their extensive portfolios of securities issued by their own national governments.
2. Undermining Trust as an Objective of Legal Policy
In addition to prompting the implementation of trust-building measures, the lessons
learned as a result of the financial markets crisis have also provoked quite contrary
reactions in the legal policy sphere. The corresponding changes to the existing legal
framework are intended to further reinforce the pre-eminence of personal
responsibility on the part of market participants, rather than placing the focus on
conduct based on trust. At the same time, a legislative approach adopting a completely
different line of attack has also been apparent. To begin with, credit ratings and credit
rating agencies have been divested of some of their relevance. Even more notably is the
attempt at providing an institutional framework allowing for the resolution of even
systemically significant financial market actors in a manner that does not destabilise the
financial markets or the economy as a whole, as a means of undermining the basis of
actual trust in implicit government guarantees. 86 Similar endeavours – to some extent,
of a legal policy nature – relate to the illiquidity of individual countries within the
81
Special Financial Market Stabilization Funds (Sonderfonds Finanzmarktstabilisierung). See Section 1 of the
German Act Establishing a Financial Market Stabilization Fund (Gesetz zur Errichtung eines
Finanzmarktstabilisierungsfonds – FMStFG), BGBl I 2008, 1982.
82
Troubled Asset Relief Program.
83
Goddard et al. provided a comprehensive overview. See John Goddard et al., The Financial Crisis in Europe:
Evolution, Policy Responses and Lessons for the Future, 17 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE 362380 (2009); Pistor, supra note 65, at 319.
84
Available at: http://www.spiegel.de/wirtschaft/merkel-und-steinbrueck-im-wortlaut-die-spareinlagensind-sicher-a-582305.html (as of: October 2015).
85
Available at: https://www.ecb.europa.eu/press/key/date/2012/html/sp120726.en.html (as of: October
2015).
86
Regulation (EU) No 462/2013 (supra fn. 7) and Regulation (EU) No 806/2014 of the European Parliament
and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of
credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a
Single Resolution Fund and amending Regulation (EU) No 1093/2010.
18
German Law Journal
Vol. 18 No. 01
Eurozone and the reinforcement or revival of the no bail-out principle enshrined in the
EC/EU treaties.87
IV. Trust as Defined by the Law
An issue that must be kept distinct from the trust-building objective of legal policy and
the placing of trust in the functioning of the legal system is that of the meaning
attributed to the concept of trust pursuant to established law. In this connection,
reference is repeatedly made – mostly in a critical sense – to the ubiquitous nature of
the definition of trust pursuant to the law.88 But this fact in itself does not preclude the
possibility of the concept of trust being amenable to sufficiently precise definition in
particular contexts in which it is used. This, after all, is a requirement of the rule of law. 89
Quite the opposite is the case. Neither the courts nor legal theorists may now decline to
undertake this task because the concept of trust has now grown beyond its original
function. It is no longer merely a notion of legal dogma having an explanatory and
organisational purpose. Trust has become a constituent element of numerous legal
provisions.
The concept of trust (in the sense of confidence or reliance) is a recognised legal concept
in many European legal systems, as well as in EU law. In civil law, not only has it been
adopted as a constituent element of legislative provisions, 90 it also makes an appearance
in numerous other contexts.91 Building on the groundwork laid by Claus Wilhelm Canaris
87
Rodi commented on the management of the crisis at the EU level. See Michael Rodi, Machtverschiebungen
in der Europäischen Union im Rahmen der Finanzkrise und Fragen der demokratischen Legitimation, 70 Juristen
Zeitung 737 (2015). Heun and Thiele have commented on the limits of Art. 125 TFEU. See Werner Heun &
Alexander Thiele, Verfassungs- und europarechtliche Zulässigkeit von Eurobonds, 67 JURISTEN ZEITUNG 973, 978
(2012).
88
Johannes Köndgen, Selbstbindung ohne Vertrag 114 (1981) (“One should dispense with the application of a
legal concept once it ceases to adequately function as a classification tool and tends to result in the making of
erroneous inferences in day-to-day practice.”) (authors’ translation). Several other commentators have also
been critical of the ubiquitous nature of trust if defined pursuant to the law. See Christian von Bar,
Vertrauenshaftung ohne Vertrauen. — Zur Prospekthaftung bei der Publikums-KG in der Rechtsprechung des
BGH, 12 ZEITSCHRIFT FÜR UNTERNEHMENS- UND GESELLSCHAFTSRECHT 476, 490 (1983); Klaus J. Hopt, Nichtvertragliche
Haftung außerhalb von Schadens- und Bereicherungsausgleich - Zur Theorie und Dogmatik des Berufsrechts
und der Berufshaftung, 183 ARCHIV FÜR CIVILISTISCHE PRAXIS 608, 639 (1983); Eduard Picker, Positive
Forderungsverletzung und culpa in contrahendo — Zur Problematik der Haftungen „zwischen“ Vertrag und
Delikt, 183 ARCHIV FÜR CIVILISTISCHE PRAXIS 369, 418 (1983); FLEISCHER, supra note 24, at 420.
89
Canaris responded to the criticism. See Claus-Wilhelm Canaris, Schutzgesetze - Verkehrspflichten –
Schutzpflichten, in FESTSCHRIFT LARENZ 27, 105 (Gotthard Paulus et al. eds., 1983); Claus-Wilhelm Canaris, Die
Schadensersatzpflicht der Kreditinstitute für eine unrichtige Finanzierungsbestätigung als Fall der
Vertrauenshaftung, FESTSCHRIFT SCHIMANSKY 43, 53 (Norbert Horn et al. eds., 1999); Claus-Wilhelm Canaris, Die
Vertrauenshaftung im Lichte der Rechtsprechung des Bundesgerichtshofs, in 50 JAHRE BUNDESGERICHTSHOF –
FESTGABE AUS DER WISSENSCHAFT 129, 191 (Canaris et al. eds., 2000).
90
In Section 122(1), Section 179(2) and the second clause of Section 311(3) of the German Civil Code
(Bürgerliches Gesetzbuch – BGB).
91
Mülbert and Sajnovits have commented on aspects of German law. See Peter O. Mülbert & Alexander
Sajnovits, Vertrauen und Finanzmarktrecht, 2 ZEITSCHRIFT FÜR DIE GESAMTE PRIVATRECHTSWISSENSCHAFT (ZfPW) 1, 16
(2016). Atiyah have commented on the common law principle of “reliance” in this context. See Patrick S.
2017
Trust in Financial Markets Law
19
the discrete legal concept of “liability based on the principle of reliance” has become
established in German law.92 Subject to some qualification and various shifts in
emphasis, it has also found its way into Swiss, 93 Austrian,94 and Portuguese law.95 Trust
is a material factor in establishing pre-contractual liability in all Continental European
legal systems, quite irrespective of whether these recognise a discrete legal concept of
liability based on the principle of reliance. 96
The fundamental public law principle that enforces reliance or, more concisely, the
principle of reliance, is also an established general principle of EU law, although it is
considered by the CJEU to be a by-product of the application of the principle of legal
certainty.97 In substantive terms, this principle stipulates that citizens must be able to
rely on the continued application of the governmental regulations that govern their
conduct. By virtue of the developments in EU law in this regard, the public law principle
of reliance has also had an influence on legal developments in Member States that
previously did not recognise the application of any such principle. 98
The importance of the concept of trust with regard to the rules governing liability for
securities prospectuses and non-disclosure of capital markets information is of
particular interest in the present context. Numerous EU Member States have introduced
specific legislation defining constituent elements of liability for securities
prospectuses,99 while in others the issue of liability in connection with inaccurate
Atiyah, Promises, Obligations, and the Law of Contract, 94 THE LAW QUARTERLY REVIEW 193 (1978). Lindsay has
written about the implied term of trust and confidence. See HMJ Lindsay, The Implied Term of Trust and
Confidence, 30 INDUSTRIAL LAW JOURNAL 1-16 (2001). Goetz and Scott have commented on the relevant US
contract law. See Goetz & Scott, supra note 14, at 1261. See also Williamson, supra note 15, at 453. MacNeil
has written in regard to relational contract theory. See Ian Roderick MacNeil, Whither Contracts?, 21 JOURNAL
OF LEGAL EDUCATION 403 (1969). See Jürgen Oechsler, 9. Wille und Vertrauen im privaten Austauschvertrag - Die
Rezeption der Theorie des Relational Contract im deutschen Vertragsrecht in rechtsvergleichender Kritik, 60
RABELS ZEITSCHRIFT FÜR AUSLÄNDISCHES UND INTERNATIONALS PRIVATRECHT 91, 93 (1996).
92
See Mülbert & Sajnovits, supra note 91, at 20.
93 Wolfgang Wiegand, Die Canaris-Rezeption in der Schweiz - Vertrauenshaftung und „einheitliches gesetzliches
Schuldverhältnis" im Schweizer Recht, in 2 FESTSCHRIFT CANARIS 881-896 (2007); PETER LOSER, DIE
VERTRAUENSHAFTUNG IM SCHWEIZERISCHEN SCHULDRECHT (2006).
94
Higher Commercial Court (Oberhandelsgericht – OHG) of Vienna, judgment of 16 December 2014, file no. 4
Ob 155/14v.
95
See Manuel A. Carneiro da Frade, Die Zukunft der Vertrauenshaftung oder Plädoyer für eine „reine"
Vertrauenshaftung, in 1 FESTSCHRIFT CANARIS 99 (2007) (with further references).
96
HEIN KÖTZ, EUROPÄISCHES VERTRAGSRECHT 10 (1st ed. 1996).
97
Fundamental Westzucker, Case 1/73, [1973] ECR 723. Wischmeyer has written about the concept of trust
in EU law. See Wischmeyer, supra note 14, at 350.
98
This is true particularly in the UK and to some extent in France. See Gunnar Folke Schuppert, Public Law:
Towards a Post-National Model, in GERMANY, EUROPE AND THE POLITICS OF CONSTRAINT 109, 123 (Kenneth Dyson &
Klaus Goetz eds., 2003).
99
For example, Germany, the U K, Greece, Ireland, Austria and Portugal. In addition, also the US and
Switzerland. See ESMA, Comparison of Liability Regimes in Member States in Relation to the Prospectus
20
German Law Journal
Vol. 18 No. 01
disclosure in securities prospectuses is governed by general instruments of civil law. 100
In many legal systems, claims for damages are limited to the damage or loss incurred by
the claimant in reliance upon the correctness/completeness of the information
contained in the securities prospectus in question, although the precise extent of the
damage or loss that is eligible for compensation (expectation damages or reliance
damages) may vary greatly.101 Liability for non-disclosure of capital markets information
in the form of the publication of inaccurate ad hoc notifications or the failure to publish
such notifications has become established in numerous Member States, despite the fact
that Directive 2003/6/EC on insider dealing and market manipulation (the Market Abuse
Directive) and now Regulation (EU) No 596/2014 on market abuse (the Market Abuse
Regulation – the MAR) neither provide for the imposition of penalties for breaches of
the ad hoc disclosure obligation under civil law, nor (explicitly 102) require the
establishment of corresponding rules governing liability by the Member States. 103 The
crucial element in establishing causation and, thus, liability, as well the extent of the
damage or loss that is eligible for compensation, is once more reliance on the part of
the individual claimant. In the English legal system, for example, Section 90a of the
Financial Services and Markets Act 2000 (the FSMA), in conjunction with Paragraphs 3(1)
and 4(a) of Schedule 10A thereto, recognises liability claims only where the investor
suffering loss effects the disposals resulting in that loss “in reliance on the information
in question.”104
Directive,
2013,
ESMA/2013/619,
available
at
https://www.esma.europa.eu/sites/default/files/library/2015/11/2013619_report_liability_regimes_under_the_prospectus_directive_published_on_website.pdf. See also KLAUS J.
HOPT & HANS-CHRISTOPH VOIGT, PROSPEKT- UND KAPITALMARKTINFORMATIONSHAFTUNG 44 (2005).
100
Belgium, France, Luxembourg, Italy, the Netherlands and Spain. See ESMA, Comparison of Liability Regimes
in Member States in Relation to the Prospectus Directive, 2013, ESMA/2013/619, available at
https://www.esma.europa.eu/sites/default/files/library/2015/11/2013619_report_liability_regimes_under_the_prospectus_directive_published_on_website.pdf. See also HOPT &
VOIGT, supra note 99, at 44; NIAMH MOLONEY, EU SECURITIES AND FINANCIAL REGULATION 121 (3rd ed. 2014).
101
See ESMA, Comparison of Liability Regimes in Member States in Relation to the Prospectus Directive, 2013,
ESMA/2013/619, p. 12, available at https://www.esma.europa.eu/sites/default/files/library/2015/11/2013619_report_liability_regimes_under_the_prospectus_directive_published_on_website.pdf. See also HOPT &
VOIGT, supra note 99, at 87.
102
Tountopoulos has commented on the “principle of effectiveness” under EU law and the duty of Member
States to provide private enforcement mechanisms pursuant to that principle. See Vassilios Tountopoulos,
Market Abuse and Private Enforcement, 11 EUROPEAN COMPANY AND FINANCIAL LAW REVIEW 297, 315 (2014). See
also Iain MacNeil, Enforcement and Sanctioning, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION 280-306
(Niamh Moloney et al. ed., 2015); Dörte Poelzig, Private enforcement im deutschen und europäischen
Kapitalmarktrecht, 44 ZEITSCHRIFT FÜR UNTERNEHMENS- UND GESELLSCHAFTSRECHT 801-848 (2015); Christoph H.
Seibt, Europäische Finanzmarktregulierung zu Insiderrecht und Ad hoc-Publizität, 177 ZEITSCHRIFT FÜR DAS
GESAMTE HANDELS- UND WIRTSCHAFTSRECHT 388, 424 (2013); Klaus Ulrich Schmolke, Private Enforcement und
institutionelle Balance, 19 NEUE ZEITSCHRIFT FÜR GESELLSCHAFTSRECHT 721, 723 (2016).
103 Belgium, Germany, the UK, France, Greece, Italy, Luxembourg, the Netherlands, Austria, Portugal and Spain.
In addition, also Switzerland and the US. See HOPT & VOIGT, supra note 99, at 114.
104
See Dirk A. Verse, Zur Reform der Kapitalmarktinformationshaftung im Vereinigten Königreich, 76 RABELS
ZEITSCHRIFT FÜR AUSLÄNDISCHES UND INTERNATIONALS PRIVATRECHT 893, 916 (2012).
2017
Trust in Financial Markets Law
21
D. Shaping Trust with Financial Markets Law
I. Dependency on Trust in the Financial Markets Context
The great significance of trust for the functioning of the various markets comprising the
financial markets –capital markets, money markets, and the foreign exchange market –
is a consequence of the singular features of the goods and market structures involved.
In the financial markets context legal interests taking the form of promises of future cash
flows are issued (primary market) and traded (secondary market). 105 The present value
of those interests will depend, on the one hand, on the future ability and willingness of
the issuer of the financial security in question to meet its obligations and, on the other
hand, on the evaluation of the promised cash flows. Unlike real assets, which are
routinely amenable to physical testing for quality assurance purposes, both of these
factors can only be determined by means of a – prognostic – evaluation of all of the
relevant information. Therefore, all of the factors that are of material importance for
setting the price of a financial product are contingent upon future developments and as
such they are rife with uncertainty. Trading legal interests on the financial markets
involves a substantial element of trust.106
In addition, the ability of financial products (as products of the operation of law) to
achieve to foundational functions of markets is contingent upon the existence of special
trading, depository, and clearing and settlement mechanisms. The first of these
foundational functions is that the market must facilitate the realisation of high turnover
rates. This is a key requirement for the attainment of the desired market depth. The
second of these foundational functions is that the market must generate liquidity, as an
essential sign of quality, on the relevant secondary markets. These are provided, by
virtue of the anonymity of trading activities, by multilateral market structures such as
stock markets and multilateral trading facilities (MTFs), which facilitate business
dealings between large numbers of participants. In addition, all market segments
require clearing and settlement mechanisms that strive to ensure that all liabilities of
the (anonymous) market participants are discharged within the shortest possible period
of time and with the highest possible levels of security in place. These structures require
market participants to place considerable trust in several elements: (1) the financial
soundness; (2) the professionalism and fairness of the other (anonymous) participants;
(3) the technical infrastructure for trading, clearing, and settlement activities; and (4)
the appropriateness of the institutional (legal) framework governing the establishment
of these markets.
105
Sapienza, supra note 48, at 30 (“Financing is nothing but the exchange of a sum of money today for a
promise to return more money in the future.”); Guiso et al., supra note 34, at 2558; Loughrey, supra note 2,
at 52; Natalie Gold, Trustworthiness and Motivations, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION, supra
note 5, at 141.
106
Sapienza, supra note 48, at 30 (“trust-intensive contracts”); Shapiro, supra note 33, at 628; Llewellyn, supra
note 61, at 336.
22
German Law Journal
Vol. 18 No. 01
II. Object of Trust
1. Financial Soundness of Market Actors
Investors’ ability to trust in the financial soundness, i.e. the (future) solvency, of banks
is of fundamental importance for the functioning of the financial markets. Investors also
must be able to trust in the financial soundness of insurance companies, investment
funds, central counterparties, central securities depositories, and operators of regulated
markets. Finally, investors also must be able to trust in other major and even
systemically significant financial market actors.
2. Professionalism of Market Actors in Upholding the Interests of Third Parties
The professionalism, i.e. expertise and integrity, of market actors constitutes a highly
significant object of trust, to some extent in conjunction with their financial soundness
and to some extent quite independent thereof. To the extent that the activities of
market actors also serve the interests of third parties – customers, other market actors
or even the capital markets community – the trust placed in their professionalism will
no longer be of relevance solely from the perspective of their own economic success,
rather it will also be of interest from a macroeconomic standpoint. This will particularly
apply to the activities of groupings of market actors.
2.1 Financial Intermediaries
The professionalism of financial intermediaries constitutes a fundamental object of trust
in the context of the provision of investment advisory services, particularly in the retail
customers segment. Private investors who are unable to place such trust in their
personal investment advisers and the latter’s underlying sales organisations – banks,
providers of securities-related services – will find it considerably more difficult, if not
impossible, to gain access to many financial products.107
2.2 Market Infrastructure Managers
In the case of organised trading venues as a central component of developed financial
markets, the professionalism of the market operators constitutes a major object of trust
for the use of the services of those trading venues. It is incumbent upon operators to
create an institutional framework in the form of a system that combines technical and
legal aspects, and that is structured in accordance with statutory and/or contractual
requirements. This should enable the individual to place trust in the functioning of that
system without necessarily grasping the details of its mode of operation and certainly
without having any more extensive control mechanisms at his or her disposal. 108 This
107
Peter O. Mülbert, Anlegerschutz und Finanzmarktregulierung – Grundlagen, 177 ZEITSCHRIFT FÜR DAS GESAMTE
HANDELS- UND WIRTSCHAFTSRECHT 160, 172 (2013); JOHN ARMOUR ET AL., PRINCIPLES OF FINANCIAL REGULATION 226
(2016).
108
See Sapienza & Zingales, supra note 3, at 124.
2017
Trust in Financial Markets Law
23
involves the establishment of an IT structure as well as a body of rules and regulations
that, for example, permits measures to be taken to absorb the impact of any market
turbulence (interruption of trading) and precludes the use, for example in the highfrequency trading context, of trading techniques that pose a threat to the system (“flash
crashes”). In addition, the rules governing the organisation of the market intended to
facilitate the creation of highly liquid markets provide for the possibility of business
dealings on an anonymous basis. This explains the necessary shifting of the object of
trust in this context from the personal sphere, i.e. the individual counterparty, to the
appropriateness of the bodies of rules and regulations created by professional market
operators.
The prompt and secure clearing and settlement of business dealings is likewise of great
importance for market participants. This is manifestly the case for trades conducted on
an anonymous basis. Clearing and settlement systems that reduce the risk of any losses
increase investors’ ability to place their trust in the settlement of the transactions in
question by shifting the focus of that trust from the individual counterparty to the
clearing and settlement system itself. This is demonstrated particularly vividly in cases
involving a central counterparty (CCP) who assumes the role of “middleman” between
the two parties and provides a special guarantee for the settlement of the transaction
in question. Here, the object of trust is the professionalism and financial soundness of
the central counterparty.
2.3 Producers of Information and Systems for the Dissemination of Information
Information will only constitute an object of trust where it can be ascribed to a specific
producer of information. It will therefore be the latter’s professionalism, i.e. the
appropriateness and correctness of the process of information production
implemented, that will constitute the actual object of trust. The position with regard to
systems for the supply of information prescribed by legislation or voluntarily established
by private stakeholders (media) is very similar, with market participants being required
to place their trust in the integrity of operators of systems for the dissemination of
information. This, for example, would promote trust that the information fed into such
systems will then be disseminated in a proper manner.
3. Fairness of Market Participants
The ability of investors to place their trust in the fairness of the other market participants
is generally considered to constitute an essential condition for willingness on their part
to supply the financial markets with liquidity.109 The object of trust with regard to fair
market conduct is the expectation that the other market participants will not exert
improper influence over the functioning of the financial markets (market manipulation)
or abuse their position in order to secure particular advantages for themselves (insider
trading).
109
See Mülbert, supra note 107, at 184 (with further references).
24
German Law Journal
Vol. 18 No. 01
4. Price-setting in Organised Markets
In the case of legal interests, the market price will play a central role for information
purposes in that it may be presumed, on the basis of the (semi-strong version of the)
efficient capital market hypothesis (ECMH), to reflect all of the publicly available
information at a given time.110 Subject to this requirement, individual trading
participants may, in reliance upon the proper ascertainment of the market price, save
themselves the expense of procuring and processing their own information and, as
rational (retail) investors, should even be able to dispense with considering and
evaluating individual pieces of information.111
The object of trust with regard to the market price is a special case insofar as the
information concerned cannot be ascribed to a particular person or organisation.
Instead, it constitutes the product of a price-setting system that only lends itself to being
neatly reduced to an interplay of supply and demand at a very superficial level. Rather,
the object of trust relates to the proper functioning of a complex price-setting system
that is contingent on all of the market actors involved in the setting of prices conducting
themselves in a manner that complies with the applicable rules and regulations, on the
proper functioning of all technical systems, and on those actors having an influence on
supply and/or demand also conducting themselves appropriately.
III. Improvements in the Basis for Trust: Overview
1. Financial Soundness of Market Participants
The regulation of the banking sector – capital adequacy, liquidity, and leverage ratio
requirements (prudential supervision) supplemented by increasingly detailed
requirements as to the institutions’ risk management and corporate governance
procedures – is intended to increase the willingness of market participants, in particular
other banks acting in the capacity of participants in the inter-bank markets, to place
their trust in the financial soundness and stability of banks and thus the banking system
as a whole.112 Currently, the key documents at the international level are Basel I-III,113
110
Fama contributed Groundbreaking work on the subject. See Eugene F. Fama, Efficient Capital Markets: A
Review of Theory and Empirical Work, 25 JOURNAL OF FINANCE 383-417 (1970). Gilson and Kraakman have
addressed this from a legal perspective. See Ronald J. Gilson & Reinier Kraakman, The Mechanisms of Market
Efficiency, 70 VIRGINIA LAW REVIEW 549-643 (1984). The same authors have provided arguments in defense of
the efficient capital markets hypothesis (ECMH) in light of the doubts cast upon its validity in the wake of the
financial markets crisis and insights from the sphere of behavioral finance. See Ronald J. Gilson & Reinier
Kraakman, Market Efficiency after the Financial Crisis: It´s still a Matter of Information Costs, 100 VIRGINIA LAW
REVIEW 313-375 (2014). See Burton G. Malkiel, The Efficient-Market Hypothesis and the Financial Crisis, in
RETHINKING THE FINANCIAL CRISIS 75-98 (Alan Blinder et al. eds., 2012).
111
Lars Klöhn, Marktbetrug, 178 ZEITSCHRIFT FÜR DAS GESAMTE HANDELS- UND WIRTSCHAFTSRECHT 671, 675 (2014)
(with further references).
112
See Recital 12 of the CRR: “This Regulation would entail that all institutions follow the same rules in all the
Union, which would also boost confidence in the stability of institutions, especially in times of stress.”
113
Moloney has written about Bassel III. See MOLONEY, supra note 100, at 379; Armour et al., supra note 107,
at 305. Currently, the Basel Committee on Banking Supervision is in the process of finalizing further revisions
2017
Trust in Financial Markets Law
25
while at the EU level the CRR114 and the CRD IV115 transpose these international
agreements into EU law.116 With respect to the insurance sector, the pursuit of largely
similar objectives at the EU level has resulted in the adoption of the Solvency II
Directive,117 which contains provisions with regard to risk management and corporate
governance that are substantively similar to those contained in the aforementioned
legislation regulating the banking sector. 118 In addition, very similar considerations and
a similar regulatory approach with regard to risk management and corporate
of the Basel agreements (Basel IV) which, in part, are highly controversial between European and US regulators
and supervisors. See, e.g., Caroline Binham et al., Bank reform talks fail to agree loan risk measures - Basel
Committee likely to miss year-end deadline for securing agreement on rules, FINANCIAL TIMES (Nov. 30, 2016),
available at https://www.ft.com/content/7d2fdaca-b71d-11e6-ba85-95d1533d9a62.
114
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential
requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. See
MOLONEY, supra note 100, at 381; EUROPEAN BANKING REGULATION (Horst Eidenmüller et al. eds., 2016). Very
recently, the European Commission presented plans for further amendments and revisions of the CRR, in
particular implementing the Basel III framework. See Proposal for a Regulation of the European Parliament
and of the Council amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding
ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to
central counterparties, exposures to collective investment undertakings, large exposures, reporting and
disclosure requirements and amending Regulation (EU) No 648/2012, COM(2016) 850 final and Annex to the
Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No
575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible
liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective
investment undertakings, large exposures, reporting and disclosure requirements and amending Regulation
(EU) No 648/2012, COM(2016) 850 final.
115
Directive 2013/36/EU (fn. 93). Very recently, the European Commission presented plans for further
amendments and revisions of the CRR, in particular implementing the Basel III framework. See Proposal for a
Directive of the European Parliament and of the Council amending Directive 2013/36/EU as regards exempted
entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures
and powers and capital conservation measures, COM(2016) 854 final.
116
Several commentators have discussed the qualitative requirements as to risk management and corporate
governance forming part of Pillar I of Basel III. See Peter O. Mülbert, Managing Risk in Financial System, in THE
OXFORD HANDBOOK OF FINANCIAL REGULATION, supra note 5, at 364, 372; Kern Alexander, The Role of Capital in
Supporting Banking Stability, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION, supra note 5, at 334, 349. Gurlit
and others have written about macro-prudential banking supervision. See Elke Gurlit, Instrumente
makroprudenzieller Bankenaufsicht - unter besonderer Berücksichtigung zusätzlicher Kapitalanforderungen,
69 ZEITSCHRIFT FÜR WIRTSCHAFTS UND BANKRECHT 1217, 1257 (2015; Elke Gurlit & Isabel Schnabel, The New Actors
of Macroprudential Supervision in Germany and Europe - A Critical Evaluation, 27 JOURNAL OF BANKING LAW AND
BANKING 349-362 (2015); Ester Faia & Isabel Schnabel, The Road from Micro-prudential to Macro-prudential
Regulation, in Financial Regulation – A Transatlantic Perspective 3 (Faia et al. eds., 2015); Brigitte Haar,
Organizing Regonal Systems, The EU Example, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION, supra note 5,
157, 174, 177; Rosa M. Lastra, Systemic Risk and Macro-Prudential Supervision, in THE OXFORD HANDBOOK OF
FINANCIAL REGULATION, supra note 5, at 309; Armour et al., supra note 107, at 409.
117
Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the takingup and pursuit of the business of Insurance and Reinsurance (Solvency II). See Michelle Everson, Regulating
the Insurance Sector, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION, supra note 5, at 409, 432; MEINRAD
DREHER, II TREATISES ON SOLVENCY (2015).
118
Meinrad Dreher, Die ordnungsgemäße Geschäftsorganisation der Versicherungsgruppe nach Solvency II
und VAG 2016, 69 ZEITSCHRIFT FÜR WIRTSCHAFTS UND BANKRECHT 649, 655 (2015).
26
German Law Journal
Vol. 18 No. 01
governance119 mean that certain investment funds known as undertakings for collective
investment in transferable securities (UCITS), 120 alternative investment fund managers
(AIFMs),121 CCPs,122 central securities depositories,123 and operators of regulated
markets124 are now also subject to regulation, again at the EU level.
Counter to this trend are the trust-fostering correlative effects of statutorily prescribed
collective safeguarding mechanisms, such as and in particular the deposit guarantee
schemes in place in the banking industry, which have been used as a means125 of
stabilising the banking system126 since the Great Depression. The long-term solvency of
the individual institution will be supplemented by the functionality of the deposit
guarantee scheme in question as the object of trust, given that a greater degree of
financial soundness can be attributed to the latter as compared to a single institution
due to its broader financial base. In this regard it is irrelevant whether a deposit
guarantee scheme merely covers the value of deposits up to certain amount in line with
the provisions of the Deposit Guarantee Schemes Directive 127 or, similar to the
institutional protection schemes for the cooperative banking sector as well as savings
and state banks in Germany, accord protection to the institution per se.128 The current
– and highly controversial – Commission proposal for a Regulation establishing a
European Deposit Insurance Scheme aspires to the creation of an overarching guarantee
scheme for the EU as a whole.129
119
See Mülbert, supra note 116, at 374 (with further references).
120
Directive 2014/91/EU of the European Parliament and of the Council of 23 July 2014 amending Directive
2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings
for collective investment in transferable securities (UCITS) as regards depositary functions, remuneration
policies and sanctions. See MOLONEY, supra note 100, at 200.
121
Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative
Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No
1060/2009 and (EU) No 1095/2010.
122
See, e.g., Art. 26 to Art. 28 of Regulation (EU) No 648/2012 of 4 July 2012 on OTC derivatives, central
counterparties and trade repositories (EMIR).
123
Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving
securities settlement in the European Union and on central securities depositories and amending Directives
98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012.
124
Art. 45 et seq. of the MiFID.
125
Several commentators have written about deposit guarantee schemes. See MOLONEY, supra note 100, at
835; Mülbert, supra note 116, at 390.
126
See also Mülbert, supra note 116, at 390.
127
Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee
schemes, in particular Recitals 3 and 7. See Patricia Sarah Stöbener de Mora, Bankrecht: Neuer
Kommissionsvorschlag für ein Einlagensicherungssystem, 26 EUROPÄISCHE ZEITSCHRIFT FÜR WIRTSCHAFTSRECHT 931
(2015). Moloney has commented on the proposal. See MOLONEY, supra note 100, at 843.
128
129
See Mülbert, supra note 116, at 390.
Proposal of the European Commission for a Regulation of the European Parliament and of the Council
amending Regulation (EU) 806/2014 in order to establish a European Deposit Insurance Scheme, COM(2015)
2017
Trust in Financial Markets Law
27
2. Professionalism of Market Actors
2.1 Financial Intermediaries
Reinforcing trust in the conduct of financial intermediaries in the context of the
provision of investment advice that is tailored to customers’ individual requirements –
investment advisory services, execution-only services, and also of late product issuance
services – was already a central objective of the EU legislature with regard to the area
of financial markets law prior to the financial market crisis. It has attracted even more
attention since the crisis. The first Directive 2004/39/EC on markets in financial
instruments (the MiFID I) was a cornerstone of the package of measures comprised in
the Financial Services Action Plan130 (the FSAP). It entered into force in 2004 and was
expected to mark the start of a certain interval in the process of consolidation.131 But, in
the wake of the financial markets crisis, it mutated into a comprehensive programme of
legislation intended to do two things. First, it would improve the protection afforded to
investors. Second, according to the explicitly worded objectives of the legislation, it
would also reinforce the attitude of trust on the part of investors. 132 At the EU level, the
fundamental aspects of the new environment of trust-building investor protection
measures have become clearly delineated in the wake of the adoption of several
legislative acts, including: Directive 2014/65/EU on markets in financial instruments (the
MiFID II); an associated legislative act in the form of Regulation (EU) No. 600/2014 on
markets in financial instruments (the MiFIR) and the Regulation (EU) No 1286/2014 on
key information documents for packaged retail and insurance-based investment
products (PRIIPs). At the national level, the necessary legislation for the implementation
of the MiFID II is still incomplete. The most notable change brought about by these
developments may well be the extension of the scope of application of trust-building
586 final. With regard to the further development thereof, see European Economic and Social Committee,
Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European
Parliament and of the Council amending Regulation (EU) 806/2014 in order to establish a European Deposit
Insurance Scheme COM(2015) 586 final – 2015/0270 (COD), ECO/393, 18 May 2016 Official Journal of the
European Union C 177/21; ECB, Opinion of the European Central Bank of 20 April 2016 on a proposal for a
Regulation of the European Parliament and of the Council amending Regulation (EU) No 806/2014 in order to
establish a European Deposit Insurance Scheme (CON/2016/26), 12 July 2016, Official Journal of the European
Union C 252/1. Very recently, the European Commission presented a proposal for amending the Regulation,
see Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No
806/2014 as regards loss-absorbing and Recapitalisation Capacity for credit institutions and investment firms,
COM(2016) 851 final (supra notes 114 and 115).
130
European Commission, Financial Services: Implementing the framework for financial markets: Action Plan,
COM(1999)232,
11
May
1999,
available
at:
http://ec.europa.eu/internal_market/finances/docs/actionplan/index/action_en.pdf.
131
European Commission, Green Paper on Financial Services Policy (2005-2010) /* COM/2005/0177 final, p. 4
et
seqq.,
available
at:
http://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:52005DC0177&from=DE.
132
Recitals 4, 5 and 39 of the Directive 2014/65/EU (supra note 7); Recital 2 of the Regulation (EU) No
1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information
documents for packaged retail and insurance-based investment products (PRIIPs).
28
German Law Journal
Vol. 18 No. 01
regulations. To date, the protection of investors’ interests and the fostering of trust on
their part has been the purview of rules governing marketing activities. In the future
issuers will be called upon by law to take account of investors’ interests in designing
their products.
(a) Marketing: Institutions (“The bank you can trust”) are subject to extensive
requirements with regard to their marketing activities, in terms of both the provision of
information and advisory services to customers and the execution of customer orders.
General rules of conduct133, the obligation to maintain an organisational structure aimed
at preventing conflicts of interest134 and the general prohibition against the accepting of
gifts or benefits135, in particular, are intended to ensure that such information and
advisory services are provided in a professional manner. Article 19 and Article 21 of the
MiFID and Articles 44 to 46 of the MiFID Implementing Directive also require the best
possible execution of customer orders and contain detailed specifications to this end.
With a view to preventing the sounding of the death knell for the model of commissionbased investment advisory services that has been the custom to date, Article 26 of the
Commission’s Delegated Directive on the MiFID imposes certain stringent requirements
of form upon the acceptance of gifts or benefits. Increasing unease in the face of the
conflicts of interest that arise in the context of the acceptance by financial institutions
of such gifts or benefits has resulted in the emergence of an alternative in the form of
so-called fee-based advisory services. The German legislature has attempted to enhance
the attractiveness of this model by imposing strict requirements on the provision of
“independent” investment advisory services 136 – which is also an option for institutions
with suitable “Chinese wall” structures in place – and, in particular, has prohibited the
receipt or retention of gifts or benefits137. Thus, applying these principles in the context
of financial markets regulation, one would expect that the elimination of conflicts of
interests inherent in the provision of commission-based investment advisory services
would result in greater trust being placed in the provision of fee-based investment
advisory services.
The MiFID II will introduce a number of more stringent provisions. The future of
commission-based investment advice remains a hotly debated subject in the political
sphere.138 Apart from this aspect, distributors of financial products will be called upon
133
Art. 11, Art. 17 and Art. 18 of the MiFID and Art. 27 et seqq. of the Commission’s Delegated Directive on
the MiFID.
134
Art. 13 and Art. 18 of the MiFID.
135
Art. 18 and Art. 19 of the MiFID and Art. 26 of Directive 2006/73/EC implementing Directive 2004/39/EC
(the MiFID Implementing Directive).
136
Section 31(4b) and (4c) and Section 33(3a) of the German Securities Trading Act (Wertpapierhandelsgesetz
– the WpHG).
137
138
Section 31(4c)(2) of the WpHG.
The European Parliament overturned the prohibition against the provision of commission-based
investment advisory services originally contained in the Proposal put forward by the Commission. Some
2017
Trust in Financial Markets Law
29
to subject each of their products to a specific testing and approval process, as well as
continuous monitoring139 with a view to ensuring its suitability for the target market as
stipulated by the issuer and for the target customer group. 140 These duties will be in
addition to their existing and largely unchanged obligations.
(b) Issues: Pursuant to the MiFID II, as a means of safeguarding the interests of investors,
issuers will now be subjected to extensive obligations of a largely procedural nature
under the banner of “product governance.” This new legislative approach is a reflection
of two factors: on the one hand, the partial misfiring of the – to date – purely marketingbased investor protection legislation and, on the other hand, the difficulties involved in
substantive product regulation measures. 141 It is for this reason that the allocation of
the risk of any errors of judgment to the issuer, as an intrinsic part of this approach, is
proving highly attractive to the supervisory authorities. 142 Pursuant to this product
governance regime, issuers are required to implement specific processes for product
testing and approval, and are additionally subject to ongoing product monitoring
obligations.143 They must identify, for each individual product, a target market
members of the Parliament called this move “a catastrophe.” See EU-Parlament kippt Provisionsverbot für
Finanzprodukte,
REUTERS
(Sept.
27,
2012),
available
at
http://www.handelsblatt.com/politik/international/mifid-ii-eu-parlament-kippt-provisionsverbot-fuerfinanzprodukte/7188012.html). After this there was some discussion as to whether the European Securities
and Markets Authority (ESMA) would, in its proposals with regard to delegated (Level II) acts, introduce a “de
facto prohibition against commissions”, provoking a strong response on the part of the European Parliament
and a number of Member States. See Angela Wefers, Bundestag bindet die Finanzaufsicht; "Wir konkretisieren
das Mandat der BaFin" - EU-Behörden sollen sich auf gesetzlicher Basis bewegen, BÖRSEN-ZEITUNG (May 6,
2015), at 5.
139
Art. 16(3)(4) of the MiFID II. See EBA, Final Report – Guidelines on product oversight and governance
arrangements for retail banking products, EBA/GL/2015/18, Guideline 9, p. 20.
140
Art.16(3)(5) and Art. 24(2)(2) of the MiFID II. See EBA, Guidelines on product oversight and governance
arrangements
for
retail
banking
products,
EBA/GL/2015/18,
20,
available
at
https://www.eba.europa.eu/documents/10180/1141044/EBA-GL-201518+Guidelines+on+product+oversight+and+governance.pdf; MOLONEY, supra note 100, at 796; Niamh
Moloney, Regulating the Retail Markets, in The Oxford Handbook of Financial Regulation, supra note 5, at 736,
761; Petra Buck-Heeb, Der Product-Governance-Prozess, 179 ZEITSCHRIFT FÜR DAS GESAMTE HANDELS- UND
WIRTSCHAFTSRECHT 782, 804 (2015).
141
Mülbert has noted that more extensive regulation of products was rare outside of the fund context. See
Mülbert, supra note 107, at 198; Buck-Heeb, supra note 140, at 789.
142
The European Banking Authority (EBA) has accordingly stipulated, citing the fostering of trust as one of the
grounds for this stipulation, that, with regard to the retail banking products falling within its area of
responsibility, the competent bank supervisory authorities, i.e. including the ECB, must ensure that each of
the institutions which are subject to their supervision has a product governance regime in place. See EBA,
supra note 140) (This report does not address the question as to the legal grounds for the imposition of such
obligations on the institutions in question.).
143
See Art. 16(3) and Art. 24(2) of the MiFID II; see, furthermore, EBA (fn. 140) Guideline 5, p. 16 et seqq. See
Emilios Avgouleas, Regulating Financial Innovation, in The Oxford Handbook of Financial Regulation, supra
note 5, at 659, 681; MOLONEY, supra note 100, at 825; Armour et al., supra note 107, at 261; Niamh Moloney,
Financial market governance and consumer protection in the EU, in Financial Regulation – A Transatlantic
Perspective 221, 237 (Ester Faia et al. eds., 2015); Buck-Heeb, supra note 140, at 782; Katja Langenbucher,
30
German Law Journal
Vol. 18 No. 01
comprising a target customer group whose requirements, singular features and
conceptions correlate with the attributes of the product in question, as well as carrying
out scenario analyses and stress tests. Issuers must also tailor their marketing strategies
to their target markets.
With regard to the highly diverse manifestations of the securitisation of receivables
(ABSs) and stocks, which are considered to have been one of the main causes of the
financial markets crisis,144 the EU has applied one of the lessons learned from the crisis.
Some years ago it began to impose stringent requirements on the financial institutions
involved in such securitisation activities in the capacity of originators or sponsors. This
was meant to encourage investors to place their trust in such instruments. 145 Institutions
participating in such transactions must themselves retain at least 5 % of the issued
securities and must at all times be aware of all of the relevant, material data pertaining
to the creditworthiness and performance of the individual underlying receivables (the
look-through approach). Given that the hopes for a revival of the securitisation market
have to date remained unfulfilled, the creation of the European Capital Markets Union
(CMU) is intended to improve the framework conditions for (CMU) securitisation
transactions by means of the implementation of higher standards. The new standards
would particularly apply to the transparency and coherence of securitisation
transactions. The European Commission, in its recently released Action Plan on Building
a Capital Markets Union, explicitly placed this objective in context as a measure for
fostering trust.146
Anlegerschutz - Ein Bericht zu theoretischen Prämissen und legislativen Instrumenten, 177 ZEITSCHRIFT FÜR DAS
GESAMTE HANDELS- UND WIRTSCHAFTSRECHT 679, 698 (2013).
144
See Rob Nijskens & Rolf Wagner, Credit Risk Transfer Activities and Systemic Risk: How Banks Became Less
Risky Individually but Posed Greater Risks to the Financial System at the Same Time, 35 JOURNAL OF BANKING &
FINANCE 1391-1398 (2011); Wolf Wagner & Ian W. Marsch, CREDIT RISK TRANSFER AND FINANCIAL SECTOR STABILITY, 2
JOURNAL OF FINANCIAL STABILITY 173-193 (2006).
145
Recital 27 of (repealed) Directive 2009/111/EC of the European Parliament and of the Council of 16
September 2009 amending Directives 2006/48/EC, 2006/49/EC and 2007/64/EC as regards banks affiliated to
central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis
management. The relevant provisions are now contained in Art. 406 et seq. of the CRR. See Mülbert, supra
note 116, at 394.
146
See European Commission, Action Plan on Building a Capital Markets Union, COM(2015) 468 final, available
at: http://ec.europa.eu/finance/capital-markets-union/docs/building-cmu-action-plan_en.pdf, p. 6: “[…] to
build a single market for capital from the bottom up, identifying barriers and knocking them down one by one,
creating a sense of momentum, and sparking a growing confidence for investing in Europe’s future.” See the
Proposal for a Regulation of the European Parliament and of the Council laying down common rules on
securitisation and creating a European framework for simple, transparent and standardised securitisation and
amending Directives 2009/65/EC, 2009/138/EC, 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No
648/2012, COM(2015) 472 final, available at: https://ec.europa.eu/transparency/regdoc/rep/1/2015/EN/12015-472-EN-F1-1.PDF; Proposal for a Regulation of the European Parliament and of the Council amending
Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms,
COM(2015) 473 final, available at: https://ec.europa.eu/transparency/regdoc/rep/1/2015/EN/1-2015-473EN-F1-1.PDF. See, also, European Commission, press release from 25 April 2016: Capital Markets Union: Taking
stock of the progress made so far, available at: http://europa.eu/rapid/press-release_IP-16-1562_en.htm.
2017
Trust in Financial Markets Law
31
(c) Granting of Loans: The position will be somewhat different to the extent that banks
are subjected, under the banner of “responsible lending practices,” 147 to ever more
obligations in the context of the granting of loans. This will apply, for example, to the
creditworthiness checks that, in the case of consumer loan agreements, must now be
subject to penalty measures under liability law in accordance with the requirements of
EU law148 and, similarly, to the imposition of new obligations on mortgage lenders,
commensurate with those incumbent on providers of investment advice, to provide
comprehensive advice to consumers looking to take out a mortgage loan
(implementation of the Mortgage Credit Directive). 149 The primary objective here is to
take out of the hands of the consumer the decision as to whether to take out a loan that
is actually unsuitable for his or her requirements or would even place him or her under
an excessive financial burden. The fact that this is likely to reinforce consumers’
willingness to trust that the loans offered to them will actually “suit” them will be a side
effect of lesser importance to individuals looking to take out a loan, as their primary goal
will be to secure the granting of that loan.
2.2 Market Infrastructure Managers
The system of rules and regulations capable of building trust in the stock markets is the
body of securities legislation. The business processes of stock exchanges are governed
by several regimes, including the German Stock Exchange Act (Börsengesetz – the BörsG)
– or the comparable national legislation in force in other countries – and the
accompanying rules and regulations of the individual stock exchange in question. They
are also monitored by the commercial and securities supervisory authorities. This serves
to establish sufficient confidence on the part of the investing community to persuade its
members to open themselves up to the risks involved in anonymous securities trading.
As compared to its predecessor, the MiFID II imposes more stringent requirements on
regulated markets (stock exchanges) in Articles 48 to 52 with regard to the body of rules
and regulations governing their business processes. This aims to reinforce trust on the
part of investors.150 Articles 18 to 20 contain more detailed, and in some cases more
147
MARCUS ZAHN, ÜBERSCHULDUNGSPRÄVENTION DURCH VERANTWORTLICHE KREDITVERGABE (2011); Petra Buck-Heeb,
Ausklärungs- und Beratungspflichten bei Kreditverträgen - Verschärfungen durch die EuGH-Rechtsprechung
und die Wohnimmobilienkredit-Richtlinie, 15 ZEITSCHRIFT FÜR BANK- UND KAPITALMARKTRECHT 177-186 (2015);
Wolfgang Servatius, Aufklärungspflichten und verantwortungsvolle Kreditvergabe, xx ZEITSCHRIFT FÜR
IMMOBILIENRECHT 178 (2015).
148
But see CJEU, judgment of 27 March 2014 – C-565/12 (LCL Le Crédit Lyonnais SA/Fesih Kalhan), NJW 2014,
1941 (regarding the application of the Consumer Credit Directive (Directive 2008/48/EC on credit agreements
for consumers)). Herresthal offered an opposing view. See Carsten Herresthal, Unionsrechtliche Vorgaben zur
Sanktionierung eines Verstoßes gegen die Kreditwürdigkeitsprüfung, 25 EUROPÄISCHE ZEITSCHRIFT FÜR
WIRTSCHAFTSRECHT 497-500 (2014) (denying the existence of any duty in this regard).
149
Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit
agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC
and 2013/36/EU and Regulation (EU) No 1093/2010. See, e.g., Section 511 of the BGB, as amended by the
German Act Implementing the Mortgage Credit Directive (Gesetz zur Umsetzung der
Wohnimmobilienkreditrichtlinie). See Buck-Heeb, supra note 147, at 184.
150
See Recitals 4 and 133 of the MiFID II.
32
German Law Journal
Vol. 18 No. 01
extensive, stipulations applicable to the operators of MTFs and organised trading
facilities (OTFs) within the meaning of Article 4(1)(22) thereof.
Some light has been shed on the extent to which organised marketplaces will be deemed
to bring about the stabilisation and establishment of an attitude of trust on the part of
investors by a provision newly included in the MiFIR in implementation of the lessons
learned from the financial markets crisis. Article 28 thereof stipulates that certain
derivatives must be traded on regulated markets, MTFs or OTFs as a means of
preventing the occurrence of market distortions in the case of over-the-counter (OTC)
trading in derivatives in the future.
The institutionalisation of clearing activities at the EU level pursuant to regulatory
requirements enshrined in Regulation on OTC derivatives, central counterparties and
trade repositories (the EMIR)151 requires market participants to use the services of a
central counterparty (CCP) in the context of the settlement and clearance of certain
derivatives contracts, as EMIR uses a three-prong approach. This results in a shifting of
the object of trust from the individual market counterpart to numerous new and – in
view of the volume of derivatives in question – even systemically relevant actors. The
EMIR attempts to counterbalance this development by imposing particularly stringent
requirements as to the professionalism and organisational structures of the CCPs
involved.152
2.3 Information Producers and Systems for the Dissemination of Information
Ensuring the quality of information provided is of particular concern to the legislature in
the context of capital markets legislation.
In the primary market, issuers enjoy a natural monopoly and have considerable
information at their disposal.153 But other market participants have few means of
verifying the correctness of information disclosed to them. The legislature has thus
established a basis for the standardised production and dissemination of information, in
the form of the various constituent elements of the obligation to publish a securities
prospectus,154 with explicit rules governing the production of information in terms of
151
Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC
derivatives, central counterparties and trade repositories. See Mülbert, supra note 116, at 391; Guido Ferrarini
& Paolo Saguato, Regulating Financial Market Infrastructures, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION,
supra note 5, at 568, 584.
152
Supra D.III.1.
153
See Johannes Köndgen, Effizienzorientierung im Kapitalmarktrecht?, in EFFIZIENZ ALS REGELUNGSZIEL IM
HANDELS- UND WIRTSCHAFTSRECHT 100, 129 (Holger Fleischer & Daniel Zimmer eds., 2008) (“a clear case of
information asymmetry”) (authors’ translation). See also Holger Fleischer, Empfiehlt es sich, im Interesse des
Anlegerschutzes und zur Förderung des Finanzplatzes Deutschland das Kapitalmarkt- und Börsenrecht neu zu
regeln?, Gutachten F zum 64. DJT 2002, F 23.
154
Article 3(1) of the Prospectus Directive.
2017
Trust in Financial Markets Law
33
the reasons therefor and the subject matter, volume, and extent thereof.155 In
November 2015 the Commission submitted a corresponding Proposal for a Prospectus
Regulation,156 which in the future will also ensure the maximum degree of
harmonisation by means of directly applicable legislation in this context. These norms
do not provide any guarantee as to the reliability of specific pieces of information. After
all, national supervisory authorities are not under any obligation to verify the content of
securities prospectuses. In fact, they will limit themselves to checking their
completeness from a technical standpoint and their coherence in substantive terms.
Nevertheless, the norms do provide an initial foundation for generating trust in the
issuers of such prospectuses.157
In the secondary market, investors interact with other investors who will ideally be able
to rely on historical market price data in deciding whether to invest or divest. Obligations
on issuers to disclose information to the market in the form of so-called periodic
reporting – annual financial reports158 and half-yearly financial reports159 –, as well as
the related ad hoc disclosure obligation160, supplement the informational value of
market price data and enable it to be adjusted in line with current information. 161
Statutory requirements as to the content of disclosure apply not only in the financial
reporting context162 but also to the content of ad hoc notifications: The national
supervisory authorities monitor compliance with these requirements; any noncompliant conduct will be subject to extensive (administrative and even) civil law
penalties.
Marketing to retail customers is subject to extremely detailed requirements as to form
and content, with key information documents for packaged retail and insurance-based
investment products coming into play here.163
Finally, even information that has been produced on a voluntary basis will, as an object
of trust, be subject to legal regulation. This is particularly the case with regard to the
regulation of rating agencies at the EU level pursuant to the Credit Rating Agencies
155
See Shapiro, supra note 33, at 637.
156
Proposal for a Prospectus Regulation on the prospectus to be published when securities are offered to the
public or admitted to trading (COM(2015) 583 final.
157
Shapiro, supra note 33, at 637). In addition, the reputation of individual issuers, which bears no relation to
the statutory requirements imposed by the law governing securities prospectuses, will play a decisive role in
establishing trust, particularly in the primary market.
158
Article 4 of the Transparency Directive.
159
Article 5 of the Transparency Directive.
160
Article 17 of the MAR.
161
Efficient capital market hypothesis; supra fn. 112.
162
Articles 4(2) and Art. 5(2) of the Transparency Directive.
163
Articles 5 to 12 of the PRIIPs Regulation.
34
German Law Journal
Vol. 18 No. 01
Regulation.164 The Credit Rating Agencies Regulation provides for the application of
quality standards to rating agencies, their internal structures, the production of
information by such entities, the monitoring of compliance with these stipulations by
the ESMA at the centralised EU level, and the imposition of penalties for non-compliance
at the Member State level.
3. Fairness of Market Participants
With a view to encouraging market participants to place trust in the fairness of other
market participants – and thus in the fairness of the market environment per se – Article
15 of the MAR essentially prohibits all forms of market manipulation while permitting
only the implementation of share price stabilisation and market management measures
to a limited extent.165 This is supplemented by the prohibition against insider trading
pursuant to Article 14 of the MAR, which extends to activities other than insider trading.
This differs from the approach taken in the US. In the EU such activities will be
disallowed even where the contractual party in possession of the insider information
discloses it to the other contractual party.166 Doubts are occasionally voiced with regard
to whether such a harsh prohibition against insider trading is in fact justified, on the
grounds that it undermines the efficiency of the dissemination of market price data
because such information only becomes available to market participants after a
considerable delay.167 Were investors in fact to express a preference for true fairness in
the markets,168 they would also place greater trust in the functioning of those markets.
Not only considerations of equity argue in favour of trust-building institutional
mechanisms for upholding fairness; this approach also makes good economic sense.169
4. Price-setting in Organised Markets
Placing trust in the functioning of price-setting processes in organised markets is a
process that is based on highly complex considerations. The establishment and
reinforcement of such a basis for trust by means of legislation/regulation thus calls for
164
Regulation (EU) No 462/2013, supra note 7. See MOLONEY, supra note 100, at 637. Schroeter has
commented on ratings in general. See ULRICH G. SCHROETER, RATINGS – BONITÄTSBEURTEILUNGEN DURCH DRITTE IM
SYSTEM DES FINANZMARKT-, GESELLSCHAFTS- UND VERTRAGSRECHTS (2014). Black has written about the role of
gatekeepers. See Julia Black, The Role of Gatekeepers, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION, supra
note 5, at 254.
165
Art. 5 of Regulation (EU) No 596/2014 (fn. 7).
166
Art. 8 of Regulation (EU) No 596/2014 (fn. 7).
167
See Klaus J. Hopt, Grundsatz- und Praxisprobleme nach dem Wertpapierhandelsgesetz, 159 ZEITSCHRIFT FÜR
HANDELS- UND WIRTSCHAFTSRECHT 135, 142 (1995); Klaus J. Hopt, Europäisches und deutsches
Insiderrecht, 20 ZEITSCHRIFT FÜR UNTERNEHMENS- UND GESELLSCHAFTSRECHT 17-73 (1991); Fleischer, supra note 153,
F28; Harry McVea, Supporting Market Integrity, in THE OXFORD HANDBOOK OF FINANCIAL REGULATION, supra note
5, at 631, 639; HENRY G. MANNE, INSIDERTRADING AND THE STOCKMARKET (1966).
DAS GESAMTE
168
169
See Mülbert, supra note 107, at 184 (with further references).
See id. at 172; PETER O. MÜLBERT, AKTIENGESELLSCHAFT, UNTERNEHMENSGRUPPE UND KAPITALMARKT 119 (2nd ed.
1996).
2017
Trust in Financial Markets Law
35
a brief analysis of a number of precepts and prohibitions. Three factors, in particular,
are of material importance: quality of the price-setting procedures; transparency; and
freedom from manipulation.
4.1 Quality of Price-Setting Procedures
A prerequisite for (efficient) market price setting procedures is an effective institutional
framework170 that ensures/facilitates the brokerage of business dealings. The primary
means of ensuring the quality of the price-setting system within this institutional
framework, which will be characterised by the lowest possible spreads and an adequate
rendering of the order situation, is the establishment of rules governing the quoted
stock exchange price. This quoted stock exchange price will additionally serve as a
reference point from a legal perspective for the monitoring and supervision of pricesetting activities in the securities trading context.171 The goal of the legal stipulations in
this regard will be the maintenance of formally realistic market and share prices.172
4.2 Transparency
Furthermore, capital markets law strives, for example by means of the imposition of
transparency and notification obligations (e.g. Articles 17 and 19 of the MAR) as well as
other provisions regulating conduct (e.g. Articles 9 et seqq., 17 and 18 of the
Transparency Directive173), to ensure the provision of as much as possible, if not all, of
the information that is of relevance for price-setting purposes.174 This fuller-spectrum of
information can then be taken into account as publicly available information in the pricesetting context.
4.3 Freedom from Manipulation
Finally, the prohibition against manipulation of the market (price) pursuant to Article 15
of the MAR aims to ensure the freedom from manipulation of the market environment
and thus also the freedom from outside influences of the market price-setting
procedures. It is therefore not surprising to find the MAR also advocating in favour of
reinforcing trust in the market,175 an approach that counters not only indirect
manipulation of market prices but also the vulnerability to manipulation of the market
170
Mülbert, supra note 107,at 183; Köndgen, supra note 153, at 105.
171
Beck has written about the German law. See Heiko Beck, Section 24 BörsG, in KAPITALMARKTRECHTSKOMMENTAR para. 1 (Eberhard Schwark & Daniel Zimmer eds., 4th ed. 2010).
172
See id.
173
Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the
harmonisation of transparency requirements in relation to information about issuers whose securities are
admitted to trading on a regulated market and amending Directive 2001/34/EC (consolidated text).
174
175
Mülbert has commented on transparency and risk management. See Mülbert, supra note 116, at 386.
Recital 2 of the MAR: “Market abuse harms the integrity of financial markets and public confidence in
securities and derivatives.”
36
German Law Journal
Vol. 18 No. 01
environment as a whole and that is illustrated by the case of the manipulation of the
LIBOR/EURIBOR reference rates.176
In addition to the quoted stock exchange price, prices in general also function in the
financial markets context as public goods, with at best only rudimentary legal
requirements as to the corresponding price-setting mechanism existing to date. This
applies, for example, to the determination of the LIBOR and EURIBOR rates, which serve
as reference values for numerous financial instruments and also mortgage loans, 177 as
well as the calculation of foreign exchange rates. The cases of manipulation involving
(very) small groups of individuals from major investment banks (“rogue traders”) that
have come to light in recent years have prompted the EU to introduce strict rules to
regulate the procedures for the determination of prices and the supervision of such
procedures,178 and to place these in context as measures aimed at reinforcing trust in
the financial markets.179
E. Conclusion
Trust appears to be a central concept in the context of financial markets law and in the
legal system as a whole. By drawing a distinction between trust in the law, trust through
the operation of law, and trust as defined by the law, we hope we have shed light on the
numerous manifestations of this concept, as well as the diverse contexts in which it
applies.
Trust in the law references the fact that even a perfect legal system would not render
trust entirely superfluous and, above all, that trust in the legal system, and thus in the
appropriateness and fairness of its legal rules, constitutes a central mechanism for
reducing the complexity of life in modern societies.
Trust through the operation of law refers to the effect of legal rules in shaping attitudes
of trust and, thus, the fact that this function (such as reinforcing or undermining trust
that is placed in institutions and systems) is an important objective of legal policy
176
The manipulation of benchmarks was subsequently included as a constituent element of the prohibitions
against market manipulation. See Art. 12(1)(d) of the MAR.
177
See MOLONEY, supra note 100, at 744-745 (VIII.8.2.3).
178
Regulation (EU) No 1066/2016 of the European Parliament and of the Council on indices used as
benchmarks in financial instruments and financial contracts. See Malte Wundenberg, Regulierung von
Benchmarks, in EUROPÄISCHES KAPITALMARKTRECHT sections 30 and 31 (Rüdiger Veil ed., 2nd ed. 2014); Gerald
Spindler, Der Vorschlag einer EU-Verordnung zu Indizes bei Finanzinstrumenten (Benchmark-VO), 27 JOURNAL
FOR BANKING LAW AND BANKING 165-176 (2015).
179
Recital 1 of Regulation (EU) No 1066/2016 of the European Parliament and of the Council on indices used
as benchmarks in financial instruments and financial contracts: “Failures in, or doubts about, the accuracy and
integrity of indices used as benchmarks can undermine market confidence, cause losses to consumers and
investors and distort the real economy. It is therefore necessary to ensure the accuracy, robustness and
integrity of benchmarks and of the benchmark determination process.”
2017
Trust in Financial Markets Law
37
measures, most particularly in the context of financial markets law but also in other
areas.
Finally, trust as defined by the law takes account of the numerous challenges of legal
dogma associated with the position that established law accords the subject. A
particularly illustrative example is provided by the rules governing liability for nondisclosure of capital markets information.
The enhancing of trust by means of the operation of financial markets law, in particular,
has evolved into a pivotal justification for the “tsunami of regulation”
(“Regulierungstsunami”180) that has occurred in the wake of the financial markets crisis.
As this article shows, trust can serve as a legal concept for making sense of this flood of
legislative acts and of shaping these into a coherent framework. 181 Enhancing trust by
means of legislative acts182 constitutes a legitimate objective in financial markets law
due to the potential for improvements in efficiency which may be realised as a result.183
Yet, it is by no means certain that this will also improve the stability and efficiency of the
financial markets as a whole. Rather, this calls for carrying out cost-benefit analyses, 184
not only for each individual legislative act (as is the approach currently taken at the EU
level185) but also, more comprehensively, for the entire regulatory regime governing the
operation of the financial markets.186
180
See Peter O. Mülbert, Regulierungstsunami im europäischen Kapitalmarktrecht, 176 ZEITSCHRIFT FÜR DAS
GESAMTE HANDELS- UND WIRTSCHAFTSRECHT 369-379 (2012).
181
Supra D.
182
See supra notes 7 and 8.
183
See supra C.III.1.
184
See, e.g., John H. Cochrane, Challenges for Cost-Benefit Analysis of Financial Regulation, 43 JOURNAL OF LEGAL
STUDIES 64-105 (2014); Jeffrey N. Gordon, The Empty Call for Benefit-Cost Analysis in Financial Regulation, 43
JOURNAL OF LEGAL STUDIES 351-378 (2014); Edward Sherwin, The Cost-Benefit Analysis of Financial Regulation:
Lessons from the SEC's Stalled Mutual Fund Reform Effort, 12 STANFORD JOURNAL OF LAW, BUSINESS & FINANCE 160 (2006); Robert W. Hahn & Cass R. Sunstein, A New Executive Order for Improving Federal Regulation?
Deeper and Wider Cost-Benefit Analysis, 150 UNIVERSITY OF PENNSYLVANIA LAW REVIEW 1482 (2002).
185
See the impact assessments carried out by the European Commission Staff, for example Commission Staff
Working Paper – Impact Assessment on CRD IV, SEC(2011) 949 final, available at: http://eurlex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52011SC0949&from=EN; Commission Staff Working
Paper
–
Impact
Assessment
on
BRRD,
SWD(2012)
166
final,
available
at:
http://ec.europa.eu/internal_market/bank/docs/crisismanagement/2012_eu_framework/impact_assessment_final_en.pdf. The Joint Research Centre of the
European Commission provides statistical analyses, computation tools, and modelling support to the
Commission bodies in charge of financial markets regulation, which have been used for several impact
assessments carried out in the context of financial markets regulation. Binder has been critical of the use of
impact assessments in the context of EU legislation. See Jens-Hinrich Binder, Ring-Fencing: An Integrated
Approach with Many Unknowns, 16 EUROPEAN BUSINESS ORGANIZATION LAW REVIEW 97, 116 (2015); Jens-Hinrich
Binder, “Alternativen: Keine“? Gesetzesfolgenabschätzung in der Finanzmarktregulierung, in FESTSCHRIFT
KÖNDGEN 65, 74 (Matthias Casper et al. eds., 2016).
186
See Douglas Elliott et al., IMF Working Paper: Assessing the Cost of Financial Regulation, 2012, WP/12/233,
available at: https://www.imf.org/external/pubs/ft/wp/2012/wp12233.pdf. Coates has written with regard
to cost-benefit analyses in the context of US financial markets law. See John C. Coates, Cost-Benefit Analysis
38
German Law Journal
Vol. 18 No. 01
of Financial Regulation: A Reply, 124 YALE LAW JOURNAL 882-1011 (2015); Eric A. Posner & E. Glen Weyl, 124
YALE LAW JOURNAL FORUM 246-262 (2015); Cass R. Sunstein, Financial Regulation and Cost-Benefit Analysis, 124
YALE LAW JOURNAL FORUM 263-279 (2015).
Articles
Ne Bis Interpretatio In Idem? The Two Faces of the Ne Bis In
Idem Principle in the Case Law of the European Court of Justice
By Alessandro Rosanò*
Abstract
The meaning of idem in the ne bis in idem principle is controversial in the case law of the
Court of Justice of the European Union. In interpreting the provision of Article 54 of the
Convention Implementing the Schengen Agreement, the court has emphasized the
necessary requirement in the identity of the material acts while in antitrust law three
requirements have been deemed necessary: (1) Identity of the facts, (2) unity of offender,
and (3) unity of the legal interest protected. Despite the opinions of some Advocates
General, the court has confirmed different interpretations of the same principle,
depending on differences of the legal scope in question. A few years ago, however, the
European Court of Human Rights proclaimed the criterion based on the identity of the
material acts as the most suitable. This might push the Court of Justice of the European
Union to correct its position in the antitrust field. Should this happen, this adjustment
might serve as grounds to recognize the existence of a regional custom concerning the ne
bis in idem principle.
*
Alessandro Rosanò, Ph.D. is Teaching Fellow of International Law and European Union Law at the Law School of
the University of Padova (Italy). Email: [email protected]. The Author wishes to thank
Tommaso Pavone, Chi Ewusi, and the anonymous reviewer for their valuable contributions and comments on
earlier version of this Article. The usual disclaimers apply.
40
German Law Journal
Vol. 18 No. 01
A. Introduction
Over the past sixty years, the birth and development of the European Communities and
subsequently the European Union (EU) have favored—among other things—a significant
mobility of people, which has posed a challenge to the laws summoned to adjudicate this
growingly transnational reality. Among the many challenges is the issue of transnational
crime:1 The phenomenon of cross-border crimes has raised many questions regarding the
reaction of Member States, the identification of the proper locus delicti commissi, and how
conflicts of jurisdiction can be mitigated. That is why the issue of the ne bis in idem
principle—the double jeopardy clause—is relevant.
One should consider a definition of that principle provided in a monograph that still is a
landmark among the Italian studies on the topic: Ne bis in idem should be understood as
the principle which excludes the renewability of criminal proceedings concerning a matter
that has already been definitively judged by a judicial authority of a legal system different
from the potentially competent one.2 But this definition is just a starting point, for it fails to
provide a definition for a matter that has already been definitively judged. In fact, it could
be understood as referring either to a matter as the material reality manifested in the
historical context or a matter as the legal characterization of that reality.
This issue has also emerged in the case law of the Court of Justice of the European Union
(CJEU),3 both in criminal and antitrust law, leading to different solutions within each
branch of law.4 This Article first retraces the most important CJEU judgments in this field,
subsequently trying to tackle two problems: The first problem concerns unifying the
concept of idem in the ne bis in idem principle in EU law, regardless of the legal scope.5 The
1
See generally TRANSNATIONAL ORGANISED CRIME (Adam Edwards & Peter Gill eds., 2003); ANNAMARIA PECCIOLI , UNIONE
EUROPEA E CRIMINALITÀ TRANSNAZIONALE: NUOVI SVILUPPI (2005); HANDBOOK OF TRANSNATIONAL CRIME AND JUSTICE (Philip
Reichel ed., 2005).
2
NOVELLA GALANTINI, IL PRINCIPIO DEL “NE BIS IN IDEM” INTERNAZIONALE NEL PROCESSO PENALE 6 (1984).
3
BAS VAN BOCKEL, THE NE BIS IN IDEM PRINCIPLE IN EU LAW: A CONCEPTUAL AND JURISPRUDENTIAL ANALYSIS 225 (2010) noted
that in a legal system characterized by the presence of a number of States in which free movement of individuals
is granted, the territorial scope of ne bis in idem must necessarily coincide with the territorial scope of the legal
system.
4
On the topic, one may want to check the following: Robin Lööf, 54 CISA and the Principles of Ne Bis in Idem, 15
EURO. J. CRIME, CRIM. L. & CRIM. JUSTICE 309 (2007); Chiara Amalfitano, Il Principio del Ne Bis in Idem tra CAAS e
Carta Dei Diritti Fondamentali Dell´Unione Europea, 52 CASSAZIONE PENALE 3889 (2012); Juliette Lelieur,
“Transnationalising” Ne Bis in Idem: How the Rule of Ne Bis in Idem Reveals the Principle of Personal Legal
Certainty, 9 UTRECHT L. REV. (2013) available at http://www.utrechtlawreview.org.
5
For that purpose, this author takes into account both horizontal transnational enforcement (when the same
offense is considered in two or more EU Member States, or an EU Member State and another third country) and
2017
Ne Bis In Idem at the CJEU
41
second problem relates to the identification of ne bis in idem as a principle of customary
international law. To address this second problem, this Article also considers the case law
of the European Court of Human Rights (ECtHR) because that court faced an interpretative
challenge when dealing with that principle and has only overcome the problem in recent
years.
B. The CJEU Case Law: Ne Bis In Idem as a Criminal Procedure Principle
First of all, one should note that significant CJEU case law concerning ne bis in idem as a
criminal procedure principle has been developed only after the communitarization of the
Schengen Agreements in 1997, in light of Article 54 of the Convention implementing the
Schengen Agreement (CISA). Under Article 54, a person whose trial has been finally
disposed of in one Contracting Party may not be prosecuted in another Contracting Party
for the same acts provided that, if a penalty has been imposed, it has been enforced, is in
process of being enforced, or can no longer be enforced under the laws of the sentencing
Contracting Party.6
This explains why the first judgment in this field dates back to the beginning of the new
millennium7 and concerns cross-border crime. In Gözütok and Brügge, Advocate General
(AG) Ruiz-Jarabo Colomer highlighted that ne bis in idem rests on two principles underlying
every legal system: Those of legal certainty and of equity. In fact, he wrote: "When the
offender is prosecuted and punished, he must know that, by paying the punishment, he
has expiated his guilt and need not fear further sanction. If he is acquitted, he must have
the certainty that he will not be prosecuted again in further proceedings"; he subsequently
added that "the classic formulation of the ne bis in idem principle requires that three
identical circumstances should be present: the same facts, the same offender and the
same legal principle–the same value–to be protected."8 The CJEU did not follow Colomer’s
vertical application of the principle (where the same offense is considered by EU antitrust authorities and national
antitrust authorities).
6
One should remember that, pursuant to Article 50 of the Charter of Fundamental Rights of the European Union,
no one shall be liable to be tried or punished again in criminal proceedings for an offense for which he or she has
already been finally acquitted or convicted within the EU.
7
8
See also Joined Cases 18 and 35–65, Gutmann, 1967 E.C.R. 75 for some hints.
Opinion of Advocate General Ruiz-Jarabo Colomer, Joined Cases C-187 and C-385/01, Gözütok and Brügge, 2003
E.C.R. I-1348, paras. 49 and 56.
42
German Law Journal
Vol. 18 No. 01
approach; by relying on the textual interpretation of Article 54, the court ruled that only
the same acts should be taken into account.9
Immediately thereafter, the CJEU faced the challenge of discerning the actual meaning of
“same acts.” The nature of the topic was explained in the Opinion of AG Ruiz-Jarabo
Colomer in Van Esbroeck. Here, it was conceptualized as referring to the purely factual
aspect of a historical occurrence, to the legal characterization of the act, or to the legal
interests protected by the characterization of the offense. From the AG´s point of view, the
second and third approaches are problematic, for the peculiarities of every national legal
system may lead to the delineation of different offenses and may identify a different legal
interest deserving of protection. Such delineation could require an important limitation of
the freedom of movement in the Schengen area.10 For these reasons, same acts must be
identified as all the acts being prosecuted, historically laid out for the national court to
assess.11
The CJEU agreed and ruled that the only relevant criterion for the application of Article 54
of the CISA is the identity of the material acts, understood as meaning a set of concrete
circumstances which are inextricably linked together in time and space and by their
subject-matter as assessed by national judges.12 This interpretation was consistently
confirmed in Gasparini,13 van Straaten,14 Kretzinger,15 Kraaijenbrink,16 Bourquain,17 and
Turanský.18
9
Joined Cases C-187 and C-385/01, Gözütok and Brügge, 2003 E.C.R. I-1378, para. 44. For a review, see John A. E.
Vervaele, The transnational ne bis in idem principle in the EU. Mutual recognition and equivalent protection of
human rights, 1 UTRECHT L. REV. (2005), available at http://www.utrechtlawreview.org.
10
This issue is also underlined in Case C-469/03, Miraglia, 2005 E.C.R. I-2009 where the Court ruled out the
application of ne bis in idem to a decision declaring a case to be closed on the sole ground that criminal
proceedings have been started in another Member State against the same defendant and for the same fact. For a
review, see Chiara Amalfitano, Bis in idem per il “ne bis in idem”: Nuovo Quesito alla Corte di Giustizia, 40 RIVISTA DI
DIRITTO INTERNAZIONALE PRIVATO E PROCESSUALE 85 (2004).
11
Opinion of Advocate General Ruiz-Jarabo Colomer, Case C-436/04, Van Esbroeck, 2006 E.C.R. I-2336, paras. 43–
45.
12
Case C-436/04, Van Esbroeck, 2006 E.C.R. I-2333, paras. 36, 38.
13
Case C-467/04, Gasparini and Others, 2006 E.C.R. I-9245. In Gasparini, the CJEU ruled that ne bis in idem applies
to a court decision of a Member State by which the accused is acquitted finally because prosecution of the offense
is time-barred.
14
Case C-150/05, van Straaten, 2006 E.C.R. I-9327. In van Straaten, the court acknowledged that the principle
applies to a decision by which the accused is acquitted finally for lack of evidence.
15
Case C-288/05, Kretzinger, 2007 E.C.R. I-6441. In Kretzinger, the CJEU ruled that, for the purposes of Article 54
CISA, also a suspended custodial sanction is relevant.
2017
Ne Bis In Idem at the CJEU
43
The concept of same acts also applies with reference to the European arrest warrant
framework decision.19 According to the CJEU, the need for a uniform application of EU law
requires that it be given an autonomous and uniform interpretation throughout the EU.20
Finally, one should thoroughly consider the analysis of AG Ruiz-Jarabo Colomer in
Bourquain, where he underlined how the ne bis in idem principle has undergone a
structural change produced by the evolution of case law. Initially, the concept was closely
tied to the idea of cooperation between states founded on mutual trust; with time, it has
become the expression of a form of judicial protection from the ius puniendi, whose logic is
ground in the right to a fair trial.21
Thus, one may say that the approach followed by the CJEU in criminal matters is consistent
in that it has highlighted the relevance of the concept of same act while also solving some
tough procedural issues while identifying—and reaffirming—the very nature of the
principle.
16
Case C-367/05, Kraaijenbrink, 2007 E.C.R. I-6619. In Kraaijenbrink, the court held that it is up to national courts
to assess whether the degree of identity and connection among all the facts is such that it is possible to find that
they are the same act within the meaning of Article 54 CISA.
17
Case C-297/07, Bourquain, 2008 E.C.R. I-9425. In Bourquain, the CJEU acknowledged that the ne bis in idem
principle also applies to cases where a sentence cannot be directly enforced on account of specific features of
procedure, such as in an in absentia trial. For a review, see Silke Brammer, Case C-297/07, Reference for a
preliminary ruling from the Landgericht Regensburg in the criminal proceedings against Klaus Bourquain,
Judgment of the Court (Second Chamber) of 11 December 2008, 46 COMMON MKT. L. REV. 1685 (2009).
18
Case C-491/07, Turanský, 2008 E.C.R. I-11039. In Turanský, the court held that the ne bis in idem principle does
not apply to a suspension decision which does not definitively bar further prosecution. This therefore does not
preclude new criminal proceedings of the same act in the same state.
19
See Article 3(2) of the Council Framework Decision 2002/584/JHA of 13 June 2002 on the European arrest
warrant and the surrender procedures between Member States—Statements made by certain Member States on
the adoption of the Framework Decision, 2002 O.J. L 190/1.
20
Case C-261/09, Mantello, 2010 E.C.R. I-11477. For a review, see Jannemieke Ouwerkerk, Case C-261/09,
Criminal proceedings against Gaetano Mantello, Judgment of the Court of Justice (Grand Chamber) of 16
November 2010, 48 COMMON MKT. L. REV. 1687 (2011).
21
Opinion of Advocate General Ruiz-Jarabo Colomer, Case C-297/07, Bourquain, 2008 E.C.R. I-9425, paras. 48–49.
44
German Law Journal
Vol. 18 No. 01
C. The CJEU Case Law: Ne Bis In Idem and Antitrust Law
With respect to the ne bis in idem case law in the field of antitrust law—and, more
specifically, in the field of anti-competitive agreements—the CJEU has had to deal with the
application of sanctions against cartels by both EU and national authorities.
In Wilhelm, AG Roemer stated there is no reason not to apply national law, despite the
substantial similarity between EU and national bans and even though the ne bis in idem
principle represents an integral part of EU law.22 On the one hand, he argued that in spite
of an evident homogeneity of protected legal interests—competition in international trade
and competition in domestic trade, with a clear interpenetration between the two
dimensions—it cannot be ruled out that their diversity of fundamental principles could
produce totally different assessments in the same case.23 On the other hand, because the
principle emerged in the criminal law framework, it is not simple to apply it to sanctions
that are administrative in nature.24 The CJEU agreed with the AG but stressed the role of
equity in such situations; applying two sanctions implies that the severity of the former is
taken into account when determining the latter.25
A few years later, in Boehringer Mannheim, the court ruled again in the case of a company
fined both by U.S. authorities and the European Commission. AG Mayras raised a
preliminary problem: He wondered if a principle criminal in nature may apply to antitrust
law—a system which is administrative in nature. He viewed ne bis in idem as a
humanitarian principle aimed at ensuring the protection of the individual as a natural
person against a number of sanctions, especially in the case of custodial sentences.26
Under antitrust law, sanctions are fines that affect legal entities. Therefore, according to
AG Mayras, it was not possible to apply the principle to those cases without adapting it to
the specific branch of law.27 Under criminal law, it is possible to limit the reference to the
identity of the material acts, because one is asked to consider behaviors such as murder,
injuries, theft that are committed by one or more individuals in specific place at a precise
time. The case of anti-competitive agreements is completely different; cartels are based on
several acts whose spatial and chronological dimension cannot be easily determined.
22
Opinion of Advocate General Roemer, Case 14/68, Walt Wilhelm and Others v. Bundeskartellamt, 1969 E.C.R. I17, para. 3.
23
Id. at para. 2.
24
Id.
25
Case 14/68, Walt Wilhelm and Others v. Bundeskartellamt, 1969 E.C.R. 2, para. 11.
26
Opinion of Advocate General Mayras, Case 7/72, Boehringer Mannheim, 1972 E.C.R. I-1291, para. 2.
27
Id. at para. 3.
2017
Ne Bis In Idem at the CJEU
45
Consequently, a quid pluris is needed, even if the AG did not identify it.28 As for the
reduction of the amount of the sanctions imposed by the Commission in light of the
sanction already imposed by U.S. authorities, the AG gave a negative answer. It is one thing
to consider agreements restricting competition in the supranational framework in light of
the peculiar relationship between the EU and Member States; therefore, cumulative
sanctions should be avoided. A completely different aspect concerns those agreements
having effects both in the legal and economic systems of the EU and its Member States, as
well as the legal systems of other countries. If the severity of a sanction imposed by the
European Commission were derivative of the fact that in third states the same company
was already fined, the aims of the EU could not be achieved. 29 In short, the swift analysis of
the CJEU excluded that decisions taken in a legal system completely alien to the process of
European integration may be taken into account in the exercise of the controlling and
sanctioning functions of the Commission.30
Eventually, case law evolved to clarify the scope of the quid pluris mentioned by AG
Mayras and endowed it with meaning. In Aalborg Portland, the CJEU ruled that when
observing ne bis in idem, the application of that principle "is subject to the threefold
condition of identity of the facts, unity of offender and unity of the legal interest
protected. Under that principle, therefore, the same person cannot be sanctioned more
than once for a single unlawful course of conduct designed to protect the same legal
asset."31 Moreover, as far as the unity of legal interest is concerned, the Opinion of AG
Ruiz-Jarabo Colomer in Italcementi is quite important because he asserted:
The unity of the legal right to be protected is beyond doubt. In the
arrangement designed to ensure free competition, it is not possible to
speak, within the European Union, of separate spheres, the Community
sphere and the national spheres, as though they were watertight
compartments. Both sectors seek to protect free and open competition
28
Id. at para. 4.
29
Id.
30
Case 7/72, Boehringer Mannheim, 1972 E.C.R. 1281. On a similar topic, see Joined Cases C-238/99 P, C-244/99
P, C-245/99 P, C-247/99 P, C-250/99 P to C-252/99 P and C-254/99 P, Limburgse Vinyl Maatschappij, 2002 E.C.R. I8375; Case C-289/04 P Showa Denko, 2006 E.C.R. I-5859; Case C-308/04 P, SGL Carbon, 2006 E.C.R. I-5977. See
also Case T-141/89, Trefileurope, 1995 E.C.R. II-791; Case T-149/89, Sotralentz, 1995 E.C.R. II-1127; Joined Cases
T-236/01, T-239/01, T-244/01 to T-246/01, T-251/01 and T-252/01, Tokai Carbon, 2004 E.C.R. II–1181.
31
Joined Cases C-204/00 P, C-205/00 P, C-211/00 P, C-213/00 P, C-217/00 P and C-219/00 P, Aalborg Portland,
2004 E.C.R. I-123, para. 338.
46
German Law Journal
Vol. 18 No. 01
in the common market, one contemplating it in its entirety and the other
from its separate components, but the essence is the same.32
D. Two Meanings for the Same Principle: The Doubts Cast by the Advocates General
It is worth recalling how the AGs have criticized the existence of two different
interpretations of the ne bis in idem principle, particularly with regard to the second
interpretative option concerning antitrust law.
In Gasparini, AG Sharpston stated that, in order for the principle to apply, it should be
given a substance-based approach that binds ne bis in idem to the essence of the facts.33
This choice is necessary in order to ensure the consistency of the case law of the CJEU
when interpreting Article 54 CISA and the rules concerning competition law. Despite the
recognition that she could not "see how a core element of a fundamental principle could
vary substantially in its content depending on whether ne bis in idem is being applied
under Article 54 of the CISA or generally as a fundamental principle of Community law,"34
AG Sharpston did not support her thesis to the end, for she asserted:
In a strictly supranational context and with respect to a single legal order
governed by one uniform set of rules . . . the legal interest protected is,
by definition, already established by the EC competition rules; and is one
and the same for the whole Community. It is therefore reasonable for
the Court to require, in that ‘unitary’ context, that there should be ‘unity
of the legal interest protected’ as one of the conditions for the
application of the ne bis in idem principle.35
Nevertheless, the CJEU did not take this analysis into account. It was AG Kokott who tried
to definitively solve the issue. In the Toshiba Corporation opinion, she raised some serious
concerns about the requirement of the unity of the protected legal interest. From her
point of view, there was no reason to apply the ne bis in idem principle to antitrust law any
differently than it would apply to other fields.36 In fact, under Article 54 CISA, the principle
aims at ensuring free movement of EU citizens within the Union as an area of freedom,
32
Opinion of Advocate General Ruiz-Jarabo Colomer at para. 91, Case C-213/00 P, Italcementi—Fabbriche Riunite
Cemento, (Jan. 7, 2004), http://curia.europa.eu/juris/liste.jsf?language=en&num=C-213/00%20P.
33
Opinion of Advocate General Sharpston, Case C–467/04, Gasparini and Others, 2006 E.C.R. I-9203, para. 92.
34
Id. at para. 103.
35
Id. at para. 157.
36
Opinion of Advocate General Kokott at para. 118, Case C-17/10, Toshiba Corporation and Others (Sep.
8, 2011), http://curia.europa.eu/juris/celex.jsf?celex=62010CC0017&lang1=en&type=TXT&ancre=
2017
Ne Bis In Idem at the CJEU
47
security, and justice while, under competition law, it aims at improving and facilitating
business in the internal market by creating a level playing field throughout the European
Economic Area. Aware of the reason behind the development of the unity-of-the-legalinterest requirement—namely, punishing anti-competitive agreements even if a sanction
has already been imposed outside the EU—AG Kokott denied that that reason represented
a real problem:
In the context of cartel offences, the material acts to which the ne bis in
idem principle is then applicable necessarily always include . . . the
period of time and the territory in which the cartel agreement had anticompetitive effects . . . or could have had such effects . . . . This has
nothing to do with the legal interest protected or the legal
characterisation of the facts. Rather, the actual or potential effects of a
cartel are an indispensable component of the facts on account of which
the undertakings participating in the cartel are prosecuted by a
competition authority and cannot thereafter be prosecuted for a second
time (ne bis in idem). The prohibition under EU law against prosecution
and punishment for the same cause of action (the ne bis in idem
principle) prevents more than one competition authority or court from
imposing penalties for the anti-competitive consequences of one and
the same cartel in relation to the same territory and the same period of
time within the European Economic Area.37
Crucially, here too, the CJEU did not agree with the AG. In light of the aforementioned
judgments, the court confirmed the traditional interpretation using the three requirements
of identity of the facts, unity of offender, and unity of the legal interest protected.38
E. Hints in the Case Law of the ECtHR Concerning the Ne Bis In Idem Principle
For the purposes of this analysis, it is useful to draw upon the ECtHR’s approach with
regard to ne bis in idem.39
37
Id. at paras. 130–31.
38
Case C-17/10, Toshiba Corporation and Others (Feb. 14, 2012). AG Kokott confirmed her ideas in Opinion of
Advocate
General
Kokott
at
para.
80,
Case
C–489/10,
Bonda
(June
5,
2012),
http://curia.europa.eu/juris/recherche.jsf?language=en but the CJEU did not give any useful answer on the topic.
See Arianna Andreangeli, Ne bis in idem and administrative sanctions, 50 C OMMON MKT. L. REV. 1827 (2013).
39
See also Opinion of Advocate General Cruz Villalón, Case C-617/10, Åkerberg Fransson (June 12, 2012),
http://curia.europa.eu/juris/celex.jsf?celex=62010CC0617&lang1=en&type=TXT&ancre= which represents a
useful guide to the case law of the CJEU and the ECtHR.
48
German Law Journal
Vol. 18 No. 01
First of all, it should be noted that, over time, the ECtHR has developed three different
interpretations on the meaning of idem in ne bis in idem under Article 4 of Protocol No. 7
to the European Convention on Human Rights (ECHR),40 highlighting either the import of
the identity of the material act, the identity of legal characterization, or the identity of the
essential elements.
In Gradinger, the ECtHR had to deal with the case of an Austrian citizen who, while driving
his car, had caused an accident leading to the death of a cyclist. The driver was first
sentenced to a fine for causing death by negligence pursuant to the Austrian Criminal
Code, and he was subsequently imposed another fine for driving under the influence of
alcohol pursuant to the Austrian Road Traffic Act. On the alleged violation of Article 4 of
Protocol No. 7, the ECtHR, being fully aware that the national provisions differ with regard
to the designation, nature, and purpose of the offenses, ruled that both impugned
decisions were based on the same conduct, thereby focusing on the identity of the
material act and holding Austria responsible for a violation of Article 4.41
With time, the ECtHR’s opinion changed. In Oliveira,42 a Portuguese citizen living in
Switzerland caused a car accident and was sentenced to both a fine pursuant to the
Federal Road Traffic Act for the accident itself and another fine pursuant to the Swiss
Criminal Code for negligently causing physical injury to another driver. Although the Zürich
District Court held that any part of the former fine that had already been paid had to be
deducted from the latter, the Portuguese citizen lodged an application before the ECtHR
for violation of Article 4 of Protocol No. 7. The Court ruled that this was "a typical example
of a single act constituting various offences," where "a single act is split up into two
separate offences." The Court thus held by eight votes to one that there had been no
violation of the ne bis in idem principle. In his dissenting opinion, Judge Repik recalled
Gradinger. In light of that reference and of the terminology used by the Court—criminal
40
Pursuant to which,
1. No one shall be liable to be tried or punished again in criminal proceedings under the
jurisdiction of the same State for an offence for which he has already been finally acquitted
or convicted in accordance with the law and penal procedure of that State. 2. The
provisions of the preceding paragraph shall not prevent the reopening of the case in
accordance with the law and penal procedure of the State concerned, if there is evidence
of new or newly discovered facts, or if there has been a fundamental defect in the previous
proceedings, which could affect the outcome of the case. 3. No derogation from this Article
shall be made under Article 15 of the Convention.
41
Gradinger v. Austria, App. No. 15963/90, paras. 54–55 (Oct. 23, 1995).
42
Oliveira v. Svizzera, App. No. 25711/94, para. 26 (July 30, 1998).
2017
Ne Bis In Idem at the CJEU
49
act and offense—it seems that, in this case, the ECtHR interpreted the idem as conveying
the idea of identity of legal characterization.
Some years later in Franz Fischer, a case very similar to Gradinger, the Court reasoned as
follows:
The wording of Article 4 of Protocol No. 7 does not refer to “the same
offence” but rather to trial and punishment “again” for an offence for
which the applicant has already been finally acquitted or convicted.
Thus, while it is true that the mere fact that a single act constitutes more
than one offence is not contrary to this Article, the Court must not limit
itself to finding that an applicant was, on the basis of one act, tried or
punished for nominally different offences. The Court . . . notes that there
are cases where one act, at first sight, appears to constitute more than
one offence, whereas a closer examination shows that only one offence
should be prosecuted because it encompasses all the wrongs contained
in the others . . . . An obvious example would be an act which constitutes
two offences, one of which contains precisely the same elements as the
other plus an additional one. There may be other cases where the
offences only slightly overlap. Thus, where different offences based on
one act are prosecuted consecutively, one after the final decision of the
other, the Court has to examine whether or not such offences have the
same essential elements.43
That interpretation was then confirmed in Sailer,44 yet shortly thereafter in Göktan,45 the
Court backtracked to Oliveira.
The ECtHR solved the foregoing interpretative enigma in Zolotukhin. In that case, the
applicant had been sentenced for a number of violations of administrative and criminal
regulations based on the same set of facts. First of all, the court recalled the three
aforementioned approaches and considered that the existence of a variety of approaches
engenders legal uncertainty incompatible with a fundamental right, namely the right not to
be prosecuted twice for the same offense.46 Hence, harmonizing the interpretation in that
43
Franz Fischer v. Austria, App. No. 37950/97, para. 25 (May 29, 2001).
44
Sailer v. Austria, App. No. 38237/97 (June 6, 2002).
45
See Göktan v. France, App. No. 33402/96 (July 2, 2002). See also Gauthier v. France, App. No. 61178/00 (June
24, 2003).
46
Zolotukhin v. Russia, App. No. 14939/03, para. 78 (Feb. 10, 2009).
50
German Law Journal
Vol. 18 No. 01
field was necessary. Because the ECHR must be "interpreted and applied in a manner
which renders its rights practical and effective, not theoretical and illusory"47 and the
approach which emphasized the legal characterization of the two offenses was too
restrictive,48 the court held that the idem element must be understood as expressing the
idea of facts which constitute "a set of concrete factual circumstances involving the same
defendant and inextricably linked together in time and space, the existence of which must
be demonstrated in order to secure a conviction or institute criminal proceedings."49 The
court thus ruled in favor of Mr. Zolotukhin.50
Such an approach perfectly overlaps the one followed by the CJEU when interpreting
Article 54 CISA, and it is for this reason that in paragraph 37 of Zolotukhin, the ECtHR made
reference to van Esbroeck, adopting a cross-fertilization perspective when adjudicating the
issue at stake.
F. How to Unify the Meaning of Idem in the Ne Bis In Idem Principle in the CJEU’s Case
Law (?)
Returning to the CJEU’s case law, one should be aware of the contrast between the two
different meanings of the idem in the ne bis in idem principle: Article 54 CISA is interpreted
as expressing the requirement of identity of material facts, but when it comes to antitrust
law, it is interpreted as expressing the requirements of identity of the facts, unity of the
offender, and unity of the legal interest protected.
As far as the first meaning is concerned, it seems both correct and obvious to say that the
requirements are two-fold: Identity of the facts and unity of the offender. In fact, ne bis in
idem cannot be relied upon by a person other than the one the final judgment was passed
upon. This realization, however, allows only minimal approximation, for the main problem
concerns the unity of the legal interest protected as the nullifying element. It therefore
seems appropriate to try to understand the reason behind such a requirement.
First of all, one should remember that the antitrust declination of the ne bis in idem
principle arose between the late sixties and the early seventies, during a time period when
the European Communities did not have competence in criminal matters. After all,
antitrust law is a branch of administrative—and not criminal—law. That has legitimized—
47
Id. at para. 80.
48
Id. at para. 81.
49
Id. at para. 84.
50
The interpretation given in Zolotukhin was later applied in Grande Stevens and Others v. Italy, App. No.
18640/10, 18647/10, 18663/10, 18668/10 and 18698/10 (Mar. 4, 2014).
2017
Ne Bis In Idem at the CJEU
51
as mentioned in the aforementioned opinion of AG Mayras—the idea that the criminal
procedure principle of ne bis in idem had to be adapted to a different area of law in which
it would—or would not, depending on the case—be applied. This conclusion was
understandable at the time, but it seems less appropriate now, that is to say, after almost
fifty years and in light of the significant development of the EU competence in criminal
matters.51 The CJEU strongly defends its case law and that seems to legitimize the idea that
the aim of that case law is to fully suppress phenomena that harm competition through a
joint effort of EU and national authorities. This new modus operandi should justify a
different interpretative approach.
This conclusion does not seem acceptable due to its Machiavellian undertones—the end
that justifies the means in the antitrust field. Traditionally, the ne bis in idem principle is a
humanitarian principle which aims to protect anyone from being prosecuted and punished
twice for the same offense. Therefore, it cannot lead to the result of making it easier to
punish twice; that would represent a severe distortion of its meaning.
Of course, if the traditional interpretation of the principle prevailed, the European
Commission and national authorities would have only one chance to hit anti-competitive
agreements, potentially involving powerful economic entities.52 This does not, however,
change the fact that the goal is not to hit them hard, but to hit them good—namely, to hit
them secundum legem.
Therefore, a revirement by the CJEU would be highly appropriate, especially if one
considers that it could be done in a rather elegant fashion. When dealing with the ne bis in
idem principle in the antitrust field, the CJEU has recalled the case law of the ECtHR.53 In
light of Zolothukin and of the need for an interpretative harmonization expressed by the
ECtHR on the ne bis in idem topic, it would not be difficult for the CJEU to acknowledge
that will and overhaul its position. That could be based on the aforementioned Article
52(3) of the Charter of Fundamental Rights of the EU; Pursuant to this article, in so far as
51
See generally VALSAMIS MITSILEGAS, EU CRIMINAL LAW (2009); ESTER HERLIN-KARNELL, THE CONSTITUTIONAL DIMENSION OF
EUROPEAN CRIMINAL LAW (2012); ANDRÉ KLIP , EUROPEAN CRIMINAL LAW: AN INTEGRATIVE APPROACH (2012).
52
See Bas van Bockel, Case C-436/04, Criminal Proceedings against Léopold Henri Van Esbroeck, Case C-150/05,
Jean Leon Van Straaten v. Netherlands and Italy, Case C-467/04, Criminal proceedings against G. Francesco
Gasparini, José Ma L.A. Gasparini, G. Costa Bozzo, Juan de Lucchi Calcagno, Francesco Mario Gasparini, José A.
Hormiga Marrero, Sindicatura Quiebra, 45 COMMON MKT. L. REV. 223 (2008).
53
See, e.g., Limburgse Vinyl Maatschappij and Others v. Commission case. For a review, see Rein
Wesseling, Joined Cases C-238/99 P, C-244/99 P, C-245/99 P, C-247/99 P, C-250/99 P to C-252/99 P and C-254/99
P, Limburgse Vinyl Maatschappij NV (LVM) and Others v. Commission, 41 C OMMON MKT. L. REV. 1141 (2004).
52
German Law Journal
Vol. 18 No. 01
the Charter contains rights which correspond to rights guaranteed by the ECHR, the
meaning and scope of those rights shall be the same as those laid down by the ECHR,
although EU law may provide more extensive protection. Because ne bis in idem is
guaranteed by both the Charter and the ECHR, its meaning and scope should be the same
both in the EU and the ECHR legal system but the interpretation provided by the CJEU in
the antitrust field cannot be considered consistent with the interpretation provided by the
ECtHR. And, of course, one cannot say that the former provides a more extensive
protection in that it makes it more difficult for the principle to apply.54
Given that judgments on this topic are increasing in frequency, it is certain that the CJEU
will tackle the issue again.55 Consequently, the only thing to do is to wait and see if the
ideas expressed by AG Kokott will be accepted by the court.56
G. Perspectives: Might the Ne Bis In Idem Principle Be a Regional Custom?
Achieving a uniform approach to the matter would be significant not only in itself and for
consistency reasons, but also in that it might pave the way to an interesting outcome
recognizing that a regional custom has come into existence.
First of all, on the relevance of ne bis in idem as a principle of customary international law
it could be useful to recall the Opinion presented by AG Tizzano in Archer Daniels
54
On Article 52 of the Charter, see Koen Lenaerts, Exploring the Limits of the EU Charter of Fundamental Rights, 8
EUROPEAN CONSTITUTIONAL LAW REVIEW 375 (2012). On the EU Charter of Fundamental Rights in general, see THE EU
CHARTER OF FUNDAMENTAL RIGHTS AS A BINDING INSTRUMENT: FIVE YEARS OLD AND GROWING (Sybe de Vries et al. eds.,
2015); MAKING THE CHARTER OF FUNDAMENTAL RIGHTS A LIVING INSTRUMENTS (G. Palmisano ed., 2014); THE EU CHARTER OF
FUNDAMENTAL RIGHTS: A COMMENTARY (S. Peers et al. eds., 2014).
55
See generally Case C-390/12, Pfleger and Others (Apr. 30, 2014), http://curia.europa.eu/juris/liste.jsf?num=C390/12; Case C-398/12, M., (June 5, 2014), http://curia.europa.eu/juris/liste.jsf?num=C-398/12&language=EN;
and Case C-129/14 PPU, Spasic (May 27, 2014), http://curia.europa.eu/juris/documents.jsf?num=C-129/14. For a
review, see John A. E. Vervaele, Schengen and Charter-related ne bis in idem protection in the Area of Freedom,
Security and Justice: M and Zoran Spasic, 52 COMMON MKT. L. REV. 1339 (2015). On the topic of harmonization, see
Martin Wasmeier, Ne bis in idem and the Enforcement Condition: Balancing Freedom, Security and Justice?, 5 NEW
J. EURO. CRIM. L. 534 (2014).
56
In light of the above, this author must challenge the wording of Article 50 of the Charter of Fundamental Rights
of the European Union, which states that no one shall be liable to be tried or punished again in criminal
proceedings "for an offence" (emphasis added) for which he or she has already been finally acquitted or convicted
within the Union in accordance with the law. The word ʺoffenceʺ poses a problem since it seems to recall the
legal characterization of the act rather than the act as an historical event. The Explanations relating to the Charter
do not let overcome the issue since they make reference to both the antitrust case law and Gözütok and Brügge
as if the CJEU ruled the same way: Actually, the concept of offense is more linked to the first interpretation rather
than the second one. Therefore, it would be more correct to speak of an act rather than an offense, as this may
be a harbinger of problems. A rewording would be welcome but it seems to presuppose a revirement in the CJEU
antitrust case law.
2017
Ne Bis In Idem at the CJEU
53
Midland.57 According to the AG, there is no principle of public international law that
prevents the authorities or courts of different States from trying and convicting a person
for the same facts since the ius puniendi is still considered a fundamental expression of
national sovereignty. Hence while there are many treaties that confirm the ne bis in idem
principle, as a general rule, they tend to limit its applicability to judicial decisions within the
same State. Focusing on international treaties, this conclusion is confirmed by Article 14(7),
of the International Covenant on Civil and Political Rights58 and by Article 4 of Protocol No.
7 to the ECHR. Pursuant to Article 8(4) of the American Convention on Human Rights,59 an
accused person acquitted by a nonappealable judgment shall not be subjected to a new
trial ʺfor the same causeʺ which is interpreted as expressing the idea of identity of material
acts.60
The list may be further enriched. For instance, think of Article 10 of the Model Treaty on
the Transfer of Proceedings in Criminal Matters adopted by the United Nations General
Assembly,61 under which from the date when the requested State informs the requesting
State that a case has been finally disposed of, the requesting State shall definitively refrain
from prosecuting the same offense. Pursuant to Article 53 of the European Convention on
the International Validity of Criminal Judgments,62 a person in respect of whom a European
criminal judgment has been rendered may neither be prosecuted nor sentenced nor
subjected to enforcement of a sanction in another Contracting State for the same act
under any of the following circumstances: (a) If he was acquitted; (b) if the sanction
imposed has been completely enforced, is being enforced, has been wholly—or with
respect to the part not enforced—the subject of a pardon or an amnesty, or can no longer
be enforced because of lapse of time; or (c) the court convicted the offender without
imposing a sanction. The same provisions can be found in Article 35 of the European
Convention on the Transfer of Proceedings in Criminal Matters.63
57
Opinion of Advocate General Tizzano at paras. 95–96, Case C-397/03 P, Archer Daniels Midland and Archer
Daniels Midland Ingredients (June 7, 2005), http://curia.europa.eu/juris/recherche.jsf?language=en.
58
International Covenant on Civil and Political Rights, Dec. 16, 1966, S. Exec. Rep. 102–23, 999 U.N.T.S. 171.
59
American Convention on Human Rights, Nov. 21, 1969, 1144 U.N.T.S. 143.
60
See Loayza-Tamayo v. Peru, Merits Judgment, Inter-Am. Ct. H.R. (ser. C) No. 33, para. 66 (Sept. 17, 1997).
61
Model Treaty on the Transfer of Proceedings in Criminal Matters, adopted Dec. 14, 1990 A/RES/45/118.
62
European Convention on the International Validity of Criminal Judgements, adopted May 28, 1970. The
Convention has been signed by 28 States and ratified by 22.
63
European Convention on the Transfer of Proceedings in Criminal Matters, adopted May 15, 1972. The
Convention has been signed by 32 States and ratified by 25.
54
German Law Journal
Vol. 18 No. 01
This prohibition against prosecuting for the same offense also exists in the Statute of the
International Criminal Court64 and the Statute of the Special Court for Sierra Leone.65
Under Article 20(2) of the former, no person shall be tried by another court for a crime
within the jurisdiction of the court for which that person has already been convicted or
acquitted. Under Article 9(1) of the latter, no person shall be tried before a national court
of Sierra Leone for acts for which he or she has already been tried by the Special Court.
EU law also contains examples of this prohibition. One could mention—apart from Article
54 CISA—Article 7 of the Convention on the protection of the European Communities´
financial interests66 and Article 10 of the Convention on the fight against corruption
involving officials of the European Communities or officials of EU Member States.67
Additionally, the Member States of the European Communities signed the Convention on
double jeopardy, which proclaims under Article 1 that a person whose trial has finally been
disposed of in a Member State may not be prosecuted in another Member State in respect
of the same facts, provided that a sanction was imposed, has been enforced, is actually in
the process of being enforced or can no longer be enforced under the laws of the
sentencing State.68
Further, one can highlight the framework decision on the principle of mutual recognition to
judgments in criminal matters: Pursuant to Article 9(1)(c), the competent authority of the
executing states may refuse to recognize a judgment—and enforce a sentence—if it would
be contrary to the principle of ne bis in idem.69 Under Article 1 of the framework decision
on conflicts of jurisdiction in criminal matters, the objective of the regulation is to promote
closer cooperation between Member States in order to prevent situations that may
64
Rome Statute of the International Criminal Court, adopted July 17, 1998.
65
Agreement between the United Nations and the Government of Sierra Leone and Statute of the Special Court
for Sierra Leone, adopted Jan. 16, 2002.
66
Council Act of July 26, 1995, Drawing Up the Convention on the Protection of the European Communities´
Financial Interests, 1995 O.J. C 316/48.
67
Council Act of May 26, 1997, Drawing Up the Convention Made on the Basis of Article K.3(2)(c) of the Treaty on
the European Union, on the Fight Against Corruption Involving Officials of the European Communities of Officials
of Member States of the European Union, 1997 O.J. C 195/2.
68
Convention between the Member States of the European Communities on double jeopardy, adopted May 25,
1987. The Convention never came into force, even if it applied to the relations between Austria, Belgium,
Denmark, France, Germany, Ireland, Italy, the Netherlands, and Portugal.
69
Council Framework Decision 2008/909/JHA of Nov. 27, 2008, on the application of the principle of mutual
recognition to judgments in criminal matters imposing custodial sentences or measures involving deprivation of
liberty for the purpose of their enforcement in the European Union, 2008 O.J. L 327/27.
2017
Ne Bis In Idem at the CJEU
55
constitute an infringement of the ne bis in idem principle.70 Finally, the European
Commission expressed the will to relaunch a debate on the principle in a Green Paper
stating—among other things—that the principle applies only where the imposed penalty
has been enforced, is actually in the process of being enforced, or can no longer be
enforced. This would have been justified in a system based on mutual assistance, but it is
questionable in an area of freedom, security, and justice, where cross-border enforcement
takes place through EU mutual recognition instruments.71
Clearly, one can neither deny the huge interest in the ne bis in idem principle72 nor that a
European consensus on this principle has developed both in regulations and in case law.
According to some legal doctrine, the substantial number of international agreements and
European regulations concerning the principle should confirm the idea that ne bis in idem
has already become an international custom.73 In a well-known 1967 judgment,74 however,
the Italian Constitutional Court denied the nature of the ne bis in idem as a principle of
customary international law in light of the relevance of the principle of territorial
sovereignty since the social and political assessment of human acts, especially in the
criminal law field, tend to vary significantly from state to state. After thirty years, the court
revisited the same topic and slightly changed their mind:75 While still denying its nature as
70
Council Framework Decision 2009/948/JHA of 30 November 2009 on prevention and settlement of conflicts of
exercise of jurisdiction in criminal proceedings, 2009 O.J. L 328/42. Because the third paragraph of the Whereas
section recalls the ne bis in idem principle as set out in Article 54 CISA, one may think that the case law concerning
that article is recalled as well.
71
Green Paper on conflicts of jurisdiction and the principle of ne bis in idem in criminal proceedings, COM(2005)
696 (not published in the O.J.).
72
See also the Initiative of the Hellenic Republic with a view to adopting a Council Framework Decision concerning
the application of the “ne bis in idem” principle, 2003 O.J. C 100/24. For a review, see Chiara Amalfitano, La
risoluzione dei conflitti di giurisdizione in materia penale nell´Unione europea, 15 DIRITTO PENALE E PROCESSO 1293
(2009).
73
Novella Galantini, Una nuova dimensione per il ne bis in idem internazionale, 44 CASSAZIONE PENALE 3474 (2004)
implies from that statement that the ne bis in idem should become a principle of custom international law in a
short time. See also FAUSTIN HÉLIE, TRAITÉ DE L´INSTRUCTION CRIMINELLE 656 (1866); HENRI DONNEDIEU DE VABRES, LE
PRINCIPES MODERNES DU DROIT PÉNAL INTERNATIONAL 311 (1928); Gerard Conway, Ne bis in idem in International Law,
3 INT’L CRIM. L. REV. 217 (2003).
74See
Corte
Costituzionale
Italiana
[Italian
Constitutional
Court],
Apr.
12,
1967,
http://www.cortecostituzionale.it/actionSchedaPronuncia.do?param_ecli=ECLI:IT:COST:1967:48; see also Corte
costituzionale
italiana
[Italian
Constitutional
Court]
Mar.
25,
1976,
http://www.cortecostituzionale.it/actionSchedaPronuncia.do?param_ecli=ECLI:IT:COST:1976:69.
75See
Corte
costituzionale
italiana
[Italian
http://www.giurcost.org/decisioni/1997/0058s-97.htm.
Constitutional
Court],
Apr.
14,
1997,
56
German Law Journal
Vol. 18 No. 01
principle of customary international law, the judges defined it as a trend principle that
inspires international law and which aims at protecting the individual from the concurring
iura puniendi of States. This suggests that something has changed during the past thirty
years and that, in the long run, profound changes may once again emerge. But, is this true?
Has something really changed?
Truth be told, in order to recognize the ne bis in idem principle as a part of customary
international law, one should take in account the generalization of the practice of states,
including the attitude of states as a whole, their national legislations, case laws, and their
interrelationships, especially concerning acquiescence and protests.76 When one thinks, for
instance, of the International Covenant on Civil and Political Rights or the ECHR, it is not
difficult to realize that a problem continues to linger: In fact, those treaties do not refer to
an international ne bis in idem but to a national one, meaning that the principle may only
apply within the legal system of a state and not in the relations between two or more
states.
Therefore, the best solution is to leave apart the international ne bis in idem and to focus
on a new, European ne bis in idem instead, which applies in the relations between Member
States of the EU, a sort of stand-alone principle of exclusively EU territorial application
which should be construed as a regional custom.
As ruled by the International Court of Justice in the Asylum case,77 the party which relies on
a regional custom has the burden of establishing that the custom exists in such a way that
it has become binding on other parties through constant and uniform usage, even if there
is no need to verify that all the states belonging to a certain geographical area concurred in
the establishment of that custom.78
76
Case of the S.S. “Lotus” (France v. Turkey) (Merits) 1927 P.C.I.J. Rep Series A No 10 (Sept. 7), Fisheries Case
(United Kingdom v. Norway) (Merits) 1951 I.C.J. 3 (Dec. 18); Right of Passage over Indian Territory (Portugal v.
India) (Merits) 1960 I.C.J. 6 (Apr. 12), Dispute regarding Navigational and Related Rights (Costa Rica v. Nicaragua)
2009 I.C.J. (July 13). See ANTHONY A. D'AMATO, THE CONCEPT OF CUSTOM IN INTERNATIONAL LAW (1971); DAVID J.
BEDERMAN, CUSTOM AS A SOURCE OF LAW (2010); JAN KLABBERS, INTERNATIONAL LAW 26–32 (2013); MICHAEL N. SHAW,
INTERNATIONAL LAW 63 –65 (2014); Hugh Thirlway, The Sources of International Law, in INTERNATIONAL LAW 97–105
(Malcolm D. Evans ed., 2014).
77
78
Asylum case (Colombia v. Peru) (Merits) 1950 I.C.J. 6 (Nov. 20).
See Anthony A. D'Amato, The Concept of Special Custom in International Law, 63 AJIL 211-223 (1969); BENEDETTO
CONFORTI, DIRITTO INTERNAZIONALE 45 (2014); JAMES CRAWFORD, BROWNLIE´S PRINCIPLES OF PUBLIC INTERNATIONAL LAW 29–
30 (2012). John A. E. Vervaele, Ne Bis In Idem: Towards a Transnational Constitutional Principle in the EU?, 9
UTRECHT L. REV. (2013) available at http://www.utrechtlawreview.org> (last visited Nov. 7, 2015). This confirmed
that ne bis in idem is not yet a principle of customary international law because it is regionalizing in the EU, but
not globalizing, and that substantiates the idea that ne bis in idem may be seen only as a regional custom.
2017
Ne Bis In Idem at the CJEU
57
As already noted, the EU may contribute to the development of international law in the
same ways as States do: (a) Through concluding treaties with non-EU States or
international organizations; (b) through its activity as a member of multilateral
organizations; and (c) through its unilateral practice.79
Decisions of competent organs affecting the legal obligations of states may be taken into
account when assessing customary international law80 and because the role played by the
CJEU in the EU legal framework is paramount,81 one should have no problems admitting
that the interpretation provided by the Court on a specific subject may be regarded as the
proper basis for confirming or even developing an international custom. With regard to the
EU, Member States are bound by the Treaties and the sources of EU secondary law and the
interpretation provided by the CJEU. Above all, one should consider the role played by the
preliminary reference mechanism in the EU judicial protection system and in the
development of the EU legal framework, whose essential function is to ensure that EU law
is applied uniformly by national courts.82 Subsequent state practice cannot change that
interpretation.83 Therefore, the views expressed by the Court in their judgments may lead
to the development of a custom, especially where those views are confirmed by the ECtHR.
79
Bruno de Witte, EU Law: Is It International Law?, in EUROPEAN UNION LAW 192 (Catherine Barnard & Steve Peers
eds., 2014). On the topic, see Trevor C. Hartley, International Law and the Law of the European Union, 72 BRIT. Y.B.
INT’L L. 1 (2001); THE WORLDS OF E UROPEAN CONSTITUTIONALISM (Gráinne de Búrca & Joseph H. H. Weiler eds., 2011);
THE EU'S ROLE IN G LOBAL GOVERNANCE: THE LEGAL DIMENSION (Bart Van Vooren et al. eds., 2013).
80
DONALD W. GREIG, INTERNATIONAL LAW 22 (1976).
81
For an introduction to this topic, see L. NEVILLE BROWN & TOM KENNEDY, THE COURT OF JUSTICE OF THE EUROPEAN
COMMUNITIES (2000); THE EUROPEAN COURT OF JUSTICE (Gráinne de Búrca & Joseph H. H. Weiler eds., 2001); ANTHONY
ARNULL, THE EUROPEAN UNION AND ITS COURT OF JUSTICE (2006); TAKIS TRIDIMAS, THE EUROPEAN COURT OF JUSTICE AND THE EU
CONSTITUTIONAL ORDER (2009).
82
For an introduction to the topic, see KOEN L ENAERTS ET AL., PROCEDURAL LAW OF THE EUROPEAN UNION (2006), KOEN
LENAERTS ET AL., EU PROCEDURAL LAW (2014).
83
Case C-327/91, France v. Commission, 1994 E.C.R. I-3641, para. 36, Avis 1/94, Competence of the Community to
conclude international agreements concerning services and the protection of intellectual property, 1994 E.C.R. I5389, paras. 52, 61. That is what the CJEU ruled with regard to the European Community Treaty, which was
characterized by the so-called Community method. In light of the Treaty of Lisbon and the communitarisation of
the third pillar, that reasoning may now apply to the EU legal framework as a whole, with the only exception being
the Common Foreign and Security Policy, which is instead characterized by the so-called intergovernmental
method. In this case, the practice of Member States still prevails. For more on this topic, see Frank Hoffmeister,
The Contribution of EU Practice to International Law, in DEVELOPMENTS IN EU EXTERNAL RELATIONS LAW 56–57 (Marise
Cremona ed., 2008).
58
German Law Journal
Vol. 18 No. 01
As far as ne bis in idem is concerned, however, new problems arise when one ponders the
aforementioned interpretative issues. After Zolothukin, the case law of the ECtHR seems to
be settled84 while the CJEU case law is not;85 the unsolved dichotomy between
interpretation of Article 54 CISA and interpretation of antitrust law provides little guidance
for discerning the ultimate meaning of the custom.
Consequently, the only way to achieve this objective is for the CJEU to begin the highly
desirable work of clarification. This is a development that would be as welcome as it
appears unlikely, at least for the time being.
H. Conclusion
This Article has shown that the ne bis in idem principle is a key topic in the case law of the
CJEU as it has been analyzed from both the criminal procedure law perspective and the
antitrust law perspective. The different approaches followed by the CJEU in these fields
have also been highlighted by underlying the relevance attached to the requirements of
the identity of the material act and identity of the protected legal interest.
In light of the criticism expressed by AG Kokott, it is this author’s opinion that it would be
possible to overcome this dystonia in order to achieve a uniform approach consistent with
the very nature of the principle. In fact, the purpose of the ne bis in idem principle is to
protect individuals and legal entities from being punished twice. Thus, the line of reasoning
expressed by the CJEU in antitrust matters should change as it makes it more difficult to
avoid double punishment. The CJEU could provide an interpretation which is consistent
with the one provided by the ECtHR in light of Article 52(3) of the Charter of Fundamental
Rights of the EU. That interpretation would strengthen the protection of fundamental
rights in the EU legal framework in an area of law where this issue is often neglected86 and
further enhance the import of Article 52(3) as a tool to achieve a higher level of protection
in the EU legal system.
Also, a reinterpretation could make it possible to solve a longstanding problem regarding
customary international law as ne bis in idem could be construed as a regional custom. This
remarkable outcome, however, cannot be achieved as long as the CJEU has not definitively
solved the consistency issues discussed above.
84
See, e.g., the abovementioned Grande Stevens and Others case.
85
See, e.g., the abovementioned Spasic case.
86
See generally ARIANNA ANDREANGELI, EU COMPETITION ENFORCEMENT AND HUMAN RIGHTS (2008); Marco Bronckers &
Anne Vallery, No Longer Presumed Guilty: The Impact of Fundamental Rights on Certain Dogmas of EU
Competition Law, 34 WORLD COMPETITION 535 (2011); MEL MARQUIS, ROBERTO CISOTTA, LITIGATION AND ARBITRATION IN EU
COMPETITION LAW 144 (2015).
Articles
Counterfactual Reasoning: An Effective Component of the
International Law Methodological Armor?
By Roda Mushkat*
Abstract
The exploration of international legal patterns is an increasingly multifaceted enterprise.
As such, it inevitably entails recourse to a progressively broader array of analytical
instruments designed to place the process on a firmer scientific, or quasi-scientific,
foundation. This expanding set consists predominantly, albeit not exclusively, of qualitative
techniques relied upon in seeking generalizations about complex realities that are
shrouded in uncertainty. The cluster of tools employed or deemed potentially usable
includes, although tentatively, counterfactual thinking. The latter may be regarded as a
research vehicle of “last resort,” underpinned by a soft substructure, but it may facilitate
the quest for better grasp of phenomena observed in the international law domain and
more effective action in that realm.
*
Professor of International Law, Hopkins-Nanjing Center, Paul H. Nitze School of Advanced International Studies
(SAIS), Johns Hopkins University and Honorary Professor, Faculty of Law, University of Hong Kong. I wish to thank
Miron Mushkat for helping me navigate through social science territory, but I am solely responsible for the views
expressed herein.
60
German Law Journal
Vol. 18 No. 01
A. Introduction
Academic legal inquiry has traditionally followed a path closely identified with “blackletter-law.” This is an approach whose principal focus is on the tightly delineated legal
sphere, within which internal mechanisms operate to entrench a range of principles that
may be fathomed by scrutinizing statutes and judicial decisions. The wider environment in
which it is embedded is relegated to the periphery. Extracting meaning and purpose from
available ordinances and cases, logically connecting them, and erecting a viable conceptual
framework on that basis has been the mainstay of this time-honored mode of scholarly
investigation.1
A convenient term appropriately invoked to capture the essence of the descriptive and
evaluative pursuits undertaken in such a fashion is “doctrinal research.”2 In educational
and professional training milieus, doctrinal research involves efforts to provide students
with the necessary skills to identify sources of legal authority, gain familiarity with indexes
and citators, obtain access to statutes and judicial records, and utilize computer
information retrieval systems such as Heinonline, LexisNexis, and Westlaw. Statutes and
cases are the core of the empirical set that supports this clearly mapped and wellestablished endeavor.3
A second path, of much more recent origin, and whose boundaries are less unambiguously
demarcated, followed by scholars engaged in a methodical examination of issues within
and beyond the law domain, and particularly those lying at the interface between the legal
and non-legal realms, comes under the rubric of “law in context.”4 Here, the emphasis is
not on the normative underpinnings of the legal system and the institutional machinery
reinforcing them but on socially relevant questions that are reliably amenable to valid
generalization. From this perspective, the law itself may constitute a source of problems
because of the social dislocation it engenders or due to its inadequacies—compared with
other, non-legal, policy instruments—as a multi-level remedial mechanism.5
The two paths do not smoothly converge. Indeed, researchers who deviate from the
traditional blueprint express serious misgivings about the narrow track traveled by those
1
See Mike McConville & Wing Hong Chui, Introduction and Overview, in RESEARCH METHODS FOR LAW 1 (MIKE
MCCONVILLE & WONG HONG CHUI eds., 2007).
2
Id., 3.
3
Id.
4
Id., 1.
5
Id.
2017
Counterfactual Reasoning and International Law
61
wedded to the conventional vision. According to them, the latter adopt “intellectually rigid,
inflexible, and inward-looking”6 procedures in their quest to enhance the understanding of
the law and the functioning of legal regimes. To better achieve this goal, they argue, a
multidisciplinary, or even interdisciplinary, standpoint needs to be embraced,
incorporating theoretical insights and empirical techniques from the social sciences and
the humanities.7 In educational and professional environments, especially the former, this
is reflected in the tweaking of curriculums away from law as traditionally conceived and
toward “socio-legal studies.”8
“Generalists” have struggled to accommodate international and comparative law within
this two-dimensional framework and have opted to create a separate category for this
apparent “outlier.”9 They have acknowledged the increasingly global character of legal life
which ineluctably means that distinctions between systems and sub-systems are becoming
more blurred.10 Yet, generalists have chosen to outline a third path along which
international legal scholars and comparativists conduct their analytical expeditions,
notwithstanding the explicit recognition of the growing fluidity and outreach seen in the
academic space, including its law segment.
This is a rather outdated and somewhat inaccurate portrayal of intellectual trends in the
international—and, for that matter, comparative—law space. It is true that international
legal inquiry addresses issues that possess certain features not readily and recurrently
witnessed elsewhere. This stems from the nature of the agenda—revolving around conflict
and cooperation in the global arena, and thus transcending country borders—that shapes
its evolution. Nevertheless, if abstracted from their specific context, the questions
confronted in international legal inquiry bear a fundamental similarity to those
encountered in other (for example, federal) hierarchically configured political settings.
Moreover, domestic-international linkages loom large—at both ends of the continuum—
on the horizon in today’s globalized community of nations and, to a considerable extent,
render the dichotomy partly obsolete.
6
Id., 4.
7
Id., 4–7.
8
Id., 4–5.
9
Id., 6–7.
10
Id., 1.
62
German Law Journal
Vol. 18 No. 01
The fact of the matter is that international legal researchers have not retreated into
hermetically closed territory, remaining comfortably oblivious to the centrifugal forces
both buffeting and propelling forward their academic neighbors. Rather, they have also
pursued a two-track strategy, albeit less unequivocally and with a lag. By far, the most
heavily traveled path is that inspired by traditional concerns with the two primary sources
of international law, custom and treaties, in a manner displaying a “black-letter-style” or
doctrinal orientation—notably in regard to treaties, which may in some respects be likened
to statutes.11 And while the principle of stare decisis does not apply in this context,
decisions of international—as well as domestic, validating the “linkage” argument—courts
and tribunals furnish a basis for drawing inferences pertaining to the content and scope of
international norms.12
Although still dominant this standard way of grappling with international legal issues is no
longer the sole perspective embraced by scholars involved in that activity, however. A
parallel approach—overlapping with the “law in context”/ “socio-legal studies” school—
has emerged under the expansive label of “law and international relations.”13 The
participants of this type of scholarship emanate from both disciplines, with those
possessing social science background—economics, political science, and sociology—
perhaps continuing to exhibit greater initiative and to exert stronger influence,
qualitatively as well as quantitatively. The persistence of this asymmetric pattern
notwithstanding, contributions originating in the legal field have reached a meaningful
level.
11
See Stephen Hall, Researching International Law in MCCONVILLE & CHUI, supra note 1, 182–92.
12
See id., 196–98.
13
See generally THE IMPACT OF INTERNATIONAL LAW ON INTERNATIONAL COOPERATION: THEORETICAL PERSPECTIVES (Eyal
Benvenisti & Moshe Hirsch eds., 2004); INTERNATIONAL LAW AND ORGANIZATION: CLOSING THE COMPLIANCE GAP (Edward
C. Luck & Michael W. Doyle eds., 2004); MARKUS BURGSTALLER, THEORIES OF COMPLIANCE WITH INTERNATIONAL LAW
(Martinus Nijhoff 2005); JACK L. GOLDSMITH & ERIC A. POSNER, THE LIMITS OF INTERNATIONAL LAW (Oxford Univ. Press
2005); INTERNATIONAL LAW AND INTERNATIONAL RELATIONS (Beth A. Simmons & Richard H. Steinberg eds., 2006);
ANDREW T. GUZMAN, HOW INTERNATIONAL LAW WORKS: A RATIONAL CHOICE THEORY (Oxford Univ. Press 2008); JOEL P.
TRACHTMAN, THE ECONOMIC STRUCTURE OF INTERNATIONAL LAW (Harvard Univ. Press 2008); INTERNATIONAL LAW AND
POLITICS (Joel P. Trachtman ed., 2008); ADRIANA SINCLAIR, INTERNATIONAL RELATIONS THEORY AND INTERNATIONAL LAW: A
CRITICAL APPROACH (Cambridge Univ. Press 2010); SERGE SUR, INTERNATIONAL L AW, POWER, SECURITY, AND JUSTICE: ESSAYS
ON INTERNATIONAL LAW AND RELATIONS (Hart Publishing 2010); INTERNATIONAL LAW FOR INTERNATIONAL RELATIONS (Basak
Cali ed., 2010); DAVID ARMSTRONG, THEO FARRELL & HELENE LAMBERT, INTERNATIONAL LAW AND INTERNATIONAL RELATIONS
(Cambridge Univ. Press 2d ed. 2012); HANDBOOK OF INTERNATIONAL RELATIONS (Walter Carlsnaes, Thomas Risse &
Beth A. Simmons eds., 2012); INTERDISCIPLINARY PERSPECTIVES ON INTERNATIONAL LAW AND INTERNATIONAL RELATIONS: THE
STATE OF THE ART (Jeffrey L. Dunoff & Mark A. Pollack eds., 2013); KAREN J. ALTER, THE NEW TERRAIN OF INTERNATIONAL
LAW: COURTS, POLITICS, AND RIGHTS (Princeton Univ. Press 2014).
2017
Counterfactual Reasoning and International Law
63
In fact, the catalyst for cross-disciplinary bridge building was not the significant entry by
social scientists into the previously detached and convention-bound international law
domain but the publication of a seminal book by a prominent international legal
researcher in the late 1960s14 and its republication a decade later.15 Louis Henkin, the
pioneering and far-sighted author, is widely credited for laying a long-lasting, even if
inevitably less than comprehensive, foundation for a study of international law that is not
constrained by traditional-style intellectual and professional preferences and practices.
Notable social science forays into this self-contained realm have followed, rather than
preceded, his tour de force.
Henkin’s point of departure was inspirational or normative, reflecting values and concerns
prevalent among scholars favoring a formalistic line of inquiry, uncontaminated by insights
from neighboring disciplines. Specifically, he was disheartened by the persistent recourse
to force in the global arena and signaled his hope that it would before long yield to
diplomacy and ultimately law. Unfortunately, the geo-political circumstances at that
juncture failed to conform to this idealistic template and Henkin, without altogether
discarding his vision, proceeded to clinically explore the interrelationships between these
three determinants of international policy outcomes. In the process, he uncovered
substantial gaps in the literature, stemming from an overly narrow focus and virtual
absence of cooperation between international relations specialists, professional diplomats
and their political “masters,” and international legal researchers:
In general, the student of foreign affairs is skeptical about international
law, and fulsome claims in its behalf tend to make him cynical . . . . As for
the diplomat and the maker of foreign policy, they do not appear to
consider international law important . . . . Students of international law,
on the other hand, tend to begin with international law, and often they
end there; all of it should be observed, and respectable governments
observe it; there is also need for more laws and nations should agree to
create that law and abide by it.16
Whether it has been the effect of this cogently conveyed critical assessment or the result
of unprompted adaptation, partly kindled by the growing appreciation that undue
parochialism hampers the expansion of knowledge, but also motivated by an inherent
proclivity to push back the frontiers of science, the line separating two of these three
14
See generally LOUIS HENKIN, HOW NATIONS BEHAVE: LAW AND FOREIGN POLICY (Columbia Univ. Press 2d ed. 1979).
15
Id.
16
Id., 2–3.
64
German Law Journal
Vol. 18 No. 01
spheres of professional pursuit has markedly narrowed. The diplomatic enterprise and the
foreign policy making endeavor may have not been fully incorporated into the equation,
yet the intellectual distance between international relations and international law has
significantly shrunk, even if international legal scholars have largely played a secondary
role in the process.
The publication of Henkin’s treatise did not galvanize researchers from the two disciplines
into immediate action, but an uptrend formed in the 1970s and has steadily gained
momentum since, without necessarily experiencing a sharp steepening of its trajectory.
Substantial headway has been made during this period in terms of broadening and
deepening both theoretically-centered and practically-oriented research agendas. Over
time, international law and international relations has evolved into a fertile and idea-rich
field of academic inquiry, in which innovative and valuable investigations are undertaken
across a spectrum and on a scale wide enough to ensure productive continuity and
diversification.
The past four decades or so, however, have primarily been characterized by a quest for
conceptual enhancement and rigor. Prevailing analytical frameworks have carefully been
scrutinized, challenged, and reformulated. New ones have been proposed and fine-tuned
through multi-party exchanges. At the same time, methodological issues have received
scant attention. This does not imply that theoretical formulations have emerged in an
empirical vacuum. On the contrary, factual support has been sought not merely via
recourse to hypothetic-deductive models, notably of the game-theoretic variety, but also
to instruments whose application entails heavy dependence on data, albeit predominantly
qualitative in nature. The case study technique, in particular, has extensively been resorted
to in this domain—indeed, to a point of “crowding out” complementary tools. Yet, cases
have often been selected and dissected in a rather unsystematic fashion, giving rise to
concerns about reliability and validity of findings.
A number of specific problematic practices have been pinpointed in this respect.17 One
involves the overwhelming tendency not to venture beyond a single case, or a handful of
cases, and not to extract sufficient information from the empirical material garnered. This
frequently reflects inadequate design but may also stem from the paucity of cases. In such
circumstances, the problem may be resolved by enlarging the sample, or at least stretching
the boundaries of a case, by invoking a rather loosely structured but nevertheless
potentially useful method known as “counterfactual reasoning” (CR).18 The aim of this
17
See generally Roda Mushkat, China’s Compliance with International Law: What Has Been Learned and the Gaps
Remaining, 20 PACIFIC RIM L. & POL’Y J. 41 (2011); Roda Mushkat, The Case for the Case Study Method in
International Legal Research (available from the author).
18
See generally ROBERT W. FOGEL, RAILROADS AND AMERICAN ECONOMIC GROWTH: ESSAYS IN ECONOMETRIC HISTORY (Johns
Hopkins Univ. Press 1964); DAVID LEWIS, COUNTERFACTUALS (Blackwell 1973); James Fearon, Counterfactuals and
2017
Counterfactual Reasoning and International Law
65
Article is to outline its essence, roots, and limitations; illustrate how CR has been found
helpful by international relations scholars; and demonstrate that their international legal
counterparts also may fruitfully avail themselves of this experimental vehicle, in general
and in a specific context, without making excessive claims on its behalf. The next four
sections follow this roadmap.
Hypothesis Testing in Political Science, 43 WORLD POL. 195 (1991); GEOFFREY HAWTHORN, PLAUSIBLE WORLDS: POSSIBILITY
AND UNDERSTANDING IN HISTORY AND THE SOCIAL SCIENCES (Cambridge Univ. Press 1991); Thomas J. Biersteker,
Constructing Historical Counterfactuals to Assess the Consequences of International Regimes: The Global Debt
Regime and the Course of the Debt Crisis of the 1980s in REGIME THEORY AND INTERNATIONAL RELATIONS 315 (Volker
Rittberger ed., 1993); NOEL J. ROESE & JAMES M. O LSON, WHAT MIGHT HAVE BEEN: THE SOCIAL PSYCHOLOGY OF
COUNTERFACTUAL THINKING (Lawrence Erlbaum Associates 1995); COUNTERFACTUAL THOUGHT EXPERIMENTS IN WORLD
POLITICS: LOGICAL, METHODOLOGICAL, AND PSYCHOLOGICAL PERSPECTIVES (Philip Tetlock & Aaron Belkin eds., 1996);
VIRTUAL HISTORY: ALTERNATIVES AND COUNTERFACTUALS (Niall Ferguson ed., 1997); Richard N. Lebow, What’s So
Different about a Counterfactual?, 25 WORLD POL. 550 (2000); NECESSARY CONDITIONS: THEORY, METHODOLOGY, AND
APPLICATIONS (Gary Goertz & Harvey Starr eds., 2003); Jorg G. Hulsmann, Facts and Counterfactuals in Economic
Law, 17 J. LIBERTARIAN STUD. 57 (2003); Gregory Mitchell, Case Studies, Counterfactuals, and Causal Explanations,
152 UNIV. PENN. L. R EV. 1517 (2004); Larry Lohman, Marketing and Making Carbon Dumps: Commodification,
Calculation, and Counterfactuals in Climate Change Mitigation, 14 SCI. AS CULTURE 203 (2005); Jajseet S. Sekhon,
Quality Meets Quantity: Case Studies, Conditional Probability, and Counterfactuals, 2 PERSPECTIVES ON POL. 281
(2004); RUTH J. BYRNE, THE RATIONAL IMAGINATION: HOW PEOPLE CREATE ALTERNATIVES TO R EALITY (MIT Press 2005); THE
PSYCHOLOGY OF COUNTERFACTUAL THINKING (David R. Mandel, Dennis J. Hilton, & Patrizia Ctellani eds., 2005);
UNMAKING THE WEST: ‘WHAT IF’ SCENARIOS THAT REWRITE WORLD HISTORY (Philip Tetlock, Richard N. Lebow, & Geoffrey
Parker eds., 2006); Giovanni Cappocia & R. Daniel Kelman, The Study of Critical Junctures: Theory, Narrative, and
Counterfactuals in Historical Institutionalism, 59 WORLD POL. 341 (2007); EXPLAINING WAR AND PEACE: CASE STUDIES
AND NECESSARY CONDITION COUNTERFACTUALS (Gary Goertz & Jack Levy eds., 2007); STEPHEN L. MORGAN & CHRISTOPHER
WINSHIP, COUNTERFACTUALS AND CAUSAL INFERENCE (Cambridge Univ. Press 2007); Jack Levy, Counterfactuals and Case
Studies, in THE OXFORD HANDBOOK OF POLITICAL Methodology 627, 627–44 (Janet M. Box-Stoffensmeier, Henry Brady,
& David Collier eds., 2008); Kathryn Sikkink, The Role of Consequences, Comparison and Counterfactuals in
Constructivist Ethical Thought, in MORAL LIMIT AND POSSIBILITY IN WORLD POLITICS 83 (Richard M. Price ed., 2008);
RICHARD N. LEBOW, FORBIDDEN FRUIT: COUNTERFACTUALS AND INTERNATIONAL R ELATIONS (Princeton Univ. Press, 2010);
JAMES PATTISON, INTERVENTION AND THE RESPONSIBILITY TO PROTECT: WHO SHOULD INTERVENE? (Oxford Univ. Press 2010);
Steven Wheatley, A Democratic Rule of International Law, 22 EURO. J. INT’L L. 525 (2011); UNDERSTANDING
COUNTERFACTUALS, UNDERSTANDING CAUSATION: ISSUES IN PHILOSOPHY AND PSYCHOLOGY (Christoph Hoerl, Teresa
McCormack & Sarah Beck eds., 2012); Clemens Mattheis, A System Theory of Nikolas Luhmann and the
Constitutionalisation of World Society, 4 GOETTINGEN J. INT’L L. 625 (2012); INGO ROHLFING, CASE STUDIES AND CAUSAL
INFERENCE: AN INTEGRATIVE FRAMEWORK (Palgrave Macmillan 2012); LARS THOMANN, STEPS TO COMPLIANCE WITH
INTERNATIONAL LABOUR STANDARDS: THE INTERNATIONAL LABOR ORGANIZATION (ILO) AND THE ABOLITION OF FORCED LABOR
(Springer 2012); RICHARD J. EVANS, ALTERED PASTS: COUNTERFACTUALS IN HISTORY (Brandeis Univ. Press 2013); Viktoria
H.S.E. Robertson, A Counterfactual on Information Sharing: The Commission’s Horizontal Guidelines 2011 Applied
to the Leading Cases, 36 WORLD COMPETITION 459 (2013); RICHARD N. LEBOW, CONSTRUCTING CAUSE IN INTERNATIONAL
RELATIONS (Cambridge Univ. Press 2014); PROBABILITIES, HYPOTHETICALS, AND COUNTERFACTUALS IN ANCIENT GREEK
THOUGHT (Victoria Wohl ed., 2014); Cass R. Sunstein, What if Hypotheticals Never Existed? Studying History with
Hypotheticals, www.newrepublic.com/article/119357/altered-pasts-reviewed-cass-r-sunstein (last visited Mar.
31, 2016); Ingo Venzke, What If? Alternative Realities of International Law, www.esil-sedi.eu/node/733 (last
visited Mar. 31, 2016).
66
German Law Journal
Vol. 18 No. 01
B. Panoramic Survey
CR features consistently, although not uniformly, and at times controversially, in a number
of academic disciplines which vary in their adherence to principles of scientific discovery.
Of these disciplines, psychology is located at the “hard” end of the analytical continuum
and history and philosophy are positioned at its “soft” counterpart. International relations,
political science, and sociology are situated in the middle, but not precisely because the
former leans toward history and the latter toward psychology. Law, if it is appropriate to
link it with the other fields of study, given the modest attention systematically accorded to
the subject, may be placed in the vicinity of international relations or political science.
While they mostly approach CR in a standardized manner, psychologists still address the
process in an elementary way that readily captures its meaning. In the rudimentary
versions of their accounts, CR entails thinking “about alternatives to past events, that is,
thoughts of what might have been.”19 Pondering along these lines is extremely common.
After all, “[w]ho among us has never wondered what might have been [the outcome] had
some past choice been different?”20 By the same token, “[w]ho among us has never
regretted choices made and actions taken?”21 This is attributable to the fact that
“[t]hinking about what might have been, about alternatives to our own pasts, is central to
human thinking and emotion.”22
In everyday life, a person’s CR frequently assumes the shape of a conditional statement,
occasionally with a probability attached to it, such as “[i]f only I had studied, I would have
passed the exam.”23 Here, the inferred result is regarded as a virtual certainty.24 As this
example highlights, CR possesses a salient evaluative dimension, involving an explicit or
implicit assessment of the relative merits of alternative and realized outcomes. Superior
hypothetical results are identified as “upward counterfactuals” and inferior ones as
“downward counterfactuals.”25 When the former relate to individual choice, the emotion
experienced, unsurprisingly, is referred to and conceptualized as “regret.”26
19
Kai Epstude & Neal J. Roese, The Functional Theory of Counterfactual Thinking, 12 PERSONALITY & SOC. PSYCH. REV.
168, 168 (2008).
20
Id.
21
Id.
22
Id.
23
Id.
24
Id.
25
See id.
2017
Counterfactual Reasoning and International Law
67
CR appears to be an ingrained element of people’s conscious mental landscape. The ability
to engage in the process develops early in life—normally by age two—and may be
observed as soon as children acquire the lexical skills to communicate subjunctive notions
of “if only.”27 This phenomenon is not confined to specific places and periods but may be
seen across space and time, including in different cultural milieus and national settings,
even if the concrete manifestations may vary somewhat.28 Consequently, it has been
suggested that CR may be an innate ingredient of human intelligence.29
Psychologists examine the process from a functional perspective, positing that it is
triggered to serve a well-defined purpose. The principal objective seems to be the
regulation of ongoing personal behavior.30 The underlying logic is that asking oneself “what
might have been” is an effective tool for monitoring performance with a view to bringing
about improvement: “Counterfactual thoughts are deeply connected to goals and are a
component of regulatory mechanisms that keep behavior on track, particularly within
social interactions.”31 Empirical findings in the field of cognitive neuroscience lend support
to this theoretical stance.32
The analytical and data-derived insights produced by psychologists are an appropriate
starting point in CR-focused introductory surveys because of their broad scope and
elaborate nature. They encompass a wide array of individual and group behavioral
propensities and cognitive responses.33 They are also rooted in a rich conceptual tapestry
that consists of illuminating accounts of basic CR processes (invoking norm theory,34
26
See id., 168–69.
27
Id., 169.
28
Id.
29
Id.
30
Id.
31
Id.
32
Id.
33
See Neal J. Roese and James M. Olson, Counterfactual Thinking: A Critical Overview, in ROESE AND OLSON, supra
note 18, at 1.
34
Id., 6–8.
68
German Law Journal
Vol. 18 No. 01
motivational considerations,35 and causal relationships36), detailed identification of
outcome-connected determinants of counterfactual generation (with special emphasis on
expectancy,37 valence,38 closeness,39 and involvement40), equally fine pinpointing of
antecedent-type determinants of this process (notably, the impact of exceptional versus
routine drives,41 actions versus inactions,42 controllable versus uncontrollable influences,43
dynamic versus static elements,44 and serial position)45 and consequences of CR (such as
affect,46 judgments of victimization,47 suspicion,48 self-inference,49 and expectancies).50
The observations about causality have the greatest cross-disciplinary ramifications. This is
because all counterfactual conditionals are causal assertions, even though not all
conditionals are causal. The latter may simply state correlations—for example, “[t]he
proposition, “[i]f today is Thursday, then tomorrow is Friday,” does not mean that
Thursday causes the next day to be Friday.”51 It is the falsity of their antecedents that
35
Id., 8–11.
36
Id., 11–15.
37
Id., 17–19.
38
Id., 19–22.
39
Id., 22–25.
40
Id., 25–26.
41
Id., 28–29.
42
Id., 29–31.
43
Id., 31–32.
44
Id., 32–34.
45
Id., 34.
46
Id., 36–38.
47
Id., 38–40.
48
Id., 40–42.
49
Id., 42–43.
50
Id., 43–44.
51
Id., 11.
2017
Counterfactual Reasoning and International Law
69
accounts for the causal attributes of counterfactual conditionals. By asserting a false
antecedent, the counterfactual establishes an inherent connection to a factual state of
affairs—for example, “thinking ‘[i]f only I were taller, then I would be happier,’ is
inherently linked to one’s actual height and actual happiness.”52 Importantly, “[t]his
reference of the counterfactual conditional to a specific, relevant factual conditional
creates the essential requirements for [John Stuart] Mill’s . . . method of difference, which
is, of course, the principal technique by which scientists infer causation.”53
The corollary is—and the implications extend beyond psychology—that just as causal
inferences may be drawn on the basis of findings produced by means of a true experiment,
in which two parallel concrete outcomes are compared with one another, so they too may
be obtained from the juxtaposition of an actual result with a counterfactual scenario. To
the extent that the two outcomes—assuming that they reflect divergent patterns—merely
differ due to the presence of a particular antecedent, this variable may be inferred to be
causal.54 It follows that “running counterfactual simulation in one’s head amounts to a
proxy experiment.”55 Indeed, “in fields in which true experiments cannot be implemented,
counterfactual test cases are accepted methods of inferring causation.”56
The assertion that all counterfactuals possess causal attributes does not mean that their
presence is necessary for a causal inference to be drawn. Not all causal inferences are
inevitably mediated by counterfactuals, but this does not detract from their potential value
as a mechanism in the quest for causal explanations.57 Nor does it diminish CR’s possible
effectiveness as a tool for addressing the indeterminacy problem, or the lack of sufficient
empirical evidence in certain circumstances. CR is capable of serving this function because,
as indicated, it entails the addition of hypothetical cases to observed—or, technically
speaking, “factual”—ones—a process that involves the manipulation of the latter in
accordance with specific guidelines, rather than in an entirely open-ended fashion.58
52
Id.
53
Id.
54
Id., 12.
55
Id.
56
Id.
57
Id.
58
See Lebow, What’s So Different about a Counterfactual? supra note 18, 577–85; Levy, supra note 18, 632–40;
Rohlfing, supra note 18, at 175–79.
70
German Law Journal
Vol. 18 No. 01
CR is not a pseudo-scientific fad possessing shallow roots. Experimentally-oriented
psychologists employing the latest techniques of their craft may have provided it with firm
methodological underpinnings, but CR’s origins lie far deeper. Its common practice, as well
as the tentative exposition of its certain limitations, may readily be traced to Ancient
Greece.59 Thucydides liberally invoked counterfactuals—interestingly, particularly those of
the “downward” variety; how the course of the Peloponnesian War might have been
worse—in an effort to come to grips with Athens’ painful and seemingly inexplicable
defeat.60 By the same token, Homer’s ruminations, pervading the Iliad, abound with
“unrealized possibilities.”61 Philosophers have steadily built a conceptual facade on this
foundation.62
In a selectively more critical manner, but on an even larger scale, historians too have
resorted to CR in their reconstructions of past events—an activity they have termed
“virtual history.”63 Proponents among them have conceded that there might be some
intuitive objections to CR. After all, why bother posing counterfactual questions? Or, to
express it differently, “[w]hy concern ourselves with what didn’t happen?”64 To illustrate,
“[j]ust as there is no use crying over spilt milk . . . so there is no use in wondering how the
spillage might have been averted ([e]ven more futile to speculate what would have
happened if we had spilt milk that’s still safe in the bottle).”65
These rudimentary misgivings have been discarded on the grounds that they do not accord
with reality because “we constantly ask such ‘counterfactual’ questions in our daily life.”66
Reservations proffered by historians closely identified with materialist determinism and
those, directly or indirectly, sympathetic to their arguments—for example, religious
historians who regard divine agency as the ultimate determinant of events67—have posed
59
See generally Wohl, supra note 18.
60
Id., 110.
61
Id.
62
See generally HOERL, MCCORMACK, & BECK, supra note 18.
63
See generally FERGUSON, supra note 18.
64
Niall Ferguson, Introduction in FERGUSON, supra note 18, at 2.
65
Id.
66
Id.
67
Id., 3.
2017
Counterfactual Reasoning and International Law
71
a greater challenge. The claim is that historical evolution is governed by distinct, and
possibly immutable, laws. Consequently, “[t]o contemplate ‘the things that might have
happened’ is not only to subscribe to ‘the Bad King John’ or ‘Cleopatra’s Nose’ of
history . . . [i]t is to be a bad loser too.”68
CR has survived, albeit not unscathed, the deterministic onslaught partly because of an
anti-deterministic backlash. Leaders of the “resistance movement” have contended that
“[t]he past—like real-life chess, or indeed any other game—is different; it does not have a
pre-determined end.”69 They have further asserted that “[t]here is no author, divine or
otherwise; only characters, and (unlike in a game) a great too many of them.”70 They have
also opined that “[t]here is no plot, no inevitable ‘perfect order’; only endings, since
multiple events unfold simultaneously, some last only moments, some extending well
beyond an individual’s life.”71
In a more clinical fashion, historians spearheading the “defense campaign” have advanced
two key arguments in favor of continued reliance on CR in research contexts: First, they
argue that “it is a logical necessity when asking questions about causation to pose ‘but for’
questions, and to try to imagine what would have happened if our supposed cause had
been absent.”72 Second, “to do this is a historical necessity when attempting to understand
how the past ‘actually was’ . . . as we must attach equal importance to all the possibilities
which contemporaries contemplated before the fact, and greater importance to these than
to an outcome which they did not anticipate”73—a useful reminder but an unduly
restrictive criterion. From the latter perspective, it is noteworthy that “what actually
happened was often not the outcome which the majority of informed contemporaries saw
as the most likely; the counterfactual scenario was in that sense more ‘real’ to decision
makers at the critical moment than the actual subsequent events.”74
68
Id., 2.
69
Id., 68.
70
Id.
71
Id.
72
Id., 72.
73
Id.
74
Id., 73.
72
German Law Journal
Vol. 18 No. 01
Such attempts to shore up the scientific, or quasi-scientific, status of CR have been partly,
rather than wholly, successful—and not merely due to the divergence of views about
economic, geographical, historical, legal, political, psychological and social change. The
lingering sense of unease with using CR, particularly outside historical circles, largely stems
from the “soft” features of the process. Other than economic historians, who avail
themselves of state-of-the-art statistical tools in this context, and psychologists, who
conduct controlled experiments in laboratory-like environments, most scholars do not
strictly and transparently adhere to a well-defined set of principles when actively
embracing CR. It remains one of the most elastic research vehicles, perhaps even the least
structured one—alongside scenario construction—in the qualitative methods space,
continuing to give rise to concerns about freewheeling excursions into the past, present,
and future.
Any misgivings about CR may be warranted but not to a point of throwing out the
proverbial baby with the bathwater. Notwithstanding positivist reservations, qualitative
inquiry is broadly recognized as a fertile, solid, and thoroughly tested field of empirical
investigative endeavor. Its substantial toolkit contains a wide array of instruments,
including the “softest” variants, which may be utilized without violating established
standards of reliability and validity. Credible strategies may be pursued in order to place
techniques for systematically organizing data, such as CR, on an adequate—as distinct from
robust—scientific, or quasi-scientific, footing.75
Moreover, as noted, specific guidelines have been formulated to render the process less
arbitrary and inconsistent. Five guidelines are particularly important in this regard: The first
pertains to the transparency of what constitutes the chosen counterfactual’s state of
interest and its consequence. The second and third concern the effectiveness of the
manipulation of the cause and delineate the minimum rewriting rule and empirical
plausibility of the manipulation. The fourth and fifth refer to the consequences resulting
from the manipulation. They lay emphasis on the use of theoretical and empirical
knowledge in seeking to substantiate the consequences and on the empirical plausibility of
the consequences that are the product of the manipulation. Adherence to these and other
criteria deemed germane to the domain is thought to be conducive to the attainment of a
satisfactory degree of validity and reliability.76
75
See generally JEROME KIRK & MARC L. MILLER, Reliability and Validity in Qualitative Research (Sage Publications
1986); Martin Healy & Chad Perry, Comprehensive Criteria to Judge Validity and Reliability of Qualitative Research
within the Realism Paradigm, 3 QUALITATIVE MKT RES.: AN INT’L J. 118 (2000); John M. Morse et al., Verification
Strategies for Establishing Reliability and Validity in Qualitative Research, 1 INT’L J. QUALITATIVE METHODS 13 (2002);
Nahid Golafshani, Understanding Reliability in Qualitative Research, 8 QUALITATIVE REP. 597 (2003).
76
See Lebow, What’s So Different about a Counterfactual? supra note 18, 577–85; Levy, supra note 18, 632–40;
Rohlfing, supra note 18, at 175–79.
2017
Counterfactual Reasoning and International Law
73
C. No Dearth of Activity in Adjacent Territory
The gap separating international law and international relations has not vanished
altogether; it is a prospect that is neither likely to materialize nor is entirely desirable, but
it has been steadily narrowing. The narrowing has been an uneven process, with greater
headway witnessed on some fronts than others. CR is a realm where the asymmetries have
been decidedly pronounced. International legal scholars—and students of law in general—
have displayed scant interest in the subject in any shape, abstract or concrete, while
researchers in the field of international relations—as well political scientists examining
parallel domestic phenomena—have explored it earnestly and fruitfully. In a manner and
on a scale similar in key respects to that of historians, researchers in the field of
international relations have demonstrated that this is a method possessing certain
empirical merits.
Indeed, from a pure analytical perspective, international “relationists” can be said to have
injected additional substance into historical discourse, reworking some of the less than
robust assumptions pervading it. Importantly, they have taken exception to the assertion
that it is misguided to attribute genuinely significant consequences to seemingly
unexceptional, on the face of it trivial, events. After all, “[c]ould anyone seriously doubt
that the course of history would have been different if Pharoah’s daughter had not found a
child in a basket in the reeds, if the Mongol fleet had not encountered a destructive
typhoon en route to Japan, if the Duke of Alba had not fallen sick in 1572, or if Hitler had
died in the tranches during World War I or in the near fatal traffic accident he suffered in
the summer of 1930.”77 Such apparently immaterial but actually momentous
occurrences/non-occurrences may have prompted Max Weber to observe that “the most
plausible counterfactuals [are] those that [make] only ‘minimal rewrites’ of history.”78
By the same token, scholars in the field of international relations have cast doubt on the
claim that exploring counterfactual scenarios should be confined to those that
contemporary actors reflected upon, leaving a trace of their experience deemed by
historians as an acceptable source. Clearly, this unduly restrictive criterion “would exclude
entire categories of counterfactuals.”79 In addition, “[i]t would limit counterfactuals to
elites who made written records, to self-conscious decisions in which alternatives are likely
to be carefully considered, and to political systems in which leaders and other important
77
Lebow, supra note 18, at 567–68.
78
Id., 568.
79
Id., 569.
74
German Law Journal
Vol. 18 No. 01
actors feel secure enough to write down their thoughts or share them with colleagues,
journalists, family members, or friends.”80 Moreover, “[i]t would rule out all
counterfactuals that were the result of impulsive behavior (or the lack of it), of human
accident, oversight, obtuseness, or unanticipated error, of acts of nature, or of the
confluence (or the lack of it), or of independent chain of causation.”81 Problematically,
however, it would also eliminate “all miracle counterfactuals.”82
A particularly notable contribution of international relationists has been in the form of
historical illustrations convincingly showing that, despite pervasive skepticism on that
score, CR is not invariably a speculative activity. For example, speculation was kept to a
minimum when a team of counterintelligence officers, established by the U.S. Central
Intelligence Agency (CIA), in the wake of the arrest of Aldrich Ames as a Soviet spy,
determined how he might have been exposed earlier. The group examined a set of
procedures that could have realistically been instituted in order to unmask Ames. It relied
in the process on substantial knowledge of his personality traits, underlying motives and
behavioral patterns, as well as prevailing practices of Soviet spymasters, and was
consequently able to draw some fairly credible and unambiguous conclusions.83
Interestingly, recourse to quantitative techniques is common in such circumstances.84
Nor should the absence of firm and incontestable evidence be seized upon to instinctively
relegate CR into speculative territory because, even when that is the case, the difference
between counterfactual and “factual” history is frequently immaterial. Contrary to
widespread assumptions, “[a]ctors only occasionally leave evidence about their motives,
and historians seldom accept such testimony at face value.”85 The truth of the matter is
that “[m]ore often historians infer motives from what they know about actors’
personalities and goals, their past behavior, and the constraints under which they
operated.”86 This is reflected across the entire historical inquiry spectrum, ranging from the
ancient end to its modern counterpart.87 Moreover, as one moves from “the level of
80
Id.
81
Id.
82
Id.
83
Id., 551–52.
84
Id., 553.
85
Id.
86
Id.
87
Id., 553–54.
2017
Counterfactual Reasoning and International Law
75
analysis of individual actors to small groups, elites, societies, [S]tates, and regional and
international systems, the balance between evidence and inference shifts decisively in
favor of the latter.”88
Whatever the level of investigation, and whatever the gap as conceptually articulated, the
differences between factual and counterfactual propositions typically fade away in
practice. For instance, to come to grips with the dynamics of the 1962 Cuban Missile Crisis,
it is essential to gain insight into both the factual and counterfactual beliefs of relevant
actors and readily cross the boundary, if any, between the two. The reason is that during
that thirteen-day-long crucial episode, in the absence of solid evidence, perceptions
shaped policy views. Specifically, “the beliefs of [American] officials determined the
motives they attributed to Khrushchev for deploying Soviet missiles in Cuba, their
estimates of the cost calculations and political conflicts they assumed to being taking place
in Moscow, and the likely Soviet responses to a blockade, air strike, or invasion.”89
Significantly, “[s]ome of these beliefs took the form of conditional expectations, and with
the passage of time they became historical factuals.”90
From an enlightened scientific perspective, any rigid distinction between factuals and
counterfactuals may be said to be devoid of ontological substance. Historians who express
misgivings about CR predominantly take this position because they are uncomfortable with
the lack of a firm factual foundation. Yet, it is increasingly acknowledged among socio-legal
researchers that facts are socially constructed. Physical scientists may be justified in
claiming that “fundamental concepts like mass, volume, and temperature are essential to
the study of nature and that extra-terrestrial scientists would have to possess the same
concepts to understand the universe.”91 This does not, however, apply to socio-legal
concepts, which vary across and within human cultures.92 There are manifold ways of
interpreting and presenting socio-legal phenomena, “and the choice and utility of concepts
depend largely on the purpose of the ‘knower.’”93
88
Id., 554.
89
Id., 555.
90
Id.
91
Id., 556.
92
Id.
93
Id.
76
German Law Journal
Vol. 18 No. 01
The earlier reference to “miracle counterfactuals” raises the issue of whether CR should be
imbued with a meaningful sense of realism. The emphasis on believability is a salient
feature of the process; “[p]lausible-world counterfactuals are intended to impress the
reader as realistic; they cannot violate their understanding of what was technologically,
culturally, temporally, or otherwise possible.”94 Believability should not be equated with
significance because there is a wide array of “what-if”-style scenarios—“historical near
misses”—that might have materialized without tangibly impinging on the outcome in
question. Counterfactuals must thus satisfy a second criterion: They should have a
reasonable probability of bringing about the result that the reconstruction of events
purports to lead to. This entails outlining a logical path between the alternative scenario
and the hypothesized effect. Some scholars believe that such historical reconfiguration is
the only legitimate form of CR, but “miracle counterfactuals violate our understanding of
what is plausible or even possible.”95
Nevertheless, researchers in the field of international relations contend that removing this
type of events from the equation may detract from the value of the analytical exercise.
They illustrate the cogency of this argument by highlighting the challenges involved in
evaluating the relative advantages of court-contested versus mediated divorces in terms of
the financial implications of each method of settlement for women. To fruitfully pursue
this project, a systematic comparison needs to be undertaken in political units. Take many
states in America, for example, that encourage or discourage mediation in equivalent
samples of divorced couples. Practical difficulties emerge, however, if the objective is to
establish whether making divorce less easy to secure is more likely to preserve families
intact, as asserted by conservative commentators, because legislation to progressively lift
the bar to divorce has been contemplated without being implemented due to formidable
obstacles. Genuinely strict divorce laws are wholly unrealistic and ending divorce
altogether is even more improbable.96 Still, these far-fetched, miracle-like, scenarios may
play a useful role in the assessment process, as evidenced, inter alia, by the unfeasible
thought experiments conducted by economists “who raise or lower prices of commodities
well beyond any realistic market expectations to test consumer preferences.”97
In addition to underscoring the merits of CR as a tool of empirical inquiry, international
relationists have also demonstrated that it enhances the information processing and
judgmental skills of those who rely on the procedure, borrowing from psychology for this
94
Id., 565.
95
Id.
96
Id., 566–67.
97
Id., 567.
2017
Counterfactual Reasoning and International Law
77
purpose. Notably, they have systematically drawn attention to the well-documented
certainty with hindsight bias, which manifests itself when outcome knowledge impedes
understanding of the past by hindering recall of what individuals were previously unsure
was expected to materialize. Thus, “[e]vents deemed improbable by experts (for example,
peace between Egypt and Israel, and end of the Cold War) are often considered
‘overdetermined’ and all but inevitable after they have occurred.”98 By reconstructing the
chain of events that seems to have culminated in a particular outcome, we appear to
become less open to contemplating alternative patterns and results. This constitutes a
failure to acknowledge the uncertainty that confronted actors and the idea that they could
have made different choices that might have produced different outcomes. There is
evidence to suggest that CR may prove instrumental in offsetting this ingrained tendency,
rendering is a valuable investigative technique:
Counterfactuals can combat the deeply rooted human propensity to see
the future as more contingent than the past, reveal contradictions in our
belief systems and highlight double standards in our moral judgements.
Counterfactuals are an essential ingredient of scholarship. They help
determine the research questions we deem important and the answers
we find to them. They are also necessary to evaluate the political,
economic, and moral benefits of real-world outcomes. These evaluations
in turn help drive future research.99
International relations literature abounds with illuminating and productive applications of
CR. The United States’ involvement in the 1950–53 Korean War is an especially noteworthy
illustration of a multifaceted, “what-if”-style of exploration.100 It is commonly thought that
forceful engagement in Korea was the first test of the Truman administration’s policy of
“containment,” and, in the invasion of the north by south that ensued in 1950, its first
failure.101 This strategy was not entirely new. Rather, it was an extension of Roosevelt’s
grand design to “accommodate post-war American security concerns, open the colonies to
American commerce and tutelage, and corral communist and anti-colonial revolution.”102
Truman’s decision to occupy the southern part of the Korean peninsula in autumn of 1945,
98
Id., 559.
99
Id., 557–58.
100
See Hawthorn, supra note 18, at 81–122.
101
Id., 83.
102
Id.
78
German Law Journal
Vol. 18 No. 01
and his articulation of a broader posture that subsequently became known as the “Truman
doctrine” in 1947, was a logical by-product of this policy stance.103
A similar inference might be drawn regarding the unwillingness of the United States to
countenance a Soviet proposal to form a provisional government to administer the whole
peninsula under a joint trusteeship until Korea was believed to be ready for self-rule. An
official at the State Department opined in 1949 that it would be plausible to contend that
“without the presence of the Soviet army, and under a four power ‘trusteeship,’ where
there would always have been three votes to one, the result might have been as in France
and Italy.”104 The validity of this assessment has been challenged, but some historians have
embraced it, arguing that events were not preordained. They postulated that “[t]he United
States need not have occupied [S]outh Korea, and [its] occupation need not have led to
two opposed [S]tates and war.”105
Invoking CR, and coupling it with elaborate data mining, Hawthorn, a scholar in the field of
international relations has produced a picture that, while inevitably open to conflicting
readings, largely accords with this evaluation.106 The issue could be stretched to
encompass a wide of array of scenarios, but he has realistically opted to confine it to the
question outlined above, namely, “whether the United States could have decided not to
occupy the southern part of the country in 1945, and once it did, whether it could have
acted in such a way as to avoid the eventual division.”107 His empirically underpinned
answer has been that “in August 1945, the United States could have tried to pre-empt an
excessive intrusion into the space between itself and the Soviet Union after 1945; that
consistently with this, it could have acknowledged that Korea stood to the Soviet Union as
Greece, Italy, France, and Japan stood to Britain and the United States; that it could have
accepted the advice of its chiefs of staff and the commanders in the Pacific; and that it
could have decided not to occupy southern Korea.”108 By the same token, “[t]he president
and the Departments of State and War could have arrived at a less anxious interpretation
of Soviet intentions, accepted their military limitations, and concentrated on the exclusive
occupation of Japan.”109 Still, “the United States did enter Korea.”110
103
Id.
104
Id.
105
Id., 84.
106
Id., 81–122.
107
Id., 107.
108
Id., 112–13.
109
Id., 113.
2017
Counterfactual Reasoning and International Law
79
This leaves unresolved the issue of subsequent choices and their ramifications.
Interestingly, in this respect, the researcher has displayed greater ambiguity than
otherwise, suggesting that, once in Korea, the Americans room for maneuver was
materially circumscribed. Specifically, they could have not pursued a different course of
action unless they had been willing to reconsider their rationale for being in Korea in the
first place. This would have entailed willingness and ability to radically rethink “their
conception of what they were and why more generally they were doing what they were
doing in the world.”111 The reason is that, at this crucial historical juncture, “they had
created a set of circumstances from which they, as they had come to define themselves,
could not retreat.”112 The reconstruction of events does not end here because “the
question of what the Americans could have done does lead naturally to the question of
whether they were right in what they did.”113 And, ineluctably, “this also is a matter of
counterfactual analysis.”114
D. Potential Pathway to Methodologically Richer International Legal Inquiry
Despite its acceptable conceptual underpinnings and proliferation of relevant case studies
in a number of neighboring disciplines demonstrating its effectiveness as a tool for seeking
theoretical and policy illumination, unlike international relationists, scholars in the field of
law, and particularly those concerned with its international dimension, have exhibited
virtually no favorable disposition toward and no active interest in CR. With few notable
exceptions, this remains virgin territory, possibly ripe for systematic and sustained
exploration. It would be inappropriate to imply, however, that in a domain characterized
by a distinct lack of methodological awareness and momentum, CR ought emphatically to
be singled out and should determinately be promoted as a top-priority area.
To date, merely one comprehensive article (Mitchell, 2004) has been published on the
useful role that CR might play in general legal research. The impetus for Mitchell’s article
emanated from the 2001 collapse of the Enron Corporation. The author was struck by the
110
Id.
111
Id., 121.
112
Id.
113
Id., 121–22.
114
Id., 121.
80
German Law Journal
Vol. 18 No. 01
outpouring of scholarship on the subject, its scope and diversity and, at the same time, its
rather inconclusive nature. A myriad of explanations have liberally been offered for Enron’s
abrupt demise, without being clear or compelling,115 which prompted the following
observation: “[W]e may ask . . . whether these Enron autopsies truly help us understand
when business and regulatory failures are likely to occur and how we might be able to
prevent them in the future.”116
Dissatisfied with the ongoing stress on quantity rather than quality, and the analytical and
policy consequences of this misdirected and unfruitful effort, Mitchell suggested that it
might be desirable to shift tack and, instead of furnishing additional views on the legal
lessons of Enron, focus on the process of learning those lessons. 117 This involves taking
concrete steps to fathom how causal stories are fashioned to account for pivotal events
such as Enron’s unraveling and how those stories are relied upon to produce policy
recommendations. In stories of that type, equivalent to single-observation case studies,
the teller depicts a pattern showing why an event has occurred and then employs this
explicit or implicit causal model to formulate prescriptions for law reform.118
Proceeding along that line of explanation is not without attractions, not least of which are
adherence to tradition, clarity, and communication in a manner harmonious with readers’
cognitive maps. Those are valuable features in an enterprise where successful
implementation hinges on delivering the right form, as well as high-quality
substance.119Nevertheless, “the methodological problems associated with the story telling
approach are so severe that many social scientists avoid this approach if at all possible.”120
Social scientists assert that causal stories provide, at best, “innocently misleading portraits
of the causes of behavior and, at worst, unavoidably partial stories biased by the writer’s
pre-existing beliefs and values.”121
The story telling explanatory mode, as observed in the Enron case, possesses diverse
ramifications that extend well beyond this particular episode, including deep into the
115
See Mitchell, supra note 18, at 1519–520.
116
Id.
117
See id., 1521.
118
See id.
119
See id., 1521–522.
120
Id., 1522.
121
Id.
2017
Counterfactual Reasoning and International Law
81
policy sphere. Insofar as policy is concerned, it is noteworthy that, in the manifold accounts
of this flagrant corporate self-destruction, the teller virtually always converts her specific
explanation for the isolated occurrence into an explanation for a broad set of potential
events, which then assumes the form of a prediction for future corporate and regulatory
failures. In other words, the teller shifts from a singular to a general causal account, with
possibly considerable strategic consequences—one that merits close attention on the part
of high-level actors in the policy arena.122 This practice leaves much to be desired because
in the process:
[T]he specific explanation becomes endowed with law-like properties, and the
causal relation posited for the Enron matter is presumed to hold in other
corporate settings as well. This occurs with little or no demonstration of the
applicability of this explanation for other events occurring under different
circumstances. Although many scholars widely apply the conclusions they
draw from Enron, they do so with little more than bald assertions or limited
anecdotal evidence to support their generalizations. For the scholar inclined
to make policy recommendations, this inductive leap must occur because,
while singular causal stories about specific events are of great interest to trial
judges, juries and the parties involved in a particular lawsuit, they are of little
interest to the lawmaker, who enact laws with behavioral implications beyond
the specific case in mind. Unless the causal explanation extends beyond Enron
to provide a more general explanation of how certain behaviors and corporate
and regulatory failures are related, then specific explanations for Enron
provide little insight for lawmakers. Stated differently, if Enron is an
aberration or the product of unique forces unlikely to be seen again, then why
bother with “sweeping legal reforms.” The focus should instead be placed on
criminal punishment, civil liability, and reparations for the players in the Enron
case alone.123
As these methodological “malpractices” illustrate, the story tellers engaged in corporate
failure post-mortems, such the one in that particular instance, that commonly follow a
two-track approach: First, a singular causal story is told to account for the specific factors
responsible for the collapse of a certain corporate entity. Second, a more general causal
story about market distortions, inappropriate company actions, regulatory oversight, or
professional wrongdoing is derived from the first story. By hastily progressing from the
122
Id., 1538–539.
123
Id., 1540–542.
82
German Law Journal
Vol. 18 No. 01
specific to the general level, however, the story tellers typically overlook alternative
credible explanations of corporate demise—scarcely ever systematically resorting to CR—
and thus expose their stories to criticism on grounds of internal validity. Moreover, to the
extent that their projections beyond the circumstances surrounding the unraveling of one
firm rest on shaky foundations, the external validity of their inferences may be in doubt.124
A key step in the process of developing strategies to minimize threats to internal and
external validity, particularly the latter, is to abandon the single-observation case studies in
favor of multiple-observation ones.125 Yet, this clearly is not a practical course to pursue in
all circumstances. In the international law context, for instance, the option seldom
presents itself. The second step thus entails the adoption of adequate criteria to enhance
the robustness of CR. Interestingly, those proposed by a domestically-oriented legal
researcher, predominantly concerned with business regulation, are essentially borrowed
from the international relations literature. These criteria include transparency,126 counterfactuality of the proposed antecedent,127 consideration of competing hypotheses,128
theoretical and statistical reasonableness of the proposed causal chain,129 co-tenability and
counterfactual minimalism,130 and projectibility.131
A second notable input into CR discourse in the general law space, or rather in the law and
economics segment thereof, is primarily theoretical nature, with no salient methodological
components and offering no visible demonstration effects. 132 On balance, Hulsmann’s
contribution to economics may have been greater than to law, but it is worth briefly
highlighting because the responses to it may have had cross-disciplinary ramifications. The
basic proposition has been that most economic laws are counterfactual in nature and do
not have to be qualified by invoking the ceteris paribus or an “all other things being equal”
condition.133 This claim, amounting to an ambitious attempt to redefine economic science,
124
Id., 1542–543.
125
Id., 1543–587.
126
Id., 1589–591.
127
Id., 1591–592.
128
Id., 1592–593.
129
Id., 1593–595.
130
Id., 1595–600.
131
Id., 1600–601.
132
See generally Hulsmann, supra note 18.
133
Id.
2017
Counterfactual Reasoning and International Law
83
has elicited illuminating reactions, the potentially most constructive being that ceteris
paribus elements may fruitfully be incorporated into CR.134
The third, and thus far last, significant addition to the general law literature featuring CR
stands out for its policy relevance rather than methodological refinement.135 Robertson
has systematically addressed the European Commission’s 2001 guidelines regarding the
applicability of article 101 of the Treaty on the Functioning of the European Union (EU) to
horizontal co-operation agreements (Guidelines), designed to serve as a framework for
assessing “pure” information exchanges between competitors—that is, those that do not
underpin other forms of anti-competitive behavior, such as the type seen in cartel-like
settings. Besides codifying the Court of Justice of the EU’s (CJEU) case law, the Guidelines
also introduce a more subtle—and grounded in economic logic—element into the
evaluation of information sharing agreements.136
The key purpose of the Guidelines is to encourage variants of information sharing that
bolster efficiency—by resolving information asymmetries, facilitating benchmarking,
enabling faster delivery of perishable products, countering unstable demand, and reducing
consumers’ search costs as well as augmenting their choices—while at the same time
discouraging firms from resorting to information exchanges that erode competition.
Consistent with the Commission’s overall strategy of pursuing an increasingly economicsbased approach in dealing with competitive forces, or lack thereof, the Guidelines limit
competitive restriction by object to very specific cases, with the preponderance of
information exchanges judged in terms of their effects.137
The careful and thorough, exclusively CR-inspired, dissection of the Guidelines and the
CJEU’s leading cases on information exchanges has shed ample light on crucial policy
issues, such as the degree to which the Guidelines purely restate the case law, the
soundness of the underlying economic logic, and the likely evolution of information
exchanges under the regulatory regime embodied in the Guidelines.138 While this is a
governance milieu characterized by intellectual experimentation and innovation, when
134
See generally Mateusz Machaj, In Counterfactuals We Are All Dead, 15 Q. J. AUSTRIAN ECON. 443 (2012).
135
See generally Robertson, supra note 18.
136
Id., 459–60.
137
Id., 460–61.
138
Id., 485–88.
84
German Law Journal
Vol. 18 No. 01
coupled with sequential learning and steady accumulation of knowledge, it is not devoid of
complexity and uncertainty. The fact that CR has proved a highly valuable—indeed, as
indicated, the sole—analytical vehicle in such intricate and fluid circumstances attests to its
utility as an instrument for generating action-oriented strategic, tactical, and operational
insights.
International legal scholars have lagged behind their general law counterparts, especially
those in the administrative realm, in evincing awareness of the possibilities furnished by CR
as a tool of empirical inquiry. Importantly, they have underscored that international legal
ratiocination is rife with CR, notably when it is related to causation, responsibility, and
damages. This is an inevitable reflection of the distinct logic brought to bear on situational
complexity and ambiguity in problem solving contexts. The corollary is that
“counterfactuals play important roles in assessing the effectiveness of international law, of
its institutions, and concrete decisions—would Nigeria have ceded Bakassi to Cameron had
it not been for the judgement of the ICJ?”139
The proposition may be extended further and rendered more specific. International legal
researchers have pinpointed three advantages that may be gained from the incorporation
of CR into the international law investigative agenda: First, considering how the overall
legal direction and particular actions could have been different “frees the mind from the
spell of necessity.”140 Second, CR may underpin causal statements and assessments
pertaining to the significance of certain factors. This is achieved in a manner that ensures
greater historical authenticity than is attained by invoking grand theories organized around
systematic variables.141 Third, CR may serve as a lubricant for human creativity and fulfill a
crucial function in the process because, “[w]hile there are so many thinks blatantly amiss in
international society, [it is] remarkably difficult to imagine alternative reality.”142
Besides such broad-based reassertions of the substantial overlap between CR and
structure of international legal arguments, and restatement of the general benefits of
engaging in the former, virtually no attempts have been made to firmly place CR in the
international law conceptual and empirical space. Relevant and effective studies have been
conducted in the fields of international humanitarian law—in relation to the responsibility
to protect143—and international labor law—with reference to international labor
139
Venzke, supra note 18, at 1 (emphasis added).
140
Id.
141
Id.
142
See id.; see also Mattheis, supra note 18, at 632–35.
143
See generally Pattison, supra note 18.
2017
Counterfactual Reasoning and International Law
85
standards.144 They have been carried out, however, respectively, by an international
relationist or political scientist and an applied social researcher rather than by
international legal scholars. Nor can they be said to constitute forays into international law
territory in the pure sense of the term, which is understandable given the professional
background and analytical disposition of the authors.
Well-delineated and problem-focused international legal inquiry is not altogether devoid of
CR elements. A wide-ranging exploration of the democratic deficit that stems from the
deficiencies of global governance through international law in the wake of the partial
collapse of the Westphalian political settlement is a case in point. Wheatley has elegantly
recycled the notion that the legal norms regulating economic, political, and social activities
are no longer the sole prerogative of domestic, democratically anchored processes
because international governance regimes increasingly claim the right to shape the
normative circumstances of citizens of democratic States, apparently without any
meaningful linkage to the idea of democratic legitimacy.145
He has further elaborated that no meta-narratives have surfaced to properly account for
the adjusted allocation of political authority, or to provide a compelling justification for the
resulting deficit in the practice of domestic democracy. This has prompted him to examine
three concrete strategic options: (1) jettisoning the project of democracy beyond the state;
(2) finding other legitimacy pillars—for example, delegation of “sovereign powers,” welfare
promoting impacts of global governance “for the people,” and high-quality governance by
experts/those “who know better”; and (3) democratizing global governance by embracing
democratic principles and institutional mechanisms—such as the introduction of ex ante
popular controls such as referendums prior to the imposition of significant international
legal obligations or allowing the ex post facto rejection of international law norms in
conformity with the expressed will of the people.146
After outlining the three overarching scenarios—a fourth one is derived from the three—
the writer has proceeded to devote the core of his article to a consideration of the
applicability of the idea of deliberative (“democratic”) legitimacy in this intricate and
multifaceted context. That notion emanates from the belief that, in the absence of
“objective truths” that inevitably pave the way for the “right policy,” “political truths
144
See generally Thomann, supra note 18.
145
See generally Wheatley, supra note 18.
146
See id., 526.
86
German Law Journal
Vol. 18 No. 01
([specifically] contingent, contestable positions) can be established only through acts of
communicative reason in which all those subject to a regulatory regime (or their
representatives) agree, through reasoned discussions, the scope and content of regulatory
norms.”147 This framework, tentatively designed for various communities within the state,
has loosely been extended to the inter-state level, to encompass processes that “lead to
the adoption of international law norms (a form of ‘deliberative diplomacy’) and to the
‘legislative’ activities of non-[s]tate (‘non-sovereign’) actors.”148
Clearly, this type of expansive intellectual journey, entailing the juxtaposition of present
configurations with a broad array of alternative futures, requires recourse to nonmainstream investigative vehicles such as CR and scenario construction. Even in this
ambitious and open-ended scholarly international legal project, however, CR is mostly
employed implicitly rather than explicitly, and is relegated to the periphery. Instead, it
should be propelled into the foreground, where it belongs, given the nature of the subject
and its methodological ramifications. CR and the thinking pervading international law may
share common characteristics, but this is yet to be convincingly shown in practice.
E. Source of Ample Demonstration Effects
One international legal issue—with salient economic, political, and social dimensions—that
figuratively cries for a CR-style treatment concerns the implementation of the Sino-British
Joint Declaration Regarding the Future of Hong Kong—formally known as the “Joint
Declaration of the Government of the Government of the United Kingdom of Great Britain
and Northern Ireland and the Government of the People’s Republic of China on the
Question of Hong Kong” and informally referred to as the Joint Declaration. The territory
has never exercised sovereign powers and, since decolonization in 1997, has functioned as
a Special Administrative Region (HKSAR) of the PRC. Its population is estimated to be
slightly in excess of seven million; at mid-2014 Hong Kong’s population consisted of 7.24
million residents, of whom 7.03 million were classified as Usual Residents and 0.22 million
as Mobile Residents.149 The sub-national status and moderate population size, coupled
with its near-static nature, may suggest that the fate of the Joint Declaration is not a
matter of great international importance.
This would not be an appropriate inference to draw. The aspirations and well-being of
seven million people are by no means a trivial question. Otherwise, thousands of local
147
Id.
148
Id., 527.
149
See Hong Kong: The Facts, www.gov.hk/en/about/abouthk/factsheets/docs/population.pdf (last visited Mar.
31, 2016).
2017
Counterfactual Reasoning and International Law
87
residents would not have taken to the streets, embarked on intense protest, and paralyzed
key parts of a normally business-driven and orderly conurbation, for a period extending
from late September 2014 to mid-December 2014. Residents rose to action because of the
perception that they were being denied political rights enshrined in the Joint Declaration150
and the Basic Law,151 the mini constitution, or domestic legal instrument, embodying its
vision and principles in more elaborate and specific form.152 While the physical
manifestations of large-scale dissent have subsided, the underlying causes that triggered
them and the profound sense of alienation that they have mirrored continue to prevail,
raising the prospect of further massive eruption and system-wide instability.
Moreover, Hong Kong should not be looked at in isolation. The territory has always been
embedded in an extensive network, performing economic functions akin to those of a
bridge and a transmission belt. Over time, this role has expanded enormously, both
quantitatively and qualitatively. This growth trajectory markedly steepened during and
after the Korean War, but Hong Kong had displayed a pronounced outward orientation
serving as a vibrant international linking pin, on one scale or another, with ineluctable
pauses engendered by armed conflict, from the establishment of British colonial rule until
it entered the phase of accelerated industrialization in the 1950s. Throughout that period,
it had operated as a China-centered entrepot, predominantly sustained by foreign trade
activities.153
Rather paradoxically, the outbreak of Korean War and the dislocation that had ensued,
expected to sever Hong Kong’s external links, instead solidified them by setting the stage
for one of its most remarkable structural transformations. The United Nations embargo
imposed on the PRC, which had sided with the Communist North, had indeed deprived
Hong Kong of its time-honored role as the Mainland’s entrepot. Its exports foundered at a
time when it confronted the enormous challenge of meeting the needs of a population
whose size nearly quadrupled, from 600,000 in 1945 to 2.3 million in 1950, as a result of
the massive influx of refugees escaping the wave of chaos unleashed by the Chinese
150
See generally RODA MUSHKAT, ONE COUNTRY, TWO INTERNATIONAL LEGAL PERSONALITIES: THE CASE OF HONG KONG (Hong
Kong Univ. Press 1997).
151
See generally YASH GHAI, HONG KONG’S NEW CONSTITUTIONAL ORDER: THE RESUMPTION OF CHINESE SOVEREIGNTY AND THE
BASIC LAW (Hong Kong Univ. Press 2d ed. 1999).
152
See generally Michael Davis, Hong Kong’s Umbrella Movement: Beijing’s Broken Promises, 26 J. DEMOCRACY 101
(2015); Victoria T.B. Hui, Hong Kong’s Umbrella Movement: The Protests and Beyond, 26 J. DEMOCRACY 111 (2015).
153
See ALEXANDER J. YOUNGSON, HONG KONG: ECONOMIC GROWTH AND POLICY 3–4 (Oxford Univ. Press 1982); KUI-WAI LI,
THE HONG KONG ECONOMY: R ECOVERY AND RESTRUCTURING 1–4 (McGraw Hill Educ. 2006).
88
German Law Journal
Vol. 18 No. 01
Communist Party (CCP), which had
prevailed in 1949 over its Kuomintang
(KMT)/Nationalist foe in a civil war that waged intermittently from 1927 to 1937, lost its
intensity following the 1937 Japanese invasion, and then vigorously resumed in 1946.154
Notwithstanding the dire outlook, Hong Kong’s response to the threat had been to
ingeniously turn it into an opportunity. Specifically, the territory had nimbly proceeded to
relinquish its entrepot status and to swiftly reinvent itself as an international center for
labor-intensive manufacturing. In the process, it had creatively mobilized the vast inflow of
flight capital from the Mainland, the fast expanding pool of labor—containing a substantial
number of businesspeople/entrepreneurs, professionals, intellectuals, and unskilled but
highly motivated workers from Guangdong Province and Shanghai—and the web of
external economic relations/relationship capital furnished by Hong Kong’s trading houses
with their elaborate contacts throughout the globe. The prospect of a severe slump had
thus been supplanted by a pattern evincing astounding growth stretching over two
decades, and even greater global exposure than previously.155
The next phase of structurally induced further international entrenchment, equally
dramatic and fast-paced, yet less trying because it has been precipitated by opportunity
rather than threat, has materialized in the wake of the opening up of the Chinese economy
in the late 1970s. That event enabled Hong Kong to move its increasingly costly
manufacturing base across the border, where key factors of production, notably labor and
land, have been far more competitively priced. The shift of labor-intensive manufacturing
processes and lower value-added activities to mainland China has given rise to far-reaching
and rapid deindustrialization, without, however, leading to a hollowing out of the entire
economic structure. This is because high value-added producer services continued to take
place in Hong Kong.156
This sweeping structural realignment fundamentally repositioned Hong Kong in the
Greater China space, which also encompasses Taiwan, albeit controversially from a political
perspective. Specifically, the territory has been transformed in the course of the
geographical and sectoral readjustment into a vital pivot of the so-called “China Circle.”
This informal but tightly interconnected economic entity consists of three concentric
layers: Greater Hong Kong—or the Hong Kong-Guangdong Province domain—constitutes
the nucleus of this expanding spatial configuration. Greater Southeast China (GSC)—which
stretches over Hong Kong, Taiwan, and the southeast coastal provinces of the Mainland
154See
Zhigang Tao & Y.C. Richard Wong, Hong Kong: From Entrepot to Manufacturing and then Producer Services,
in URBAN TRANSFORMATION IN CHINA 236 (Aimin Chen, Gordon G. Liu & Kevin H. Zhang eds., 2004).
155
Id., 235–39.
156
Id., 239–48.
2017
Counterfactual Reasoning and International Law
89
(Guangdong, Fujian, Jiangsu, Shanghai, and Zhejiang)—is deemed to be the inner layer.
Greater China, or the Chinese Economic Area, is regarded as the outer layer.157
This prominence in the Greater China space is a form of decisive regionalization, without,
however, fully reflecting the extent of Hong Kong’s internationalization as a large-scale
center for cross-border intermediation and provider of producer services. The Chinese
connection stands out and is readily quantifiable, but the territory has evolved in the past
three-and-a-half decades or so into one of the world’s few all-inclusive “capitals of
capital,”158 leveraging its position as both the gateway to China and the heart of the
Chinese diaspora.159 Problematic divergences from the letter and spirit of the Joint
Declaration, as well as the Basic Law, may thus reverberate beyond Hong Kong, generating
negative network externalities160 costly for a host of regional and international players.
Exploration of such divergences leads to the realm of compliance, defined as “a state of
conformity or identity between an actor’s behavior and a specified rule.”161 It does not
entail an examination of the underlying motives, which may be instrumental rather than
normatively shaped, because compliance “is agnostic about causality.”162 Nor does it need
to be confined to the strictly legal sphere because adherence to standards is a multifaceted
issue.163 By the same token, the impact of law is not limited to compliance as “legal rules
may change [s]tate behavior even when [s]tates fail to comply.”164 Still, “most theories of
157
See YU-WING SUNG, HONG KONG AND SOUTH CHINA: THE ECONOMIC SYNERGY 1–2 (City Univ. Hong Kong Press 1991);
YU-WING SUNG, THE EMERGENCE OF GREATER CHINA: THE ECONOMIC INTEGRATION OF MAINLAND CHINA, TAIWAN, AND HONG
KONG (Palgrave Macmillan 2005) 9–10. See also Y.Y. KUEH, PAX SINICA: GEOPOLITICS AND E CONOMICS OF CHINA’S
ASCENDANCE (Hong Kong Univ. Press 2012).
158
See generally YOUSSEF CASSIS, CAPITALS OF CAPITAL: THE RISE AND FALL OF INTERNATIONAL CENTERS, 1780–2009
(Cambridge Univ. Press, 2d ed. 2010).
159
See generally DAVID R. MEYER, HONG KONG AS A GLOBAL METROPOLIS (Cambridge Univ. Press 2000); STEPHEN CHIU AND
TAI-LOK LUI, HONG KONG: BECOMING A CHINESE GLOBAL CITY (Routledge 2009).
160
See generally PAUL OMEROD, POSITIVE LINKING: HOW NETWORKS CAN REVOLUTIONIZE THE WORLD (Faber & Faber 2012).
161
Kal Raustiala & Anne-Marie Slaughter, International Law, International Relations, and Compliance, in HANDBOOK
Beth A. Simmons eds., 2009).
OF INTERNATIONAL R ELATIONS 539 (Walter Carlsneas, Thomas Risse &
162
Id.
163
Id.
164
Id.
90
German Law Journal
Vol. 18 No. 01
compliance with international law are at bottom theories of the behavioral influence of
legal rules.”165
A fine distinction is commonly drawn, in this context, between conformity to international
law and its implementation and effectiveness. The former of these two supplementary
concepts is equated with “the process of putting international commitments into practice:
the passage of legislation, creation of institutions (both domestic and international), and
enforcement of rules.”166 It is viewed as a crucial step toward compliance, but not as an
inevitable one, because adherence to international law may occur whether or not it takes
place, without any concrete initiative by a government or other relevant authorities.167 In
contrast, effectiveness refers to the impact of a rule on international legal behavior, with
judgment exercised in light of the standards that it sets. 168 Again, the linkage between
compliance and effectiveness is not watertight. Rules may conceivably be inherently
effective yet fail to elicit conformity. Similarly, assiduous compliance may be indicative of
overly lax standards.169 Such nuanced distinctions are analytically valuable, but this Article
observes international law as liberally identified with constructive implementation, geared
toward maximizing positive impact, because otherwise compliance may be given an
excessively mechanistic interpretation.
Seeking notional clarity is a fruitful pursuit, even if little is to be gained from excessive
differentiation, but it is not always an entirely productive one. By contrast, the static
nature of most international legal theories concerned with rule-following in the global
arena may be regarded as analytically inadequate. The shortcoming stems from the
tendency to scrutinize compliance at a point in time, overlooking progress, or lack thereof,
over time. There are modest exceptions to the norm, such as constructivism, which loosely
traces the development of state identity and its behavioral consequences,170 and
165
Id.
166
Id.
167
Id.
168
Id.
169
Id.
170
See generally JUTTA BRUNNEE & STEPHEN J. TOOPE, Constructivism and International Law in Dunoff and Pollack,
supra note 13; Benedict Kingsbury, Indigenous Peoples in International Law: A Constructivist Approach to the Asia
Controversy, 92 AM. J. INT’L L. 414 (1998); Jutta Brunnee & Stephen Toope, International Law and Constructivism:
Elements of an Interactional Theory of International Law, 39 COLUMBIA J. TRANSNAT’L L. 19 (2000); Jutta Brunnee,
Enforcement Mechanisms in International Law and International Environmental Law, in ENSURING COMPLIANCE WITH
MULTILATERAL ENVIRONMENTAL AGREEMENTS: A DIALOGUE BETWEEN PRACTITIONERS AND ACADEMIA 1 (Ulrich Beyerlin, PeterTobias Stoll, & Rudiger Wolfrum eds., 2006); Asher Alkoby, Theories of Compliance with International Law and the
Challenge of Cultural Difference, 4 J. INT’L L. & INT’L REL. 151 (2008); Harlan G. Cohen, Can International Law Work?
2017
Counterfactual Reasoning and International Law
91
transnational legal process theory (TLPT), which broadly focuses on the (favorable)
implications for compliance of State participation in international governance regimes.171
Such dynamic conceptualizations, however, are few and far between, and those available
may be said to lack sufficient coherence and precision.172 It remains an open question
whether they provide a thoroughly viable framework for multiyear tracking of Chinese
adherence to the letter and spirit of the Joint Declaration and the Basic Law.
Interestingly, China has served as fertile ground for the application of the selectively timesensitive paradigms. Constructivists have thus highlighted the crystallization during the
post-1978 reform era of Chinese identity as a “responsible power” and the positive
ramifications this process has had for compliance on the trade, arms control,
environmental protection, and human rights fronts.173 By the same token, proponents of
TLPT have marshalled partial evidence in support of the proposition that involvement in
international governance regimes in similar domains has been a beneficial—from a
Western perspective—experience because it has entailed socialization-induced normative
learning that, for all intents and purposes, has helped to turn China into a status quooriented nation from a “rogue”-like one.174 This should bode well for Chinese conformity
with the letter and spirit of the Joint Declaration and the Basic Law, in addition to serving
as a theoretical benchmark for systematically monitoring relevant conditions and trends.
A Constructivist Expansion, 27 BERKELEY J. INT’L L. 636 (2009); G ERRY NAGTZAAMI, THE MAKING OF INTERNATIONAL
ENVIRONMENTAL TREATIES: NEOLIBERAL AND CONSTRUCTIVIST ANALYSES OF NORMATIVE EVOLUTION (Edward Elgar ed., 2009);
JUTTA BRUNNEE & STEPHEN J. TOOPE, LEGITIMACY AND LEGALITY IN INTERNATIONAL LAW: AN INTERACTIONAL ACCOUNT
(Cambridge Univ. Press, 2010); ADRIANA SINCLAIR, INTERNATIONAL RELATIONS THEORY AND INTERNATIONAL LAW: A CRITICAL
APPROACH (Cambridge Univ. Press, 2010); RYAN GOODMAN & DEREK JINKS, SOCIALIZING STATES: PROMOTING HUMAN RIGHTS
THROUGH INTERNATIONAL LAW (Oxford Univ. Press, 2013).
171
See generally Harold H. Koh, Transnational Legal Process, 75 NEB . L. REV. 181 (1996); Harold H. Koh, Why Do
Nations Obey International Law? 106 YALE L. J. 2599 (1997); Harold H. Koh, How Is International Law Enforced, 74
IND. J. L. 1397 (1999); ANNE-MARIE SLAUGHTER, A NEW WORLD ORDER (Princeton Univ. Press, 2004).
172
See generally Roda Mushkat, Conceptions of Identity and Identity Economics: A Chinese-Based Explorations, 4
INT’L J. PUB. L. & POL’Y 245 (2014).
173
See generally GERALD CHAN, CHINA’S COMPLIANCE IN GLOBAL AFFAIRS: TRADE, ARMS CONTROL, ENVIRONMENTAL
PROTECTION, HUMAN RIGHTS (World Scientific Publishing 2006).
174
See generally ANN E. KENT, CHINA, THE UNITED NATIONS AND HUMAN RIGHTS: THE LIMITS OF COMPLIANCE (Univ. Penn.
Press 1999); ANNE E. KENT, BEYOND COMPLIANCE: CHINA, INTERNATIONAL ORGANIZATIONS, AND GLOBAL SECURITY (Stanford
Univ. Press, 2007); ALASTAIR I. JOHNSTON, SOCIAL STATES: CHINA IN INTERNATIONAL INSTITUTIONS (Princeton Univ. Press
2008); Chen Dingding, China’s Participation in the International Human Rights Regime: A State Identity
Perspective, 2 CHINESE J. INT’L POL. 399 (2009).
92
German Law Journal
Vol. 18 No. 01
Yet, in the two decades since decolonization, international legal researchers have found
virtually no scope for invoking, in that context, constructivist and TLPT-style explanations,
as well as offering corresponding prognostic insights and prescriptions. This in all likelihood
stems from the fact that States have multiple identities that may not be readily reconciled,
may not be firmly established, may not be meaningfully delineated, and may not withstand
extraneous—specifically, non-identity-related—pressures.175 Similarly, the explanatory
power of TLPT appears to be rather limited when it is brought to bear on China’s attitudes,
including the behavioral component, toward international law.176 Notably, instrumental
learning is prevalent and so is non-learning, non-linear learning, uneven learning and,
particularly, incremental, or slow-paced learning, that may prove dysfunctional—if it leads
to policy outcomes out of sync with economic, social, and political realities.177
In a recent empirically rich and rigorous study of Chinese legal compliance in the trade and
human rights realms, the author has demonstrated that the process may vary from one
issue-area to another—in particular, trade and human rights may display different
patterns—because of its contingent nature and, crucially, that State learning may be far
from comprehensive in nature—that is, assume the shape of “selective adaptation”—due
to a host of deep-rooted and situation-specific influences. The appropriate inference to
draw seems to be that the dissection of China’s adherence to the letter and spirit of the
Joint Declaration and the Basic Law should not exclusively center on a single event, but
instead be an ongoing process. This process should occur without being rigidly guided by
any preconceptions—constructivist, those of the TLPT variety, or any others—derived from
unidirectional paradigmatic sources.
Hong Kong and the Mainland have historically moved along structurally and functionally
different paths and, while the gap has been narrowing, it continues to be sizeable. The
former has traditionally operated as a heavily “marketized” entity, governed by the rule of
law, inching toward democracy in one form or another, and providing sound channels for
175
See generally Mushkat, supra note 172.
176
See generally Roda Mushkat, Economic Development, Environmental Preservation, and International Policy
Learning in China: Venturing beyond Transnational Legal Process Theory, in RETHINKING LAW AND DEVELOPMENT: THE
CHINESE EXPERIENCE 187 (Gunaghua Yu ed., 2013); Roda Mushkat, Non-Democratic State Learning of Universal
Human Rights: Reconfiguring Chinese Patterns, 27 TEMPLE INT’L & COMP. L. J. 63 (2013); Miron Mushkat & Roda
Mushkat, The Political Economy of Constitutional Incrementalism in Hong Kong, 9 NORTHWESTERN INTERDISC. L. R EV.
(forthcoming in 2017).
177
See generally PITMAN B. POTTER, ASSESSING TREATY PERFORMANCE IN CHINA: TRADE AND HUMAN RIGHTS (UBC Press
2014).
2017
Counterfactual Reasoning and International Law
93
the expression of a wide range of voices.178 The latter, by contrast, has persistently
subscribed to state capitalism (socialism during the 1949–78 revolutionary era), rule by law
(previously rule of man), one-party dominance, and tight control over socio-political
activity.179 The architects of the Joint Declaration and the Basic Law have constructed a
legal façade to minimize intrusions from the centralized, top-down driven system into the
decentralized, steered in a bottom-up manner one by introducing mechanisms to preserve
and enhance—through progressive democratic reform—Hong Kong’s pre-1997 institutional
environment, as well as expand and boost its capacity for self-government.180
The commendable and pragmatic vision, embodied in the seemingly ingenious but
potentially unworkable “one country, two systems” formula, is asymmetrically configured
at the international level because the signatories do not have the same rights and
obligations.181 Moreover, there are no procedures for adjudication and enforcement,182
although this objective may presumably be achieved indirectly, at the domestic level, via
the Basic Law.183 To complicate matters, the Joint Declaration and the Basic Law are
inevitably open to conflicting interpretations. Be that it may, this does not preclude the
possibility of fruitfully engaging in serious discourse regarding compliance, both in relation
to specific acts and the implementation—as indicated, broadly defined—process as a
whole.
In both respects, there is a basis for arguing that the vision, both abstract and concrete,
codified in international legal and constitutional documents designed to ensure Hong
Kong’s prosperity and stability, the twin goals that it purports to mirror, has not fully been
realized, particularly insofar as civil and political rights are concerned. For instance, dubious
attempts have been made by the local government, acting at the behest of its central
counterpart in Beijing—a “principal” whom serves as an “agent” to introduce draconian
178
See generally NORMAN J. MINERS, The Government and Politics of Hong Kong (Oxford Univ. Press, 5th ed. 1998);
MA NGOK, POLITICAL DEVELOPMENT IN HONG KONG: STATE, POLITICAL SOCIETY AND CIVIL SOCIETY (Hong Kong Univ. Press
2007).
179
See generally KENNETH LIEBERTHAL, GOVERNING CHINA: FROM REVOLUTION THROUGH REFORM (W.W. Norton, 2d ed.
2004); TONY SAICH , GOVERNANCE AND POLITICS OF CHINA (Palgrave Macmillan, 3d ed. 2011).
180
See generally Mushkat, supra note 150; Ghai, supra note 151.
181
See generally C.L. Lim, Britain’s “Treaty Rights” in Hong Kong, 151 Q. L. REV. 348 (2015).
182
See generally Mushkat, supra note 150.
183
See generally Mushkat, supra note 151.
94
German Law Journal
Vol. 18 No. 01
national security legislation184 and “patriotic” education in the territory.185 More
importantly, the breadth, depth, and pace of democratization have consistently fallen short
of legitimate expectations.186
This has coincided with a sustained pursuit of multifaceted strategies to “mainlandize” the
Hong Kong governance regime. There is evidence to suggest that these efforts have met
with considerable, albeit not necessarily unqualified, success, as reflected in symptoms of
“political decay” in the territory. To state it more precisely, the “HKSAR is [currently]
characterized by a more personal style of governance; a chaotic implementation of public
policies; an increasingly politicized judiciary whose decisions have been . . . challenged by
Beijing and its supporters in Hong Kong; endangered civil liberties including academic
freedom; an amalgamation of political labeling and mobilization; a failure of political
institutions to absorb public pressure and demands; and a governmental insensitivity to
public opinion.”187
The halting progress toward full-fledged democracy—in all probability due to CCP’s desire
to maximize political leverage in Hong Kong and its penchant for tinkering, rather than
tackling problems head-on, in order to minimize risks and facilitate error-correction188—has
left the HKSAR with a fragmented and malfunctioning governance regime. The chief
executive (CE), at the epicenter of the system, and the primary political lever relied upon by
the CCP in the territory, continues to be nominated by a committee whose composition is
heavily shaped by the powers that be in Beijing.189 The officeholder is alienated from the
184
See generally Miron Mushkat & Roda Mushkat, The Political Economy of the Constitutional Conflict in Hong
Kong, 11 TILBURG FOREIGN L. REV. 756 (2004); NATIONAL SECURITY AND FUNDAMENTAL FREEDOMS: HONG KONG’S ARTICLE 23
UNDER SCRUTINY (Fu Hualing, Carole J. Petersen, & Simon N.M Young eds., 2005); Roda Mushkat, The Intricacies of
Implementing International Law: a Juxtaposition of Theories with the Actualities of the Sino-British Declaration
Regarding the Future of Hong Kong, 31 CHINESE (TAIWAN) Y.B. OF INT’L L. & AFF. 1 (2014).
185
See generally Mushkat; GREGORY FAIRBROTHER, TOWARD CRITICAL PATRIOTISM: STUDENT RESISTANCE TO POLITICAL
EDUCATION IN HONG KONG AND CHINA (Hong Kong Univ. Press 2003); Chitat Chan, Young Activists and the AntiPatriotic Education Movement in Hong Kong; Some Insights from Twitter, 12 J. CITIZENSHIP, SOC. & ECON. EDUC. 148
(2013); Tracy Lau, State Formation and Education in Hong Kong: Pro-Beijing Schools and National Education, 53
ASIAN SURV. 728 (2013).
186
See generally Davis, supra note 150; Hui, supra note 150.
187
See SONNY S.H. LO , GOVERNING HONG KONG: L EGITIMACY, COMMUNICATION, AND POLITICAL DECAY 13 (Nova Science
2002). See also SONNY S.H. LO, THE DYNAMICS OF BEIJING-HONG RELATIONS: A MODEL FOR TAIWAN? (Hong Kong Univ.
Press, 2008); Peter T.Y. Cheung, Who Is Influencing Whom? Exploring the Influence of Hong Kong on Politics and
Governance in China, 51 ASIAN SURV. 713 (2011).
188
See generally Mushkat & Mushkat, supra note 176.
189
Id.
2017
Counterfactual Reasoning and International Law
95
community-at-large and enjoys no legitimacy at the grassroots level. Functional
constituencies, arbitrarily and haphazardly constructed, and acting as another source of
selective political leverage for the CCP in Hong Kong, represent special interests in the
seriously fractured Legislative Council (LEGCO), alongside directly-elected members. The
two segments do not cooperate harmoniously. The CE dominates LEGCO in theory but is
severely handicapped in practice. Recurring policy paralysis and widespread disaffection
are the upshot.190
A proposal was put forward a decade ago,191 and refined recently,192 to overhaul the
political edifice in line with the spirit and letter of the Joint Declaration and Basic Law. It is
consistent with Hong Kong’s status as a global metropolis and expectations on the demand
side—specifically, those of the public. It should not provoke an adverse CCP reaction and
thus can be said to meet the criterion of “political viability.”193 The scheme is forwardlooking, but it should not disrupt historical continuity. It has several attractive features and
implementation should not pose an undue challenge—satisfying pertinent criteria such as
“technical feasibility,” “economic and financial possibility,” and “administrative
operability.”194
The crux of the proposal is to embrace bicameralism, with a directly-elected lower house,
and an upper house consisting of functional constituency representatives elected in an
equitable and transparent fashion.195 The allocation of responsibilities to each body should
be grounded in sound logic, but be skewed in favor of the lower house. LEGCO members
should nominate candidates for the CE position, subject to proper threshold requirements,
which should be extended to the proliferating political parties, in order to reduce legislative
disarray. Internal functional constituency and political party structures and decision-making
procedures should be democratized.196 As may be inferred, the scheme constitutes an
190
Id.
191
See generally Miron Mushkat & Roda Mushkat, Conversationalism, Constitutional Economics, and
Bicameralism: Strategies for Political Reform in Hong Kong, 1 ASIAN J. POL. SCI. 23 (2005).
192
See generally Mushkat and Mushkat, supra note 174.
193
See CARL V. PATTON & DAVID S. SAWICKI, BASIC METHODS OF POLICY ANALYSIS AND PLANNING 214–18 (Prentice-Hall, 2d
ed. 1993).
194
Id., 208–10, 210–14, 218–19.
195
See generally Mushkat & Mushkat, supra note 176.
196
Id.
96
German Law Journal
Vol. 18 No. 01
attempt to recapture the apparently lost spirit of the Joint Declaration and the Basic Law,
and at the same time build a cohesive governance regime that is capable of garnering the
support of all key stakeholders, whose perceptions of institutional effectiveness and
fairness currently are poles apart.
The fine details of the proposal are of less interest here than the fact that the authors have
liberally employed CR, in conjunction with scenario construction, in an effort to
demonstrate that the scheme, if adopted, would have tangibly contributed to Hong Kong’s
prosperity and stability, helping to avert the late 2014 breakdown of public order. The
contention is not merely founded on compelling reasoning but is sustained by a rich set of
theoretical models and empirical findings. 197 The exercise could productively be repeated
with respect to virtually every significant policy step, or a series of steps, carrying
international and constitutional ramifications that might have been taken in Hong Kong in
the past two decades or so. This lends further substance to the argument in this Article
that, despite being mostly overlooked by students of international law, CR merits a place on
their modest methodological agenda.198
F. Conclusion
The narrowing of the gap between the international legal and international relations
scholarly foci and practical pursuits has spawned a sizeable literature at the intersection of
the two neighboring academic disciplines. Ample insights have been generated regarding
processes, such as compliance and enforcement, whose adequate understanding requires
access to tools that have been the preserve of social scientists. This has, however,
predominantly been a conceptually-driven evolution. The methodological side of the
picture has thus far been accorded little systematic attention. Some potentially useful
analytical vehicles such as CR have been, for all intents and purposes, simply disregarded.
Elsewhere, a more constructive posture has been observed. Psychologists and historians,
the former quantitatively and the latter qualitatively, have been particularly inclined to
resort to CR in their quest for unraveling the complexities of human behavior and political
evolution. Researchers in the field of international relations have displayed a similar
disposition. Indeed, they have led as well as have followed. Perhaps their most notable
input in this regard has been in the form of a cluster of criteria that need to be satisfied in
order to place CR on a satisfactory scientific, or quasi-scientific, footing. That qualifies as a
197
198
Id.
Another apt and detailed illustration may be found in Vinod K. Aggarwal and Jonathan T. Chow, The Perils of
Consensus: How ASEAN’s Meta-Regime Undermines Economic and Environmental Cooperation, 17 REV. INT’L POL.
ECON. 262 (2010).
2017
Counterfactual Reasoning and International Law
97
meaningful methodological contribution, readily embraced by scholars across the
disciplinary spectrum.
Legal inquiry has not been completely oblivious to the possibilities that CR offers, both
theoretically and as a research technique. They have been acknowledged in general, as well
as in specific areas such as administrative law or regulatory policy. The recognition has
been coupled with fruitful applications, albeit on a modest scale. In comparison, the
international law proverbial methodological chest is empty or nearly so, notwithstanding
the fact that international legal reasoning bears close parallels to CR. There is sufficient
evidence, including that extracted from a noteworthy and sensitive Greater China source,
to suggest that this state of affairs leaves much to be desired. Palpable gains may be
realized if the oversight is rectified.
98
German Law Journal
Vol. 18 No. 01
Articles
Article 13(2) TEU: Institutional Balance, Sincere Co-Operation,
and Non-Domination During Lawmaking?
By David Yuratich*
Abstract
This Article assesses the extent to which Article 13(2) TEU supports a republican reading of
the EU’s institutional structure. This question has arisen in light of the move towards more
intergovernmental forms of economic governance following the Eurozone Crisis. Dawson
and de Witte and Bellamy have critiqued this mutation through theory-driven readings the
institutional balance clause of Article 13(2) TEU, arguing that it establishes a norm of nondomination between EU institutions that has been undermined by increased
intergovernmentalism. This Article considers whether the institutional balance case law
supports their reading. It finds that institutional balance’s dominant role is not normative:
It protects pre-existing institutional competences. It does carry a normative side when
used as a general principle of EU law to support arguments about increasing the European
Parliament’s legislative contributions, but this is not an independent head of claim. A
better legal support for the presence of a non-domination in Article 13(2) lies within its
second clause, the principle of sincere co-operation. Ultimately, the case law around both
clauses of Article 13(2) TEU means that the provision is best understood as having a
tripartite structure providing a constitutional basis for non-domination during lawmaking.
*
Lecturer in Law, Royal Holloway University of London. Email: [email protected]. I would like to thank
Professors Chris Hilson, Panos Koutrakos, and Danny Nicol, and anonymous referees, for their comments on
earlier drafts, and Dr. Theodore Konstantinides for his encouragement. An early version of this paper was
presented at the ECPR European Union Standing Group’s 7th Pan-European Conference on the European Union,
Leiden University, 2014.
100
German Law Journal
Vol. 18 No. 01
A. Introduction
The Eurozone crisis’s impact on EU constitutional law has been subject to searching
examination. Tuori and Tuori frame it within the historical processes of EU
constitutionalization, reminding us that the EU’s development has not solely been driven
by economic imperatives. At different times, led by Treaty change and jurisprudence, the
EU has pursued economic, juridical, political, security, and social goals.1 Tuori and Tuori’s
view is that the economic constitution has generally been a pacemaker, not a dictator; it
“defined the space”2 within which other constitutional objects were and are pursued. To
conceive of EU constitutionalization solely in terms of economic integration obscures the
broader goals within various legal and political instruments governing the EU’s legal order. 3
Their contribution is timely because, as they point out, the Eurozone crisis has led a
constitutional mutation—economics has become more than a pacemaker. Anxieties have
emerged that, instead of defining the space within which EU law operates, responses to
the Eurozone crisis overruled and re-configured the democratic and political norms
necessary for the legitimacy of the EU’s constitutional order. 4
This reconfiguration is manifest in criticism of increased intergovernmentalism. It is
frequently charged that key decisions are now taken by Member State and EU executives
with very limited, or no, input from the European and national parliaments, and this goes
against the democratic principles within the EU Treaties.5 The lack of European Parliament
(EP) power in the economic realm is particularly problematic because the EU’s democratic
development has broadly, although not exclusively, centered on its empowerment; the EP
has transformed from an advisory body into a directly-elected one with significant
powers.6 The EP’s diminishing role within Eurozone governance has, according to these
views, undermined the developing democratic constitution.
These criticisms are often premised on the notion that the proper division and
maintenance of institutional power, and the balance between competing constitutional
1
KAARLO TUORI & KLAUS TUORI, THE EUROZONE CRISIS: A CONSTITUTIONAL ANALYSIS 4–5 (2014).
2
Id. at 9.
3
Id. at 16.
4
Id. at 205. See generally Eduardo Chiti & Pedro Gustavo Teixeira, The Constitutional Implications of the European
Responses to the Financial and Debt Crisis, 50 COMMON MKT. L. REV. 683 (2013); Ben Crum, Saving the Eurozone at
the Cost of Democracy?, 51 J. COMMON MAR. STUD. 614 (2013).
5
6
See generally Chiti and Teixeira, supra note 4.
See generally Manfred Kohler, European Governance and the European Parliament: From Talking Shop to
Legislative Powerhouse, 52 J. COMMON MKT. STUD. 600, 601–02 (2014); Andreas Føllesdal & Simon Hix, Why There
Is a Democratic Deficit in the EU: A Response to Majone and Moravcsik, 44 J. COMMON MKT. STUD. 533 (2006).
2017
Article 13(2) TEU and Lawmaking
101
objectives, has been usurped. Article 13(2) TEU, which states that “[e]ach institution shall
act within the limits of the powers conferred on it in the Treaties, and in conformity with
the procedures, conditions and objectives set out in them,” is often cited in support of
these arguments. This has renewed studies of whether the institutional balance carries a
normative potential. In addition to protecting existing institutional competences, can it
found arguments about what those competences ought to be? Investigations of this
question primarily adopt a theoretical approach providing a normative reading that is
broadly in line with a key tenet of republican political theory. These readings suggest that
institutional balance can prescribe a more equal relationship among the EU’s legislative
institutions—the Commission, Council, and EP—that is premised upon non-domination.7
This Article contributes to these debates by engaging in a juridical analysis of how far
institutional balance assists in conceptualizing this aspect of EU democracy. Investigating
the case law allows an assessment of these theoretical positions against the legal meaning
of institutional balance. This methodology also serves as a reminder that the CJEU has
developed significant constitutional and democratic principles that have enriched the EU’s
legal legitimacy.8 Since the onset of the Eurozone crisis, as Scicluna notes, its
constitutionalising role has been overshadowed by political integration.9 The court has
gone “from vanguard of European integration to laggard”10 in the Eurozone context; its
role as an integrator and a developer of constitutional values has been reduced to rubberstamping political agreements. Studying the case law on institutional balance helps kick
against this tendency by articulating an underpinning part of the court’s ongoing attempts
to develop EU democracy. Although this question has arisen in the context of the
Eurozone crisis, it is not this author’s purpose to analyze in depth the implications that our
understanding of institutional balance has for the Eurozone crisis response because it is
well-established that the balance has been undermined. Rather, the aim is more limited.
This Article builds on those critiques by considering how far institutional balance, viewed
through its case law, can help normatively theorize EU democracy.
7
See infra, Section C.
8
See generally Koen Lenaerts, The Principle of Democracy in the Case Law of the European Court of Justice, 62
INT’L & COMP. L. Q. 271 (2013); Daniel Halberstam, The Bride of Messina: Constitutionalism and Democracy in
Europe, 30 EUR. L. R EV. 775, 784 (2005); G. Federico Mancini & David T. Keeling, Democracy and the European
Court of Justice, 57 MOD L. REV. 175 (1994). This process is not uncontroversial—see generally Thomas Horsley,
Reflections on the Role of the Court of Justice as the “Motor” of European Integration: Legal Limits to Judicial
Lawmaking, 50 COMMON MKT. L. REV. 931 (2013).
9
Nicole Scicluna, Politicization Without Democratization: How the Eurozone Crisis is Transforming EU Law and
Politics, 12 INT’L. J. CONSTIT. L. 545, 562–56 (2014).
10
Id. at 563.
102
German Law Journal
Vol. 18 No. 01
It is submitted that institutional balance only supports republican-type conceptualizations
of EU democracy to a limited extent. Its dominant juridical role is to protect pre-existing
institutional competences. That said, when executed as a general principle of EU law to
support other arguments, it carries an expectation that the EP has a fuller legislative
contribution, in line with the need to involve EU citizens alongside Member States and the
Commission in a non-dominating legislative process. While enlightening, this is probably
not justiciable. Instead, it is more fruitful to use the principle of sincere co-operation—also
found in Article 13(2) TEU—as a legal support for these normative political readings of
institutional balance. In contrast to institutional balance, sincere co-operation has clearly
been used to protect a constructive legislative dialogue between EU institutions.11 This is
of greater use to EU democracy analysis, and, in particular, to republican readings of its
institutional architecture. Article 13(2) TEU is therefore best understood as having a
tripartite structure providing a constitutional basis for non-domination during lawmaking.
The institutional balance clause protects competences and helps support decisions that
improve legislative participation, and sincere co-operation enforces a constructive
dialogue.
The Article is structured as follows: Section B explains in brief why intergovernmental
critiques of the Eurozone crisis response have arisen. Section C builds upon this by
exploring how institutional balance and republican ideas of non-domination have been
used in such critiques, and how they relate to one another to provide a normative
understanding of EU lawmaking. Sections D–F respectively examine the case law on
institutional balance and sincere co-operation, presenting the tripartite reading of Article
13(2) TEU and institutional balance. Section G concludes.
B. The Eurozone Crisis and Intergovernmentalism
Interest in institutional balance and in its relationship to non-domination has reawakened
because intergovernmentalism has characterized the EU’s various responses to the
Eurozone crisis. 12 Economic decision-making has slipped away from the Community
Method, diminishing the EP’s input and prioritizing the role of Member State governments
and supranational EU institutions, particularly the Commission and European Council.13
This change has been referred to as a mutation; economic constitutionalism has pushed
11
See infra, Section F.
12
Tuori & Tuori, supra note 1, at 216–21; Chiti & Teixeira, supra note 4, at 688. For earlier discussions, see
generally Thomas Christiansen, The European Union After the Lisbon Treaty: An Elusive ‘Institutional Balance’?, in
EU LAW AFTER LISBON (Andrea Biondi, Piet Eeckhout & Stefanie Ripley eds., 2012); Jean-Paul Jacqué, The Principle of
Institutional Balance, 41 COMMON MKT. L. REV. 383 (2004).
13
Chiti & Teixeira, supra note 4, at 686.
2017
Article 13(2) TEU and Lawmaking
103
out competing constitutional objectives and legitimating factors, undermining, in
particular, Article 10 TEU’s commitment to representative democracy and the institutional
roles protected by Article 13(2) TEU.14 Questions arise around whether the correct balance
of power between EU institutions has been maintained, and, as explained below, these are
typically answered in the negative.
The intergovernmental mutation is clearest under the European Stability Mechanism 2012
(ESM). Designed to provide financial assistance to Eurozone states, it operates within
public international law, not EU law. The EP is not involved in its operation and played no
part in its negotiation.15 Although Pringle16 held that its creation was permitted by the
TFEU, the ESM is not subject to the Treaty provisions about accountability and
transparency.17 The absence of direct EP input is particularly problematic because it could
have been avoided. The European Central Bank and the Commission were conscripted to
the ESM’s cause, given roles in assessing, negotiating, and monitoring financial assistance.
One argument in Pringle challenged this conscription on the grounds that Article 13(2) TEU
forbade EU organs from taking on new tasks. This argument was unsuccessful; it was held
that these roles were continuations of their existing tasks under the EU Treaties. 18 This
reasoning would allow the Parliament to be involved, so long as it was performing tasks to
which it was entitled, which would include representing EU citizens. Indeed, Scicluna notes
that Parliament unsuccessfully proposed that, because the ESM requires that Member
State financial assistance is subject to strict conditionality, the rules on conditionality
should be adopted as a normal EU Regulation using co-decision.19 This would allow the EP,
and EU citizens, to have a direct say over bailouts. This did not happen. Instead, the ESM
excluded the EU’s only directly-representative institution from the financial assistance
14
Tuori & Tuori, supra note 1, at 205; Agustín José Menéndez, Editorial: A European Union in Constitutional
Mutation?, 20 EUR. L. J. 127 (2014).
15
Koen Lenaerts, EMU and the EU’s Constitutional Framework, 39 EUR. L. REV. 753, 763 (2014).
16
Case
C-370/12,
Thomas
Pringle
v.
Government
of
Ireland,
(Nov.
27,
2012),
http://curia.europa.eu/juris/document/document.jsf?text=&docid=130381&pageIndex=0&doclang=en&mode=lst
&dir=&occ=first&part=1&cid=164236 [hereinafter Pringle].
17
Lenaerts, supra note 14, at 757.
18
Pringle, supra note 15, at 158–59. See generally Vestert Borger, The ESM and the European Court’s
Predicament in Pringle, 14 GERMAN L. J. 113 (2013); Pieter-Augustijn Van Mallegham, Pringle: A Paradigm Shift in
the European Union’s Monetary Constitution, 14 GERMAN L. J. 141 (2013); Jonathan Tomkin, Contradiction,
Circumvention, and Conceptual Gymnastics: The Impact of the Adoption of the ESM Treaty on the State of
European Democracy, 14 G ERMAN L. J. 169 (2013).
19
Scicluna, supra note 9, at 561.
104
German Law Journal
Vol. 18 No. 01
process and thus undermined the balance of voices and interests that had previously
characterized EU governance.20
Similar problems arose with the 2012 Treaty on Economic Stability, Coordination, and
Governance (the Fiscal Compact) and the two sets of regulations and directives referred to
as the “Six-pack” and the “Two-pack.”21 Unlike the ESM, these are explicitly linked to the
other EU Treaties; the packs are primary EU law, and the Fiscal Compact, through its Article
2, must be interpreted according to EU Treaty norms.22 Subsequently, the
intergovernmental critiques are quieter because each instrument must take effect subject
to the EU Treaties and its norms on representative democracy. The EP participates under
an economic dialogue.23 Under the Six-pack, the EP may the ask the President of the
Council, Commission, European Council, or Eurogroup to discuss relevant measures they
have taken, for example, those concerning violations of budgetary objectives by Member
States.24 Under the Two-pack, the Council and Commission must also keep the Parliament
informed on the implementation of its powers. The Fiscal Compact provides that the EP’s
President may be invited to Euro Summit meetings and requires a report of such meetings
to be sent to the Parliament for discussion.25 The Two-pack also allows for the Parliament
to veto delegated Commission acts concerning Member State budgetary surveillance.26
Nonetheless, both Crum and Fasone raise significant questions about the democratic utility
of the economic dialogue and maintain an intergovernmental critique. They argue that the
Parliament lacks decision-taking powers, that its right to be informed comes too late to be
influential, and that, even if coordinated with national parliaments, there is no significant
Parliamentary control, review, or amendment of proposed executive actions.27 Economic
dialogue provisions instead speak generally about a discussion—often after the event—
rather than granting the Parliament any real influence.
20
Chiti & Teixeira, supra note 4, at 689.
21
For details of these instruments, see EUR. COMM., THE EU’S ECONOMIC GOVERNANCE EXPLAINED (2014),
http://europa.eu/rapid/press-release_MEMO-13-979_en.htm.
22
Lenaerts, supra note 14, at 757.
23
Cristina Fasone, European Economic Governance and Parliamentary Representation: What Place for the
European Parliament?, 20 EUR. L.J. 164, 175–76 (2013).
24
Id. at 176
25
Id. at 176–81.
26
Id. at 181.
27
Id. at 184; Crum, supra note 4, at 622.
2017
Article 13(2) TEU and Lawmaking
105
C. Institutional Balance, the Eurozone Crisis, and Republicanism
The reduced levels of EP involvement in Eurozone governance connect the critiques of
intergovernmentalism with the institutional balance. Dawson and de Witte demonstrate
this in their argument that the EU is properly characterized by a constitutional balance of
interests that seeks to legitimize and stabilize the polity by embedding pluralism and
dialogue within it.28 This framework should create conditions for democratic legitimacy
because it allows the EU’s constituencies—the Member States, the EU’s interest as a
supranational body, and EU citizens—to seek self-determination.29 Constitutional balance
is divided into three distinct types of balance: (1) substantive, where the division of
competences balances national sovereignty with EU matters; (2) spatial, where similar
levels of representation are granted to small and large states; and (3) institutional, relating
to how institutions interact with one another and voice the interests they represent.30 For
this Article’s purposes, the key point is that their model uses institutional balance to
visualise EU lawmaking and thus an aspect of its democracy. The requirement that “[e]ach
institution shall act within the limits of the powers conferred on it in the Treaties” ensures
that the legislative institutions can play their mandated legislative and representative
roles. The Community Method has, since the Treaty of Lisbon, been dominated by the
ordinary legislative procedure. This method requires the Parliament and Council to agree
on a Commission proposal before it becomes law, generally striking a balance between the
voices represented in each institution. Article 13(2) TEU grants legal protection to this
process and helps embed a constructive dialogue among these three institutions and their
constituencies. Dawson and de Witte argue that consequently the Community Method
ought to enable a form of pluralism:
By incorporating a wide range of diverse interests within the legislative
process, by making these interests mutually interdependent in the generation
of norms and by creating multiple forums through which the citizen’s
interests can be articulated . . . the Union ensures that citizens have
authorship over the norms that bind them.31
28
Mark Dawson & Floris de Witte, Constitutional Balance in the EU After the Euro-Crisis, 76 MOD. L. REV. 817, 817–
18 (2013).
29
Id. at 819–20.
30
Id. at 822.
31
Id. at 829.
106
German Law Journal
Vol. 18 No. 01
Lenaerts and Verhoeven make similar comments about the institutional balance. They
argue that it dictates a co-operative legislative process: “[It] shape[s] institutions and the
interactions between them in such a manner that each interest and constituency present
in the Union is duly represented and co-operates with others in the frame of an
institutionalized debate geared towards the formulation of the common good.”32 Once
institutional balance is understood in this way, concerns about the increased
intergovernmentalism bypassing the traditional Community Method become more than
constitutional complaints about the division of powers; they are democratic worries.
Embedded in those worries is a suggestion that institutional balance is not just about
protecting institutional competences; it also guards or prescribes a system in which
different legitimating constituencies may engage in a pluralistic and co-operative dialogue
about the content of legislation.33 Intergovernmentalism, especially in light of the EP’s
reduced role, thus undermines the EU’s democratic constitution in the name of economic
constitutionalism.
The relationship between pluralistic dialogue and the institutional balance has, before and
after the Eurozone crisis, been subject to examination from a republican or republicantype perspective.34 Republicanism, in contrast to liberal theories which emphasize
freedom as non-interference and seek to constrain government via individual rights
protection, places more normative emphasis on democratic representation and debate.
Republican theorists typically judge the democratic nature of a polity on how effectively
those in power are regulated and restricted by transparent and accountable processes of
political contestation.35 It is not that liberalism does not support representative decisionmaking—most conceptions of democracy do36—but that the republican prioritization of
representative politics is motivated by a distinct conception of freedom defined as nondomination. Pettit analogizes this conception to the relationship between a slave and a
benevolent master. If the master never interferes with the slave’s life, there is noninterference. Nevertheless, domination remains because the master still has the capacity
to arbitrarily interfere with the slave’s choices and interests regardless of the slave’s
opinions.37 Hence, republican freedom supposes that citizens are free insofar as they do
32
Koen Lenaerts & Amaryllis Verhoeven, Institutional Balance as a Guarantee for Democracy in EU Governance, in
GOOD GOVERNANCE IN EUROPE’S INTEGRATED MARKET 47 (Christian Joerges & Renaud Dehousse eds., 2002).
33
Dawson & de Witte, supra note 28, at 842–43.
34
See generally Dmitris N. Chryssochoou, The European Synarchy: New Discourses on Sovereignty, 1 GÖTTINGEN J.
INT’L. L. 115 (2009).
35
Richard Bellamy, “An Ever Closer Union Between the Peoples of Europe”: Republican Intergovernmentalism and
Democratic Representation Within the EU, 35 J. EUR. INTEGRATION 499, 500 (2013).
36
See generally David Held, Models of Democracy (2008).
37
Phillip Pettit, Republicanism: A Theory of Freedom and Government 22 (1997).
2017
Article 13(2) TEU and Lawmaking
107
not experience arbitrary and non-deliberative interference.38 Although there are other
features and controversies within republican thought, this point broadly unites all
conceptions.39 If a party can arbitrarily interfere in people’s lives, this removes individual
freedom, and, when replicated on the state or polity level, this interference becomes
undemocratic; it suppresses the ability of citizens to achieve self-determination and
negotiate common goods. One solution to the problem of domination is through
constitutional design. Lawmaking institutions ought to be made representative of the
constituency and provide an apparatus for effective and inclusive public reasoning and
contestation, treating citizens with equal concern and respect.40 Through a process of
representative deliberation that includes public and reason-based argument and counterargument, common premises will arise that gain the preference of a majority without
arbitrarily imposing it on the dissenting minority.41
Because institutional balance delineates lawmaking roles and competences to institutions
tasked with representing legitimating interests, its potential to regulate their interactions
has been identified as a source of republican contestation between the EU’s
constituencies. Craig was among the first to suggest that institutional balance provides the
basis for a dialogue aimed at achieving the common good.42 He argued that “the resulting
schema serves both to satisfy the demands for participation in the legislative process by
these differing interests, and also that this allocation of power can help to foster the
passage of legislation which is designed to achieve the general good of the Community.”43
As read by Bellamy and Castiglione, the implication is that a republican approach to
governance based on a “politics of compromise”44 can provide a form of EU democracy
38
Phillip Pettit, Legitimate International Institutions: A Neo-Republican Perspective, in THE PHILOSOPHY OF
INTERNATIONAL LAW 140 (Samantha Besson & John Tasioulas eds., 2010).
39
These encompass issues such as whether non-domination requires or demands a highly participatory citizenry
and the extent to which it can or should be secured through judicial review. See generally Samantha Besson &
José Luis Martí, Law and Republicanism: Mapping The Issues, in LEGAL R EPUBLICANISM: NATIONAL AND INTERNATIONAL
PERSPECTIVES (Samantha Besson & José Luis Martí eds., 2010).
40
Id. at 21–22; Pettit, supra note 37, at 145–50.
41
Pettit, supra note 37, at 150.
42
Paul Craig, Democracy and Rule-Making Within the EC: An Empirical and Normative Assessment, 3 EUR. L. J. 105,
114–16 (1997).
43
44
Id. at 118.
Richard Bellamy & Dario Castiglione, Democracy, Sovereignty and the Constitution of the European Union: The
Republican Alternative to Liberalism, in THE EUROPEAN UNION AND ITS ORDER: THE LEGAL THEORY OF EUROPEAN
INTEGRATION 187 (Andrew Scott & Zenon Bankowski eds., 2000).
108
German Law Journal
Vol. 18 No. 01
that is not reliant on the existence of a demos. Bellamy has since developed a normative
republican model for the EU that envisages it as “an international association of
democratic states.”45 Bellamy’s starting point is that just as there must be non-domination
within states, it is also necessary that there is non-domination between them.46 Inter-state
interactions, such as those required from EU membership, may limit the ability of a state to
secure non-domination among its citizens because the range of domestic policy choices
may be constrained by, or subjected to the dominant influence of, other states and legal
obligations.47 The Eurozone crisis provides an example: The Fiscal Compact, Six-Pack and
Two-Pack boil down to constitutionalizing a creditor-debtor relationship where the
creditor states dominate the debtor, as seen particularly with the crisis in Greece.48 To
ward off this problem, Bellamy argues that interactions between states should be subject
to the same non-domination a republican would expect national citizens to enjoy.49 This
way, republican ideals may be pursued between states as well as within them, with
attendant benefits for the democratic legitimacy of the global, or here European, order.50
Part of his model prescribes that international organizations must be under the shared
control of their Member States, each accountable to its citizens. For Bellamy, the Council
and the EP are the key EU institutions here. In the Council, the elected ministers, therefore
the governments, of Member States bargain together and are each accountable to their
national parliaments. Consequently, national executives exercise direct contestation over
the decisions that affect their states, and they are themselves contested by their national
electorates.51 The representation of national citizens is buttressed by their direct
representation through the EP, particularly within the EU’s processes of lawmaking and
scrutiny.52 Institutional balance may be of assistance here in two ways. First, it can protect
the competences of each institution; and second, it may promote non-domination and
dialogue between them. If this is borne out by the case law, Bellamy’s republican model of
the EU will gain stronger legal-constitutional support. The potential for institutional
balance to secure a form of republican intergovernmentalism can be further seen in
Dawson and de Witte's constitutional balance; their observations that there is an
45
Bellamy, supra note 35, at 507.
46
See also Federico Fabbrini, States’ Equality vs States’ Power: the Euro-Crisis, Inter-State Relations and the
Paradox of Domination, 17 CAMBRIDGE Y.B. EUR. L. STUD. 3 (2015).
47
Bellamy, supra note 35, at 505.
48
Id. at 513.
49
Id. at 507.
50
Id. at 507.
51
Id. at 508.
52
Id. at 509–10.
2017
Article 13(2) TEU and Lawmaking
109
internalized pluralism is conceptually similar to arguments that the EU’s constitutional
system is properly based upon non-domination. Institutional balance can regulate the
design of the legislative process and its representation of affected interests.
The theoretical perspective in the above accounts does not establish why as, a matter of
law, Article 13(2) TEU’s statement that each institution “shall act within the limits of the
powers conferred on it in the Treaties” can have the effect of promoting republican
intergovernmentalism. On its face, Article 13(2) TEU reads as simply protecting the powers
each institution has already been granted. If an institution has not been given a particular
power, institutional balance may be of limited use when there is a perceived or actual
need to expand its competence. Indeed, this has contributed to the intergovernmental
Eurozone crisis response—the institutional balance did not provide any constitutional
obligation as to how new competences should be divided.53 Pringle highlights this problem.
The litigated question in Pringle was whether the Commission and Central Bank could have
roles under the ESM; it did not engage with whether they should. The constitutional
legitimacy of the EP’s exclusion from the ESM could not be considered. This seems
inconsistent with approaches to the institutional balance that state it can require
representative institutions to engage in the mutual generation of law. Perhaps as a result,
the accounts that identify a normative democratic side to institutional balance are
articulated from an explicitly or implicitly republican-type position, emphasizing dialogue
and non-domination. They use a normative theoretical approach, rather than a legal
analysis of Article 13(2) TEU, to strengthen their arguments that institutional balance does
or should constitutionalize legislative dialogue. The extent to which institutional balance
can support these positions would be enhanced if the case law indicates that it has the
capacity to suggest what each institution’s powers ought to be.
It will be argued that the Pringle approach is only representative of one side of the
institutional balance case law. There is evidence that, as a general principle of law, one can
identify non-domination within institutional balance. This aspect is, however, rarely
justiciable; it informs the court’s reasoning but is not an independent head of claim.
Stronger legal support for the republican position arises when Article 13(2) TEU is read in
its totality to include its sincere co-operation clause as well as institutional balance. Sincere
co-operation is a justiciable provision closely related to institutional balance, and it can
more effectively enforce a republican conversation.
53
Id. at 835.
110
German Law Journal
Vol. 18 No. 01
D. Interest Representation
Before examining the case law on Article 13(2) TEU, it is necessary to show that the CJEU’s
approach to institutional balance conceptually aligns with the premise that it can facilitate
non-domination between constituencies. Underpinning the theoretical arguments is the
notion that three constituencies need to be represented within the EU’s lawmaking
process for it to be democratically legitimate—the supranational EU interest, Member
States, and EU citizens. They are primarily identified with the Commission, Council, and EP,
with national parliaments providing secondary representation. Articles 10 and 17 TEU
enshrine a similar position. The former claims that the EU is based on representative
democracy, stating that EU citizens are represented in the EP and Member States in the
Council, whereas the latter notes that the Commission promotes the EU’s general
interest.54 Notably, these provisions are silent on how to create pluralism between these
interests. To assess the accuracy of the claims that Article 13(2) can provoke dialogue and
non-domination between those interests, the case law must be considered.
This starting point—three constituencies must be represented in EU decision-making—is
indeed shared by case law, seminally Van Gend en Loos.55 As is well known, it held that:
“The Community constitutes a new legal order of international law for the benefit of which
the states have limited their sovereign rights, albeit within limited fields and the subjects
of which comprise not only member states but also their nationals.”56 This did more than
pave the way for the creation of direct effect. Chalmers and Barroso recognize that it was a
statement about the nature of the EU project. It made clear that the EU was a “community
beyond the state”57—more than a mere international organization. The judgment
describes a political space whose “subjects come together to realize and contribute to
common purposes tied to the legal and administrative order of the Union.”58 Those
subjects are the legitimating constituencies of the EU, those for whom the project exists.
As the quotation from the case makes clear, they are those in charge of seeking the EU’s
overall community interest (this is the ‘benefit’ for which sovereign rights have been
restricted), the elected Member States, and the nationals of those states who would later
become EU citizens.59 This basic position enables, on a conceptual level, the court’s case
54
Consolidated Version of the Treaty on European Union of May 9, 2008, arts. 10, 17, 2008 O.J. (C. 115) 13.
55
Case 26/62, NV Algemene Transport-en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue
Administration, 1963 E.C.R. 1.
56
Id. at 12.
57
Damian Chalmers & Luis Barroso, What Van Gend en Loos Stands For, 12 INT’L J. CONSTIT. L. 105, 108 (2014).
58
Id. at 121.
59
Id. at 120.
2017
Article 13(2) TEU and Lawmaking
111
law on institutional balance to sit alongside the theories maintaining that Article 13(2) TEU
can establish a dialogue between those affecting and affected by EU activity.
This argument would be limited if it was only supported by Van Gend en Loos. At the time
of that decision there was no elected EP, and so the Court’s statement only covers EU
citizens insofar as they are indirectly represented by their national governments in the
Council. Importantly, introducing direct elections to the EP 1979 enabled the CJEU to
expand its depiction of how citizens ought to be represented. In Isoglucose,60 the court
made clear that the EP represented a vital part of EU democracy and its future: “[The EP]
reflects at Community level the fundamental democratic principle that the peoples should
take part in the exercise of power through the intermediary of a representative
assembly.”61 The case itself was simple, concerning a clear breach of the Treaties where
the Council failed to consult the EP on a legislative proposal. Therefore, it is striking that
the CJEU articulated a wider and non-dispositive democratic principle in its decision. The
statement identifies the EP’s input as necessary for the EU’s democratic legitimacy, making
explicit what was implicit in Van Gend en Loos: the EP, as well as national parliaments,
could act as the peoples’ interlocutor. This is underscored by the CFI judgment in
Martinez,62 later upheld by the CJEU in Front National.63 At issue in both cases was the EP’s
decision, pursuant to its rules of procedure, to dissolve a political grouping because its
members had no political affinities. In Martinez, the CFI stated that political groupings in
the Parliament must genuinely share common political objectives so that they may better
reflect and advocate for the diverse interests of the EU citizenry and promote “the joint
expression of political wills and the emergence of compromises.”64 There are two levels to
this decision, underscoring that the CJEU understands the EP’s democratic role within the
institutional balance to be representing EU citizens: First, it foregrounds future objectives
of pan-European representation. The EP is seen as a forum in which truly “European”
political sentiments should be identified and built upon through the formation of likeminded political groupings. Considering the second-order nature of EP elections, the
second level is far more immediate. Put simply, it is that the EP must, daily, represent EU
citizens, and it is undesirable for MEPs to act in a way that frustrates this objective. Even if
representation comes from second-order elections, Bellamy points out that that the EP
does represent a range of national political opinions. This range of representation creates
60
Case 179/80, Roquette Frères v. Council, 1982 E.C.R. 3623.
61
Id. at para. 33.
62
Case T-222/99, Martinez v European Parliament, 2001 E.C.R. II-2823.
63
Case C-486/01 P, Front National v. European Parliament, 2004 E.C.R. I-6289.
64
Id. at para. 146.
112
German Law Journal
Vol. 18 No. 01
the space for contestation and non-domination in the EU decision-making process.65
Protecting the EP’s legislative input through institutional balance can allow for immediate
contestation and facilitate long-term political integration among EU citizens.
This judicial assessment of the interests represented by the EP, and by the Commission and
Council, is conceptually aligned with the republican arguments that institutional balance
can be used to promote self-determining communities based on non-domination and
contestatory politics.66 It is worth mentioning that national parliaments are increasingly
involved in EU governance, for example through the subsidiarity early warning system.
Their increasing role may provide further sources of contestation beyond providing agentprincipal accountability for national executives in the Council. This is not the focus of this
piece, which is to uncover how far non-domination inhabits the case law in Article 13(2)
TEU, which only refers to a balance between EU institutions. Any assessment of whether
institutional balance, or an alternative route, can provoke ties between national
parliaments and European institutions that in turn promote non-domination, requires
more attention that this article is able to provide.67 For current purposes, having shown
that the CJEU understands EU lawmaking to be based on the effective interaction of bodies
representing key constituencies, an examination of the case law surrounding Article 13(2)
TEU will commence.
E. The Case Law of Institutional Balance
I. Protecting Competences
On one level, the case law on institutional balance does not bear deep similarities to
republicanism. The concept is typically used to delineate the boundaries within which each
EU institution may act.68 Advocate General Maduro summarizes the common position
thus: “Legislative procedures laid down by the Treaties establish the extent to which each
institution is to be associated with the taking of decisions and thus establishes an
institutional balance.”69 On this view, EU bodies cannot trespass onto another’s powers or
65
Bellamy, supra note 35, at 509.
66
See generally Besson & Martí, supra note 38.
67
For present links, see generally Richard Bellamy & Sandra Kröger, Domesticating the Democratic Deficit? The
Role of National Parliaments and Parties in the EU’s System of Governance, 67 PARLIAMENTARY AFF. 37 (2014); ADAM
CYGAN, ACCOUNTABILITY, PARLIAMENTARISM, AND TRANSPARENCY IN THE EU (2013).
68
69
Gerard Conway, Recovering a Separation of Powers in the European Union, 17 EUR. L. J. 304, 320–21 (2011).
Opinion of Advocate General Maduro at para. 31, Case C-133/06, Parliament v Council (Sept. 27, 2007),
http://curia.europa.eu/juris/document/document.jsf?text=&docid=63513&pageIndex=0&doclang=EN&mode=lst
&dir=&occ=first&part=1&cid=331243.
2017
Article 13(2) TEU and Lawmaking
113
exceed their own.70 This only shapes the democratic contribution of the institutions to the
extent that this is a by-product of ensuring that their competences are respected.71
As noted earlier, Pringle is an example of this ultra vires approach. It used Article 13(2) TEU
to determine whether the Commission and European Central Bank’s roles under the ESM
were within their legal remit. This was also evident in Council v. Commission (MFA).72 That
case concerned whether the Commission could withdraw a proposal for a framework
regulation on granting micro-financial assistance to third countries. The proposal was
withdrawn because the Council and EP wanted to approve each grant of assistance via the
ordinary legislative procedure, replacing the Commission’s proposed mechanism of using
delegated legislation. The Commission argued that the use of the ordinary legislative
procedure would have distorted the original proposal and was not desirable. It was not
disputed that under Article 17(1) TEU, the Commission had the right of legislative initiative
and may withdraw its proposals in certain circumstances. The issue was instead whether
this right still applied when a proposal had been passed onto the EP and the Council, thus
beginning its passage through the EU legislature. The CJEU confirmed the meaning of
institutional balance:
Under Article 13(2) TEU, each EU institution is to act within the limits of the
powers conferred on it in the Treaties, and in conformity with the procedures,
conditions and objectives set out in them. That provision reflects the principle
of institutional balance, characteristic of the institutional structure of the
European Union . . . each of the institutions must exercise its powers with due
regard for the powers of the other institutions.73
This quotation recognizes that the EU’s institutional structure is based on a division of
powers and roles. The Court held that the Commission’s withdrawal of the proposal was in
keeping with its powers. Because the Commission is tasked with seeking the general
interest of the EU, legislative proposals can be withdrawn if it believes they are no longer
pursuant to this objective. This interpretation of institutional balance as a competence
divider is widespread. It is even evident in cases where Article 13(2) TEU is not explicitly
70
Case 149/85, Roger Wybot v Edgar Faure, 1986 E.C.R. 2391, para. 23.
71
Bart Driessen, Interinstitutional Conventions and Institutional Balance, 33 EUR. L. REV. 550, 560 (2008).
72
Case
C-409/13,
Council
v
Commission
(Apr.
14,
2015),
http://curia.europa.eu/juris/document/document.jsf?text=&docid=163659&pageIndex=0&doclang=en&mode=lst
&dir=&occ=first&part=1&cid=331361 [hereinafter MFA].
73
Id. at para. 64.
114
German Law Journal
Vol. 18 No. 01
cited, using institutional balance as shorthand for a division of powers. For example, the
Council did this in Council v. Parliament (EU Budget).74 Here, it argued that an institutional
balance within Article 314(9) TFEU was breached because the EU budget was authorized
not through a joint legislative act but through the signature of the EP’s President. This
argument failed; it was clear that the EP had followed the correct procedures and acted
intra vires. The budget is jointly agreed, but it is not jointly authorized.
The republican-type approaches to institutional balance require more than this, because
they contain expectations about how institutional roles ought to be exercised. On these
approaches, institutional balance suggests non-dominating dialogue between the EU
institutions and their constituencies. The competence-based approach only supports this
by ensuring that one institution does not take powers away from another and by
protecting competences that are already aligned to republican ideals. The EU Budget case
is an example of this. Had the Council’s argument been successful, it would have been
because the Parliament unlawfully abridged the Council’s mandated input and created a
state of domination in the budget approval procedure. Although this speaks to the
republican view that there should not be arbitrary interference in decision-making, it
passes no comment on what influence each institution ought to have beyond the letter of
the Treaties. The case supports the idea that institutional balance protects a dialogue if
one is already required, but it cannot necessarily maneuver one into place. Importantly,
the EU Budget case saw the Council found a separate argument on the sincere cooperation
clause of Article 13(2) TEU. It argued that that the EP had not properly cooperated with it
by refusing to agree that the President of the Council should also sign the budget into law.
This argument was rejected because the budget had in fact been mutually agreed upon,
and, because the law was clear that the President of the Council did not need to formally
authorize the budget, the EP’s President had executed his duties under the Treaties in
good faith. Despite failing, this ground of argument highlights a significant difference
between Article 13(2) TEU’s two clauses of institutional balance and sincere co-operation.
Institutional balance is predominantly about competences, whereas sincere co-operation is
about interactions between institutions. It is therefore better-suited to securing nondomination. This difference is discussed further in Section F.
II. Institutional Balance’s Potential as a General Principle of Law
Nonetheless, one element of the case law on institutional balance does suggest a
normative republican side. MFA, despite predominantly being an example of the ultra vires
approach, is illustrative. After holding that the Commission remained within its
74
Case
C-77/11,
Council
v
Parliament
(Sept.
17,
2013),
http://curia.europa.eu/juris/document/document.jsf?text=&docid=141561&pageIndex=0&doclang=en&mode=lst
&dir=&occ=first&part=1&cid=331613.
2017
Article 13(2) TEU and Lawmaking
115
competences to withdraw its proposal, the court discussed the boundaries of the power to
withdraw. It concluded that the power must not be used like a veto, because the
Commission has not been granted that right. Exercising legislative withdrawal is only
compatible with Article 13(2) TEU if accompanied by reasons contestable by the other
legislative institutions and amenable to judicial review. This is because institutional balance
imperatively attaches conditions to the exercise of legislative prerogatives. A veto would
breach the institutional balance upon which the lawmaking process is based because it
excludes other constituencies, especially the Council and EP, from exercising influence and
ownership over EU law.75 This suggests that the way in which interests are represented
during lawmaking can be partially regulated by the institutional balance, and this might
help promote non-domination. The concept can provide some sort of normative statement
about the operation of the lawmaking process and EU democracy.
The relationship between the institutional balance and the shape of EU democracy mainly
operates at the level of general principles of EU law. In this context, institutional balance
generally helps support judicial reasoning on the proper scope of institutional powers
rather than acting as an independent head of claim. As Chamon explains, this is because
often there will be specific Treaty provisions setting out the limits of a disputed power;
resolving such conflicts does not necessarily require reference to the broader principle of
institutional balance.76 It is when the Treaties do not provide clear guidance that
institutional balance may influence the Court’s reasoning as to the proper scope of
institutional powers.77 In such situations, the case law suggests that, as a general principle
of EU law, institutional balance carries a normative edge beyond its usual role as a
delineator of competences. This invites a broadly republican reading. This position is
supported by the complementary assessments of De Witte and Tridimas. De Witte refers
to institutional balance as an “institutional principle”78 that reinforces, but cannot redraw,
inter-institutional relations. Tridimas classifies it as a general principle that “underlie[s] the
constitutional structure of the Community and define[s] the Community legal edifice.”79
The CJEU agrees, reiterating in MFA that it is “characteristic of the institutional structure of
the European Union.”80 This gap-filling role in informing legal arguments is not
75
MFA, supra note 72, at paras. 75–76.
76
Merijn Chamon, The Institutional Balance, an Ill-Fated Principle of EU Law?, 21 EUR. P. L. 371, 386 (2015).
77
Id.
78
Bruno de Witte, Institutional Principles: A Special Category of General Principles of EU Law, in GENERAL PRINCIPLES
Joakim Nergelius eds., 2000).
OF EUROPEAN COMMUNITY LAW 158 (Ulf Bernitz &
79
Takis Tridimas, THE GENERAL PRINCIPLES OF EU LAW 4 (3d ed. 2006).
80
MFA, supra note 72, at para. 64.
116
German Law Journal
Vol. 18 No. 01
unimportant; it does influence the EU’s constitutional order. Adopting Tridimas’ analysis of
general principles of EU law, this occurs in two ways: First, it provides an underpinning
grammar of EU democracy by mapping the “constitutional standards underlying the
Community legal order.”81 Second, and closely related, it helps the Court interpret the
Treaties, either by filling gaps in the text or by forming part of “judicial policy . . . what the
court perceives to be its function, what it considers to be the underpinnings of the legal
system, how it prioritizes its rules”82 that colors its interpretative technique.83 In this sense
institutional balance is a valuable constitutional idea underlying the Treaties, capable of
articulation and enforcement by the EU’s constitutional court.
The next section shows that in some circumstances institutional balance is used to support
the reasoning in cases that maximise the legislative role of the EP and thereby encourage
non-domination. Overall though, this aspect of institutional balance is limited because it is
not independently justiciable. It does, however, indicate that there is more to Article 13(2)
TEU in its totality than competence delineation. The normative promise of institutional
balance is, as argued in Section F, executable through the sincere co-operation clause of
Article 13(2) TEU. Ultimately it is this combined reading which best supports the
republican-type interpretations of the EU’s constitutional structure put forward by Bellamy
and Dawson and de Witte.
III. Institutional Balance Shaping Competences
The interface between institutional balance and the normative functioning of EU
democracy is most famously evident in Chernobyl.84 The CJEU held that the EP could sue to
defend its legislative prerogatives under Article 173 EC, even though this was on a literal
reading not allowed because Article 173 EC did not grant the EP locus standi.85 The
Commission would ordinarily bring such a case on the Parliament’s behalf, but here this
would be contradictory because the Parliament wished to challenge the Commission’s
choice of legal basis for a regulation. The chosen legal base excluded the EP from the
legislative process. The Court reasoned that if the Parliament could not protect its
prerogatives in these circumstances, it would be at odds with “maintenance and
observance of the institutional balance”86 because it was unable to fulfil or defend its
81
Tridimas, supra note 79, at 19.
82
Id. at 52.
83
Id. at 53.
84
Case C-70/88, Parliament v Council, 1990 E.C.R. I-2041.
85
Id. at para. 12.
86
Id. at para. 26.
2017
Article 13(2) TEU and Lawmaking
117
institutional role. Institutional balance demanded that Parliament be able to effectively
protect its prerogatives, which included representing EU citizens within the legislative
process. This informed the decision to grant standing on a teleological reading of Article
173 EC. The court held that, because the Parliament had an indirect way to protect its
prerogatives in court, it would be unconstitutional to prevent it doing so directly when the
usual route was not viable. This captures the utility of institutional balance as a general
principle of law that can help rationalize decisions promoting non-domination. De Witte
suggests that Chernobyl is an outlier: Institutional balance was particularly influential in a
rare and unrepeated situation where it was necessary to vindicate the EP’s procedural
rights in the face of a clear lacuna.87 Other decisions, which are discussed below, further
show that institutional balance can support the promotion of dialogue between
institutions and the interests they represent.88 Because the EP’s legislative input has
historically been weaker than the Council and Commission, these cases primarily see the
Parliament’s input maximized within the constraints of the Treaty provisions. Institutional
balance informs their reasoning. The cases suggest that it is inhabited by a republican
principle, albeit one that is not an independent head of claim.
The relevant cases concern the consultation legislative procedure. Consultation, whereby
the Council must ask the Parliament’s opinion before promulgating law, was, for many
years, the main lawmaking method in the EU. Although it has mostly been surpassed by
other legislative procedures, its case law remains relevant for two reasons: First,
consultation remains a special legislative procedure, particularly used in external relations
law. The cases to be discussed are directly relevant to these situations. Second, these cases
articulate the way that non-domination can underpin the general principle of institutional
balance. Given that institutional balance is a general principle of EU law, this point is not
confined to a particular procedural context; it should have a wider constitutional
significance and be applicable in any context where there is an arguable breach of
institutional competences. The reason this arises in the consultation context and not
elsewhere is because dialogue does not generally need to feature in case law concerning
other legislative processes. For example, the ordinary legislative procedure requires
conciliation if the Parliament and Council cannot agree on a legislative draft. It therefore
requires non-dominating dialogue. Similarly, the consent procedure, often used during the
conclusion of international agreements, gives the EP a veto. Although this does not
necessarily influence the content of what it assents to or rejects, it provides for political
87
88
De Witte, supra note 78, at 151–52.
Case 817/79, Roger Buyl v Commission, 1982 E.C.R. 245 [hereinafter Buyl]; Case C-65/90, Parliament v Council,
1992 E.C.R. I-4593 [hereinafter Cabotage I]; Case C-388/92, Parliament v Council, 1994 E.C.R. I-2067 [hereinafter
Cabotage II]; Case C-392/95, Parliament v Council, 1997 E.C.R. I-3213 [hereinafter Visas].
118
German Law Journal
Vol. 18 No. 01
contestation because there must be an agreed course of action.89 When these processes
are discussed in litigation, it is usually in the context of legal base case law, where it is
argued that the Commission has chosen to base legislation upon the incorrect legal basis
and subsequently that the wrong legislative procedure has been used.90
Buyl v Commission91 was one of the first cases connecting institutional balance,
consultation, and republican ideas. Commission officials challenged the legality of a
regulation that reduced their remuneration. One of their arguments was that the
Parliament was improperly consulted because the final draft of the regulation was so
different to the one on which it originally opined that its views ought to be re-canvassed. In
response, the CJEU explained that consultation and democracy were connected to
institutional balance. Consultation “enables the Parliament effectively to participate in the
Community’s legislative process, [and] is an essential feature of the institutional balance
which the Treaties seek to achieve.”92 Buyl’s complaint was ultimately dismissed because
the post-consultation changes were small and methodological, rather than substantive,
alterations about how remuneration was to be calculated.93 Nonetheless, the case seeded
an expectation that the EP’s views should be properly considered, and adopted if
appropriate, during consultation.
This expectation germinated in Cabotage I,94 which articulated a principle of reconsultation. If a proposal has substantially changed following the initial Parliamentary
consultation, and those changes were not confined to those requested, the Council must
ask for a second opinion.95 In Cabotage I and Cabotage II96 the Council had not done this,
so subsequently the relevant Regulations were annulled. The implication is that if the EP’s
opinion must be heard on a legislative proposal, this is more than a box-ticking exercise.
There is an expectation of Parliamentary influence on consecutive drafts. Although this
89
See generally Cristina Eckes, How the European Parliament’s Participation in International Relations Affects the
Deep Tissue of the EU’s Power Structures, 12 INT’L J. CONSTIT. L. 904 (2014).
90
These processes have typically been litigated upon. See generally Kieran St. Clair Bradley, Powers and
Procedures in the EU Constitution: Legal Bases and the Court, in THE EVOLUTION OF EU LAW 85 (Paul Craig & Gráinne
de Búrca eds., 2011).
91
Buyl, supra note 88.
92
Id. at para. 16.
93
Id. at paras. 23–24.
94
Cabotage I, supra note 88.
95
Id. at para. 16.
96
Cabotage II, supra note 88.
2017
Article 13(2) TEU and Lawmaking
119
expectation is ultimately based on the definition of consultation, that definition is itself
informed by the institutional balance. Re-consultation reflects a need to protect the
democratic spirit of the Parliament’s legislative prerogatives. It is not just about protecting
existing institutional powers. Advocate General Darmon’s Opinion in Cabotage II made
clear that Cabotage I adopted re-consultation even though it was “not provided for by the
Treaty.”97 Although neither Cabotage judgment explicitly referred to institutional balance,
Darmon identifies that the institutional balance was at stake in both cases. He argued that:
“The Court [has] stressed the importance of the parliamentary consultation procedure for
the institutional balance of the community . . . restriction on the re-consultation
requirement would result in excluding the Parliament from the legislative procedure.”98 In
his view the CJEU had been and should be motivated by Isoglucose’s recognition that the
EP’s representation of EU citizens was an essential part of the EU’s institutional balance.
This moved the court beyond a need to protect the EP’s bare competences and into
upholding the democratic reasoning behind them.99 In the specific circumstances of
Cabotage II, he was at one with the final judgment in his assessment that the changes to
the legislation were so substantial that they demanded re-consultation of the EP.100 The
general principle of institutional balance thus informed a purposive reading of the Treaties
that emphasised the need to improve the EP’s legislative position and protect nondomination between key constituencies.
The link between Parliamentary participation and re-consultation was more clearly evident
in Parliament v Council (Visas),101 which explicitly referred to institutional balance. Here
the EP successfully argued that it was not properly consulted when the Council made
significant changes to a legislative draft after its initial consultation without remanding it to
re-consultation. Advocate General Fennelly’s Opinion summarized the relevant law:
Where the Treaty provides for consultation, the Parliament is entitled to
express its views both on the original proposal and again in the event of
substantial amendment . . . . As the Court has put it, “consultation . . . [of the
Parliament] is likely to affect the substance of the measure adopted.” To
97Opinion
of Advocate General Darmon, at para. 17 in Cabotage II (Mar. 16, 1994),
http://curia.europa.eu/juris/showPdf.jsf?text=&docid=98665&pageIndex=0&doclang=en&mode=lst&dir=&occ=fi
rst&part=1&cid=334142.
98
Id. at paras. 17–19.
99
Id.
100
Id. at para. 59; Cabotage II, supra note 88, at para. 15.
101
Visas, supra note 88.
120
German Law Journal
Vol. 18 No. 01
dispense with consultation because of an a priori view that the attitude of the
Parliament was known and was unacceptable to the Council presupposes
closed minds and rigid postures on the part of both institutions and denies
the usefulness of the process of consultation.102
This interpretation sees consultation as designed to create an engaged and constructive—
that is, non-dominating—dialogue that bears resemblance to republican thought. This
encourages effective legislative input from each representative organ and their
constituencies. Both sides receive fuller consideration and can influence the content of the
promulgated law rather than being treated to a box-ticking exercise. The Court’s judgment
in Visas concurred and explicitly related this to institutional balance, making apparent that
the concept provides a framework for how EU democracy should operate. In response to
the Council’s unsuccessful defense that, because it was aware of Parliament’s wishes, reconsultation was unnecessary, the CJEU confirmed the re-consultation law and noted:
Proper consultation . . . constitutes one of the means enabling it [the EP] to
play an effective role in the legislative process of the Community; to accept
the Council's argument would result in seriously undermining that essential
participation in the maintenance of the institutional balance intended by the
Treaty and would amount to disregarding the influence that due consultation
of the Parliament can have on adoption of the measure in question.103
Letting the Council avoid re-consultation because it felt it was sufficiently aware of the EP’s
wishes would prevent dialogue between the two institutions and the interests they
represent. EU citizens would be unable to influence the content of legislation, and Member
State executives would dominate. Although this reasoning took place in the context of the
consultation procedure, it has a wider significance. It suggests that the institutional
balance, as a general principle of EU law, can be understood as more than a division of
powers. It supported the argument that the EP has to be involved in a non-dominating
method of dialogic lawmaking. This lends some legal weight to the republican approaches
to institutional balance, shining light on how the concept can motivate, explicitly or
implicitly, the promotion of inter-institutional dialogue.
There are limitations to this analysis, however. Most obviously, Section E.I showed that
when institutional balance is directly relied upon as a head of claim, it is usually as part of
an argument that there has been ultra vires action. The ‘general principles of law’ reading
102
Opinion of Advocate General Fennelly, at para. 23 in Visas (Mar. 20, 1997),
http://curia.europa.eu/juris/showPdf.jsf?text=&docid=100707&pageIndex=0&doclang=en&mode=lst&dir=&occ=f
irst&part=1&cid=334514.
103
Visas, supra note 88, at para. 22.
2017
Article 13(2) TEU and Lawmaking
121
outlined in Sections E.II and D.III suggests that it can carry a normative edge, but this is
usually limited to informing or filling in gaps of other arguments. It also seems only to have
arisen in the context of consultation, making it difficult to test the hypothesis that as a
general principle of law it ought to operate beyond that specific situation. This also makes
it difficult to argue that the case law interpreting and utilizing the statement that each
institution “shall act within the limits of the powers conferred on it in the Treaties”
supports the models that see it as a potential wellspring of non-domination. If one seeks
juridical support for those positions, one must look elsewhere. It was earlier noted that
sincere co-operation between institutions is the second clause of Article 13(2) TEU and is
sometimes cited, for example in EU Budget, alongside the institutional balance in an
attempt to dictate how institutions should behave. It is now submitted that instead of
focusing on institutional balance as a progenitor of non-domination, the case law suggests
that Article 13(2) TEU in its totality, or sincere co-operation alone, provides a firmer
support for the argument that republican norms inhabit the EU’s institutional architecture.
F. Sincere Co-Operation
Sincere cooperation under Article 13(2) TEU requires that “the institutions shall practice
mutual sincere co-operation.” As will be shown, this has been decisive in arguments
concerning the proper interaction of legislative institutions. It gives effect to the nondominating principles identified within the institutional balance case law. Consequently,
Article 13(2) TEU as a whole, rather than just the institutional balance clause, should be
drawn upon to support republican readings of the law governing the EU’s legislative
process.
Interestingly, Bellamy’s republican intergovernmentalism does not refer to sincere cooperation within Article 13(2) TEU but instead uses its presence in Article 4(3) TEU as an
example of the EU’s commitment to non-domination. This provision relates to cooperation between Member States. It states that “pursuant to the principle of sincere
cooperation, the Union and the Member States shall, in full mutual respect, assist each
other in carrying out tasks which flow from the Treaties.” According to Bellamy, this is part
of Article 4’s broader commitment to respect the competences of Member States and their
internal democratic preferences alongside the pursuit of common EU goals. This analysis is
in line with Dawson and de Witte’s argument that the EU has a constitutional balance of
interests.104 Given that a central pillar of both models stresses the need for representative
EU institutions to interact as equals, it is interesting that neither mentions Article 13(2)
TEU, which adapts this inter-state obligation into an inter-institutional one. In the context
104
Dawson & de Witte, supra note 28, at 508.
122
German Law Journal
Vol. 18 No. 01
of Article 4(3) TEU (then Article 10 EC), Commission v Sweden105 held that sincere
cooperation requires “Member States to facilitate the achievement of the Community’s
tasks and to abstain from any measure which could jeopardize the attainment of the
objectives of the Treaty.”106 Here, the relevant objectives were the effectiveness of
external action and the unity of the EU’s international representation. In this way, the
general principle of sincere cooperation supports the pursuit of wider Treaty objectives.107
The same goes for Article 13(2) TEU.108 The CJEU’s interpretation of inter-institutional
cooperation seems to provide for effective participation of representative institutions
during lawmaking, so long as the principles of non-domination between legitimating
constituencies, identified in Sections D and E above, and now enshrined in Article 10 TEU,
are followed.
The ECJ connected democracy, the institutional balance, and sincere co-operation in
Parliament v Council (UNCTAD).109 It held that “inter-institutional dialogue, on which the
consultation procedure in particular is based, is subject to the same mutual duties of
sincere cooperation as those which govern relations between Member States and the
Community institutions.”110 Here, the court first makes an explicit reference to the need
for dialogue during consulation. As noted in Visas, this is dormant within institutional
balance.111 The CJEU extended this point in MFA, holding that “sincere cooperation . . . .
pursuant to Article 13(2) TEU, must govern relations between EU institutions in the context
of the ordinary legislative procedure.”112 The CJEU has stressed that this duty applies to the
execution of any institutional role.113 Sincere co-operation is a more direct vehicle for
shaping a constructive dialogue between legislative institutions than the institutional
105
Case C-246/07, Commission v Sweden, 2010 E.C.R. I-3317.
106
Id. at para. 69.
107
See generally Daniele Davison-Vecchione, Beyond The Forms of Faith: Pacta Sunt Servanda and Loyalty, 16
GERMAN L. J. 1163 (2015); Andres Delgado Casteleiro & Joris Larik, The Duty To Remain Silent: Limitless Loyalty in
EU External Relations?, 36 EUR. L. REV. 524 (2011).
108
Christophe Hillion, A Powerless Court? The European Court of Justice and the Common Foreign and Security
Policy, in THE EUROPEAN COURT OF Justice AND EXTERNAL RELATIONS LAW: CONSTITUTIONAL CHALLENGES 68 (Marise
Cremona & Anne Thies eds., 2014).
109
Case C-65/93, Parliament v Council, 1995 ECR I-643 [hereinafter UNCTAD].
110
Id. at para. 23.
111
Visas, supra note 88, at para. 22.
112
MFA, supra note 72, at para. 83.
113
Case
C-48/14,
Parliament
v
Council,
at
para.
57–58
(Feb.
12,
2015),
http://curia.europa.eu/juris/document/document.jsf?text=&docid=162261&pageIndex=0&doclang=en&mode=lst
&dir=&occ=first&part=1&cid=335377.
2017
Article 13(2) TEU and Lawmaking
123
balance. Whereas institutional balance primarily safeguards the granted powers of
representative institutions, sincere co-operation dictates how those powers should be
utilized. Taken together, Article 13(2) TEU in its totality can both promote and protect nondomination.
MFA and UNCTAD provide good examples of how sincere co-operation protects one
institution and its constituencies from dominating another during the lawmaking process.
In MFA, the CJEU held that the Commission had fulfilled the requirement of sincere
cooperation. Prior to its contested legislative withdrawal, the Commission had attempted
to reconcile the dispute among it, the Council, and Parliament, and only acted when it was
apparent that they would not accept the model of confirming micro-financial assistance
through delegated legislation.114 There had not been any domination; attempts were made
to come to a mutually acceptable decision. UNCTAD is a less straightforward case. That
case concerned the legality of a regulation modifying the EU’s generalized tariff
preferences. The EP unsuccessfully argued that the Council had not correctly followed the
consultation procedure, and failed because it had breached the duty of sincere
cooperation. It failed to respond in time to the Council’s request for an opinion, which was
made on 22 October 1992 with a view to adopting the Regulation by 1 January 1993.
Failure to adopt by that date would apparently harm exports to non-EU states.115
Parliament twice delayed its plenary debate and postponed it to January 1993. Because of
the need to adopt the proposal before 1993, however, the Council passed the Regulation
in December 1992 without waiting for the delayed opinion. The Council’s apparent failure
to consult the Parliament was due to the Parliament’s lack of co-operation. The Council
was not culpable:
Parliament failed to discharge its obligation to cooperate sincerely with the
Council . . . [accordingly the EP] is not entitled to complain of the Council's
failure to await its opinion . . . consultation was not complied with because of
the Parliament's failure to discharge its obligation to cooperate sincerely with
the Council.116
It may be argued that if the Court truly prized the Parliament’s contribution, it would have
required consultation. Advocate General Tesauro took this view. He noted that
consultation and re-consultation are prominent constitutional concepts because
114
MFA, supra note 72, at paras. 101–05.
115
UNCTAD, supra note 109, at para. 14.
116
Id. at paras. 27–28.
124
German Law Journal
Vol. 18 No. 01
institutional balance demands the Parliament has effective legislative participation; letting
the Council proceed alone would undermine this.117 This argument is broadly in line with
the reading of institutional balance offered in Section 3 above; the EP’s legislative
competences must be protected. The CJEU’s different approach to the case suggests that
sincere co-operation is the dominant provision in Article 13(2)’s wider non-dominating
paradigm. Institutional balance has a republican aspect as a general principle of law that
informs judicial reasoning, but its overall role is to safeguard existing powers that may or
may not keep with non-domination. In contrast, it seems that sincere cooperation requires
a non-dominating dialogue, or an attempt at one, between institutions. UNCTAD held that
the EP’s prevarication meant it was not committed to a constructive debate. It could not
justifiably argue that it had been arbitrarily excluded from the legislative dialogue, because
it had several opportunities to contribute; rather, it had forfeited its rights. This suggests
that democratic legitimacy is not based on Parliamentary contribution per se; it flows from
non-domination during lawmaking between various representative institutions. This is
aligned with the theoretical analyses of the institutional balance and suggests that they can
be strengthened by an additional focus on sincere co-operation.
G. Conclusion
As a general principle of law underpinning inter-institutional relationships, the institutional
balance is significant for understanding the EU’s democratic constitution. The reading
presented in this article took its cue from the fact that intergovernmental critiques of the
Eurozone crisis have renewed study of the idea that institutional balance should require a
non-dominating dialogue between key EU constituencies. The main analyses of this
argument, offered by Dawson and de Witte and Bellamy, come from a normative
theoretical perspective. The case law on Article 13(2) TEU does not entirely support their
positions. Institutional balance is primarily used to protect existing institutional
competences that may or may not be aligned with democratic principles of nondomination. It has been used as a general principle of law to support arguments that seek
to maximize existing institutional competences, but this serves a gap-filling function at
best. If Article 13(2) TEU is read in its totality to encompass both institutional balance and
sincere co-operation, however, the law provides a stronger support for the republican
conceptualizations of EU democracy. Sincere co-operation requires institutions to interact
in a way that reduces their ability to exert dominance over one another. A tripartite view
of Article 13(2) TEU can both protect and further a normative republican reading of the
EU’s institutional structure; institutional balance protects existing competences and
suggests that it should pursue non-domination, while sincere co-operation can ensure that
117
Opinion of Advocate General Tesauro, at paras. 18–20 in UNCTAD (Dec. 13, 1994),
http://curia.europa.eu/juris/showPdf.jsf?text=&docid=98895&pageIndex=0&doclang=en&mode=lst&dir=&occ=fi
rst&part=1&cid=336647.
2017
Article 13(2) TEU and Lawmaking
125
non-domination takes place. In uncovering this, it has also been shown that the CJEU has
developed an understanding of democracy based upon the need to involve three
constituencies as fully as possible within lawmaking. It is indeed unfortunate that this
democratic constitutional architecture has been undermined by the Eurozone crisis
response.
One wider implication of this Article may be noted. It has been argued that nondomination is an appropriate lens through which to understand inter-institutional
lawmaking relationships. This first raises questions about how far non-domination, and
republicanism more widely, has permeated the EU’s democratic constitution beyond
Article 13(2) TEU. Further assessments of constitutional principles of EU law from a
republican perspective would help determine the extent to which republicanism is a useful
tool through which to analyze EU democracy.
126
German Law Journal
Vol. 18 No. 01
Articles
Due Process in UN Commissions of Inquiry: A Legal Analysis of
the Procedures of Goldstone’s Gaza Inquiry
By Michael Nesbitt

Abstract
Throughout its history, the United Nations has resorted to large-scale ad hoc Commissions
of Inquiry (UN COIs) to investigate serious international incidents. These UN COIs have often
been highly political affairs, though their tasks and goals—including most recently
investigating reports of war crimes or crimes against humanity the world over—are distinctly
legal in nature. The result has been a focus on both the politics of such UN COIs—including
most prominently whether their mandates or their Commissioners are biased—and on the
merit of their legal-criminal findings. Yet it is the processes and procedures of UN COIs, and
particularly their commitment to transparent due process, that are best able to form a
bulwark against both political and legal attacks. Thus, it is their processes and procedures
that should be the focus of much legal-academic work; unfortunately, to date this has not
tended to be the case. By analyzing perhaps the most well-known and controversial recent
UN COI, the 2009 United Nations Fact Finding Mission on the Gaza Conflict, and focusing on
its due process and procedures rather than its politics or its correct application of
international criminal or human rights law, this paper seeks to remedy this oversight. It seeks
to identify the legal and procedural shortcomings—the failures of due process—of a wellresourced, well-staffed political inquiry to offer a representative example of how UN COIs
tend to fall short, why they must be considered legal undertakings, and how future UN COIs
might remedy these common shortcomings by focusing on the legality of their procedures.

Dr. Michael Nesbitt, Assistant Professor of Law at the University of Calgary, Faculty of Law, and Fellow with the
Centre for Military, Security and Strategic Studies. I would like to thank Professor David Dyzenhaus, my SJD
supervisor, for his numerous comments on previous versions of this paper. Thanks are also owing to Professors
Jutta Brunnée and Kerry Rittich for their close reading of (several) previous drafts and for their thoughtful and
incisive comments. Finally, thanks to the anonymous peer reviewers of this article and the wonderful editorial staff
at the German Law Journal for all of their edits and suggestions. All mistakes are, of course, solely those of the
author.
128
German Law Journal
Vol. 18 No. 01
A. Introduction
In the past 30-years, the world has seen a massive proliferation of large-scale human rights
fact-finding missions, particularly ad hoc United Nations (UN) Commissions of Inquiry (COIs
or Commissions).1 Recently, the UN has turned to large-scale ad hoc COIs to investigate
many of the most serious modern conflicts, including those in the former Yugoslavia,2
Rwanda,3 Darfur,4 Gaza5 and elsewhere.6 International courts delegate some of their factfinding duties to such Commissions and rely upon the names listed in COI reports or the
evidence collected.7 Nation states rely upon the information contained in such reports to
1
Philip Alston has noted that, “[o]ver the past decade, international monitoring has become almost a standard
recommendation by human rights groups.” Philip Alston & William Abresch, Can Human Rights Monitoring Halt
Abuses in Sri Lanka?, 31 FLETCHER F. WORLD AFF. 21, 22 (2007).
2
U.N. Secretary-General, The Final Report of the Commission of Experts Established Pursuant to Security Council
Resolution 780, U.N. Doc. S/1994/674 (May 27, 1994).
3
U.N. Secretary-General, Report of the Independent Inquiry into the Actions of the United Nations during the 1994
Genocide in Rwanda, U.N. SCOR, U.N. Doc. S/1999/1257 (Dec. 15, 1999).
4
Report of the International Commission of Inquiry on Darfur to the United Nations Secretary-General Pursuant to
Security Council Resolution 1564 of 18 September 2004, U.N. Doc. S/RES/1564 (Jan. 25, 2005).
5
U.N. GAOR, Human Rights in Palestine and Other Occupied Arab Territories: Report of the United Nations FactFinding Mission on the Gaza Conflict, U.N. Doc. A/HRC/12/48 (Sept. 25, 2009) [hereinafter Goldstone Report]; See
also U.N. Hum. Rts. Council, Report of the Detailed Findings of the Independent Commission of Inquiry Established
Pursuant to Human Rights Council Resolution S-21/1, U.N. Doc. A/HRC/29/CRP.4 (June 24, 2015) [hereinafter Gaza
2015 Inquiry].
6
U.N. Office of the High Commissioner, Human Rights Council, Report of the Mapping Exercise Documenting the
Most Serious Violations of Human Rights and International Humanitarian Law Committed within the Territory of the
Democratic Republic of the Congo between March 1992 and June 2003 (Aug. 2010) [hereinafter DRC Mapping
Exercise]; Report of the International Commission of Inquiry Mandated to Establish the Facts and Circumstances of
the Events of 28 September 2009 in Guinea, U.N. Doc. S/2009/693 (Dec. 18, 2009) [hereinafter Guinea COI]; Report
of the independent international commission of inquiry on the Syrian Arab Republic, U.N. Doc. A/HRC/S-17/2/Add.1
(Nov. 23, 2011), http://www2.ohchr.org/english/bodies/hrcouncil/specialsession/17/docs/A-HRC-S-17-2-Add1.pdf
[hereinafter Syria COI].
7
See, e.g., Simone Halink, All Things Considered: How the International Court of Justice Delegated its FactAssessment to the United Nations in the Armed Activities Case, 40 N.Y.U. J. INT’L L. & POL. 13 (2008); see also Ruth
Teitelbaum, Recent Fact-Finding Developments at the International Court of Justice, 6 LAW & PRAC. INT’L CTS. &
TRIBUNALS 119 (2007); Christopher M. Rassi, Lessons Learned from the Iraqi High Tribunal: The Need for an
International Independent Investigation, 39 CASE W. RES. J. INT’L L. 215 (2006). The reports of UN fact-finding
missions, COIs, and of truth commissions have been used extensively as of late in both international court and
tribunal decisions. See Michael P Scharf, The Case for a Permanent International Truth Commission, 7 DUKE J. COMP .
& INT’L L. 375, 380 (1997). See also Velasquez Rodriquez Case, Judgment of July 29, 1988, Inter-Am. Ct. H.R. (ser. C)
No. 4 (1988); Anguelova v. Bulgaria, App. No. 38361/97, 2002-IV Eur. Ct. H.R. (2002). See generally RICHARD MAY &
MARIEKE WIERDA, INTERNATIONAL CRIMINAL EVIDENCE 345 (2003); M. Cherif Bassiouni, The United Nations Commission of
Experts Established Pursuant to Security Council Resolution 780 (1992), 88 AM. J. INT’L L. 784 (1994).
2017
Due Process in UN Commissions of Inquiry
129
issue travel bans on identified political and/or military leaders, to freeze assets, or to levy
sanctions against implicated parties.8 Such inquiries are deemed to be vital to criminal
accountability measures, transitional justice reforms of all kinds, and the political and
economic development of many countries in the aftermath of systemic human rights abuses.
However, despite the importance and increasingly broad and demanding mandates of ad
hoc UN COIs, there is relatively little detailed legal research that analyzes their processes
and procedures.9 This is a particularly troublesome oversight because the procedures of a
COI can make or break the endeavor. It is also troublesome because media and public
discussions, as we shall see, focus largely on UN COI processes while legal academic research
tends to give such issues short shrift in favor of a focus on the substantive law—criminal or
human rights—as applied by the COIs.10 There is, in other words, a disconnect between
much of the media and social commentary on UN COIs and the legal analysis. The literature
concerning international relations and international law needs to remedy this disconnect—
ideally by focusing from a legal due process perspective on the procedures of UN COIs.
This paper is an effort to start to bridge this gap. It will proceed by way of a case study of
one of the most complex, controversial, and heavily criticized UN COIs in recent memory:
United Nations Fact Finding Mission on the Gaza Conflict 11 (hereafter referred to as “the
Gaza COI” when speaking of the particular Commission, and “the Goldstone Report” when
referring to the actual report produced by the COI). This paper will proceed in the following
manner. First, the present article will provide an explanation of why the Gaza COI is
particularly salient and generalizable. Second, an overview of both the establishment of the
Gaza COI and of the issuance of the Goldstone Report will be provided, followed by a brief
8
Given the inability of most states to conduct independent fact-finding missions, such decisions will invariably be
based at least in part on the reports of other organizations, foremost among them UN reports. See generally Halink,
supra note 7, at 26–27. Halink notes that the International Court of Justice has “attribute[d] greater weight to UN
materials than to other secondary evidence such as NGO reports and press statements,” and “virtually conclusive,”
as compared to the evidence offered by both Parties.
9
For a call for greater study of UN COIs, see M. Cherif Bassiouni, Appraising UN Justice-Related Fact-Finding
Missions, 5 WASH. U. J. L. & POL’Y 35, 41 (2001). As an example of an author who has started to do some of this work,
though has tended to evaluate COIs from a purely practical rather than legal perspective, see generally Theo
Boutruche, Credible Fact-Finding and Allegations of International Humanitarian Law Violations: Challenges in
Theory and Practice, 16 J. CONFLICT & SECURITY STUD. 1 (2011). Boutruche also maintains a blog on the topic; see
generally Theo Boutruche, THE ART OF FACTS: A L EGAL BLOG AND FACT-FINDING AND ARMED CONFLICT,
www.theartoffacts.org. By contrast, a good example is the extensive legal review that truth commissions have
received. See, e.g., MARK FREEMAN, TRUTH COMMISSIONS AND PROCEDURAL FAIRNESS (2006); PRISCILLA HAYNER, UNSPEAKABLE
TRUTHS: FACING THE CHALLENGE OF TRUTH COMMISSIONS (2002).
10
See, e.g., Abraham Bell, A Critique of the Goldstone Report and Its Treatment of International Humanitarian Law
(Mar. 30, 2010) available at http://ssrn.com/abstract=1581533. For a good example of this dynamic in the context
of the Gaza COI, see ADAM HOROWITZ, LIZZY RATNER, & PHILIP WEISS, THE GOLDSTONE REPORT: THE LEGACY OF THE LANDMARK
INVESTIGATION OF THE GAZA CONFLICT (2011).
11
Goldstone Report, supra note 5.
130
German Law Journal
Vol. 18 No. 01
discussion of the response to the report by Israel, Palestinian Authorities, and Hamas. Third,
it will discuss the idea of bias—both real and perceived—from a legal perspective. Bias will
be discussed initially as it relates to the Gaza COI’s original mandate and then with respect
to the choice of commissioners and as it relates to the scope of the investigation and choice
of incidents to investigate. Finally, this chapter will conclude with an analysis of two
particularly important due process issues: (1) the methods and rules that the Gaza COI
adopted as they relate to the gathering and corroboration of evidence; and, (2) the language
of, and standard of proof adopted by, the Gaza COI. My goal is to identify clearly and in detail
many of the problems inherent in the processes and procedures of contemporary ad hoc UN
COIs, and suggest that, by looking at UN COIs through even the most simplified of legal
lenses, we might start to see ways for future COIs to remedy some common shortcomings.
B. Why Study the Goldstone COI?
The Gaza COI is arguably the paradigmatic case with respect to contemporary, large-scale
ad hoc UN COIs. Like none before or arguably since, it encompassed all the hopes and
objectives that the UN expects modern COIs to fulfill. However, due to the highly charged
political environment in which it operated, the Gaza COI also clearly communicates the
weaknesses of the large-scale UN COI including the failure to engage meaningfully with due
process and the manifestation of bias that results from resorting to ad hoc procedures the
interpretation of which fail to draw on legal foundations.
The Gaza COI had a similar mandate, criteria, and ultimate result as other contemporary ad
hoc UN COIs. Like so many of its contemporaries, the Gaza COI was dubbed a post-conflict
initiative, though a return to conflict was eminently foreseeable. The initiative was intended
to address human rights and humanitarian law abuses on a large scale by assigning
responsibility for wrongs committed, just as countless UN COIs had done before;12 however,
the Gaza COI also represented the culmination of a series of trends in international law and
fact-finding toward holistic transitional justice inquiries—that is, inquiries which try to
address all (or many) of the multifarious elements of transitional justice.13 In the Gaza COI
we can truly see an attempt to do virtually everything that transitional justice has evolved
to include: to provide a history, a forum for telling tales perhaps to promote reconciliation,
a broad contextual analysis of history and socio-economic factors that contributed to the
violence, of both human rights abuses and assurances that impunity will not reign and
criminal charges should follow.
12
13
See sources, supra notes 2–6.
This would include, inter alia: promoting accountability for criminal wrongs; providing recommendations on
institutional and legal reforms and/or reparations programs; providing an historical narrative of the conflict upon
which to build a shared collective memory or “truth” about the past; and, offering a forum for witnesses to air their
grievances, express their views and wishes and discuss their experiences.
2017
Due Process in UN Commissions of Inquiry
131
Moreover, the Gaza COI provides perhaps the best—and most discussed—recent example
of a contemporary ad hoc UN COI that was marred by powerful criticism related to a list of
common procedural concerns often associated with large-scale UN COIs, thereby making it
ripe for a procedural analysis.14 In this regard, it is also the ‘hard case’ in that it operated
within the context of the Israel-Palestinian dispute and, as a result, garnered a lot of
attention and criticism from all sides. As such, it makes the issues and controversies
confronted by such investigations more noteworthy than perhaps any other modern UN COI.
Further, like so many previous UN COIs, while the criticism of the Gaza COI relates to both
the substantive law as applied by the COI as well as the COI’s procedural shortcomings, the
legal-academic analysis that followed tended to focus on the substance of the COI’s report—
that is, the law as applied by the COI—while public criticism centered in significant part upon
the procedures of the COI.15 With this in mind, this paper fills a gap not merely by focusing
in more detail upon law as it applies to the processes of one particularly controversial UN
COI, but it also links more closely the legal-academic discussion to that of the general public.
Finally, the Gaza COI is relevant not just at the macro level, concerning the future of UN COIs
more broadly, but also at the micro level, concerning the Israeli-Palestinian conflict. In the
summer of 2014 the world witnessed a repeat of the violence in Gaza, which led to
another—albeit less ambitious and well-scrutinized—UN COI report in 2015, called the
“Independent International Commission of Inquiry Established Pursuant to Human Rights
Council Resolution S-21/1.”16 In light of the long history of UN inquiries relating to Israel and
Gaza, in addition to the seemingly interminable conflict in the region, it is safe and
indisputably sad to say that there will undoubtedly be more UN COIs into subsequent
conflicts.
I. The Goldstone Report: History and Context
As most now know, a conflict has existed in the Middle East since at least 1947—almost a
year before Israel declared its independence as a state on 15 May 1948—which centered
14
Looking at past UN COIs, one can see that UN they have been generally and consistently been criticized by
academic and non-academic commentators alike with regard to: their biased mandates (partiality); the clarity of
their mandate and purpose (transparency and consistency/clarity); a disproportionate focus on a particular country,
region or conflict (a lack of representative participation, partiality); the selection of biased commissioners (partiality
and independence); inflammatory language used in reports (partiality) and shifting standards of proof
(transparency of rules and operating procedures); a misguided or biased review of the facts (partiality); the lack of
clarity in or promulgation of their rules and methods of operation (transparency); the quality of their evidence used
to indict and the quality, quantity and use of corroborating evidence (fairness, partiality, transparency of processes
and rules of evidence); and, their approach to balancing interests in protecting witnesses while also provi ding full
and prompt disclosure of legal findings to individuals and/or states concerned.
15
For but a small example, see Bell and Horowitz, et. al., supra note 10.
16
Gaza 2015 Inquiry, supra note 5.
132
German Law Journal
Vol. 18 No. 01
upon Israel and the Palestinian Occupied Territories. A recapitulation of the causes and
consequences of the Israeli-Palestinian/Arab conflict is well beyond the scope of this
article.17 Suffice it to say that as of about November 2008, yet another nominal truce, this
one having existed since June 2008 between Israel and Hamas—the elected political power
in the Gaza Strip at the time—had come to a de facto end. The truce broke down after a
series of rockets were launched from Gaza into Israel, after incursions by Israel into Gaza
territory, and after the solidifying of an Israeli blockade that was supposed to be eased by
the terms of the truce.
By 27 December 2008, Israel unilaterally decided that the conflict had escalated to the point
where, from its perspective, a large-scale military intervention was the only way to exercise
its right to defend its civilian population against terrorism and the firing of rockets from Gaza
territory into Israel, although Israel’s military campaign itself had been prepared in advance
of this date.18 War was once again cast upon the region. Between 27 December 2008 and 17
January 2009, Israel conducted Operation Cast Lead—Israel’s codename for the military
intervention—against Hamas in the Gaza Strip. Media coverage of the conflict was intense;
in particular, the military conduct of all parties evoked strong negative reactions
internationally. During the conflict Hamas—at the time not only the elected political party
in Gaza, but also a terrorist group as designated by the European Union, United States, and
Canada—was criticized in the international press for sending rockets into Israeli towns,19
targeting civilians (or at the very least failing to differentiate between civilians and
combatants), and for its militants’ dressing in civilian clothing while launching attacks within
17
For an accessible though lengthy review of the context and conflict, see MARK TESSLER, A HISTORY OF THE ISRAELIPALESTINIAN CONFLICT (2009).
18
For an article arguing why Israel did not have to “break the truce” and intervene militarily in order to protect its
civilian population, see Henry Stiegman, Discrediting Goldstone, Delegitimizing Israel, in THE GOLDSTONE R EPORT: THE
LEGACY OF THE LANDMARK INVESTIGATION OF THE GAZA CONFLICT 390 (Horowitz, Ratner, & Weiss, eds. 2011). Stiegman
asserts:
[Hamas] offered to extend the truce, but on condition that Israel end its blockade. Israel
refused. It could have met its obligation to protect its citizens by agreeing to ease the
blockade, but it didn’t even try. It cannot be said, therefore, that Israel launched its assault
to protect its citizens from rockets. It did so to protect the continuation of its strangulation
of Gaza’s population.
For an explanation of Israel’s reasons for the intervention, see Rory McCarthy, Our goals are near, says Israeli PM
as Gaza fighting intensifies, THE GUARDIAN (Jan. 11, 2009); Rory McCarthy, Israel criticized after “shocking” discovery
of exhausted children, THE GUARDIAN (Jan. 8, 2009); and Clancy Chassay, Cut to pieces: The Palestinian family drinking
tea in their courtyard, THE GUARDIAN (Mar. 23, 2009). The Guardian subsequently maintained an online section
devoted to its investigations of claims of abuse and criminality—see the Guardian’s “war crimes investigation” page
online: http://www.guardian.co.uk/world/series/gaza-war-crimes-investigation.
19
See, e.g., Rockets from Gaza: Harm to Civilians from Palestinian Armed Groups’ Rocket Attacks, HUMAN RIGHTS
WATCH (Aug. 6, 2009) www.hrw.org/en/reports/2009/08/06/rockets-gaza-0.
2017
Due Process in UN Commissions of Inquiry
133
populated areas.20 Reports of an Israeli bombing of a UN school21 and attacks on civilians
who were waving white flags,22 the use of civilians as human shields,23 the targeting of
civilian infrastructure,24 as well as the use of white phosphorous on civilians25 resulted in
criticism of Israel.26
Those outside of Israel/Gaza were deeply divided as to what had really happened and
whether it was legally justifiable under the laws of war. This factual uncertainty played a
major role in the international debate concerning how or whether the international
community should respond to the conflict. In the end, with a perceived need for an
independent, impartial inquiry into the conflict, the Human Rights Council acceded to its
increasingly reflexive response in such situations: an ad hoc UN COI.27 Thus, Resolution S9/1 was brought forward by the Human Rights Council on 12 January 2009 to consider “the
grave violations of human rights in the Occupied Territory, particularly due to the recent
Israeli military attacks against the occupied Gaza Strip.”28
The wording of this initial resolution created an initial problem for the Gaza COI that would
subsequently be established: The resolution presupposed the “grave violations” of human
rights and focused on Israeli actions without reference to Hamas. The original mandate
similarly presupposed the outcome. It stated that the Human Rights Council was:
to dispatch an urgent, independent fact-finding mission, to be appointed by the
President of the Council, to investigate all violations of international human
rights law and international humanitarian law by the occupying Power, Israel,
against the Palestinian people throughout the Occupied Palestinian Territory,
20 Azmi
Keshawi, Martin Fletcher, & Sheera Frenkel, Gaza’s tunnels, traps and martyrs: the Hamas strategy to defeat
Israel, THE TIMES (Jan. 12, 2009). Political violence was also seen as prevalent with respect to Hamas. See generally
Under Cover of War: Hamas Political Violence in Gaza, HUMAN RIGHTS WATCH (Apr. 19, 2009),
https://www.hrw.org/sites/default/files/reports/iopt0409webwcover.pdf.
21
Rain of Fire: Israel’s Unlawful Use of White Phosphorus in Gaza, HUMAN RIGHTS WATCH ch. IV (Mar. 25, 2009).
22
For an overview of the issue, see White Flag Deaths: Killings of Palestinian Civilians during Operation Cast Lead,
HUMAN RIGHTS WATCH (Aug. 13, 2009).
23
Clancy Chassay & Julian Border, Guardian Investigation Uncovers Evidence of Alleged Israeli War Crimes in Gaza,
THE GUARDIAN (Mar. 24, 2009), www.guardian.co.uk/world/2009/mar/23/israel-gaza-war-crimes-guardian/.
24
Id.
25
See generally Rain of Fire, supra note 21.
26
For an example of an article offering such criticism, see McCarthy, Our goals are near, supra note 18.
27
For example, Israel denied the use of white phosphorus in inhabited areas and the bombing of the UN school,
while Hamas denied the use of human shields.
28
Goldstone Report, supra note 5, at 37 ¶ 131.
134
German Law Journal
Vol. 18 No. 01
particularly in the occupied Gaza Strip, due to the current aggression, and calls
upon Israel not to obstruct the process of investigation and to fully cooperate
with the mission . . . . 29
Clearly the mandate was one-sided as it focused only on violations by the aggressor Israel.
As a result, first Mary Robinson, former UN High Commissioner for Human Rights,30 and then
Justice Goldstone rejected the mandate and offers to head the Gaza COI. Israel continues to
present the mandate of the Gaza COI as biased because it treats this formulation as the
“formal mandate” of the COI, despite the subsequent amendment to the mandate as
requested by the eventual chief commissioner, Justice Richard Goldstone (as discussed
below).31 Of note, the 2015 Gaza COI was better, though it was couched within a Human
Rights Council Resolution that presupposes the conclusions for which the COI was
established to seek.32 Historically, the fact that only the founding Resolution and not also
the mandate pre-supposed a specific conclusion is better than to be expected when it comes
29
Human Rights Council Res. S-9/1, 9th U.N. Doc. A/HRC/S-9/L.1 (Jan. 9, 2009). [Emphasis added.]
30
See Letter of Ambassador Aharon Leshno-Yaar, Permanent Representative of Israel to the U.N. Human Rights
Council (July 6, 2009) in Goldstone Report, supra note 5 [hereinafter Letter of Ambassador Aharon Leshno-Yaar].
31
Israel Ministry of Foreign Affairs, Initial Response to Report of the Fact Finding Mission on Gaza Established
Pursuant to Resolution S-9/1 of the Human Rights Council 3–4, ¶¶ 10–13 (Sept. 24, 2009) [hereinafter Initial Israeli
Response to Gaza COI].
32
See, e.g., Human Rights Council Res. S-21/1, U.N. Doc. A/HRC/RES/S-21/1 ¶ 2 (July 24, 2014) [hereinafter Res. S21/1]:
Condemns in the strongest terms the widespread, systematic and gross violations of
international human rights and fundamental freedoms arising from the Israeli military
operations” which have involved disproportionate and indiscriminate attacks, including
aerial bombardment of civilian areas, the targeting of civilians and civilian properties in
collective punishment contrary to international law . . . .
The Resolution does also condemn the killing of two Israeli civilians though the language is much more limited and,
in any event, presupposing conclusions on both sides hardly vitiates bias.
2017
Due Process in UN Commissions of Inquiry
135
to UN COIs into Israeli actions33 and, all too often, UN COIs more generally,34 which have
tended to exhibit strong signs of bias.35
In the context of the Goldstone Inquiry, Goldstone managed to mitigate the mandate
problem to a degree. Before the beginning of the COI’s investigations, sixteen experienced
investigators and judges wrote to an open letter presented to UN Secretary-General Ban Kimoon. The open letter canned for Secretary-General Ban Ki-moon open a full investigation
into the alleged abuses.36 Specifically, the letter called for “a prompt, independent and
impartial investigation” of “serious violations of international humanitarian law committed
by all parties to the conflict,” which would “provide recommendations as to the appropriate
prosecution of those responsible for gross violations of international law.”37 Eventually, after
a meeting with Goldstone and an agreed amendment to the mandate,38 the President of the
33
See, e.g., Human Rights Council, U.N. Doc. A/HRC/3/2 (Nov. 23, 2006). Resolution S-2/1, which gave the COI its
mandate, was entitled, The grave situation of human rights in Lebanon caused by Israeli military operations. In
addition to pre-determining causation, Resolution S-2/1 pre-determined the COI’s outcome by, “[c]ondemning
Israeli military operations in Lebanon, which constitute gross and systematic human rights violations of the
Lebanese people”. See Res. S-2/1, supra note 32, at Annex I. For another recent example of a U.N. HRC COI dealing
with Israel, see The Human Rights Inquiry Commission to Investigate Violations of Human Rights and Humanitarian
Law in the Occupied Palestinian Territories after 28 September 2000, U.N. Doc. E/CN.4/2001/121 (Mar. 16, 2001),
established pursuant to Commission on Human Rights Res. S-5/1, (Oct. 19, 2000), later endorsed by the Economic
and Social Council decision 2000/311 (Nov. 22, 2000). See also Report of the Secretary-General Prepared Pursuant
to General Assembly Resolution ES-10/10 on Illegal Israeli Actions in Occupied East Jerusalem and the Rest of the
Occupied Palestinian Territory, U.N. Doc. A/ES-10/L14 (Aug. 1, 2002). After issuing his report, Goldstone himself
stated: “I had hoped that our inquiry into all aspects of the Gaza conflict would begin a new era of even-handedness
at the UN Human Rights Council, whose history of bias against Israel cannot be doubted.” Richard Goldstone,
Reconsidering the Goldstone Report on Israel and War Crimes, WASHINGTON POST (Apr. 2, 2011) [hereinafter
Goldstone Recantation].
34
As but one commentator stated: Many UN reports, “were not in general dressed up in the restrained language
of traditional diplomacy, and the reader cannot feel confident that a complete and balanced picture has been
presented.” See Sydney D. Bailey, UN Fact-Finding and Human Rights Complaints 48 INT’L. AFF. 250, 258 (1972).
35
Res. S-21/1, supra note 32, at ¶ 13. At least in this case the decisive paragraph (13), the Resolution is neutral as
to whom the COI should focus on and whom is guilty, though it does presuppose that there were “crimes
perpetrated.”
36
The open letter was published in newspapers and on Amnesty International’s website in March 2009. See Gaza
Investigators Call for War Crimes Inquiry, AMNESTY INTERNATIONAL (Mar. 16, 2009). Those signing the letter included
Justice Goldstone, Hina Jilani, Desmond Travers—each of the eventual COI—as well as notables such as Alex
Boraine, Archbishop Desmond Tutu, Mary Robinson, William A Schabas, and Antonio Cassese.
37
Id.
38
In Letter of Justice Goldstone to the Israeli Permanent Representative to the U.N. Human Rights Council,
Ambassador Aharon Leshno-Yaar (Apr. 8, 2009) [hereinafter Goldstone Letter to Israeli Ambassador] at Annex II to
the Goldstone Report, supra note 5, Goldstone stated:
I wished personally to assure you that prior to considering the invitation to lead the Mission,
I satisfied myself that it would be given unbiased and even-handed terms of reference. In
particular, it seemed to me that it was crucial, in order to assess the military actions
136
German Law Journal
Vol. 18 No. 01
Human Rights Council was able to negotiate the passing of a resolution establishing the Gaza
COI on 3 April 2009. The understanding was that the mandate would thereafter read that
the COI was:
to investigate all violations of international human rights law and
international humanitarian law that might have been committed at any
time in the context of the military operations that were conducted in
Gaza during the period from 27 December 2008 and 18 January 2009,
whether before, during, or after.39
Formally, however, the mandate was never amended by way of a subsequent Human Rights
Council resolution. So, while the above wording made its way into the Gaza COI’s final report
and was taken to be the applicable mandate by the Commissioners, Resolution S-9/1
technically stands as the UN document calling for the establishment of the inquiry—thereby
establishing the foundation for claims of bias with regard to the formal mandate of the Gaza
COI.
While the Israeli presence in Gaza formally ended on 18 January 2009, it was not until 4 May
2009 that the Gaza COI first convened in Geneva.40 Given the delay, the Gaza COI, “agreed
to be bound by a short time frame (about three months) to complete its work and report to
the Council at the earliest opportunity.”41 As has become standard practice for such UN COIs,
a secretariat providing logistical and research support was established by the Office of the
United Nations High Commissioner for Human Rights (OHCHR) to aid the work of the
Commissioners.42
conducted by Israel, and in particular to investigate the effects on Israeli citizens of the rocket
attacks that emanated from Gaza . . . . As a completely independent body, the Mission will
now be determining its own terms of reference. I would hope that I could consult with the
Government of Israel and take into account its views with regard to the terms of reference.
Your advice in this regard would be much appreciated. [Emphasis added.]
39
Goldstone Report, supra note 5, ¶ 1, at 13. See also Goldstone Letter to Israeli Ambassador, supra note 38, where
Goldstone reiterated his intention to proceed “independently and impartially.” [Emphasis added.]
40
Goldstone Report, supra note 5, ¶ 5, at 13.
41
Id. ¶ 134, at 37. To give a sense for how short a time-frame this is, contrast to the two to three years that many
truth commissions are given to investigate and report, or even longer for an international court to prosecute but
one case.
42
Goldstone Report, supra note 5, ¶ 3, at 3.
2017
Due Process in UN Commissions of Inquiry
137
The 452-page Goldstone Report produced by the Gaza COI, entitled “Human Rights in
Palestine and Other Occupied Arab Territories: Report of the United Nations Fact-Finding
Mission on the Gaza Conflict,” was released on 25 September 2009.43
With respect to Operation Cast Lead, the Goldstone Report found that between 1387 and
1417 Palestinians were killed during the twenty-two day military operation.44 By contrast,
Gaza authorities reported 1444 fatalities, and the Government of Israel reported 1166.45 The
Government of Israel indicated that there were also four Israeli fatalities in southern Israel—
three civilians and one soldier—killed by rocket and mortar attacks, and an additional nine
Israeli soldiers killed during the fighting, four of whom were killed by friendly fire. 46
Of the Goldstone Report’s twenty-one chapters on substantive violations of international
law (excluding the Goldstone Report’s analysis of the subsequent judicial responses by all
parties), sixteen address Israeli actions, four concern abuses by “Palestinian armed groups,”
and one explains allegations against the Palestinian Authority. The Goldstone Report
concluded that serious violations of international human rights and humanitarian law were
committed by both Israel and by Palestinian armed groups, and actions taken by both sides
were found to amount to war crimes and, in a very few instances, possibly to crimes against
humanity. For its part, Israel was found, inter alia, to have: intentionally targeted civilians
and civilian objects, in some cases with the intention of spreading terror among the civilian
population; committed grave breaches of the Fourth Geneva Convention, including willful
killing and extensive destruction of property not justified by military necessity; violated the
right of Gaza’s population to maintain an adequate standard of living, including access to
adequate and safe food, water, and housing; denied freedom of movement to Palestinians
living in the Gaza Strip and West Bank; denied the right to enter and leave their own
territory, and limited their access to an effective remedy, which it was said could amount to
persecution, a crime against humanity.47 The core violations stemmed from investigations
into thirty-six incidents.48
43
Id.
44
Id. ¶ 30, at 17.
45
Id.
46
Id. ¶¶ 30–31, at 17.
47
Goldstone Report, supra note 5, at 413–19.
48
As is evident, these core incidents related primarily to allegations of indiscriminate or disproportionate Israeli
attacks on civilians. However, there are certainly other claims made, including in relation to the repression of
dissent in Israel (Goldstone Report, supra note 5, ch. XXV) and abusive detentions (Goldstone Report, supra note 5,
at ch. XIV, XV and XXI).
138
German Law Journal
Vol. 18 No. 01
Palestinian armed groups were said to have committed indiscriminate attacks against Israeli
citizens and violated the principle of distinction as between civilians and combatants by
virtue of launching rocket and mortar attacks into civilian areas. This course of action was
said to amount to war crimes and possibly a broader crime against humanity. Palestinian
armed groups were also criticized for failing to distinguish themselves consistently from the
civilian population in an adequate manner and for having unnecessarily exposed civilians to
danger by launching mortar and rocket attacks from sites close to civilian buildings.
However, in neither case was there sufficient evidence for the Goldstone Report to claim a
violation of international law. Moreover, no evidence was said to have been uncovered with
regard to the use by Palestinian armed groups of civilians as human shields, or with respect
to the armed groups’ use of hospitals or ambulances for combat purposes.49
The Goldstone Report concluded that neither side to the conflict conducted credible
investigations into alleged criminal violations committed during the 22-day offensive. The
Report also recommended that its findings be made available to the UN Security Council,
and that a committee of experts be established to monitor domestic proceedings related to
violations of international human rights and humanitarian law and report back on any
investigations carried out domestically. Referral to the ICC or national courts on the basis of
universal jurisdiction over the prosecution of serious international crimes was also
recommended in the event that the parties failed to carry out credible investigations and
prosecutions.
After the Report’s release in September 2009, the Human Rights Council subsequently
endorsed the Goldstone Report on 16 October 2009 in a resolution that also condemned
Israel but made no mention of Hamas or Palestinian armed groups:50
49
50
Goldstone Report, supra note 5, at 419–22.
Press Release, United Nations, Human Rights Council Endorses Recommendations in Report of Fact-Finding
Mission Led by Justice Goldstone and Calls for their Implementation (Oct. 16, 2009). See also Human Rights Council
Res. A/HRC/S-12/L.1 (Oct. 14, 2009). This endorsement took place after some significant procedural and political
wrangling. The resolution to endorse the Goldstone Report was initially delayed on 2 October 2009 when the
Palestinian delegation dropped its support for the Goldstone Report, purportedly under heavy political from, inter
alia, the United States. See Rory McCarthy, UN Delays Action on Gaza War Report, THE GUARDIAN (Oct. 2, 2009).
However, on 11 October 2009, President of the Palestinian Authority, Mahmoud Abbas, called on the Human Rights
Council to hold a special session to debate the Goldstone Report, which was then held on 15 November 2009.
2017
Due Process in UN Commissions of Inquiry
139
Deeply concerned at the actions by Israel undermining the sanctity and
inviolability of religious sites in the Occupied Palestinian Territory
including East Jerusalem . . . (1) Strongly condemns all policies and
measures taken by Israel, the occupying Power, including those limiting
access of Palestinians to their properties and holy sites particularly in
Occupied East Jerusalem, on the basis of national origin, religion, sex, age
or any other discriminatory ground, which are in grave violation of the
Palestinian People's civil, political, economic, social and cultural rights[.]51
Unsurprisingly, Western nations voted against the resolution.52 Nevertheless, the Human
Rights Council requested periodic updates on the implementation of the Goldstone Report’s
recommendations, and suggested that the UN General Assembly consider the findings and
recommendations.
Despite protests by both Israel and the United States, the UN General Assembly adopted a
non-binding resolution whereby it endorsed the Goldstone Report53 and called for credible
follow-up investigations.54 The General Assembly also requested that the UN SecretaryGeneral send the Goldstone Report to the Security Council for its consideration.55
Additionally, Navi Pillay, the United Nations High Commissioner for Human Rights, said that
she concurred with the recommendations of the Goldstone Report and, in particular,
supported its plea for “urgent action to counter impunity.”56 Similarly, UN Secretary-General
51
See Human Rights Council Res. A/HRC/RES/S-12/L.1, id. Emphasis in original.
52
The final vote was 25 in favor, 5 opposed, with 11 abstentions. Five nations also declined to vote by being absent,
including the United Kingdom and France. Id.
53
See Press Release, General Assembly, By Recorded Vote, General Assembly Urges Israel, Palestinians to Conduct
Credible, Independent Investigations into Alleged War Crimes in Gaza, U.N. Press Release GA/10883 (Nov. 5, 2009)
[hereinafter Press Release GA/10883]; see also American Society of International Law, International Law in Brief,
United Nations General Assembly Resolution on the 2008 Gaza Conflict” ( Nov. 14 2009). The Resolution was
adopted by a recorded vote of 114 in favor, 18 against, and 44 abstentions. Notable votes against the res olution
included Australia, Canada, Germany, Israel, Italy, Netherlands, and the United States. Many European Union
countries abstained.
54
The majority of supporters of the resolution were “developing” countries. Canada’s speaker “said his delegation
had voted against the resolution because it was concerned about the imbalanced nature of the Goldstone Report .
. . . ” In addition to Canada, Australia, the Czech Republic, Germany Hungary, Israel, Italy, the Netherlands, Poland,
Slovakia, and the United States, among others, voted against the resolutions. Notable abstentions included
Denmark, Austria, Japan, New Zealand, Norway, Republic of Korea, Russian Federation, Spain, Sweden and the
United Kingdom. See G.A. Res. 64/254, (Feb. 26, 2010) (requesting an update on the steps taken to implement the
Goldstone Report).
55
Id.
56
Sharon Otterman, UN Rights Official Backs Gaza Report, NEW YORK TIMES (Oct. 16, 2009).
140
German Law Journal
Vol. 18 No. 01
Ban Ki-Moon urged credible and immediate follow-up investigations by both sides of the
dispute, as did American, British, and French UN representatives.57
Given the political and legal backdrop to the Goldstone Report and the controversial nature
of the issues at hand, it is perhaps unsurprising that the release of the Report evoked strong,
often emotional, reactions worldwide. Virtually all aspects of the Goldstone Report—from
the choice of commissioners, to the scope of the inquiry, to the legal and factual findings—
have been criticized, some commentators more sympathetic than others.58 In addition to
newspapers, bloggers, and academics, non-governmental organizations (NGOs) and
governments also weighed in on the merits and demerits of the Goldstone Report, including,
57
Allies
Push
Israel
for
Gaza
Probe,
http://news.bbc.co.uk/2/hi/middle_east/8308367.stm.
BBC
NEWS
(Oct.
15,
2009),
58
One critique generally viewed as particularly thoughtful was Moshe Halbertal, The Goldstone Illusion: What the
UN report gets wrong about Gaza—and War, THE NEW REPUBLIC (Nov. 6, 2009),
www.tnr.com/print/article/world/the-goldstone-illusion [hereinafter Halbertal, The Goldstone Illusion]. Alan
Dershowitz, a persistent critic of the Human Rights Council and those who criticize Israel, stated that the Goldstone
Report:
is much worse than most of its detractors (and supporters) believe. It is far more accusatory
of Israel, far less balanced in its criticism of Hamas, far less honest in its evaluation of the
evidence, far less responsible in drawing its conclusions, far more biased against Israeli than
Palestinian witnesses, and far more willing to draw adverse inferences of intentionality from
Israeli conduct and statements than from comparable Palestinian conduct and statements.
See Alan Dershowitz, The Case Against the Goldstone Report: A Study in Evidentiary Bias, Harvard Public Law
Working Paper No. 10-26, at 1, available at http://ssrn.com/abstract=1542897.
2017
Due Process in UN Commissions of Inquiry
141
respectively, Amnesty International,59 Human Rights Watch,60 the United States House of
Representatives61 and State Department,62 and the European Parliament.63
II. Follow-up Reactions to the Goldstone Report: Israel, Hamas and the Palestinian Authority
From the Gaza COI’s inception, Israel refused to cooperate with the Commission or grant it
access to Israeli territory, claiming in justification that the “grossly politicized” Human Rights
Council resolution constituting the Gaza COI was biased and one-sided.64 Israel noted that
the original resolution (S-9/1) determined, “at the outset that Israel has perpetrated grave
violations of human rights” and implied that Israel, “deliberately targeted civilians and
medical facilities, and systematically destroyed the cultural heritage of the Palestinian
people.”65 The Israeli government’s concern was that the legal basis of the Gaza COI,
regardless of Goldstone’s assurances about using a revised understanding of its terms, was
biased.
59
Amnesty International supported the Goldstone Report’s findings and argued that the UN should ensure that its
recommendations are implemented because they offered, “the best hope for justice and accountability.” See UN
Must Ensure Goldstone Inquiry Recommendations are Implemented, AMNESTY INTERNATIONAL (Sept. 15, 2009).
Amnesty International further noted that, “[t]he report’s findings are consistent with those of Amnesty
International’s own field investigation into the 22-day conflict . . . . ” Id.
60
Human Rights Watch noted that the Goldstone Report’s findings “closely correspond[ed]” to its findings and
those of “other independent groups [NGOs].” See UN: US, EU Undermine Justice for Gaza Conflict: Goldstone Report
Offers Chance to End Impunity, H UMAN RIGHTS WATCH (Sept. 30, 2009), www.hrw.org/en/news/2009/09/30/un-useu-undermine-justice-gaza-conflict?. See also Letter to Prime Minister Haniya, HUMAN RIGHTS WATCH (Oct. 20, 2009),
www.hrw.org/en/news/2009/10/20/letter-prime-minister-haniya?print; Letter to Ban Ki-moon on the General
Assembly Resolution of Post-fact Finding Investigations in Gaza, HUMAN RIGHTS WATCH (Nov. 23, 2009),
www.hrw.org/en/news/2009/11/23/letter-ban-ki-moon-general-assembly-resolution-post-fact-findinginvestigations-gaza?; Israel/Gaza: Implement Goldstone Recommendations on Gaza, HUMAN RIGHTS WATCH (Sept. 16,
2009), http://www.hrw.org/en/news/2009/09/16/israelgaza-implement-goldstone-recommendations-gaza.
61
H.R. Res. 867, 111th Cong. (2009) [hereinafter H.R. Res. 867].
62
The United States Department of State officially condemned the Goldstone Report as “deeply flawed” and
disagreed with both its methodology and many of its recommendations. Statement by Michael Posner, UN Assistant
Secretary of State for Democracy, U.S. State Dep’t (Sept. 2009), http://geneva.usmission.gov/2009/09/29/gazaconflict [Posner State Department Response]. See also U.S. State Dep’t, 2009 Human Rights Report: Israel and the
Occupied Territories (Mar. 11, 2010), www.state.gov/g/drl/rls/hrrpt/2009/nea/136070.htm.
63
Despite being divided, with many European Union (EU) countries voting against the UN General Assembly and
Human Rights Council resolutions on the Goldstone Report, outside the UN context the EU parliament nevertheless
offered its (non-binding) endorsement of the Goldstone Report by majority vote. See Leigh Phillips, Despite Heavy
Lobbying,
EU
Parliament
Endorses
Goldstone
Report,
EU
OBSERVER
(Mar.
10,
2010),
http://euobserver.com/24/29650?pring=1. The vote in the parliament was 335-287.
64
Letter of Ambassador Aharon Leshno-Yaar, supra note 30.
65
Id.
142
German Law Journal
Vol. 18 No. 01
In a pre-emptive move against the Goldstone Report, in July 2009, Israel released its own
157-page report entitled “The Operation in Gaza: Factual and Legal Aspects,” which
addressed many of the controversial incidents, the applicable legal framework, and offered
its own context for Operation Cast Lead.66 This report concluded that the operation was “a
necessary and a proportionate response to Hamas’ attacks,” directed solely against military
objectives.67 Israel also prepared an initial 32-point response to the Goldstone Report on 24
September 2009.68 This response claimed that the Gaza COI was “instigated as part of a
political campaign, [representing] a political assault directed against Israel . . . . ”69 Israel’s
response also asserted that the Goldstone Report “repeatedly adopts evidentiary double
standards, attributing credibility to every anti-Israel allegation, and invariably dismissing
evidence that indicates any wrongdoing by Hamas.”70 Moreover, the Israel response posited
that the Goldstone Report was “highly judicial in nature, reaching conclusive judicial
determinations of guilt”71 and that the Report went “far beyond its mandate as a fact-finding
mission, making legal and judicial determinations of criminal wrongdoing, even in the
absence of crucial information.”72
Israel’s updated response came in the form of a report delivered to the UN in January of
2010. In this response, Israel focused primarily on its follow-up investigations and claimed
that 150 incidents had been or were being investigated, 36 of which were referred for
criminal investigation.73 The January 2010 response revealed only one criminal conviction of
an Israeli soldier in relation to the war: The soldier was jailed for seven and a half months
for stealing a credit card from a Palestinian home.74 Israel also chose to review four incidents
detailed by the Goldstone Report,75 and has maintained a governmental website dedicated
66
Israel Ministry of Foreign Affairs, The Operation in Gaza: Factual and Legal Aspects (July 2009). See also Israel
Ministry of Foreign Affairs, FAQ: The Operation in Gaza—Factual and Legal Aspects (Aug. 16, 2009).
67
Id., The Operation in Gaza: Factual and Legal Aspects, at 1.
68
Initial Israeli Response to Gaza COI, supra note 31.
69
Id., ¶ 1, at 1.
70
Id., ¶ 4, at 2.
71
Id., ¶ 23, at 17.
72
Id., ¶ 5, at 2.
73
Israel Ministry of Foreign Affairs, Gaza Operation Investigations: An Update (Jan. 29, 2010) [hereinafter Israeli
Investigations Update].
74
See Rory McCarthy, Israel Denies Gaza War Crimes in Report to UN, THE GUARDIAN (Jan. 31, 2010).
75
Israeli Investigations Update, supra note 73, at 36–45.
2017
Due Process in UN Commissions of Inquiry
143
to responding to the Goldstone Report and updating Israeli governmental responses and
other subsequent actions.76
Subsequent to Israel’s report of January 2010, Israel continued to investigate its actions.77
However, on 10 April 2010 Human Rights Watch issued a report stating that investigations
by both Israel and Hamas since the issuance of the Goldstone Report had fallen far short of
international legal standards.78 Shortly thereafter, Israel’s government issued a second
response on 19 July 2010 to the Goldstone Report—Israel’s third report overall—which
focused on the follow-up actions of the government and military, some of which had come
after the issuance of the Human Rights Watch Report.79 In a September 2010 report to the
Human Rights Council, a UN Committee of Independent Experts—created to monitor any
follow-up investigations80 and headed by eminent international jurist Christian Tomuschat—
responded to all three Israeli reports. The Committee of Independent Experts report found
that Israel had failed to investigate credibly at least some of the crimes committed during
76
See generally Israeli Ministry of Foreign Affairs, http://www.mfa.gov.il/gazafacts.
77 See Israeli
Ministry of Foreign Affairs, IDF Military Advocate General Indicts Soldiers for Incidents During Operation
Cast
Lead
(July
6,
2010),
http://www.mfa.gov.il/MFA/Government/Communiques/2010/Military_Advocate_General_indicts_IDF_soldiers_
Operation_Cast_Lead_6_Jul_2010.htm; Israeli Ministry of Foreign Affairs, Military Prosecution Indicts Two IDF Staff
Sergeants
for
Unauthorized
Conduct
During
Operation
Cast
Lead
(Mar.
11,
2010),
http://www.mfa.gov.il/MFA/Government/Communiques/2010/Military_Prosecution_indicts_sergeants_Operatio
n_Cast_Lead_11-Mar-2010.htm. See, for example, the BBC News reported in 10 March 2010 that the “Israeli
military has charged two of its soldiers with endangering the life of a Palestinian boy during Israel’s offensive . . . .
” Israel Charges of Human Shield, BBC NEWS (Mar. 12, 2010); see also Israeli Sniper Faces Gaza Manslaughter
Charges, BBC NEWS (July 6, 2010), http://news.bbc.co.uk/2/hi/world/middle_east/10526541.stm; Isabel Kershner,
Indictments in Gaza War Are Announced, NEW YORK TIMES (July 6, 2010). See also Israeli Soldier Shot Two Women as
They
Waved
a
White
Flag,
THE
TELEGRAPH
(July
6,
2010),
http://www.telegraph.co.uk/news/worldnews/middleeast/israel/7875702/Israeli-soldier-shot-two-women-asthey-waved-white-flag.html
78
See Turning a Blind Eye: Impunity for Laws-of-War Violations During the Gaza War, HUMAN RIGHTS WATCH (Apr. 10,
2010), http://www.hrw.org/node/89575.
79
See Israel Ministry of Foreign Affairs, Gaza Operation Investigations: Second Update, (July 2010)
http://www.mfa.gov.il/NR/rdonlyres/1483B296-7439-4217-933C-653CD19CE859/0/GazaUpdateJuly2010.pdf
[hereinafter Israeli Second Updated Response].
80
See Follow-up to the Report of the United Nations Independent International Fact-Finding Mission on the Gaza
Conflict, Human Rights Council Res. A/HRC/RES/13/9, art. 9 (Apr. 14, 2010):
Decides, in the context of the follow-up to the report of the Independent International FactFinding Mission, to establish a committee of independent experts in international
humanitarian and human rights laws to monitor and assess any domestic, legal or other
proceedings undertaken by both the Government of Israel and the Palestinian side, in the
light of General Assembly resolution 64/254, including the independence, effectiveness,
genuineness of these investigations and their conformity with international standards . . . .
[Emphasis in original.]
144
German Law Journal
Vol. 18 No. 01
the Gaza offensive. However, the Committee’s report did note a number of positive
procedural developments implemented by Israel—such as the nomination of a humanitarian
officer for all fighting battalions—that have come about in response to the Goldstone
Report.81 It should be noted that the Committee of Independent Experts relied on publicly
available information (primarily the three Israeli reports issued in response to the Goldstone
Report) because the government of Israel was unwilling to cooperate with the Committee.
This lack of cooperation led the Human Rights Council Committee to find that its
bases of information [on Israeli investigations] [were] insufficient for a
definitive assessment. Consequently, the Committee is not in a position
to establish whether the investigations carried out by Israel met
international standards of independence, impartiality, thoroughness,
effectiveness and promptness.82
At the same time, the Committee of Independent Experts report also concluded that Israel
had failed to investigate credibly at least several incidents, focusing on only a few relatively
low-ranking officials and ignoring those responsible for planning the war; the report thus
concluded that the impartiality of the investigative processes could be put into question as
a result.83
The Committee of Independent Experts’ founding mandate was renewed subsequent to the
September 2010 report and new commissioners were appointed.84 The second Committee
of Independent Experts report was issued on 18 March 2011. 85 This time, the report noted
that Israel had “dedicated significant resources to investigate over 400 allegations of
operations misconduct in Gaza reported by the [Goldstone Report] and others,”86 including
52 criminal investigations.87 The March 2011 report noted that much was left to be done in
terms of continued investigations; that investigations had proceeded at a very slow pace,
which could undermine investigated efforts; but that “[g]iven the scale of this undertaking,
81
Human
Rights
Council
Res.
15/50,
¶¶
42–43,
46
(Sept.
21,
2010),
http://www2.ohchr.org/english/bodies/hrcouncil/docs/15session/A.HRC.15.50_AEV.pdf. The report also noted
examples of “serious attempt[s] on the part of Israeli investigators to explain what happened . . . . ” Id. at ¶ 46.
82
H.R.C. Res. 15/50, supra note 81, ¶¶ 44–50.
83
Id.
84
Human Rights Council Res. 15/6, U.N. Doc. A/HRC/RES/15/6 (Oct. 6, 2010). New commissioners were appointed
because the previous commissioners had other obligations that prevented them from continuing in the position.
85
Human Rights Council Res. 16/21, U.N. Doc. A/HRC/16/21 (Mar. 18, 2011).
86
Id. at ¶ 77.
87
Id. at ¶ 24.
2017
Due Process in UN Commissions of Inquiry
145
it is unsurprising that in 2011, much remains to be accomplished.”88 However, it was again
reiterated that, “there is no indication that Israel has opened investigations into the actions
of those who designed, planned, ordered and oversaw Operation Cast Lead.”89 Moreover, it
was clear that not all incidents mentioned in the Goldstone Report had been investigated
and that the number of criminal convictions remained very low.
According to an op-ed by Justice Goldstone in the Washington Post, this second Committee
of Independent Experts report caused Goldstone to “reconsider” his own report,90 a
development which was accompanied by Israel seeking the retraction of the Goldstone
Report at the UN.91 What Goldstone actually said was that, had Israel cooperated with the
Gaza COI and provided him with the information that Israel had since made available in
internal investigations and prosecutions, some of that evidence “probably would have
influenced [the COI’s] findings about intentionality and war crimes.”92 Goldstone’s assertion
seemed to apply only to a reconsideration of one incident (of the thirty-six investigated) that
spoke in part to one broad charge leveled against Israel by the Goldstone Report – the charge
that Israel had a high level plan to target intentionally civilians – although he seemed to
imply that as a general matter he no longer believed that Israel had a high-level plan to target
civilians. His basis for such an about-face was ambiguous.93 The three other Gaza COI
commissioners, in contrast, made clear that they did not share his view and that subsequent
revelations had changed little.94
88
Id. at ¶ 77.
89
Id. at ¶ 79.
90
Goldstone Recantation, supra note 33.
91
Israel Seeks Retraction of Damaging UN Report, THE GLOBE AND MAIL (3 April, 2011). See also Judge Goldstone to
Visit Israel, Says Minister, THE GUARDIAN (Apr. 5, 2011).
92
Goldstone Recantation, supra note 33. Goldstone seemed to be speaking in particular about one notorious case
where he found that Israel appeared to intentionally target civilians, though he seemed to generalize at times by
stating that there was not an intentional policy of targeting civilians in general. In his “recanting” of this, he stated:
“While the investigations published by the Israeli military and recognized in the UN committee’s report have
established the validity of some incidents that we investigated in cases involving individual soldiers, they also
indicate that civilians were not intentionally targeted as a matter of policy.” He then uses as the example the shelling
of the al-Simouni home.
93
For a discussion of how bizarre Goldstone’s reconsideration may have seemed, see Roger Cohen, The Goldstone
Chronicles, NEW YORK TIMES (Apr. 7, 2011); John Dugard, Where Now for the Goldstone Report, NEW STATESMAN BLOG
(Apr. 6, 2011).
94
See Hina Jilani, Christine Chinkin & Desmond Travers, Goldstone Report: Statement Issued by Members of UN
Mission on Gaza War, THE GUARDIAN (Apr. 14, 2011); Ed Pilkington & Conal Urquhart, Goldstone’s Gaza Report
Stands, UN Insists, THE G UARDIAN (Apr. 5, 2011). See also Member of UN Fact Finding Mission on Gaza Conflict Insists
Report Stands Unchanged, MIDDLE EAST MONITOR (Apr. 4, 2011).
146
German Law Journal
Vol. 18 No. 01
In contrast to Israel, Hamas initially saw the Goldstone Report as a vindication of its position,
though it continued to deny the charges against it95 and has since exhibited little interest in
investigating alleged wrongdoings that took place during the war or holding those
responsible accountable for its actions. Hamas did release a report in response to the
Goldstone Report—though it did not initially submit it to the UN—and rejected the
Goldstone Report’s charges of war crimes.96 The Human Rights Watch Report on the postGaza invasion investigations of Israel and Hamas found once again that Hamas made no
credible attempts to investigate and/or prosecute, as did the first of the Committee of
Independent Experts reports, which had noted that two “investigative” reports had been
submitted to the Committee, though one was not really an investigation at all.97 The second
Committee of Independent Experts report noted that some “efforts” had been made with
respect to criminal investigations into human rights violations, although no investigations
had commenced into the launching of rockets and mortars into Israeli territory.98
The Palestinian Authorities in the West Bank established a high-level, four-member
commission to investigate the Goldstone Report’s findings.99 The first Committee of
Independent Experts report also reviewed the Palestinian Authorities’ high-level
commission’s report and found “that the [Palestinian Authority’s] Independent Investigation
Commission undertook independent and impartial investigations in a comprehensive
95
See Ezzedeen Al-Qassam Brigades, UN Report Clear Proof of Israel’s War Crimes (Sept. 16, 2009),
www.gassam.ps/news-1840-UN_report_clear_proofs_of_Israels_war_crimes.html. Hamas initially rejected some
of the findings—those related to its actions, of course—but evidently determined it was better to promote worldwide acceptance of the Goldstone Report.
96
UN Receives Goldstone Responses, BBC NEWS (Jan. 29, 2010), http://news.bbc.co.uk/go/pr/fr//2/hi/middle_east/8487301.stm. See “Case of applying recommendations of the United Nations Fact-Finding
Mission report in relation to the Israeli aggression against Gaza (December 2008 to January 2009)”, prepared by
the Government Committee for Follow-up to the Implementation of the United Nations Fact-Finding Mission
Report of the de facto Gaza authorities
97
Turning a Blind Eye, supra note 78, at 6. The report stated:
In Gaza, Hamas has taken no meaningful steps to investigate and punish those who violated
the laws of war. After rejecting criticism of its conduct during the war, Hamas established a
commission headed by the Gaza Minister of Justice to look at the allegations in the Goldstone
report. In January 2010 it released the commission’s findings that Hamas’s armed wing…and
other Palestinian armed groups had fired rockets only at Israeli military targets, and civilian
casualties from those attacks were mistakes, due to the weapons’ technological limitations.
The claim ignores the fact that the rockets fired into Israel that did not land in open terrain
mostly struck in civilian populated areas…far from any legitimate military target . . . .
98
99
H.R.C. Res. 15/50, supra note 81, ¶¶ 88–90.
See Report of the Palestinian Independent Investigation Commission Established Pursuant to the Goldstone
Report, U.N. Doc. A/64/890 (Aug. 2010).
2017
Due Process in UN Commissions of Inquiry
147
manner that squarely addressed the allegations in the [Goldstone] report.”100 However, the
same Human Rights Council Committee of Independent Experts report also noted that, “it is
unclear to what extent [the Palestinian Authority’s Independent Investigation Commission’s]
report will lead to criminal investigations and prosecutions,”101 and that “investigations are
only the first step to achieving accountability . . . and that the prosecution of perpetrators .
. . should follow promptly.”102 The second Committee of Independent Experts report
detailed a number of subsequent institutional advancements, including the creation of a
Palestinian Constitutional Court, the transfer of cases from military to civilian jurisdiction,
and the appointment of a General Prosecutor to conduct investigations.103 However, the
second Committee of Independent Experts report again noted that the “criminal
accountability mechanisms have not yet been duly activated in relation to any of the
allegations of serious violations in the [Goldstone Report].”104
Let us now delve a little more deeply into some of the criticisms of the Goldstone COI,
proceeding in general in the temporal order in which such criticisms were raised.
C. Bias and the Law
I. Bias and the Original Mandate
As noted, the original mandate for what was to become the Gaza COI was undoubtedly onesided as against Israel. The mandate focused only on Israeli actions, and presupposed their
criminality. Justice Goldstone managed to change the language and the focus of the inquiry
to ensure that all sides would be investigated, but criticism remained that the “official”
mandate was biased. Justice Goldstone and his fellow commissioners clearly were governed,
at least in practice, by the updated mandate and viewed it as the Gaza COI’s legally
constituting instrument.105 But Israel managed to bring the credibility of the mandate—and
thus the credibility of the Goldstone Report and its findings—into question by focusing on
the original, biased mandate rather than the revised version. The United States House of
Representatives apparently concurred with Israel’s assessment and, in a non-binding
resolution, noted inter alia that Gaza COI’s original mandate was biased and asserted that
100
H.R.C. Res. 15/50, supra note 81, ¶ 70.
101
Id. at ¶ 73.
102
Id. at ¶ 5.
103
H.R.C. Res. 16/21, supra note 85, ¶¶ 84–97.
104
H.R.C. Res. 16/21, supra note 85, at ¶ 87.
105
See supra note 38 and accompanying text.
148
German Law Journal
Vol. 18 No. 01
this original mandate remained applicable to the Gaza COI, having never formally been
overturned by a subsequent Human Rights Council resolution.106
For Israel and the United States House of Representatives, the argument that the mandate
was biased could be added to a laundry list of other procedural concerns, which were then
used to impugn the credibility of the Goldstone Report’s findings. At least some of the
subsequent debate was therefore redirected from an analysis of human rights abuses to a
discussion of the biased mandate.
Israel’s reaction to the Goldstone Report was not merely a spurious attempt to distract from
its substance by disingenuously locating bias in the very foundation of the inquiry; rather,
Israel’s reaction to the original so-called biased mandate should be seen in context. This
context includes the specific complaints as regards the Commission on Human Rights, and
now the Human Rights Council, long viewed as focusing disproportionately on Israel, as well
as the perception of those reports, COI’s and fact-finding missions that came before the Gaza
COI.107 Based on Israel’s history with the Human Rights Council and its COIs, for Israel it came
106
H.R. Res. 867.
107
The United States statement noted, inter alia, that between the creation of the Human Rights Council in 2006
and the issuance of the Goldstone Report, “[the Human Rights Council] ha[d] passed 20 resolutions on Israel, more
than the number of resolutions for all 191 other UN members combined. The Council also ha[d] held 11 special
sessions, 5 focused exclusively on Israel.” See Posner State Department Response, supra note 62. The US is not the
only one to assert that the UN has a long history of focusing disproportionately on Israel, or at least on the IsraeliPalestinian conflict, with primarily Middle Eastern and African nations forcing the issue. From the General Assembly
to the UN’s various human rights reporting instruments, historically no conflict is or has been more scrutinized.
Many observers have noted the statistics related to the majority focus on Israel as opposed to other situations. See
Theodoor van Boven, Fact-Finding in the Field of Human Rights, 3 ISR. Y.B. HUM. R TS. 93, 116 (1973): “It is no doubt
true that the active and close concern of the United Nations for human rights and fundamental freedoms is almost
exclusively concentrated on Southern Africa and the Middle East; the prevailing political climate in the United
Nations is certainly the reason for this.” For a more recent example with respect to the Human Rights Council (i.e.
since April 2006) is the Freedom House Report, The UN Human Rights Council Report Card: 2007–2009, (Sept. 10,
2009), http://www.freedomhouse.org/sites/default/files/inline_images/UNHRC%20Council%20Report%2020072009.pdf. The report states:
The Council’s performance with regard to special sessions remains disappointing in terms of
addressing urgent human rights issues, but has decidedly improved since the first year of the
Council, when three of the first four special sessions focused on Israel. Of the seven special
sessions held since June 2007, two focused on Israel and the other five focused on Burma,
the world food crisis, the Democratic Republic of Congo, the economic and financial crisis,
and Sri Lanka.
Id. at 8. The report also had the following to say:
Israel remained the target of an inordinate number of both condemnatory resolutions and
special sessions. Israel was the target of 10 out of 18 condemnatory resolutions passed during
the period of this report (and 19 out of 31 since the first session of the Council), the language
of which is consistently one-sided, assigning sole responsibility to Israel for the violations of
human rights in the Occupied Palestinian Territories. Israel was also the target of three of the
2017
Due Process in UN Commissions of Inquiry
149
as no surprise that the intention behind calling for an inquiry was to criticize Israel in
particular. Whatever subsequent actions were taken would have to overcome the fact that
history seemed to be repeating itself and, once again, Israel was the focus of condemnation
and inquiry where other parties to the conflict—namely Hamas—were not explicitly named.
Given such a history and the intention of the Human Rights Council in calling for the inquiry
to perpetuate the history, little independence or impartiality could be expected from Israel’s
perspective. According to Israel, the legitimacy of the Gaza COI was wholly undermined;
merely changing the wording of the mandate did not change the intention of Human Rights
Council members who first called for the inquiry.108
Of course, Justice Goldstone was neither a representative of a member-state of the Human
Rights Council that called for the inquiry, nor was he responsible for the original mandate.
In actuality, he condemned it. So the counter-argument goes that Goldstone, and the other
members of the Gaza COI, were not tainted by this institutional bias. The impartiality of the
commissioners as well as their independence from the “tainted” Human Rights Council was
therefore vital to ensuring the legitimacy of the report.
In this regard, the Gaza COI experienced difficulties from the very beginning because it was
not so clear that the other members of the Gaza COI were indeed untainted by the
perception of bias—the very thing that the Gaza COI relied upon to prove its independence
from the original mandate. The obvious conclusion is that an unbiased mandate is critical to
the legitimacy of a UN COI and thus the credibility of its ultimate report. However, the history
and credibility of the institution creating the mandate can also affect the perceived
legitimacy of the UN COI, and thus the credibility of its report.
II. Bias, Impartiality, and the Gaza COI’s Commissioners
As has historically been the case with UN COIs, criticisms of the Goldstone Report related to
its findings and in particular to the reliability, credibility, and impartiality of the Goldstone
Report as reflected by its operating principles and procedures. These working principles and
procedures, in turn, depend upon and are inter-connected with the purpose ultimately
assigned to a UN COI. One of the first concerns raised with regard to the Gaza COI was
related to the extent to which the COI should be viewed as a legal undertaking: To what
extent did the Goldstone COI have a legal-judicial purpose and follow legal procedures as a
result? Now, the disputed—and shifting interpretations of—the legality of the Gaza COI
four first special sessions called by the Council and was the target of two of the seven special
sessions that took place during this reporting period.
Id. at 9. See also Freedom House, The UN Human Rights Council Report Card 2009–2010, 2 (Sept. 15, 2010),
http://www.freedomhouse.org/sites/default/files/inline_images/UNHRC%20Report%202009-2010.pdf.
108
See, e.g., Initial Israeli Response to Gaza COI, supra note 31.
150
German Law Journal
Vol. 18 No. 01
caused several additional problems, including allegations of potential bias of the
commissioners themselves.
Like many other COIs, both national and international, the Gaza COI was led by a strong
personality who had an extensive background in both international law and human rights
law: The President of the Human Rights Council appointed Justice Richard Goldstone lead
commissioner of the Gaza COI. Goldstone was inarguable well-qualified for the position, as
he is a former judge of the Constitutional Court of South Africa; he chaired the Goldstone
Commission into the illegal activities of the apartheid state; he is a former chief prosecutor
at the International Criminal Tribunal for the former Yugoslavia; and, Justice Goldstone is a
professor of law.
Three other members were also appointed to the Gaza COI, including Ms. Hina Jilani,109
Colonel Desmond Travers,110 and Professor Christine Chinkin, whose addition was
particularly controversial. Christine Chinkin is a professor of international law and has had
previous experience as a member of the UN Human Rights Council’s high-level fact-finding
mission to Beit Hanoun (2008).111 She was thus naturally considered an expert in
international law and fact-finding, and considered to be someone with experience in the
region. However, while a professor of international law at the London School of Economics
and before the Gaza COI had started work, she was a signatory to a public letter on the Gaza
conflict. The letter was also signed by over two dozen prominent academics who all agreed
that “the rocket attacks on Israel by Hamas [did] not amount to an armed attack entitling
Israel to rely on self-defense.”112 The title of the public letter has also drawn criticism:
“Israel’s Bombardment of Gaza is Not Self-Defense—It’s a War Crime.”113 The letter posited
that “the blockade of humanitarian relief, the destruction of civilian infrastructure, and [the
prevention of] access to basic necessities such as food and fuel, are [all] prima facie war
crimes.”114 As a result of this letter numerous commentators, including the Government of
109
At the time, she was an Advocate of the Supreme Court of Pakistan, and had formerly been a Special
Representative of the Secretary-General on the situation of human rights defenders. She was also a member of the
International Commission of Inquiry on Darfur in 2004.
110
Colonel Travers is a former Officer in Ireland’s Defense Forces as well as a member of the Board of Directors of
the Institute for International Criminal Investigations. Goldstone Report, supra note 5, ¶¶ 2, 132.
111
See Human Rights Council, Human Rights Situation in Palestine and Other Occupied Arab Territories: Report of
the High-level Fact-finding Mission to Beit Hanoun Established under Council Resolution S-3/1, U.N. Doc.
A/HRC/9/26 (Sept. 1, 2008).
112
Christine Chinkin, et. al., Israel’s Bombardment of Gaza Is Not Self-defense—It’s a War Crime, SUNDAY TIMES at 16
(Jan. 11, 2009).
113
Id.
114
Id.
2017
Due Process in UN Commissions of Inquiry
151
Israel and the United States House of Representatives,115 questioned professor Chinkin’s
impartiality as a commissioner.116 Rarely is it noted, however, that the letter also condemns
“the firing of rockets by Hamas into Israel and suicide bombings which [were] also contrary
to international humanitarian law and are war crimes.”117 Perhaps the fact that Professor
Chinkin seemed to have pre-determined prima facie criminality on both sides, as opposed
to only with respect to one party, is a non sequitur in that the concern, seen in its best light,
was really with respect to Chinkin having predetermined criminality. Whether she had
prejudged one or both sides was of lesser significance.
In any event, it has been argued that her appointment created a suspicion of bias. As a result,
there were several requests that she recuse herself from the Gaza COI, including a direct,
formal petition by UN Watch (a pro-Israeli NGO) to Justice Goldstone that she be
disqualified.118 Arguably a judge on a domestic COI would have been disqualified in similar
circumstances; however, in rejecting the petition to disqualify Professor Chinkin, Justice
Goldstone stated that bias did not apply as it would in a court or administrative law setting
because the Gaza COI was neither “judicial” nor even “quasi-judicial” in nature:119 “Ours
wasn’t an investigation, it was a fact-finding mission . . . . We made that clear . . . [i]f this was
a court of law, there would have been nothing proven.”120
Goldstone recommended that independent criminal investigations and, if necessary,
prosecutions be undertaken either by the parties to the conflict, the International Criminal
Court, or by way of the exercise of universal jurisdiction because he viewed the COI as a factfinding mission, rather than a criminal or legal undertaking.121 This is to say that Justice
Goldstone saw his role as purely investigatory, whereby the issues are brought into the
115
See generally H.R. Res. 867, supra note 61.
116
See Letter of Ambassador Aharon Leshno-Yaar, supra note 30. See also Initial Israeli Response to COI, supra note
31, ¶ 17.
117
Chinkin, et. al., supra note 112.
118
See U.N. Watch, Request to Disqualify Prof. Christine Chinkin from UN Fact Finding Mission on the Gaza Conflict,
(Aug. 20, 2009).
119
U.N. Watch, UN Goldstone Inquiry Rejects ‘so-called’ Petition of UN Watch; Denies Mission is Quasi-judicial, (Aug.
30, 2009), http://blog.unwatch.org/?p=451. See also Justice Goldstone’s talk at Brandeis University, available at
http://www.brandeis.edu/now/2009/november/gazaforumcoverage.html; and Goldstone Walks a Fine Line in an
Ancient War Zone, B USINESS DAY (Apr. 8, 2009), www.businessday.co.za/articles/Content.aspx?id-77618. See also
Gal Beckerman, Goldstone: ‘If This Was a Court of Law, There Would Have Been Nothing Proven’, JEWISH DAILY
FORWARD (Oct. 16, 2009), www.forward.com/articles/116269.
120
See Beckerman, supra note 119.
121
Goldstone Report, supra note 5, ¶ 1968.
152
German Law Journal
Vol. 18 No. 01
public domain and the legal and criminal work are left to be accomplished by courts of law.122
Subsequent to the Gaza COI, Justice Goldstone has described the purpose of UN COIs as
offering a “roadmap” for future prosecutors (and presumably others) to use to aid in
deciding on what incidents or types of offences might usefully be investigated.123 Under this
understanding, it would seem that criminal courts could not rely on the Goldstone Report’s
findings.124 In this regard, Alan Dershowitz has stated, “[i]f [Chinkin’s] bias would have been
a ground for judicial disqualification, then surely her conclusions should not be credited by
quasi-judicial bodies, such as the International Criminal Court, the Human Rights Council,
and other governmental and non-governmental bodies.”125
However, Goldstone’s assertion in rejecting the petition to disqualify Chinkin that the Gaza
COI was completely non-judicial in nature seems difficult to reconcile with his other
assertion that the Gaza COI itself was necessarily impartial and independent.126 In reviewing
Israel’s duty to investigate allegations of serious violations of international law, the
Goldstone Report explicitly stated that inquiries were required to observe “the universal
principles of independence, effectiveness, promptness and impartially (sic).”127 Elsewhere in
the Goldstone Report, it was made clear that the Gaza COI was itself bound by what was
called “international investigative standards developed by the UN.”128 However, it is unclear
122
Goldstone has asserted since the report that: “Some have charged that the process we followed did not live up
to judicial standards. To be clear: Our mission was in no way a judicial or even quasi-judicial proceeding. We did not
investigate criminal conduct on the part of any individual in Israel, Gaza or the West Bank.” Goldstone Recantation,
supra note 33.
123
Goldstone subsequently addressed the purpose of large-scale UN COIs, such as that in Gaza, in an interview:
When he began working [as chief prosecutor of the ICTY], Goldstone was presented with a
report commissioned by the U.N. Security Council based on what he said was a fact-finding
mission similar to…Gaza. “We couldn’t use that report as evidence at all,” Goldstone said.
“But it was a useful roadmap for our investigators, for me as chief prosecutor, to decide where
we should investigate. And that’s the purpose of this sort of report.”
[Emphasis added]. See Gal Beckerman, supra note 119.
124
Id.
125
Dershowitz, supra note 58, at 5.
126
According to Goldstone, in the Executive Summary of the Goldstone COI, published by the European Human
Rights Law Review, “the Mission adhered to an impartial and independent analysis of the parties’ compliance with
their obligations under general international law, the Charter of the United Nations, international humanitarian
law, international human rights law and international criminal law.” Goldstone, et. al., Report on UN Fact Finding
Mission on the Gaza Conflict, 2 EUR. HUM. RTS. L. REV. 125, 125 (2010).
127
128
Goldstone Report, supra note 5, ¶ 1814.
Id. at ¶¶ 158, 161: “The methods adopted to gather and verify information and reach conclusions were for the
most part guided by best practice methodology in the context of United Nations investigations.”
2017
Due Process in UN Commissions of Inquiry
153
what independence and impartiality might mean—and how these principles should be
interpreted—if legal or quasi-legal standards are removed from the equation so that, for
example, the appearance of bias does not affect the COI’s independence or impartiality. As
the first follow-up to the Goldstone Report by the Human Rights Council Committee of
Independent Experts stated with regard to its review of the investigations into their own
conduct during the 22-day conflict by Israel and Hamas:
impartiality refers to the question of whether an investigator is or is likely
to be biased. The [UN] Human Rights Committee has stated that “judges
must not harbor preconceptions about the matter put before them, and
that they must not act in ways that promote the interests of one of the
parties”. Similar considerations apply to investigators.129
In any event, it is a choice whether or not we treat such COIs as legal responses to mass
atrocities or, rather, design them as simply something akin to a human rights fact-finding
mission of the sort that a NGO might conduct. The latter approach would support
Goldstone’s assertion that the Gaza COI was neither judicial nor quasi-judicial,130 in that he
seems to assert that no or very limited formal legal rules apply, at least as concerns issues
of bias or the choice of commissioners. However, such a position is inapposite with the
reality of what contemporary UN COIs do, how they are designed, and what is needed from
them. Law is inextricably linked to COI processes. Ad hoc UN COIs are legally constituted
through formal resolutions, conduct administrative-legal inquiries akin to COIs in domestic
settings. The COIs also apply interpretations of international laws, make pronouncements
on criminal guilt or the possibility thereof, and their findings result in—or are intended to
support—legal consequences, such as being used by legal bodies such as courts to found
legal actions. Thus, it is hard to see how impartiality and independence can both be required
by universal principles but not subject to either a judicial or quasi-judicial legal
interpretation. Law is infused throughout the UN COI and legality must necessarily play a
role in the interpretation of independence and impartiality in this case, particularly with
respect to issues of real or perceived bias.
Moreover, the effectiveness and legitimacy of UN COIs depend on their ability to produce
impartial, independent reports for political bodies that could not likely do so themselves. A
review of the perceptions of UN COI commissioners, reports, academic commentators, as
well as the ever-increasing set of applicable rules and guidelines reveals that the legitimacy
of UN COIs is inexorably linked to their ability to complete their fact-finding task not just in
a thorough fashion, but in an open, impartial, reliable and independent manner.
129
130
H.R.C. Res. 15/50, supra note 81, ¶ 23 [Emphasis added.]
Goldstone reiterated his assertion that the Gaza COI was not to live up to judicial standards: “Some have charged
that the process we followed did not live up to judicial standards. To be clear: Our mission was in no way a judicial
or even quasi-judicial proceeding.” [Emphasis added.] Goldstone Recantation, supra note 33.
154
German Law Journal
Vol. 18 No. 01
Theoretically, because of the impartiality and independence of UN COIs, their factual
findings and recommendations can be relied upon in a way that the findings, assertions, and
recommendations of UN political organs cannot. Regardless of whether or not a particular
UN COI perceives itself to be “extra-“ or “quasi-judicial”—or something else entirely—and
regardless of a particular purpose ascribed to a UN COI, its benefits derive from the fact that
it is able to act, to a greater or lesser degree, “legally”, even in otherwise highly political
contexts. In other words, the benefit of UN COIs has always been their ability to bring legal
legitimacy—the sort that follows from transparent efforts for reasoned objectivity—to
political conflicts.
The parallels between Justice Goldstone’s assertions in 2009 and the more recent 2015 Gaza
inquiry are striking. Before being appointed as chairman of the commission of investigation,
Professor William Schabas called for the indictment of Israeli Prime Minister Benjamin
Netanyahu, asserting that there was prima facie evidence of Israeli disproportionality in its
attacks on Gaza—tantamount to saying war crimes were prima facie committed (prima facie
being arguably as far as a COI could go in its findings). 131 Israel’s response to the
appointment, as it had been to Chinkin’s appointment in 2007, was to assert that Schabas
was “a vocally biased critic of Israel,” meaning that Israel would not get “a fair hearing” from
the UN commission.132 In a series of events very similar to what had transpired years earlier
with Professor Chinkin, Schabas was called upon by Israel and others (including Canada) to
step down for the perception of bias, something he eventually reluctantly did.133 Tellingly,
in his resignation letter to the UN, Professor Schabas stated: “In early August 2014, when I
was asked if I would accept a nomination to the Commission of Inquiry, I was not requested
to provide any details on any of my past statements and other activities concerning Palestine
and Israel.”134
The point here is not to take a position on whether Professors Schabas or Chinkin were
biased in a meaningful sense. Rather, the idea is that bias and the perception thereof matter
with respect to UN COIs and particularly their commissioners; the investigations and
ultimate reports need to be credible and reliable if they are to have any hope of making an
131 Israel
Ministry of Foreign Affairs, Behind the Headlines: The Human Rights Council Commission of Inquiry on Gaza,
(Sept. 7, 2014), http://mfa.gov.il/MFA/ForeignPolicy/Issues/Pages/The-Human-Rights-Council-commission-ofinquiry-on-Gaza.aspx. See also Irwin Cotler, The Fatal Flaws of the Schabas Inquiry, THE JERUSALEM POST (Sept. 11,
2014), http://www.jpost.com/Opinion/The-fatal-flaws-of-the-Schabas-Inquiry-375139.
132
Behind the Headlines, supra note 131.
133
See United Nations Human Rights Office of the High Commissioner, Press Statement on the Resignation of the
Chairperson of the Commission of Inquiry on the 2014 Gaza Conflict, (Feb. 3, 2015),
http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=15535&LangID=E. The final report was
due on March 23 of that year, though because of the resignation it was released on 29 June 2015.
134
William Schabas, Letter to HE Joachim Rücker President, (Feb. 2, 2015), http://blog.unwatch.org/wpcontent/uploads/r%C3%BCcker.schabas.2.2.15.resignation-letter.pdf.
2017
Due Process in UN Commissions of Inquiry
155
impact. When a commissioner is viewed as biased, particularly by one of the parties to whom
the report is arguably targeted, the COI’s report loses its legitimacy and thus its
effectiveness. The lesson was not learned after the Gaza COI and one can only hope that,
moving forward, UN COIs will take greater note of their “judicial” or “quasi-judicial” nature,
to use Justice Goldstone’s terms, when it comes to the appearance of impartiality of the
commissioners.
In order to gain insight into what constitutes prejudice in the context of ad hoc UN COIs and
their commissioners, the most obvious improvement to be made is that questions of bias
should be confronted directly, first by the UN body constituting the COI and then, if
necessary, by the commission itself. Allegations of bias supported by documentation must
not be dismissed as inapplicable or as allegations to be confronted only in courtrooms – as
though non-courtroom bodies are not also legal in meaningful ways. Decisions must be
viewed as fair and impartial in the context; the COI cannot have it both ways. It cannot on
the one hand promote criminal accountability135 by claiming the same legitimacy, reliability
and credibility that domestic-level COIs (for example, Canadian, British or Australian COIs)
generally claim, and then, on the other hand, act non-judicially and avoid these tricky legal
and procedural processes and principles in favor of those utilized by some other non-legal
fact-finding missions (NGOs for example).136 It is insufficient to simply dismiss claims of bias
when the perception of bias is at issue. With respect to the same conflict, we have now seen
twice the negative consequences that conduce to COI reports where claims of bias are not
taken with the seriously that they deserve. When the issue is raised, some legal analysis is
required before a commissioner who has made her views known and taken a public position
on a particular issue of direct relevance to the COI is determined to be suitable or unsuitable
for the post of commissioner. The often outraged response to Professor Chinkin’s
appointment as a commissioner to the Gaza COI (and Professor Schabas’ appointment to a
subsequent Gaza UN COI) demonstrates that perhaps the more polarized the conflict
confronted by UN COIs, the greater the necessity for fidelity to the legal principles of
independence and impartiality. A commitment to these principles would likely have required
the recusal of Professor Chinkin from the Gaza COI, just as Professor Schabas eventually
stepped aside in the more recent Gaza COI of 2015.
135
The Goldstone Report ends with: “[t]he Mission is of the view that the prosecution of persons responsible for
serious violations of international humanitarian law would contribute to ending such violations, to the protection
of civilians and to the restoration and maintenance of peace.” See Goldstone Report, supra note 5, ¶ 1966.
Goldstone himself has since repeated that this was the primary purpose of the COI. See Richard Goldstone, Justice
in Gaza, NEW YORK TIMES (Sept. 17, 2009), www.nytimes.com/2009/09/17/opinion/17goldstone.html.
136
Indeed, many good NGOs will adopt legal or quasi-legal standards with respect to impartiality in order to ensure
the legitimacy and reliability of their reports. For without credibility, neither NGO nor UN inquiries are of much
value (except, perhaps, as unreliable political tools). Thus, though I distinguish here between NGO COIs and UN
COIs, there is no reason why an NGO inquiry could not be seen as legalistic, nor is there any reason why it will or
should not exhibit a fidelity to legality.
156
German Law Journal
Vol. 18 No. 01
A commitment to legality, however, also surely requires a commitment to independence,
and in the case of UN COIs, it is important that commissioners not be subject to arbitrary
dismissal. Rules as to discharging a commissioner are necessary, easy to promulgate, and
there are numerous options available. Unfortunately none of these options are binding upon
UN COIs. For example, though the ideal outcome would be for a commissioner to recuse
herself in situations in which she is unable to be impartial and independent, the dismissal of
a commissioner by unanimous vote of the other commissioners is one possible option.
In terms of determining with precision what is required for a commissioner to maintain
impartiality and independence, reference to the specific mandate, the purpose, and
overarching goals of the UN COI will be necessary. Legal decisions of this nature are very fact
specific: What legality might require—that is, what it means to be impartial and the degree
to which one must be impartial—depends upon the position of the commissioner, the
investigation, and some understanding of the parties’ concerns. This does not mean,
however, that the mandate and purpose of the COI have to be so specific that they speak
directly to the issue of bias; such a specific mandate could be impractical and unwarranted.
But it does mean that the applicable law must be clear and accessible so that interpretations
of what constitutes prejudice and independence can be reasonably evaluated and, if
necessary, critiqued. In other words, had either of the Gaza COI’s mandates been more
transparent with respect to their goals and the means by which those goals might be
achieved by a Commission, we would likely have a better understanding of the appropriate
standards of impartiality and independence in that particular situation. Generally, it might
be said that the more formal and criminal-esque the investigation, the greater fidelity future
large-scale UN COIs should evince with respect to due process of law and impartiality.
III. Bias and the Scope of the Gaza COI’s Investigation
The Human Rights Council did not strictly circumscribe the temporal and geographic
confines of the Gaza COI in its mandate. It was thus left to the Gaza COI’s commissioners to
determine the scope of the inquiry.137 This gap—left by the Human Rights Council—created
a pair of problems. First, the Gaza COI invited claims of bias by broadening the temporal
scope of its investigation beyond the 22-day conflict and by offering its own perception of
the relevant history to the conflict. In so doing the Gaza COI exposed itself to claims that it
harbored historical biases, which could be said to permeate the Goldstone Report and
influence its subsequent legal analysis.138 In this way, some of the substantive legal and
137
Truth Commissions, or even international courts, generally circumscribe the timeline that is to be considered.
138
Moshe Halbertal, for example, has stated with respect to the historical review conducted by the Goldstone
Report:
The honest reader of these sections cannot avoid the impression that their objective is to
prepare a general indictment of Israel as a predatory state that is geared toward violating
human rights all the time. It will naturally follow from such a premise that the Gaza operation
2017
Due Process in UN Commissions of Inquiry
157
factual analyses of the Gaza COI was side-tracked by discussions of the Goldstone Report’s
arguably less relevant and less important historical narrative. Second, the Gaza COI could be
seen as biased for broadening the geographic scope of the investigation to include the West
Bank, an area that was not part of the military conflict at the time.
The Gaza COI saw its mandate as extending, at least in part, well beyond the scope of the
22-day conflict. In justifying the inclusion of an historical narrative to lead-off the Goldstone
Report, the report asserted that “[a] review of the historical, political and military
developments between the Six-Day War in 1967 and the announcement of the ‘period of
calm’ . . . in June 2008, and of Israeli policies towards the Occupied Palestinian Territory is
necessary to consider and understand the events that fall more directly within the scope of
the Mission’s mandate.”139 The Goldstone Report’s subsequent historical analysis might
generally be broken into three important sections found in chapters II and III.140
First, chapter II, part A, of the Goldstone Report provided about six pages on the history of
the conflict between Israel and Palestine, dating back to the Six-Day War of June 1967 when
the West Bank, including East Jerusalem as well as the Gaza Strip, were first captured by
Israel.141 However, it is not clear how much of this historical narrative is directly relevant or
necessary to understanding “the events that fall more directly within the scope of the . . .
mandate,” which presumably includes the military activities that occurred during Operation
Cast Lead and ultimately led to allegations of war crimes, crimes against humanity, and other
serious human rights violations. For example, the Goldstone Report deigns to note little of
the events between 1967 and 1977, other than the fact that “’[m]ilitary orders’ were used
to rule the civil affairs of the Palestinian population” in the West Bank and Gaza Strip during
this time, and that all of Jerusalem was annexed to the capital of Israel in 1980—an action
was yet another instance of Israel’s general wicked behaviour [sic]. These long sections are
the weakest, the most biased, and the most outrageous in this long document. They are
nothing if not political.
See Halbertal, supra note 58.
139
Goldstone Report, supra note 5, ¶¶ 176–97.
140
Although there are certainly other chapters in the Goldstone Report that provide historical background, these
other chapters tend to be issue-centric in that they are focused on the relationship between specific policies or
issues, such as the Israeli blockade of the Gaza Strip, and the subsequent military activity, rather than on offering a
more broad, general historical contextualization of the conflict. Foremost among these other sections might be
chapter XVII on “The Impact of the Blockade and of the Military Operations on the People of Gaza and their Human
Rights.” Goldstone Report, supra note 5, ¶¶ 1217–335. In general, these issue specific resorts to history provide
more of the type of information and context that is necessary to understand the scope of the alleged human rights
abuses found in the Goldstone Report than the broader historical contextualization offers.
141
Id. at ¶¶ 177–97.
158
German Law Journal
Vol. 18 No. 01
condemned by the UN.142 This essentially brings us to 1977 when, as the Goldstone Report
notes, the Likud Party was elected in Israel and the expropriation of Palestinian land was
accelerated through the development of settlements, which, in turn, led to “growing tension
and violence.”143
Temporally, the next event mentioned is the 1987 Palestinian intifada, which was neither
contextualized nor explained in depth other than to say that it was “forcefully repressed by
the Israeli security forces but lasted until 1993 . . . . ”144 The Oslo Accords are also briefly
discussed, though little history or context is provided before it is mentioned that “[a] second
popular uprising erupted in September 2000, after the then opposition leader Ariel Sharon
conducted a controversial visit to the Temple Mount/al-Haram al-Sharif in Jerusalem. This
second intifada set off an unprecedented cycle of violence.”145 The Goldstone Report’s
discussion of the violence that followed the second intifada is the first time in the historical
review that one gets a sense of what it was like to live in the region at the time, or how much
animosity and death had become a part of day-to-day life. Even then, the most relevant
context is expressed simply by noting the number of deaths caused by suicide bombings or
military conflict.146 Otherwise, the Goldstone Report simply notes several major newsworthy
events that took place in the 2000s, such as the construction of the “separation Wall,”147 and
the 2002 “road map to peace” proposed by the United States, European Union, Russia and
the UN.148 In fact, pre-2004, most of the information provided by the Goldstone is piecemeal,
highly selective, and provides little context or detailed analysis that would help those
unfamiliar with the dispute in attempting to understand the conflict in any meaningful way.
This trend does change slightly when the Goldstone Report offered its discussion of the
“disengagement plan”, which took place in 2004 and provided for the “unilateral removal
from the Gaza Strip of Israeli security forces”, though Israel maintained its control over
borders, telecommunications, water, electricity, and several other aspects of day-to-day
life.149 Hamas is then mentioned for the first time,150 though subsequent violence against
142
Id. at ¶ 177.
143
Id. at ¶ 178.
144
Id.
145
Id. at ¶ 180.
146
Goldstone Report, supra note 5, ¶¶ 181–83.
147
Id. at ¶ 185.
148
Id. at ¶ 186.
149
Id. at ¶ 187.
150
Id. at ¶ 188.
2017
Due Process in UN Commissions of Inquiry
159
Israel is associated with other groups like the al-Qassam Brigades or Israel as against Hamas.
The Goldstone Report then makes note of Israel’s imposition of economic sanctions on the
Hamas-led Palestinian Authority, but no mention is made of why Israel thought this
necessary. Rather, the general focus of the report’s discussion of the period between 2004
and 2006 seems to be on Hamas’ split from the Palestinian Authority and Fatah, as well as
its subsequent democratic election. Finally, part A of chapter II of the Goldstone Reports
concludes by mentioning several “Israeli military operations in Gaza and the West Bank”
which occurred prior Operation Cast Lead,151 and then by detailing the post-2006 violence
between Israel and “Palestinian militants,” reverting again to a form that basically lists
several events and the number of deaths.
Second, in chapter II, part B, the Goldstone Report offered an historical overview of Israel’s
“pattern of policies and conduct relevant to the Occupied Palestinian Territory”152 and a
discussion of the “relevant political and administrative structures in the Gaza Strip and West
Bank” which contributed to the conflict.153 This discussion focused primarily on the
settlements and the separation Wall built by Israel, the demolition of Palestinian homes and
the evacuation of Palestinians, the Israeli policy of “closure,” (which closes off certain areas
and restricts the movement of goods and people) and, finally, various Israeli laws that treat
differently Palestinians and “persons of Jewish race or descendency”—and provide benefits
to the latter people.154
Third, chapter III of the Goldstone Report considered the events occurring between the
“ceasefire” of 19 June 2008 and the commencement of military operations on 27 December
2008, and included a discussion of the right to self-determination and of various human
rights, humanitarian and international criminal laws as they apply to the law of
occupation.155 Though there are a few hints of how the movement of goods and services
into Gaza were restricted during this period, and the consequent economic and
humanitarian impact, much of chapter III is nevertheless concerned with documenting the
various violent acts perpetrated by all parties after the ceasefire and the number killed by
this violence. Lists of events and tallies of the number of people killed stands in place of
historical or contextual analysis.
The Goldstone Report’s review of all of these particular facts that took place before the 27
December 2008 date—articulated by the Gaza COI’s mandate as the day the hostilities
151
Id. at ¶¶ 193–4.
152
Id. at ¶¶ 198–209.
153
Id. at ¶¶ 210–22.
154
Goldstone Report, supra note 5, ¶ 206.
155
Id. at ¶¶ 223–310.
160
German Law Journal
Vol. 18 No. 01
commenced—was necessarily bound to be a controversial exercise. In offering a thoughtful
critique of the Goldstone Report, Moshe Halbertal argued:
The [C]ommission should not have dealt with the context leading to the
war; it should have concentrated on its mandate, which concerned only
the Gaza operation. By setting its findings about the Gaza war in a greatly
distorted description of the larger historical context, it makes it difficult
for Israelis—even of the left, where I include myself—to take its findings
seriously.156
The historical context to which Halbertal is referring, in addition to the causes and
instigations of the conflict between Israel and Palestinians, has been in dispute since at least
1947. Historical overviews by their very nature tend to provide an ideal terrain for locating
partiality, particularly where the incentive exists for one or all of the subjects of the historical
overview to find bias wherever it might exist. But the problem was not merely that the
historical overview could be controverted; rather, the problem, according to Halbertal, was
that the articulation of any perceived historical inaccuracies could taint the entirety of the
Goldstone Report with allegations of bias and thus affect the credibility of all of its findings,
especially those of specific violations of international law.
In offering the historical overview, certain choices were made by the Report’s authors in
terms of what period to use to commence the story, and what events to focus on. One can
be sympathetic to the commissioners here in terms of the choices made. The Goldstone
Report began its historical review with the Six Day war of 1967, which makes sense as a
starting point given that the war marked the time when the Gaza Strip and West Bank, the
geographical foci of the investigation, came under Israeli authority.
But the “relationship” did not necessarily begin at this time. One could have gone back to
1947 or to the 1949 Armistice demarcation where the “Green Line” was drawn between
Israel and the Gaza Strip, administered until 1967 by Egypt, and the West Bank, administered
during that same period by Jordan. By one account, the events that took place after the 2005
Israeli withdrawal from the Gaza Strip represent all the history that is “necessary” to
understand the political and legal backdrop to Operation Cast Lead: “Operation Cast Lead
cannot be understood, either legally or politically, in a historical vacuum. Thus, Section III [of
the article] will sketch the necessary backdrop to the recent fighting, beginning with Israel’s
2005 withdrawal of troops and settlers from the Gaza Strip . . . . ”157
Note also that both the Goldstone Report and the above account strongly assert the need
for an historical review in order to understand the legal context, but do not directly justify
156
See Halbertal, supra note 58.
157
George E. Bisharat, et. al., Israel’s Invasion of Gaza in International Law, 38 DENV. J. INT’L L. & POL’Y 41, 45 (2009).
2017
Due Process in UN Commissions of Inquiry
161
this assertion – historical reviews of armed conflicts have become such an entrenched part
of modern human rights fact-finding and the transitional justice movement that it is no
longer necessary to justify resort to them. But this presumption should not stand. The
assertion that an historical inquiry is necessary in order to understand the legal context of
any conflict is contingent upon additional, largely unstated, presumptions, including the
precise legal context one is analyzing. For example, it is hard to see how an historical context
dating back 40-years is necessary to determine whether the use of white phosphorus in the
vicinity of a school during Operation Cast Lead amounted to a war crime; here, the context
of the deployment of the weapon could be a consideration, but surely whether or not the
use of white phosphorus in that context amounts to a war crime does not depend upon the
historic process of establishing settlements in the West Bank, or indeed on anything beyond
the timeframe of the 22-day conflict.158
In terms of the specific problems that resulted from the broad historicizing undertaken in
the Goldstone Report, the choice of which historical events to include and which to exclude
led to a great deal of controversy and criticism. For example, the Goldstone Report’s focus
on the annexation of Jerusalem and the establishment of settlements in the 1970s and 1980s
was not met with any similar focus on the formation of the Palestine Liberation Organization
(PLO).159 Indeed, the PLO was first mentioned as the leaders of a “widespread popular
uprising—the intifada” which was “forcefully repressed by the Israeli security forces,” while
the settlements were described as having “continued unabated to this day.”160 It is worth
noting here, however, that the Goldstone Report did make special note of the fact that,
according to Israel, “154 suicide bomb attacks against Israeli civilians and military personnel
took place between 1993 and 2007,”161 and that “[t]he firing of rockets and mortars from
Gaza into Israel began in 2001” with Israel reporting that “as many as 3,455 rockets and
3,742 mortar shells were fired into Israel from Gaza until mid-June 2008.”162
158
This is not to say that the historical context is not relevant in the case of the Gaza COI or any other UN COI, only
that the extent of its relevance and what time-frame is relevant are contextual decisions to be made contingent on
other factors. The relevance of any history must be maintained by reference to what precisely that history is legally
and politically relevant to demonstrating. Thus, the extent of the historical inquiry will necessarily depend on at
least: (1) the extent to which the inquiry is about providing political, as opposed to legal, context in order to, for
example, understand the broader dispute and potential solutions thereto; and, (2) the determination made as to
the scope of the applicable law—meaning that if the COI is limited to considerations of war crimes then historical
context may play a smaller role, while a COI that considers the purported breach of social and economic rights may
need to resort to some greater degree to historical context in order to situate those breaches.
159
Goldstone Report, supra note 5, ¶¶ 177–78.
160
Id. at ¶ 178.
161
Id. at ¶ 182.
162
Id. at ¶¶ 183, 185, 201–03. The language used in such historical narratives can also be used to support claims of
bias. For example, the Goldstone Report refers to the construction of the “Wall” starting in June 2002, which the
Israelis prefer to call a barrier or fence. At the same time, there is no discussion of the controversy surrounding the
purposes and actions of Hamas. As Halbertal notes, “[i]n the supposed context that the report analyzes, there is no
162
German Law Journal
Vol. 18 No. 01
Perhaps more damning from the Israeli perspective is chapter II, part B, concerning “Israel’s
pattern of policies and conduct relevant to the Occupied Palestinian Territory,” which goes
into detail about Israel’s breach of the Geneva Conventions (particularly as concerns the
Occupied Territory),163 its building of settlements164 and destruction of Palestinian-owned
edifices,165 and on the policy of “closure” described as “closures of entire areas and
restrictions on the movement for goods and people on the basis of alleged security threats
to Israel.”166 No equivalent section concerning the PLO, Fatah, Hamas, or the Palestinian
Authority’s “policies and conduct relevant to the situation in Gaza [or in Israel]” is included
in the Goldstone Report. Yet, to Israel, years of terrorist conduct and “asymmetrical warfare”
are certainly relevant to the evaluation of, for example, Hamas’ denials to the Gaza COI that
it engaged in various forms of non-traditional and criminal methods of warfare during the
22-day conflict.
Of course, this being history, it might also be said that the Goldstone Report’s historical
review benefitted Israel in some ways by omitting certain salient discussions. For example,
despite Israel’s justifications for Operation Cast Lead, Henry Stiegman has argued that, after
an initial breach of the ceasefire, Hamas:
offered to extend the truce, but on condition that Israel end its blockade.
Israel refused. It could have met its obligation to protect its citizens by
agreeing to ease the blockade, but it didn’t even try. It cannot be said,
therefore, that Israel launched its assault to protect its citizens from
rockets.167
It should also be noted that a relatively brief historical inquiry was sufficient to attract a high
level of criticism. In the context of the Goldstone Report as a whole, the historical inquiry
was highly circumscribed and, as is evident from the above overview of the relevant
historical sections, did not purport to be comprehensive. Fewer than twenty pages were
primarily devoted to an historical overview and, for the most part, discussion was restricted
to the immediate past because the commissioners decided, “to focus primarily on events,
mention of Hamas’s role and its ideology as reflected in its extraordinary charter, which calls for the destruction of
Israel and the genocidal killing of Jews.” See Halbertal, supra note 58, at 355.
163
Goldstone Report, supra note 5, ¶¶ 198, 206.
164
Id. at ¶¶ 198–99.
165
Id. at ¶ 200.
166
Id. at ¶ 204.
167
See Stiegman, supra note 18, at 390.
2017
Due Process in UN Commissions of Inquiry
163
actions or circumstances occurring since 19 June 2008, when a ceasefire was agreed
between the Government of Israel and Hamas.”168
On the one hand, it seems that due to the indeterminacy of the mandate, decisions were
made by the commissioners as to the contents of the report that exposed them (and, by
extension, their findings and recommendations) to claims of bias in light of the
extraordinarily heightened controversy that surrounds the history of the region. On the
other hand, perhaps the commissioners and the Goldstone Report would have been subject
to such scrutiny and controversy regardless of the mandate; certainly it was the case that a
relatively short historical review resulted in a great deal of controversy. Either way, it is
pertinent to ask whether this level of historicizing is in fact necessary for a UN COI such as
this one and to what extent historical reviews can or do contribute to controversy and
detract from COIs’ fact-finding.169
For its part, after offering an historical background to the conflict, the Gaza COI noted that
its mandate was not primarily historical but, to repeat, was “to focus primarily on events,
actions or circumstances that had occurred since 19 June 2008, when a ceasefire was agreed
between the Government of Israel and Hamas.”170 If this is accurate and the Gaza COI was
not about a transitional justice-inspired search for some broader, historical truth, then it
would seem that the commissioners unnecessarily exposed themselves and the Goldstone
Report to conflict and allegations of bias, thereby detracting from their legal work and
findings. The commissioners were themselves directly implicated in the purported bias not
only because they provided the historical overview, but also because they thought it
necessary to provide such an overview in the first place. Had the mandate explicitly required
such an overview, the commissioners could have at the very least claimed that it was not
their decision as to whether or not they considered the controversial history. In future
inquiries, if such historical background is necessary, perhaps it is better to explicitly address
this issue at the outset of the COI and to specify the temporal scope of the inquiry clearly
and openly in the mandate so that the commissioners are not negatively associated with
potential allegations of bias relating to the temporal scope of the investigation.
The appropriateness of the approach taken by the Gaza COI depends upon one’s
understanding of the general purposes of such large-scale COIs and of what specific
purpose(s) the Gaza COI might realistically be able to achieve, which will also influence the
appropriate scope of the COI and what legal violations should be considered. Publicly, as
represented by NGO and media reports from the time around Operation Cast Lead, the
168
Goldstone Report, supra note 5, at ¶¶ 12, 153, 223.
169
A distinction might be drawn here between a war crimes COI and a truth commission. For a discussion of the
distinction between COIs and truth commissions. See generally HAYNER, supra note 9; and FREEMAN, supra note 9.
170
Goldstone Report, supra note 5, at ¶¶ 12, 153, 223.
164
German Law Journal
Vol. 18 No. 01
primary main-stream concern regarding the conflict was about the conduct of the parties
during Operation Cast Lead, with the larger ongoing conflict looming in the background.
While it may have been that the military actions were seen as the final straw, as the
culmination of a long series of events that produced the need for a consideration of the
modern policies and practices of all parties starting at some prescribed period decades ago,
it is unclear whether such historicizing is what was desired or needed by the large-scale Gaza
COI. It is even less clear whether the Gaza COI, constituted as it was without the involvement
of the parties, was capable of effectively undertaking such an historical task. The Goldstone
Report acknowledged this limitation when it noted that the Report focused primarily on
post-19 June 2008 events, despite the “broad mandate”: “[W]hile the Gaza events must be
seen in the context of the overall conflict and situation in the Occupied Palestinian Territory,
in view of the limited time and resources available, it would be beyond its abilities to focus
on conduct or actions that took place long before the military operation of DecemberJanuary.”171
Moreover, as was noted above, the geographic scope of the Gaza COI was also left open to
interpretation. As a result, the Gaza COI did not limit itself to an investigation solely of the
Gaza Strip, but considered that its mandate required that it extend its inquiry beyond Gaza
to “include restrictions on human rights and fundamental freedoms related to the strategies
and actions of Israel in the context of its military operations.”172 According to the Goldstone
Report, “[d]evelopments in Gaza and the West Bank are closely interrelated [and] an analysis
of both is necessary to reach an informed understanding of and to report on issues within
the Mission’s mandate.”173 Specifically, the Gaza COI considered as relevant the Israeli
strategies related to the West Bank (including east Jerusalem), which included detention of
Palestinians in Israeli prisons, violations of the right to free movement, and restrictions upon
freedom of assembly and expression by the Palestinian Authority. A more precise mandate
would have assured greater clarity with respect to the scope of the investigation and
whether it was to include the West Bank, which is geographically separated from the Gaza
Strip by Israel and which was not invaded during the December 2008–January 2009 military
incursion.
Geographically expanding the scope of the inquiry brings into question whether the Gaza
COI process was only or primarily about the 22-day military offensive and the crimes
committed during that time–whether it was about accountability and ending impunity in the
context of military conflict–or whether the Gaza COI was part of a larger transitional justice-
171
Id. at ¶ 153. Further, the COI also took “into consideration matters occurring after the end of military operations
that constitute continuing human rights and international humanitarian law violations related to or as a
consequence of the military operations, up to 31 July 2009”. Id. at ¶¶ 12, 153.
172
Goldstone Report, supra note 5, ¶ 1373.
173
Id. at ¶ 1374.
2017
Due Process in UN Commissions of Inquiry
165
inspired project to contextualize and historicize the situation and elaborate a more
comprehensive picture of both the historical conflict and the breaches of international
human rights and humanitarian law.174 Either way, the approach taken by the Gaza COI and
the international community led to deeper Israeli disengagement from and consternation
towards the Gaza COI and, perhaps, the Middle East peace process.175
IV. Bias and the Choice of Incidents to Investigate
The Gaza COI invited further claims of bias by focusing only on select incidents it deemed as
representative of patterns of abuse without providing much justification for the selection of
said incidents. According to the Goldstone Report, relevant incidents “committed in the
context of the . . . military operations” were considered, including a review of “restrictions
on human rights and fundamental freedoms relating to Israel’s strategies and actions . . .
.”176 While the Goldstone Report did “not purport to be exhaustive in documenting the very
high number of relevant incidents that occurred in the period covered by the Mission’s
mandate . . . the Mission consider[ed] that the report [was] illustrative of the main patterns
of violations.”177
However, the Goldstone Report did not explain how the incidents reviewed within the
Report were determined to be “illustrative” of a broader pattern of conduct, or how it chose
as between incidents of a similar “type”.178 Furthermore, the Gaza COI did not explain how
it ensured that the incidents that it chose to investigate that otherwise seemed to be
illustrative of a general pattern of behavior would be representative in terms of the ultimate
legal findings (i.e., in terms of whether or not a criminal wrong was likely committed). So,
for example, while two incidents might look similar–they both involve an attack on a
174
One important purpose of truth commissions is to create a shared sense of history, community and belonging,
to provide a history that can be relied upon as a source for understanding and for confronting problems that are
better understood in their historical context. A corollary to this objective is to create a shared (though potentially
disputed) understanding of the history that has plagued the nation or region and offer a cathartic outlet for the
dispute, which flows from knowing the truth and dealing with the past, which it is said allows the nation to move
productively toward its future. Arguable, the political and social circumstances that obtain in the Middle East at this
time are not conducive to accomplishing such an objective. In any event, it was unclear that this was indeed the
objective.
175
As was noted, Israel did not grant access to the West Bank. See, e.g., Goldstone Report, supra note 5, ¶ 1376.
176
Goldstone Report, supra note 5, ¶ 14.
177
Id. at para. 16.
178
So, for example, the Goldstone Report notes that the “Israeli Government alleges that ‘Hamas abused the
protection accorded to places of worship, making a practice of storing weapons in mosques’”. But then the report
only notes the investigation of one Mosque, investigated seemingly because it was attacked by Israel, and notes
that “the Mission was not able to investigate the allegation of the use of mosques generally by Palestinian groups
for forming weapons.” No explanation is given as to why one of the most serious and prevalent of Israeli accusations
was not further investigated. See Goldstone Report, supra note 9 at paras. 464–65.
166
German Law Journal
Vol. 18 No. 01
hospital, for example–one incident may have resulted by accident while the other resulted
from a criminal intent to harm civilians. As concerns these two incidents, one might well be
“illustrative” of the other in terms of appearances, but the criminal findings cannot
necessarily be generalized from one to the other. For the purposes of a UN COI, it is
necessary that the incidents chosen not only fit a pattern of behavior, but also that they are
likely to offer generalizable findings; it is not clear if or how this was done in the Goldstone
Report. By contrast, Human Rights Watch generally notes in its reports how the incidents
investigated came to the organization’s attention and how the incidents were subsequently
chosen to be included in a specific report, as it did with respect to its investigations into
Operation Cast Lead.179
As a result of the uncertainty surrounding how the Gaza COI chose the incidents to
investigate that it did, hardline critics such as Dershowitz were able reasonably to ask why
the use of the Shifa hospital, which Israel contends served as a main base of Hamas’ military
operations, was not investigated as a possible war crime while investigations took place
regarding other hospitals.180 Or how the Gaza COI was unable to conclude whether mosques
were used for military purposes when it only investigated one mosque alleged by Israel to
be used by Hamas for such purposes?181 Such criticism is enhanced by the fact that, unlike
the Goldstone Report, Human Rights Watch did in fact find that “[d]uring the IDF offensive
in Gaza, Hamas and other Palestinian armed groups used civilian structures to engage Israeli
forces and to store arms . . . . They also booby-trapped and dug tunnels under civilian
structures.”182 In other words, the Goldstone Report’s selectivity may have caused it to come
to findings contrary to those of Human Rights Watch.
It appears that the incidents involving hospitals and mosques that were investigated by the
Gaza COI were selected for inclusion in the Goldstone Report because Israel—rather than
Palestinian forces—was responsible for the bombings. As such, the Gaza COI was able to
“double up” by investigating incidents where allegedly crimes were committed by both
sides. However, this does not explain why other mosques or hospitals claimed by Israel to
hold Palestinian arms or armed combatants were not also investigated. Thus, the Gaza COI’s
approach to choosing which incidents to investigate combined with the Commission’s failure
to explain transparently how this process took place gave Israel ammunition to condemn
the Goldstone Report for its “political”—that is, its biased and/or arbitrary—selection of
incidents,183 and to label the Report as contrary to the preponderance of evidence as
179
Rain of Fire, supra note 21, at 6.
180
Dershowitz, supra note 58, at 39.
181
Id. (citing the Goldstone Report, supra note 5, ¶ 465).
182
See I Lost Everything, HUMAN RIGHTS WATCH 5 (May 13, 2010), http://www.hrw.org/en/node/90317/section/1.
183
See, e.g., Initial Israeli Response to Gaza COI, supra note 31, ¶ 18.
2017
Due Process in UN Commissions of Inquiry
167
established by other sources such as third-party news reports and the aforementioned
Human Rights Watch findings.
Israel's concern to the Gaza COI’s choice of incidents was that the Gaza COI seemed to be
making the type of discretionary decisions commonly associated with the administrative
state, meaning the type of decisions that are based upon discretionary determinations of
what would be the most efficacious approach to investigating. This discretionary approach
can be contrasted with the type of decision-making ordinarily associated with law or legality,
specifically, where the decision-makers act with reference to clear, transparent rules and/or
principles with the intention of offering a fair, impartial and fully reasoned legal solution.
Israel's argument supposes that discretionary decisions are necessarily political and thus rely
on the biases of the decision-makers (commissioners); to Israel, in the context of a war
crimes inquiry, the exercise of such discretion without reference to rules or offering
justificatory explanations for its actions undermines the legitimacy of the Gaza COI's process
and the quality of its findings.
Moreover, such criticisms speak to the useful purpose that UN COIs might play. Given the
short timeframe allotted to the Gaza COI to complete its mission—and indeed to most UN
COIs to complete their missions—as well as the mandate requiring the “urgent dispatch” of
the Gaza COI and most other UN COIs, some selection will be necessary in terms of including
analysis of some incidents and excluding others. Presumably this explains why the Gaza COI
investigated incidents that might speak to legal wrongs committed by both sides in the case
of the hospital and mosque investigations. The time and resources do not exist to investigate
all allegations of abuse in such situations and thus UN COIs cannot, in similar situations, hope
to offer a comprehensive historical overview of a conflict or displace other transitional
justice tools that might offer a greater opportunity for witnesses and victims to tell their
stories.
Acknowledging the need to choose between incidents and that the effort was made to
provide a picture of the pattern of abuses that occurred is a good first step toward ensuring
a fair, transparent process. However, providing a precise explanation as to the process
behind such decision-making promotes clarity and transparency, and, by extension, the
overall appearance of the decision-making process seems considerably less political.
Furthermore, the process of debating rules—in this case with respect to the selection of
incidents— leads to better outcomes. An open debate and articulation of the rules of
operation requires an engagement with the standards, principles that might be applied, and
any available alternatives, a process which tends to require that reasoned argument
determine the chosen standard.
168
German Law Journal
Vol. 18 No. 01
D. Due Process Considerations in Relation to the Goldstone Report
Criticism of the Goldstone Report extended beyond issues of bias and into issues of due
process as well. Indeed, it should go without saying that fundamental to determining
whether any UN COI report is viewed as legitimate (impartial, credible and reliable) is how
it deals with issues of due process. Unfortunately, UN COIs have long been criticized for their
general failure to meet sufficient standards of due process.184 Two sections of the Goldstone
Report—those relating to evidence-gathering and the corroboration of evidence—are
particularly relevant to the discussion of due process and legitimacy of UN COI reports, and
these sections also indicate where some of these problems lie and how they might be
overcome in the future.
I. Evidence-Gathering and Corroboration of Evidence
The Gaza COI viewed its approach to information-gathering as “inclusive”185 and based on
“international investigative standards developed by the United Nations.”186 These methods
of information gathering included:
(a) a review of reports from different sources; (b) interviews with victims,
witnesses and other persons having relevant information; (c) site visits to
specific locations in Gaza where incidents had occurred; (d) the analysis
of video and photographic images, including satellite imagery; (e) the
review of medical reports about injuries to victims; (f) the forensic analysis
of weapons and ammunition remnants collected at incident sites; (g)
meetings with a variety of interlocutors; (h) invitations to provide
information relating to the Mission’s investigation requirements; (i) the
wide circulation of a public call for written submissions; [and] (j) public
hearings in Gaza and in Geneva.187
Three field visits were conducted between the end of May and the beginning of July 2009—
two to the Gaza Strip and one to Amman. These visits included investigations of thirty-six
incident sites in the Gaza Strip.188 In addition, several members of the Gaza COI’s secretariat
184
See, e.g., Thomas M. Franck & H. Scott Fairley, Procedural Due Process in Human Rights Fact-Finding by
International Agencies, 74 AM. J. INT’L L. 408 (1980).
185
Goldstone Report, supra note 5, at 15, ¶ 18.
186
Id. at ¶ 158. See also Goldstone Report, ¶ 161 (“The methods adopted to gather and verify information and reach
conclusions were for the most part guided by best practice methodology developed in the context of United Nations
investigations.”).
187
Id. at ¶ 18.
188
Id. at ¶¶ 21, 139, 159(b).
2017
Due Process in UN Commissions of Inquiry
169
staff were present in Gaza during that same timeframe to conduct additional field
investigations.189 A total of 188 individual interviews were conducted,190 primarily in person,
when possible, or alternatively by telephone.191 The Gaza COI also met with a number of civil
society organizations (including women’s organizations, NGOs, bar associations) in addition
to meeting with military analysts, journalists, UN representatives, the Head of the United
Nations Board of Inquiry into incidents in Gaza, and diplomatic representatives.192
A call for submissions was also sent to “all interested persons and organizations”193 and
“notes verbales” were sent to “all United Nations organs and bodies and Member States of
the United Nations.”194 The two public hearings held by the Gaza COI took place over two
days in Geneva during June and July 2009.195 The Gaza COI reviewed over 300 reports,
submissions, and other documents, 30 videos, and 1,200 photographs.196
The Goldstone Report noted that the purpose of the public hearings “was to enable victims,
witnesses and experts from all sides to the conflict to speak directly to as many people as
possible in the region as well as in the international community.”197 The hearings were
broadcast live, and priority was given to victims and other “affected” communities.198 The
content of the hearings included the discovery of facts in addition to “legal and military
matters.”199
In terms of the Goldstone Report itself, in theory primary (otherwise termed “first-hand” or
“direct”) evidence was given priority to establish the Commission’s findings: “In establishing
its findings, the Mission sought to rely primarily and whenever possible on information it
gathered first-hand.”200 Secondary evidence gathered by those other than the Gaza COI
189
Id. at ¶¶ 5, 133, 139.
190
Id. at ¶¶ 19; 159(b).
191
Id. at ¶ 159(b).
192
For a complete list see Goldstone Report, supra note 5, ¶ 137.
193
Id. at ¶¶ 6; 140.
194
Goldstone Report, supra note 5, ¶ 140.
195
Id. at ¶¶ 7, 141.
196
Id. at ¶¶ 19, 160. The 300-plus reports amounted to over 10,000 pages according to the Goldstone Report.
197
Id. at ¶ 22.
198
Id.
199
Id.
200
Goldstone Report, supra note 5, ¶¶ 23, 168.
170
German Law Journal
Vol. 18 No. 01
team, including media and interest group reports and affidavits, was used in the Goldstone
Report, in theory at least, “primarily as corroboration.”201
Accessing primary evidence was often difficult for the Gaza COI. As has been noted, Israel
did not cooperate with the Gaza COI202 and, “[b]y refusing to cooperate with the Mission,
the Government of Israel prevented it from meeting Israeli Government officials, but also
from travelling to Israel to meet Israeli victims and to the West Bank to meet Palestinian
Authority representatives and Palestinian victims.”203 Consequently, “denial of access to
Israel and the West Bank resulted in the decision to hold hearings of participants from Israel
and the West Bank in Geneva.”204 The Palestinian Authority and the Permanent Observer
Mission of Palestine to the United Nations did offer cooperation and support,205 and access
to the Gaza Strip was granted by Egypt.206 Still, representatives of the implicated Palestinian
armed groups were not agreeable to meeting.207
The Gaza COI submitted “comprehensive lists of questions to the Government of Israel, the
Palestinian Authority and the Gaza authorities in advance of completing its analysis and
findings”, but did not receive a reply from Israel.208 No note is made of whether an
opportunity to respond to the Gaza COI’s specific findings was given to the parties before
the final version of the Goldstone Report was released to the public.
Thus, despite the extensive research undertaken by the Gaza COI and its attempts to access
relevant information and to acknowledge the interests of a variety of interested groups by
way of interviews or site inspections, there was nevertheless an issue with accessing
information that might have been provided at the state level, namely by Israel.
Despite the fact that Israel chose not to participate or make its people available for
interviews or its territory available for inspection, one criticism of the Goldstone Report was
that: “The testimonies in the Goldstone Report are Palestinian testimonies . . . . This
commission that describes its mission as fact-finding treats the missing Israeli testimonies as
if they are Israel’s problem, rather than a methodological and empirical shortcoming in the
201
Id.
202
Id. at ¶¶ 8, 20.
203
Id. at ¶ 20.
204
Id. at ¶ 22.
205
Goldstone Report, supra note 5, ¶¶ 9, 145.
206
Id. at ¶ 144.
207
Id. at ¶ 441.
208
Id. at ¶ 26.
2017
Due Process in UN Commissions of Inquiry
171
report itself.”209 As Sydney D. Bailey noted with regard to the totality of the first 25-years of
UN human rights fact-finding: “The vicious circle is familiar. UN bodies are not granted
facilities for impartial fact-finding. As a consequence, their reports are one-sided. The onesided nature of UN reports is then given as a reason for denying UN bodies the facilities for
performing the tasks entrusted to them.”210 Thirty-five years after Bailey first noted this
“vicious circle”, it appears that it continues to go round. When UN COIs are denied territorial
access, the respective COI reports will necessarily be less comprehensive. By extension, the
nation that has refused territorial access may be expected to attempt to impugn the
credibility and reliability of the respective report. Depending upon what the UN COI is
attempting to prove, the uncooperative state might even have a legitimate reason for doing
so—although, of course the uncooperative nation contributed to the situation.
In any event, with regard to the information it was able to receive, the Goldstone Report
asserted that its “final conclusions on the reliability of the information received were based
on its own assessment of the credibility and reliability of the witnesses it met” in addition
to, “verifying the sources and methodology used in the reports and documents” received,
and “cross-referencing” received information.211 In evaluating the probity and reliability of
the evidence, the Gaza COI considered “the demeanour of witnesses, the plausibility of their
accounts and the consistency of these accounts with the circumstances observed by it and
with other testimonies.”212 It also attempted, insofar as possible, “to speak with the authors
of the documents in order to ascertain the methodologies used and to clarify any doubts or
problems.”213
This approach raises long-standing and in many ways still unanswered questions regarding
what COIs should or could use as corroborating material, and how much verification or crossreferencing is necessary. The Goldstone Report did not go far in shedding light on how the
corroboration and verification of information received by UN COIs was properly and
effectively achieved. Instead, the Goldstone Report simply noted that, “the [secondary
material] it reviewed and to which it refers are credible and based on sound
methodologies.”214 What makes a sound methodology, however, is not explicated to allow
others to scrutinize the veracity of this claim. Virtually all of the reports and secondary
sources produced by NGOs and the press that were mentioned in the Goldstone Report were
209
See generally Halbertal, supra note 58.
210
Bailey, supra note 34, at 266.
211
Goldstone Report, supra note 5, ¶ 24.
212
Id. at ¶ 170.
213
Id.
214
Id. at ¶ 1378.
172
German Law Journal
Vol. 18 No. 01
found by Gaza COI to be fully credible and reliable.215 Astonishingly, the Goldstone Report
also reached the same conclusion regarding everyone the Commission interviewed as a
witness and whose testimony was included in the final report. Thus, one might reasonably
ask whether the Gaza COI only selected the reliable reports and witnesses for inclusion and
whether it excluded information that the Commission found to be unreliable—or rather
whether it was leaving out reports that offered assertions contrary to the Goldstone
Report’s findings?
Moreover, many (perhaps most) of the statistics and documentation contained in the
Goldstone Report are traced to a single source—either a report or an interview with a
witness.216 Although the Goldstone Report asserted that secondary materials were used
mostly to corroborate primary (first-hand) evidence, chapter VII, for example, is one of
several chapters that rely on a great variety of the secondary materials to substantiate
findings of fact, usually in the absence of direct evidence. These secondary materials came
from other UN bodies, such as the Office for the Coordination of Humanitarian Affairs, as
well as from the Israeli humanitarian NGO B’Tselem and various press releases, though some
information also came from other NGO reports and sources. In the chapters that focus on
the West Bank (chapters XX-XXIII), most factual assertions that were supported by secondary
materials referred to only one external report, or possibly, in fewer circumstances, two;
rarely were more than two sources cited to substantiate a factual assertion, and generally
multiple sources meant reference to multiple press stories—that is, to multiple unverified
secondary sources. This is, of course, explained by the fact that the Gaza COI was not able
to visit the West Bank.217 But, again, one must then question whether it was worth extending
the geographic scope of the Gaza COI if it lessened the overall quality and veracity of the
findings and enabled the Goldstone Report’s detractors to question the evidentiary
standards of the findings based, at least in part, on its peripheral review of events in the
West Bank.
Human Rights Watch generally looks for three independent witnesses to corroborate its
findings of fact.218 The UN’s Democratic Republic of Congo (DRC) Mapping Exercise—a UN
COI by another name—required at least two independent sources to corroborate each of
215
The one exception being that the Palestinian armed groups’ websites were found unreliable in that they
exaggerated the commission of their own crimes or their “successes” as against Israel. In other words, the exception
is not a third party report, but a finding that one of the parties to the dispute was unreliable in its admissions that
it had committed a crime. Id. at ¶ 458.
216
See, e.g., Goldstone Report, supra note 5, n.257–64.
217
Chapter VIII of the Goldstone Report also relied on secondary sources to a greater extent than elsewhere in the
report because it could not find first-hand witnesses to interview in many cases. Id. at ¶ 141.
218
See, e.g., Rain of Fire, supra note 21, at 6.
2017
Due Process in UN Commissions of Inquiry
173
the over 600 violent incidents listed with at least one being a primary source.219 The DRC’s
report stated, “[i]ncidents not corroborated by a second independent source have not been
included in this report, even in cases where the information came from a reliable source.
Such incidents are, however, recorded in the database.”220 In contrast, it is unclear what
level of corroboration was required by the Gaza COI, both in terms of how much
corroboration, and if it mattered whether it was primary evidence like witness testimony or
a secondary report. This is not to say that further corroboration was required to make the
information communicated in the Goldstone Report reliable, or that it was practicably
possible to maintain a higher standard; rather, the Goldstone Report did not consistently
make clear its standards for verifying the reliability of evidence received.
In general these concerns represent a problem that is broader than just the issues raised by
the Gaza COI’s practices. There is a need in the academic literature for a discussion of what
is possible, typical, or ideal in terms of human rights fact-finding in such circumstances. For
example, Diane Orentlicher notes that, “[t]ypically . . . careful NGOs do not cite press
accounts unless their research staff have reason to credit the report.”221 It would seem, then,
that UN COIs should follow a similar rule, or at least engage in a discussion of why or why
not such a standard was followed. Other relevant questions were not even posed by the
Goldstone Report, let alone answered directly or implicitly, including: Is there a necessary
difference between UN reports and other reports in terms of credibility? Should the UN COI
be prepared to defend a report upon which it relies should questions arise, or should it take
the proactive step of identifying in its report why secondary materials explicitly relied upon
by the COI were found to be credible? Answers to these questions would not only help assess
the credibility of future reports, but also possibly help determine the scope of the inquiry.
Such questions are particularly salient in the context of large-scale UN COI reports because
such reports are widely circulated and read in the halls of international power. If foreign
offices or other international bodies are relying upon UN COI reports to support sanctions
regimes or initiate possible criminal investigations, it should be asked to what extent these
foreign offices or other bodies are relying on the commissioners of UN COI reports to have
already verified the secondary materials used to substantiate findings. If foreign offices are
219
The DRC’s report states: “each reported incident had to be corroborated by at least one independent source in
addition to the primary source in order to confirm its authenticity.” See DRC Mapping Exercise, supra note 6, ¶¶
117, 10. Further, the Panel of Experts in Angola required direct evidence were it to name a responsible political
official of wrongdoing (violation of sanctions) and corroborating evidence by at least two sources for it to be
deemed credible. See Luciana T. Ricart, Due Process of Law in the Fact-Finding Work of the Security Council’s Panels
of Experts: An Analysis in Terms of Global Administrative Law, 4 Inst. Int’l L. & Just. Emerging Scholars Paper 8
(2008), http://www.iilj.org/wp-content/uploads/2016/08/Ricart-Due-Process-of-Law-in-the-Fact-Finding-work-ofthe-Security-Council%E2%80%99s-Panels-of-Experts-2008.pdf.
220
221
DRC Mapping Exercise, supra note 6, ¶ 106.
D. Orentlicher, Bearing Witness: The Art and Science of Human Rights Fact-Finding, 3 HARV. HUM. RTS. J. 83, 130
(1990).
174
German Law Journal
Vol. 18 No. 01
taking the UN COI reports at face value and not offering deeper scrutiny into their findings
or the sources supporting their findings (which is likely the case based on this author’s
discussions with diplomats in Canada and elsewhere), this presents an opportunity to inform
foreign offices that they should be giving greater scrutiny to secondary materials used to
buttress UN COI conclusions. Alternatively, the UN COI reports themselves should provide
an explanation as to why, in particular, the secondary materials used to make findings or
corroborate evidence are credible and reliable.
The tendency in the Goldstone Report was to assert that the various sources of evidence
that it relied upon were “credible and reliable” without fully explaining what these terms
might mean or how they were to be contextually interpreted. Instead, generally the
Goldstone Report either simply asserted reliability and credibility, or explained that the
Commission relied on its understanding of applicable UN standards to guide it in making its
determinations. Yet these UN standards are not consistently identified or—at least— not
pinpointed in the Goldstone Report. It follows that little discussion or argument is available
extrapolating how rules and principles found in UN standards were interpreted in the
context at hand to make determinations regarding the inclusion or exclusion of evidence. It
is hard to imagine any report viewed through a legal lens—such as the lens of an
administrative lawyer—that would fail to clearly identify the standards upon which its
decisions rest and grapple with how to apply those standards to the context at hand.
Finally, the Goldstone Report failed to explain several other issues with respect to the
integrity of the evidence used to substantiate its findings, including: did the process of
verifying forensic or other evidence involve scientific testing that might be scrutinized? How
many commissioners had to concur to come to a legal finding? And finally, were records kept
of the processes used and information gathered? Answers to such questions are necessary
before one can gauge the reliability and credibility of a UN COI report. The Goldstone Report
should have provided these answers, as should future UN COIs. Once again, if UN COIs are
to be viewed as legal endeavors—as being infused with and legitimized by adherence to
basic legal principles—the Commissions should, at the very least, provide a reminder of the
benefit of offering transparent justifications for its findings and the evidentiary bases upon
which these findings rested.
II. Language, Precision and the Standard of Proof
While no formal standard of proof was identified by the Goldstone Report and the
informational verification and cross-referencing processes were not explained, the Gaza COI
did explain that it did not “pretend to reach the standard of proof applicable in criminal
trials,”222 and that, instead, the aforementioned processes of verification and cross222
Goldstone Report, supra note 5, ¶¶ 25, 172. Goldstone has also “emphasized that his conclusion that war crimes
had been committed was always intended as conditional.” See also Beckerman, supra note 119.
2017
Due Process in UN Commissions of Inquiry
175
examination were used to establish a “sufficient” level of credibility and reliability.223 The
Darfur COI established the standard of “reasonable suspicion,”224 which is now often used
by UN COIs including the 2010 DRC COI Mapping Exercise,225 the 2011 Syrian COI,226 and the
2015 Gaza COI.227 Interestingly, Goldstone Report commissioner Hina Jilani also served as a
commissioner on the Darfur COI, but has not explained why she supported the application
of two different standards at the two COIs.
The phrase “reasonable suspicion” as used by the Darfur COI has at least two advantages
over “sufficiently credible and reliable” as used by the Goldstone Commission. First, because
the reasonable suspicion standard now has a history of use in UN COIs, it can be more readily
understood and interpreted by reference to past practice. It is understood as a term of art
employed by UN COIs to signal a tentative finding of fact. Second, the Darfur COI’s approach
to the standard of proof is qualified by the term “suspicion,” which is necessarily tentative.
In contrast, a “sufficient” level of reliability and credibility begs several questions, including
what it is sufficient for, and how one knows when evidence has become “sufficiently”
credible and reliable.228 Moreover, the Goldstone Report did not clarify any of the
shortcomings inherent in the terminology employed. As a result, the lack of specificity as to
what constitutes “sufficient” in the Goldstone Report, and the lack of subsequent
engagement with how the term was being interpreted, could be seen as problematic,
particularly given the fact that the Gaza COI purported to make legal findings on
international human rights and more specifically humanitarian and criminal law, and that it
recommended criminal investigations.
Also problematic is the fact that although the Goldstone Report claimed that it did not use
a “beyond a reasonable doubt” standard of proof, the language of the Goldstone Report
223
See generally Beckerman, supra note 119. See also Goldstone Report, supra note 5, ¶ 171.
224
Note also that it may be seen to be taken from NATO military parlance. This has its advantages and
disadvantages, but it suggests that military personnel – often associated with UN war crimes COIs at various levels
and to various degrees—not only understand the standard of proof, at least at some level, but also do not relate it
to a criminal standard as used by courts of law.
225
See DRC Mapping Exercise, supra note 6, ¶ 7 (“The level of evidence required was naturally lesser than would be
expected from a case brought before a criminal court. The question was therefore not one of being satisfied beyond
[a] reasonable doubt that a violation was committed but rather of reasonably suspecting that the incident did
occur.” [Emphasis added.]) See also DRC Mapping Exercise, supra note 6, ¶ 101.
226
See Syria COI, supra note 6, ¶ 5. See generally U.N. Doc. S/RES/1564, supra note 4.
227
Gaza 2015 COI, supra note 5, ¶ 19. Helpfully, the COI went on to explain this in a little more detail: “This means
that the commission, on the basis of reliable and consistent information, was satisfied that a reasonable and
ordinarily prudent person would have reason to believe that such an incident or pattern of conduct had occurred.”
228
In this way it raises the question: When did the available evidence become sufficient to prove the case? When it
was sufficient!
176
German Law Journal
Vol. 18 No. 01
often tells a different story: “In many cases . . . acts entailing individual criminal responsibility
have been committed. In all of these cases the Mission has found that there is sufficient
information to establish the objective elements of the crimes in question.”229 The Goldstone
Report’s tendency to imply that its findings were definitive was particularly true with respect
to its recapitulation of the inquiry’s legal findings, found in the concluding chapter XXX.230
To take but one example: “The [Israeli] operations were in furtherance of an overall policy
aimed at punishing the Gaza population for its resilience and for its apparent support for
Hamas, and possibly with the intent of forcing a change in such support. The Mission
considers this position to be firmly based in fact . . . . ”231 The Report of an Expert Meeting
on the Gaza COI, organized by Chatham House, noted that had the Goldstone Report’s
conclusions been “presented as prima facie findings rather than final conclusions, the Report
would have been stronger.”232
The language of the Goldstone Report muddies the standard of proof in other ways. The
Gaza COI made no hard findings relating to many of the crimes purportedly perpetrated by
Hamas. Even on the most obvious of Hamas’ alleged crimes, the Goldstone Report often
used tentative and noncommittal language such as “were” Hamas to, for example, launch
rockets and mortars at the population of southern Israel, this action “would” constitute a
war crime as a failure to distinguish between military targets and civilians.233 Such semantics
have caused some confusion amongst scholars given the Commission’s uneven application
of such language in the Goldstone Report. As some commentators have noted, Israel was
found to “have” committed certain crimes, whereas Hamas “would” be responsible.234 The
229
Goldstone Report, supra note 5, ¶¶ 25, 172. [Emphasis Added.] “Statements by political and military leaders
prior to and during the military operations in Gaza leave little doubt that disproportionate destruction and violence
against civilians were part of a deliberate policy.” Id. at ¶ 1215. As but one example, the mens rea of recklessness
was met in regard to the Israeli shelling of the UNRWA field office due to the fact that shelling continued after the
Israeli forces were made aware of the existence of the compound, the hazardous (explosive material) contained in
it. Id. at ¶ 594. The mens rea was not associated with any particular individual.
230
Id. at ¶¶ 1919, 1921–23, 1927–29, 1930.
231
Goldstone Report, supra note 5, ¶ 1884. [Emphasis added.]
232
Report of an Expert Meeting which Assessed Procedural Criticisms made of the UN Fact-Finding Mission on the
Gaza Conflict (The Goldstone Report), CHATHAM HOUSE 13 (Nov. 27, 2009), www.chatham
house.org.uk/files/15572_il271109summary.pdf [hereinafter Chatham House Report].
233
234
Goldstone Report, supra note 5, ¶ 496.
Note that the Gaza COI did find Hamas responsible for further breaches of international law. For example, with
respect to its targeting of Fatah affiliates, the Goldstone Report states that Hamas committed “serious violations of
human rights”, in particular with respect to article 3 (right to life, liberty and security of the person), article 5
(freedom from torture and cruel, inhuman or degrading treatment or punishment), article 9 (no one shall be
subjected to arbitrary arrest or detention), articles 10 and 11 (right to fair and impartial legal proceedings), and
article 19 (regarding freedom of opinion and expression) of the Universal Declaration of Human Rights. Id. at ¶
1372.
2017
Due Process in UN Commissions of Inquiry
177
difference, generally, is the findings of fact upon which the legal analyses are based. With
respect to many purported crimes by Hamas, the Gaza COI was unable to make a factual
determination as to intent and thus had to speculate regarding the law. The same was not
generally true with respect to Israel.235 Moreover, there are certainly instances where the
Goldstone Report found that, “Israel would be responsible under international law” for acts
that were actually found to have happened.236 However, the previous quote above is
obscured in the Goldstone Report by the fact that a mere paragraph later, the Goldstone
Report states that, “the direct targeting and arbitrary killing of Palestinian civilians is a
violation by the Israeli armed forces of the right to life as provided in article 6 of the
International Covenant on Civil and Political Rights.”237
It is also the case that unequivocal language was generally used with respect to purported
Israeli violations,238 while equivocations were generally used when describing Hamas’
purported violations. The Report of an Expert Meeting on Gaza organized by Chatham
House said that: “The criticisms of Hamas in the Report are tentative, for example[,] in
relation to the protection of civilians, while the language employed regarding alleged Israeli
violations is stronger and more condemnatory.”239
It was not always clear why there was a difference in tenor as between the findings, or why
some facts seemed to support strong findings and others tentative conclusions. For example,
the findings of legal violations against Israel in chapter IX (concerning Israeli obligations to
protect civilians) are based on the same type of press reports and other secondary reports
as various other findings with respect to Hamas in chapter VIII on Hamas’ obligations to
protect civilians where the Gaza COI was unable to come to a legal conclusion.240 So, one
235
Why this was the case is another question. This of course created its own set of problems. It has been asserted
that intent was regularly imputed to Israeli operations, but was not similarly—and under similar circumstances—
imputed to Palestinian actions. More shall be offered on this argument below.
236
Goldstone Report, supra note 5, ¶¶ 814, 815, 1173–75. Both the equivocal and certain are used in a particularly
confusing manner in paragraph 1175 (“The Mission considers that the severe beatings, constant humiliating and
degrading treatment and detention in foul conditions allegedly suffered by individuals in the Gaza Strip . . . would
constitute torture, and a grave breach under article 147 of the Fourth Geneva Convention . . . . Such violations also
constitute war crimes.” [Emphasis added.]
237
Goldstone Report, supra note 5, ¶ 816. There are numerous examples of such contradictions throughout the
Goldstone Report, including sometimes in the same paragraph. See, e.g., ¶ 1587. In one convoluted paragraph, it
was said that ill-treatment during arrest and detention by Hamas, “raise[d] concerns and warrant[ed] proper
investigation,” while arrests and detentions of political affiliations were “legally unacceptable” and “would violate
the right not to be arbitrarily detained.” [Emphasis added.]
238
Id. at ¶ 595.
239
Chatham House Report, supra note 232, at 13.
240
In similar wording to the sections on Israel, where first-hand accounts were difficult to gather, in Chapter VIII the
Goldstone Report states: “To gather first-hand information on the matter, the Mission requested a meeting with
representatives of armed groups. However, the groups were not agreeable to such a meeting. The Mission,
178
German Law Journal
Vol. 18 No. 01
might reasonably ask why the language is more equivocal in chapter VIII (Hamas) than that
in chapter IX (Israel) when analyzing the same legal obligation (the protection of civilians)
with resort to similar second-hand accounts.241 This harkens back to the discussion about
corroboration of evidence in the Goldstone Report: What was it about the secondary
reports, or the crimes, or the findings of fact that enabled the Gaza COI to make
determinative conclusions in some chapters based primarily on secondary material, but not,
for example, in section VIII with respect to Hamas?242
A further example relates to the Goldstone Report’s imputation of criminal intent as it
pertained to certain actors—particularly Israeli actors—who were said by the Goldstone
Report to be intentionally “targeting” civilians as a matter of high-level policy. In the
Goldstone Report, the mens rea of intention is generally spoken of in unequivocally certain
terms, at least as it relates to Israel.243 For example: “The Mission finds that the attack on
the abd al-Dayem family condolence tents constitutes an intentional attack against the
civilian population and civilian objects, willful killing and the willful infliction of suffering.”244
consequently, had little option but to rely upon indirect sources to a greater extent than for other parts of its
investigation.” [Emphasis added.] Goldstone Report, supra note 5, ¶ 441.
241
Id. at ¶¶ 449–52. See particularly para 452:
In view of the information communicated to it and the material it was able to review, the
Mission believes that there are indications that Palestinian armed groups launched rockets
from urban areas. In those instances in which Palestinian armed groups did indeed fire
rockets or mortars from urban areas the question remains whether this was done with the
specific intent of shielding the combatants from counter-attack. The Mission has not been
able to obtain any direct evidence on this question; nor do reports from other observers
provide a clear answer. [Emphasis added.]
The Goldstone Report then cites the International Crisis Group as finding from separate interviews that the intent
was there and was not there, respectively (see ¶ 453). Why the Goldstone Report did not indicate that sometimes
the intent seemed present and others not, is not addressed. Of course, to make out the crime, one instance of
intent is sufficient.
242
See, e.g., Goldstone Report, supra note 5, ¶ 1581 (“Reports that the Palestinian Authority interfered with the
work of journalists and the media give rise to the concern that the right to freedom of opinion and expression has
been interfered with.” [Emphasis added]).
243
Id. at ¶¶ 894, 389, 778. See also ¶ 1890 (“[The outcome and modalities] were also to a large degree aimed at
destroying or incapacitating civilian property and the means of subsistence of the civilian population.”); and ¶ 1891
(“It is clear from evidence gathered by the Mission that the destruction of food supply installations, water sanitation
systems, concrete factories and residential houses was the result of a deliberate and systematic policy by the Israeli
armed forces.” [Emphasis added]). Compare this with the mens rea of recklessness, which is often accompanied
by equivocating language such as “it appears.” There are some cases, however, where the certainty of the language
appears higher (see id. at ¶¶ 594, 838, 1433). For example: “The Mission finds that the Israeli armed forces were
systematically reckless in determining to use white phosphorous in built-up areas and in particular in and around
areas of particular importance to civilian health and safety.” [Emphasis added.] Id. at ¶ 894.
244
Id. at ¶¶ 883–84. [Emphasis added.]
2017
Due Process in UN Commissions of Inquiry
179
Moreover, in some cases intention is drawn purely from the circumstances of the case at
hand: “The fact that [Muhammad Hekmat Abu Halima and Matar Abu Halima] were hit in
the chest and the abdomen, respectively, indicates that the intention was to kill them.”245
As but another example, the Gaza COI found that an Israeli attack on a Palestinian prison
was intentional because Israel stated that 99% of its strikes were accurate and Israel did not
offer an alternative explanation as to why the complex was bombed.246
This last example in particular is reminiscent of a criticism of the Goldstone Report that we
saw earlier, which asserted that the Goldstone Report did not treat the absence of Israeli
testimony as a methodological shortcoming of the Goldstone Report itself. Rather, at least
with respect to the intentional targeting of civilians, the Goldstone Report treated the lack
of Israeli cooperation as, at worst, leading to a reverse onus situation whereby it was
incumbent on Israel to justify its military actions lest they necessarily be found both
intentional and sufficient to amount to international crimes, or, at best, as giving rise to a
shifting burden of proof. Once facts were found by the Report, the burden then shifted to
Israel to justify its actions. The absence of Israeli cooperation and testimony—or, in the
alternative, at least a commission-appointed advocate for Israel247—meant that, whether by
shifting burden or reverse onus, invariably there would be no defense offered. The Gaza COI
then had two options: (1) it could make a presumptive finding against Israel, treating Israel
as responsible for not mounting a defense; or, (2) it could treat the absence of evidence as
to intention as a methodological shortcoming of the Goldstone Report and make tentative
findings of fact that “might” or “could” amount to war crimes and crimes against humanity
for intentionally targeting civilians. In either case, it would have been incumbent on the Gaza
COI to gather enough circumstantial and other evidence so as to be reasonably justified in
generalizing from specific incidents to broader claims about high-level, intentional policy,
specifically, that crimes took place on such a widespread and systematic scale that they
could not but have been the result of an intentional, high-level policy.
As previously discussed, the latter approach was generally not followed,248 and, to a degree,
it came back to haunt the Gaza COI. In particular, the problem with the former approach (1)
245
Id. at ¶ 800.
246
Id. at ¶ 370. The result that seems to be implied is that if fighting takes place in a city—as it usually does today—
then any bombing in that city will be a crime so long as the bombing party does not offer an explanation. In modern
warfare, this is tantamount to saying that so long as one does not participate in a UN COI, one will be found guil ty
of war crimes.
247
Unlike judges in common law systems, UN COI commissioners have not traditionally had the assistance of
prosecution and defense attorneys—though such attorneys are often present to aid commissioners in domestic
common law COIs, for example in Canada and the UK. UN COI commissioners are therefore responsible for making
the case, which includes acting as prosecution, defense and judge.
248
Before continuing it should be noted that this was not always the case; at times, the Gaza COI did indeed resort
to option (2) above. In other words, the Goldstone Report did at times treat the lack of information and territorial
180
German Law Journal
Vol. 18 No. 01
was laid bare by Justice Goldstone’s controversial recantation—or, in his words,
“reconsideration”—of the Goldstone Report, in which he claimed that, had he had the
information available to him that Israel made public subsequent to the publication of the
Goldstone Report, certain findings of the Goldstone Report would likely have been
influenced, particularly with respect to the policy of intentionally targeting civilians (chapter
XI).249 Some observers interpreted this statement as an admission that the Goldstone Report
was erroneous in its findings, at least as they concern the intentional targeting of civilians by
Israel. Now, it is unclear that this is even what Goldstone was suggesting, though the larger
point is that there need not even have been a debate had the language in the Goldstone
Report been more tentative—had it consistently chosen the second, latter approach
described above.
Let us discuss Goldstone’s reconsideration in slightly more detail in order to illustrate this
point. The Goldstone Report investigated “[eleven] incidents in which serious allegations of
direct attacks with lethal outcome were made against civilians” and found that, “[t]here
appears to have been no justifiable military objective pursued in any of them.”250 The
Goldstone Report went on to explain “that, on the basis of the facts it was able to ascertain,
in none of the cases reviewed were there any grounds which could have reasonably induced
the Israeli armed forces to assume that the civilians attacked were in fact taking a direct part
in the hostilities . . . . ”251 As a result, the Goldstone Report found that “the Israeli armed
forces [had] violated the prohibition under customary international law . . . that the civilian
population as such will not be the object of attacks.”252 A high standard of proof appears to
access as a methodological shortcoming. As but one example, with respect to the death of Muhammad Hajji, killed
in his living room by errant fire during the military invasion, the Goldstone Report stated:
On the basis of the information before it, the Mission can neither make a statement as to
what type of weapon killed him, nor as to whether he was the intended target of a direct
attack. The circumstances of his death suggest, however, that he was killed by fire from the
Israeli armed forces while at home in a room with his children.” [Emphasis added.] Goldstone
Report, supra note 5, at ¶ 753.
However, more than anything the fact that the Goldstone Report sometimes opted for option (2) highlighted the
extent to which it did not always do so.
249
His strongest statement was: “If I had known then what I know now, the Goldstone Report would have been a
different document.” See Goldstone Recantation, supra note 33.
250
Goldstone Report, supra note 5, ¶ 705. [Emphasis added.]
251
Id. at ¶ 811. [Emphasis added.]
252
Id. at ¶ 812. [Emphasis added.] In a slightly less clear finding shortly thereafter, the Goldstone Report states:
“From the facts ascertained, the Mission finds that the conduct of the Israeli armed forces in these cases would
constitute grave breaches of the Fourth Geneva Convention in respect of willful killings and willfully causing great
suffering to protected persons and as such give rise to individual criminal responsibility.” [Emphasis added.] Id. at ¶
816.
2017
Due Process in UN Commissions of Inquiry
181
have been met in finding that there existed an intention to target civilians. However, on the
facts presented in the Goldstone Report there is little direct evidence of a high-level
intention to target civilians and there are certainly instances where it appears that civilians
were intentionally not targeted. The Goldstone Report’s case seems to rest on circumstantial
evidence in eleven isolated cases coupled with a lack of evidence demonstrating that what
took place was not intentional – a clear instantiation of the first approach.
Goldstone’s reconsideration of the finding that Israel intentionally targeted civilians then
cited only one of the eleven incidents investigated by the Gaza COI, that of the bombing of
the al-Samouni family. The al-Samouni neighborhood of South Gaza (Zeytoun)—given its
name by its primary inhabitants, the al-Samouni family—saw shooting on the night of 3-4
January 2009, though witnesses denied seeing Palestinian fighters in the area.253 By 4
January many members of the extended al-Samouni family had been told by Israeli soldiers
to gather in the home of Wa-el; several attempts to evacuate the family members were
made on 4 January, including by the International Committee of the Red Cross, but no such
efforts were successful.254 On the morning of 5 January, five members of the family exited
the house to gather firewood and saw Israeli soldiers stationed on the roofs of nearby
homes. At that time, a “projectile struck next to the five men,” killing two. Within five
minutes, “two or three more projectiles had struck the house directly.”255 Wa-el and another
member of the extended family, Saleh al-Samouni, testified at a Gaza COI public hearing that
the missiles were launched from Apache helicopters.256 According to the Goldstone Report,
twenty-one members of the al-Simouni family were killed by the missile strikes; nineteen
other members of the family were also injured in the incident.257 The home of Wa-el alSamouni, a mosque, and most other homes in the area were eventually demolished.258 The
Goldstone Report also made the following factual finding in supporting its conclusion that
this was a deliberate attack against civilians:
the fact that a first projectile struck next to the five men soon after they
had left the house (at a time at which there was no combat in the area)
and two or three projectiles struck the house after the survivors had
retreated into the house, indicates that the weaponry used allowed a high
253
Id. at ¶ 708.
254
Goldstone Report, supra note 5, ¶¶ 717–22.
255
Id. at ¶ 714.
256
Id.
257
Id. at ¶¶ 706–35 (see specifically ¶ 715).
258
Id. at ¶ 722.
182
German Law Journal
Vol. 18 No. 01
degree of precision with a short response time and that the five men and
then the house were the intended targets of the attack.259
In his reconsideration, Justice Goldstone stated that the information that subsequently came
to light through Israeli internal investigations and “recognized in the U.N. [second
Independent] committee’s report . . . indicate[d] that civilians were not intentionally
targeted as a matter of policy”, though the second Committee of Independent Experts report
recognized no such thing: the report did imply that the al-Samouni bombing was the result
of a mistaken interpretation of a drone image,260 as Justice Goldstone specifically claimed in
his reconsideration. However, the report also “reiterate[d] the conclusion of its previous
report that there [was] no indication that Israel [had] opened investigations into the actions
of those who designed, planned, ordered[,] and oversaw Operation Cast Lead.”261
Had the Goldstone Report (and perhaps Justice Goldstone’s reconsideration) been clearer
in explaining its standard of proof, better engaged with this standard of proof, and utilized
more tentative language, its findings would have been more precise and compelling and
therefore less amenable to attack. For example, the Goldstone Report could have used
tentative language such that “should” an Israeli court or another criminal court investigate
these incidents it “would” be incumbent upon Israel to explain how these events were not
a result of intent, recklessness, or negligence, lest it be found guilty of attacking civilians. If
the Report had consistently used tentative language to clearly signify that each finding was
not, in fact, final, then the evidence that Justice Goldstone later claimed to be exculpatory
would not have made any difference to the validity of the Goldstone Report.262 In other
words, the Goldstone Report would nevertheless have been correct in asserting the need to
investigate the relevant incidents, and that it was possible that they might amount to crimes.
No reconsideration would have been necessary.263
259
Id. at ¶ 730.
260
H.R.C. Res. 15/6, supra note 85, ¶ 27.
261
H.R.C. Res. 15/6, supra note 85, ¶ 79.
262
It must be said that Justice Goldstone’s reading of the Human Rights Council Committee of Independent Experts
report finds exculpatory evidence in this regard that is otherwise hard to see. Put another way, it is hard to find
evidence in the Report of an intentional high-level policy to target civilians based on the facts found in the Goldstone
Report. At the same time, it is likewise hard to find evidence that there was not an intentional policy in the
Committee of Independent Experts report reviewing subsequent Israeli investigations.
263
In part, this seems to be what the other three Gaza COI commissioners were asserting in their response to
Goldstone’s reconsideration. See Hina Jilani, Christine Chinkin & Desmond Travers, Goldstone Report: Statement
Issued by Members of UN Mission on Gaza War, THE GUARDIAN (Apr. 14, 2011) (“The mission and the report are part
of a truth-seeking process that could lead to effective judicial processes. Like all reports of similar missions of the
UN, it provided the basis for parties to conduct investigations for gathering of evidence, as required by international
law, and, if so warranted, prosecution of individuals who ordered, planned or carried out international crimes.”)
2017
Due Process in UN Commissions of Inquiry
183
Human Rights Watch reports264 and both of the reports released by the Human Rights
Council Committees of Independent Experts repeatedly used equivocal language when
discussing conclusions that were influenced by the dearth of available information caused
by a lack of Israeli cooperation. In contrast to the Goldstone Report, such language was
consistently maintained both in the substantive analyses and conclusions of the reports.
This is all to say that it is important for UN COIs to be particularly vigilant with respect to
criminal intent. Mens rea attaches to a specific person (or persons): An individual person
forms the requisite mens rea, be it recklessness, negligence, or intent. Without
consideration of a person’s purpose, circumstances, and individual action, it is difficult to
see how a mens rea can be found to exist with any high degree of certainty; the language
and standard of proof of the UN COI report must reflect these circumstances. When
intention is found with certainty, or the appearance thereof, then the finding can be proven
wrong with certainty, which Justice Goldstone seems to have admitted happened in one
case.265
Human Rights Watch highlights yet another problem with regard to the Goldstone Report’s
findings regarding Israel’s purportedly intentional high-level policy to target civilians:
In his [Washington Post] article, [Justice] Goldstone backed away from a
particularly controversial charge in the report—the allegation that Israel
had an apparent high-level policy to target civilians. He now says that
information from Israeli investigations indicates “that civilians were not
intentionally targeted as a matter of policy.” [Justice] Goldstone was right
to make that amendment. Human Rights Watch also investigated some
of the cases in which Israeli troops fired at and killed Palestinian civilians .
. . . Deeply troubling as these cases were, they were too isolated for us to
conclude that the misconduct of individual soldiers reflected a wider policy
decision to target civilians.266
This statement speaks to the tendency in the Goldstone Report to make (or appear to make)
general conclusions as to policy—and on the mens rea of intent—based on the investigation
of isolated or specific events without explaining how such incidents are generalizable or
reflect a broader pattern or policy, as was discussed earlier in this article. If an incident
appears to evince an intention to target civilians, then that would also appear to be an
264
See, e.g., White Flag Deaths, supra note 22.
265
Again, from the publicly available information at the time of Goldstone’s reconsideration, the result is not so
clear.
266
Kenneth Roth, Gaza: The Stain Remains on Israel’s War Record: Richard Goldstone’s Partial Retraction of His Own
Report Doesn’t Excuse the Conduct of Israel’s War in Gaza, THE G UARDIAN (Apr. 5, 2011). [Emphasis added.]
184
German Law Journal
Vol. 18 No. 01
isolated crime. But that isolated crime does not necessarily speak to whether a general, highlevel policy to target civilians existed; further justification or documentation is needed, and
this justification should also include an explanation of situations that might tend to
demonstrate the absence of a high-level policy. Justice Goldstone seemed to make a similar
mistake in generalizing from a specific incident in his reconsideration. If the al-Simouni case
was proven to be the result of “an Israeli commander’s erroneous interpretation of a drone
image,” as Justice Goldstone’s reconsideration claims and the second Committee of
Independent Experts report seems to suggest,267 and not the result of a high-level policy.
This still does not speak to the other ten cases investigated by the Goldstone Report or
disprove, more generally, the existence a high-level policy to target civilians.
None of this is to claim that the Goldstone Report was biased or, as a whole, a poor report,
at least relative to other international inquiries. It is simply to note that the implications for
UN COIs regarding standard of proof and the consistency and precision of the language used
with respect to crimes are not simply legal—relating to an objective legal standard or legal
discussions of bias—but also social whereby the legitimacy and credibility of the report
depends on the perceived impartiality of the COI’s work. The language used by such UN COI
reports and the precision and consistency of the language very much matters; and other
important examples exist in the Goldstone Report to drive home this point.
One such interesting and particularly stark example of the Goldstone Report’s inconsistency
in its language and applicable standard of proof is exposed with respect to crimes against
humanity as analyzed in the Goldstone Report. For example, with regard to the crime of
persecution as it relates to the Israeli blockade of goods into the Gaza Strip, the Goldstone
Report concludes: “From the facts available to [the Commission], the Mission is of the view
that some of the actions of the Government of Israel might justify a competent court finding
that crimes against humanity have been committed.”268 Interestingly, the Gaza COI is very
precise in its language here and intentionally equivocates in its finding. It is not that
persecution has been committed, or has on the facts found been committed, or even that
the Gaza COI believes on the facts the crime has been committed—all variants of the usual
nomenclature used throughout the Goldstone Report. Rather, here the facts might justify
another body coming to a legal conclusion. We must ask what the difference is between
might and the usual finding, which is simply that a violation occurred. Is there less certainty
here, or is it the complexity of the charge that led to the greater equivocation?
Arguably, the Gaza COI was reluctant to take a strong position on the crime of persecution
because the finding relates in this rare case to a crime against humanity as opposed to a war
crime or human rights violation. In other words, this finding is different from the majority of
others. However, it is not immediately clear why this distinction between crimes against
267
H.R.C. Res. 16/21, supra note 85, ¶ 8.
268
Goldstone Report, supra note 5, ¶ 1335. [Emphasis added.]
2017
Due Process in UN Commissions of Inquiry
185
humanity on the one hand and war crimes or human rights abuses on the other would lead
to a difference in language or legal certainty. The Goldstone Report’s equivocation is on the
legal side, not the factual side of things. So, if the facts are equally conclusive as between
crimes, why the need to equivocate with regard to the law as it relates to crimes against
humanity and not war crimes? Whatever the reason, the Goldstone Report consistently
equivocates with regard to the few purported crimes against humanity,269 unlike the
majority of the time where it is unequivocal with regard to its findings that war crimes have,
in fact, been committed.
It is also interesting that, in this case and for the only time in the Goldstone Report, the
report equivocates with respect to whether a court would make out the legal elements of
the crime. But a court did not have to come to a conclusion on the crime of persecution, not
yet at least. Rather, the Goldstone Report had been tasked with coming to this conclusion,
and it refused to do so. The Goldstone Report seems to be particularly hesitant here about
coming to a legal conclusion, instead making it clear that criminality is a decision for a court
to make, and the outcome is yet to be decided. This is the only reminder in the substantive
chapters of the Goldstone Report that a court has not yet rendered a verdict.
Compounding the problem relating to the standard of proof is the fact that many chapters
in the Goldstone Report have different sections for “factual analysis”, “legal analysis”, and,
finally, “conclusions”. The “conclusions” are generally where conclusions are drawn about
legal violations in relation to the factual analysis, as tends to be the case in common law
court judgments. The legal analysis is, in theory, where one would find an analysis of the
applicable law, perhaps how it was or could be applied. However, rarely is a comprehensive
analysis—or anything approaching this standard—of the law offered. The Chatham House
Report of an Expert Meeting on the Goldstone Report, mentioned above, has asserted that,
because the rules of international humanitarian law are difficult to interpret from the facts,
[a] commission should tease out these legal issues and should make its
view clear on the interpretation it favours. The Goldstone Report does not
set out in detail its interpretation of the law in order to determine which
facts are relevant to determine whether a target is legitimate or not. It
did not need to express a definite view in the way that a court should, but
269
Id. at ¶ 1691:
From the facts available, the Mission finds that the rocket and mortars attacks, launched by
Palestinian armed groups in Gaza, have caused terror in the affected communities of
southern Israel and in Israel as a whole . . . . This indicates the commission of an indiscriminate
attack on the civilian population of southern Israel, a war crime, and may amount to crimes
against humanity. [Emphasis added.]
186
German Law Journal
Vol. 18 No. 01
merely needed to record that different interpretations exist on a given
point, and indicate the facts which would be relevant to a tribunal.270
A good example is the Goldstone Report’s chapter on rocket and mortar attacks on Israel
(XXIV). The legal analysis and conclusions section offer no definitive conclusions and
amounts, essentially, to a page of noting the applicable law without an analysis of how that
particular law is to be interpreted. As is common throughout the document, the Goldstone
Report notes that the duty to protect and respect civilians forms part of customary
international law, though it neither sources this legal conclusion nor explicates what
“protect and respect” might mean in the specific context.271 The subsequent “findings”
section in Chapter XXIV (this is the only chapter with a “findings” section) takes note of the
facts that amount to breaches of international law. However, these facts are not explicitly
associated with any specific legal requirements found in international law documents. In
other words, the “findings” are somehow different than “conclusions,” but do no more than
implicitly draw upon the legal analysis rather than explicitly tie the facts to provisions of
law.272 Associating the findings with specific breaches of provisions within international
human rights and humanitarian law, and sourcing the interpretations of these provisions,
would not only be useful; it would go a long way to helping third parties fully understand
and debate the Goldstone Report’s findings (and the credibility of the legal findings).273
A perfunctory review of the law, while potentially in keeping with the practice of many factfinding missions, does not conduce to basic requirements of legality in the context of UN
COIs—or most COIs that engage the law, whether national or international. Clarity and
reasoned justifications are clearly necessary. Furthermore, those implicated by the findings
are, as autonomous agents, deserving of open, detailed explanations of how the legal
findings were made, how the law was applied, and what facts were relied upon to finalize
the decision. It might also be added that instantiating a “culture of justification”— whereby
it becomes the culture with respect to COIs to rationally defend all decisions—not only
encourages such behavior in future UN COI reports, but also promotes the development of
a standard practice as to how the law and various rules are to be applied and interpreted in
various UN COI contexts. This, in turn, will make the applicable rules more transparent and
more familiar to those to whom the rules may apply in the future. Future UN COI reports
270
See generally, Chatham House Report, supra note 232.
271
Goldstone Report, supra note 5, ¶ 1683. Another example is the Goldstone Report’s reference to the prohibition
of indiscriminate attacks in Article 51(4) of Additional Protocol I to the Geneva Conventions, without a
corresponding explanation of what indiscriminate might mean in the context, and how it can and has been
interpreted in international law.
272
One salient exception to this proposition is the section of the Report on Accountability and Judicial Remedies.
See, e.g, Goldstone Report, supra note 5, at 388–90.
273
Id. at ¶ 1950. Note that the conclusions do no better in amalgamating the legal and factual findings with the
relevant provisions of international law.
2017
Due Process in UN Commissions of Inquiry
187
will be better, and its reasoning stronger, with a more comprehensive review of the law in
relation to the facts.
E. Conclusion
Operating in the context of a highly controversial and politicized dispute, the Gaza COI was
subjected to harsh criticism but also lauded for completing a difficult task. While both the
criticism and praise may have been heightened given the highly political context of the
dispute, the targets for criticism were fairly typical in the context of UN COIs. In particular,
the Gaza COI was criticized for: being the product of the Human Rights Council, an institution
with a history of focusing disproportionately on Israel and, arguably, establishing biased
inquiries; its biased mandate and commissioner(s); its indeterminate mandate as
exemplified by the mandate’s failure to circumscribe strictly the temporal and geographic
scope of the inquiry; its failure to articulate the method utilized to determine which incidents
to investigate; its methods of gathering and corroborating evidence and its failure to
articulate transparently the rules that governed this process; and for various due process
issues including the definitiveness of its conclusions and language particularly pertaining to
Israel as well as the seemingly inconsistent application of its hazy standard of proof.
The Goldstone Report provides fertile ground for analyzing how many of these issues might
be addressed simply by learning from past mistakes and taking care to be precise in
language, engage with problems, and justify the ultimate decisions taken. In order to
execute these tasks well UN COIs must recognize the role that law plays in the work of such
bodies; not just in that they make legal findings with reference to international human rights
and humanitarian law, but also that their processes are “quasi-judicial” in nature, that they
depend for their legitimization and success on the credibility and reliability that attends legal
processes that evince transparency, their accountability, and overarching notions of
fairness. For UN COIs procedure is substance, and good law in one does not come without
good legal practice in the other.
188
German Law Journal
Vol. 18 No. 01
Developments
Freedom of Speech for Public Officials vs. the Political Parties’
Right to Equal Opportunity: The German Constitutional Court’s
Recent Rulings Involving the NPD and the AfD
By Thomas Kliegel
Abstract
Public Officials are bound by the fundamental rights when they are acting in their political
function. Acting as such they cannot, in general, claim the freedom of speech for themselves
as normal citizens do. If they give statements regarding other political parties they have to
abide by the principle of neutrality. Statements that could be understood as negative will be
– especially if they are made during the election process – a violation of the right of political
parties to equal opportunity, which is an indispensable element of the free and open process
of forming popular opinion. The delineation of whether a public official is appearing as such,
as a “party politician” or “private individual” can, however, be difficult and it is the obligation
of the public official to leave no doubt about the role he is exercising. Different from any
other public official the Federal President needs not comply with the principle of neutrality.
He has a broad margin of assessment and only transgresses his legal boundaries if he violates
the integrative task of his office in an arbitrary manner.

Dr. iur., Judge at the District Court (Landgericht) in Essen, Germany. From 2013-2016 the author was a Judicial
Clerk to Justice Peter Müller of the German Federal Constitutional Court. Justice Müller was the reporting Justice
in 2 BvE 2/14 and 2 BvQ 39/15. This article reflects the author’s personal opinions. The author expresses his
gratitude to Dr. Andrew Cannon, Deputy Chief Magistrate, Magistrates Court of South Australia, and Dipl.-Jur.
Christopher Hunt, for their very helpful remarks.
190
German Law Journal
Vol. 18 No. 01
A. Introduction
The Second Senate of the German Constitutional Court in two judgments - delivered on 10
June 2014 and 16 December 2014 - rejected applications of the National Democratic Party
(Nationaldemokratische Partei Deutschlands [NPD]) against Federal President Joachim
Gauck and the Federal Minister for Family, Senior Citizens, Women and Youth Manuela
Schwesig because of negative statements they made during electoral campaigns concerning
the NPD.1
On 10 June 2014,2 the Court held that within the boundaries of the Constitution and the laws
the Federal President is generally free to decide how to perform the representational
functions and integrative tasks connected to his office, as long as he does not take sides in
an arbitrary manner. On 16 December 2014,3 the Court then held that the standards
applying to statements made by the Federal President regarding political parties as well as
to judicial review of such statements are not transferable to statements made by members
of the Federal Government. Unlike the Federal President, members of the Federal
Government must ensure, when participating in political competition, that they do not use
the means and possibilities of their office, because if they do, they are bound by the principle
of neutrality. With these two judgments Karlsruhe laid down the general principles applying
to statements by public officials and drew a clear distinction between the Federal President
and members of the Federal Government. However, these principles as well as the
distinction leave room for interpretation and have been intensively discussed by legal
scholarship. Besides, one must not forget that these judgments were delivered, while the
party-ban proceedings against the NPD were still pending.
The first application of the general principles was not long in coming: On 7 November 2015,4
the Second Senate granted a preliminary injunction in favor of the party “Alternative for
Germany” (Alternative für Deutschland [AfD]) and against the Federal Minister for Education
and Research Johanna Wanka because of a negative press release on the homepage of the
Ministry regarding an upcoming assembly of the AfD.
1
The author has provided more extensive analysis of these court rulings in German. See Thomas Kliegel,
Äußerungsbefugnisse von Amtsträgern gegenüber politischen Parteien, in LINIEN DER RECHTSPRECHUNG DES
BUNDESVERFASSUNGSGERICHTS 413 (Scheffczyk & Wolter eds., 2016).
2
Federal President Case, 136 BverfGE 323 (2014) [hereinafter Federal President Case].
3
Schwesig Case, 138 BVerfGE 102 (2014) [hereinafter Schwesig Case].
4
Wanka
Case,
BVerfG
-2
BvQ
39/15,
November
7,
2015,
available
at
http://www.bverfg.de/SharedDocs/Entscheidungen/DE/2015/11/qs20151107_2bvq003915.html
[hereinafter
Wanka Case].
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
191
The following note starts with describing the basis and the development of the principles
laid down by the Court (Section B.). This introductory part is followed by a brief résumé of
the facts of the three recent cases (Federal President, Minister Schwesig, and Minister
Wanka) in Section C and a short summary of the judgments and the preliminary injunction
in Section D. The focus is laid on Section E. in which the critique and impact of the decision
on the law will be described and valuated. The note closes with a short conclusion
(Section F.).
B. Origin and Development of the Principles
It was the first time in history the German Constitutional Court was called upon to decide on
the constitutionality of (oral) statements made by public officials that may have harmed the
political parties’ right to equal opportunity. The question of political parties’ right to equal
opportunity in the face of other barriers or burdens had, however, already been the subject
of several decisions by the Court. One fundamental decision in this line of cases was the
1977 judgment on public relations of the Federal Government before elections to the
Bundestag (Federal Parliament).5 Revisiting that important decision lays an important
foundation for the discussion of the Court’s more recent cases.
I. The 1977 Judgment on Public Relations of the Federal Government
During the federal electoral campaign of 1976 the German Press and Information Office and
the publications divisions of several federal ministries distributed millions of leaflets,
pamphlets, and brochures disclosing the records of and the benefits conferred by various
governmental agencies. Although some of these publications were informational, many
advanced the cause of the SPD-FDP coalition government. In addition, funds allocated to the
publications divisions of various agencies were used to take out advertisements in
prominent magazines and newspapers, listing the accomplishments of the incumbent
government. In Organstreit6 proceedings, the opposition party CDU challenged these
publications and expenditures.
5
See, e.g., DONALD P. KOMMERS, THE CONSTITUTIONAL JURISPRUDENCE OF THE FEDERAL REPUBLIC OF GERMANY 177 (2d ed.
1997).
6
An application to the Federal Constitutional Court may be filed if supreme federal organs, or actors that are
equivalent to such organs, disagree on their respective rights and obligations under the Basic Law. This type of
proceeding is necessary because the organs have no authority over each other. Organstreit proceedings make it
possible for constitutional organs to judicially scrutinize each other’s actions; thus, Organstreit proceedings protect
political decision-making by enforcing the separation of powers.
192
German Law Journal
Vol. 18 No. 01
The Court held that elections can confer democratic legitimation in the sense of Article
20(2)7 of the Grundgesetz (Basic Law or Constitution) only if they are free.8 Not only must
the actual act of casting the ballot remain free of coercion and undue pressure as stipulated
by Article 38(1)9 of the Basic Law, but the voters must be able to form and express their
opinions freely and openly.10 The Court explained that the formation of the popular will
takes place through the act of voting, rising from the people to the constitutional organs,
and not vice versa. The decisions of the majority can be regarded as the opinion of all only if
the majority emerges in the free and open process of forming popular opinion. The Court
further insisted that, during the decision-making process the majority must bear in mind the
common good, particularly the rights and interests of the minority, whose chances of
becoming a majority must neither be taken away nor curtailed.11
The Court also concluded that the guarantee of equal opportunity in the competition for
votes is an indispensable element of the free and open process of forming popular opinion.
In a modern parliamentary democracy, this process requires the existence of political
7 Article
20 of the German Basic Law [Constitutional Principles - Right of Resistance]
(1) The Federal Republic of Germany is a democratic and social federal state.
(2) All state authority is derived from the people. It shall be exercised by the people through elections and other
votes and through specific legislative, executive and judicial bodies.
(3) The legislature shall be bound by the constitutional order, the executive and the judiciary by law and justice.
(4) All Germans shall have the right to resist any person seeking to abolish this constitutional order, if no other
remedy is available.
8
Public Service Case, 44 BVERFGE 125, 139 (1977).
9
Article 38 of the German Basic Law [Elections]
(1) Members of the German Bundestag shall be elected in general, direct, free, equal and secret elections. They
shall be representatives of the whole people, not bound by orders or instructions, and responsible only to their
conscience.
(2) Any person who has attained the age of eighteen shall be entitled to vote; any person who has attained the age
of majority may be elected.
(3) Details shall be regulated by a federal law.
10
Party Finance I Case, 20 BV ERFGE 56, 97 (1966).
11
Public Service Case, 44 BVERFGE 125, 139 (1977).
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
193
parties, which are granted a constitutional status by the Basic Law in Article 21 12. This
provision guarantees their free formation and the participation in forming the popular will.
It also lays down rules to secure their equal rights and chances in the competition for votes.13
Those principles apply to the process of the election itself, as well as the preparation for the
election.
The right of political parties to participate in the formation of popular opinion is violated
when state institutions or agencies intervene in the electoral campaign in favor or to the
detriment of a political party.14 Such an intervention violates the principle of neutrality of
the state and the integrity of forming the popular will through elections and other votes.
State organs can have a strong effect on the formation of popular will and public opinion
and by their conduct influence voters’ decisions. Because of this ability they must not use
their official capacity to try to influence the formation of the popular will by employing
additional special measures before or during elections in order to secure or gain power over
these organs. They are constitutionally barred from identifying themselves, as state organs,
with political parties during electoral campaigns and from supporting or opposing political
parties with public funds. This applies in particular to attempts to influence the decision of
voters through advertising. Organs of the state must serve everyone and remain neutral in
electoral campaigns. This obligation of neutrality applies to all parties, as long as the Federal
Constitutional Court has not declared them unconstitutional. Of course, this does not
prevent a member of the Federal Government bureaucracy from entering the electoral
campaign on behalf of a political party in a non-official capacity.
Based on these principles the Court proceeded to invalidate the public relations measures
taken by the government during the 1976 federal electoral campaign. The Court concluded
12
Article 21 of the German Basic Law [Political parties]
(1) Political parties shall participate in the formation of the political will of the people. They may be freely
established. Their internal organisation must conform to democratic principles. They must publicly account for their
assets and for the sources and use of their funds.
(2) Parties that, by reason of their aims or the behaviour of their adherents, seek to undermine or abolish the free
democratic basic order or to endanger the existence of the Federal Republic of Germany shall be unconstitutional.
The Federal Constitutional Court shall rule on the question of unconstitutionality.
(3) Details shall be regulated by federal laws.
13
Public Service Case, 44 BVERFGE 125, 139 (1977).
14
Id. at 143-144.
194
German Law Journal
Vol. 18 No. 01
that the publications and expenditures contravened the idea of democracy (Article 2015),
violated the principle of equality among political parties (Article 2116), and contravened the
principle of free and equal elections (Article 3817).
II. Development of the New Principles
Taking this judgment as the basis, the Court developed (new) standards for statements by
public officials that concern political parties. In the first judgment on the statement by the
Federal President, the Court granted the President a wide margin regarding his public
statements and justified it with his special representative and integrative role in the German
democracy. However, the judgment was delivered, while some public officials in Germany
tried to make a point against right-wing or even extremist parties using harsh, sometimes
offensive language. Especially the NPD filed applications to the constitutional and
administrative courts of the German states (Länder), where the party most often lost.18 The
courts’ standards, though, still awaited clarification. Furthermore, some of the courts made
reference to the standards of the judgment of the Second Senate regarding the Federal
President, but did not sufficiently take into account that those standards might not apply to
other public officials.19 So when the NPD filed its application against Minister Schwesig the
Constitutional Court used this opportunity to clarify the standards concerning statements
made by public officials on political parties and - most important - drew a clear distinction
between the Federal President and members of the Federal Government. The standards of
the judgment on Schwesig were confirmed in the preliminary injunction against Minister
Wanka.
15
See supra note 7.
16
See supra note 12.
17
See supra note 9.
18
See, e.g., Verfassungsgerichtshof Rheinland-Pfalz, NEUE ZEITSCHRIFT FÜR VERWALTUNGSRECHT RECHTSPRECHUNGSREPORT 665 (2014); Thüringer Verfassungsgerichtshof, Judgment on December 3, 2014 – VerfGH 2/14 –, juris;
Saarländischer Verfassungsgerichtshof, Judgment on July 8, 2014 - Lv 5/14 - BeckRS 2014, 53505;
Verwaltungsgerichtshof Kassel, Court Order on November 24, 2014 - 8 A 1605/14 - BeckRS 2015, 42621;
Verwaltungsgerichtshof Kassel, NEUE ZEITSCHRIFT FÜR VERWALTUNGSRECHT RECHTSPRECHUNGS-REPORT 815
(2013). See also, Kliegel, supra note 1, at 420-423.
19
See, e.g., Saarländischer Verfassungsgerichtshof, supra note 18. Although the court recognized the difference
between the Federal President and holders of government office, it cited the judgment of the Second Senate and
drew difficult comparisons.
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
195
C. Facts of the Three Recent Cases: Federal President, Minister Schwesig, and Minister
Wanka
I. Statement by the Federal President (Case 2 BvE 4/13)20
In August, 2013, the Federal President took part in a discussion with several hundred
vocational school students between the ages of 18 and 25 in a school in Berlin-Kreuzberg.21
During the event—which had the motto “22 September 2013 – Your Vote Counts!”—the
President emphasized the importance of free elections for democracy and encouraged the
students to become involved in social and political activities. In response to a student’s
question the President addressed certain incidents related to protests that members and
supporters of the far-right National Democratic Party of Germany (Nationaldemokratische
Partei Deutschlands – NPD) had launched against an asylum accommodation center in
Berlin-Hellersdorf. The press coverage of the discussion quoted the President as having said
the following: “We need citizens who take to the streets and show the nutcases their limits.
All of you are called upon to do so;” and “I am proud to be the President of a country in
which citizens defend their democracy.”
The NPD argued in an Organstreit22 complaint filed before the Constitutional Court that this
statement violated its right to equal participation laid down in Article 21(1)23 and Article
38(1)24 of the Basic Law.25
II. Statement of Minister Schwesig (Case 2 BvE 2/14)26
In June, 2014, Manuela Schwesig – the Federal Minister for Family, Senior Citizens, Women
and Youth – took part in the opening of the “Summer Academy for Democracy, Cultural
20
See Federal President Case, at 324–27.
21
The facts are set out in the judgment. See Federal President Case, at 324–27.
22
See supra note 6.
23
See supra note 12.
24
See supra note 9.
25
See supra note 21.
26
See Schwesig Case, at 103–07.
196
German Law Journal
Vol. 18 No. 01
Openness and Tolerance” in Weimar during the run-up to the 2014 elections in the federal
state of Thuringa. On the sidelines of the event Minister Schwesig gave an interview to a
regional newspaper concerning different topics, including the fight against right-wing
extremism.27 Asked how one should deal with motions filed by the NPD – in the event that
the far-right party were to obtain seats in the legislature – Schwesig said: “But I will support
the Thuringian campaign to ensure that such a situation does not even arise. It must be the
top priority to prevent the NPD from winning seats in the legislature.”28 Context and other
information added to the interview referred to Schwesig’s public office and to the fact that
she is a member of the Social Democratic Party of Germany (Sozialdemokratische Partei
Deutschlands – SPD).
The NPD argued in an Organstreit29 complaint filed before the Constitutional Court that this
statement violated its right to equal participation laid down in Article 21(1)30 of the Basic
Law.
III. Statement of Minister Wanka (Case 2 BvQ 39/15)31
The right-wing political party Alternative for Germany (Alternative für Deutschland – AfD)
announced an assembly in Berlin to be held on November 7, 2015. The event’s motto was
“Red card for Merkel - Asylum has limits.”32 Days before the assembly was to take place, on
November 4, 2015, Johanna Wanka – the Federal Minister for Education and Research –
published a press release on the homepage of the Ministry containing the following
statement: “Red card for the AfD. Johanna Wanka on the planned assembly of the AfD: ʻThe
red card should be shown to the AfD and not the Chancellor. Björn Höcke and other speakers
of the party aid and abet radicalism in society. Such actions award unacceptable support to
right-wing extremists who openly incite to racial hatred.ʻ”33
27
Gerlinde Sommer, Schwesig: "Ziel muss sein, dass die NPD nicht in den Landtag kommt", THÜRINGISCHE
LANDESZEITUNG , June 25, 2014, available at http://www.tlz.de/web/zgt/politik/detail/-/specific/Schwesig-Zielmuss-sein-dass-die-NPD-nicht-in-den-Landtag-kommt-1783547207.
28
See Sommer, supra note 27.
29
See supra note 6.
30
See supra note 12.
31
See Wanka Case, at paras. 1–5.
32
Id.
33
Id.
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
197
The AfD argued in a motion for provisional measures filed before the Constitutional Court
that this statement violated two constitutional guarantees: its right to equal participation
laid down in Article 21(1)34 of the Basic Law; and its freedom of assembly under Art. 8 of the
Basic Law. The AfD demanded the removal of the statement from the Ministry’s homepage.
D. Summary of the Judgments and the Preliminary Injunction
I. 2 BvE 4/13 (Federal President)35
The Second Senate of the Constitutional Court held that the statements made by the Federal
President were not objectionable under constitutional law and, therefore, did not violate
the NPD’s right to equal opportunity for political parties.
1. General Principles
The first and most prominent justification the Second Senate offered for its judgment is the
special constitutional function the Basic Law ascribes to the Federal President: The President
represents the state and the people of the Federal Republic of Germany both externally and
internally and is called upon to embody the unity of the state. The Court explained that the
holder of the office of Federal President is generally free to decide how to give specific shape
to the representational functions and integrative tasks connected with the office.36 If an
important task of the Federal President consists in making the unity of the polity visible by
his appearances in public, and to further that unity via the authority of this office, then he
must have a broad margin of assessment in this respect. The Federal President can only live
up to the expectations connected to the office, the Court reasoned, if he can respond to
developments in society and to general policy challenges according to his assessment. In so
doing the President is free to choose the topics and to decide what form of communication
is adequate in the given context.37 For these reasons the Court concluded that the Federal
President does not require statutory authorization, beyond the authority to make public
34
See supra note 12.
35
See Federal President Case, at 330–38.
36 Id.
37 Id.
at 332.
198
German Law Journal
Vol. 18 No. 01
statements that is inherent in his office, when he refers to groups or persons while pointing
out undesirable developments or warns of dangers in society.38
The Court acknowledged, however, that the Federal President's actions are limited by the
Constitution and the law.39 These limits include the President’s duty to respect a number of
constitutional rights, such as the political parties' right to equal opportunity under Article
21(1)40 of the Basic Law and, insofar as equal opportunity in elections is concerned, Article
21(1) in conjunction with Article 38(1)41 or Article 28(1)42 of the Basic Law. With this in mind
the Court conceded that, Presidential statements containing negative judgments regarding
a political party’s aims and activities could have a negative effect on the party’s equality of
opportunity in political competition.43
Yet, even with these constitutional limits in mind, the Court insisted that its ability to police
the realm of Presidential statements must also be limited. The Court concluded that when
reviewing statements by the Federal President that affect the political parties' equality of
opportunity, it must take into account the fact that it is exclusively for the Federal President
38 Id.
39 Id.
at 333.
40
See supra note 12.
41
See supra note 9.
42
Article 28 of the German Basic Law [Land constitutions – Autonomy of municipalities]
(1) The constitutional order in the Länder must con form to the principles of a republican, democratic and social
state governed by the rule of law, within the meaning of this Basic Law. In each Land, county and municipality the
people shall be represented by a body chosen in general, direct, free, equal and secret elections. In county and
municipal elections, persons who possess citizenship in any member state of the European Community are also
eligible to vote and to be elected in accord with European Community law. In municipalities a local assembly may
take the place of an elected body.
(2) Municipalities must be guaranteed the right to regulate all local affairs on their own responsibility, within the
limits prescribed by the laws. Within the limits of their functions designated by a law, associations of municipalities
shall also have the right of self-government according to the laws. The guarantee of self-government shall extend
to the bases of financial autonomy; these bases shall include the right of municipalities to a source of tax revenues
based up on economic ability and the right to establish the rates at which
these sources shall be taxed.
(3) The Federation shall guarantee that the constitutional order of the Länder conforms to the basic rights and to
the provisions of paragraphs (1) and (2) of this Article.
43 See
Federal President Case, at 333.
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
199
to decide how to perform the functions and integrative tasks connected to the office.44 The
extent to which the Federal President respects the concept of a "neutral Federal President"
cannot be subject to judicial review, neither as an abstract matter nor in concrete cases. But
the Court accepted that it would contradict the principle of the rule of law if political parties,
whose right to equal opportunity is an essential element of the democratic basic order, had
no legal protection vis-à-vis the Federal President.45 Faced with this constitutional dilemma
the Court concluded that it is both necessary and sufficient to judicially review the Federal
President's negative remarks about a political party to determine whether he made them in
a way that clearly neglects the integrative task of his office, and thus in an arbitrary
manner.46
2. Application of the Principles to the Case
Applying this standard and giving the President’s statements an objective interpretation, the
Court concluded that the references to resisting the NPD did not demonstrate support for
or approval of violent protests against the applicant.47 At the beginning of his remarks, the
Court emphasized, the Federal President explicitly pointed out that even tearing off posters
was unacceptable.48 This convinced the Court that there could be no doubt about his clear
disapproval of violent conflicts with the applicant. Additionally, the Court found it significant
that, in reference to the constitutional concerns raised by the NPD, the President referred
to the importance of the freedom of expression and assembly and called for full participation
in the political struggle of opinions. The Court explained that the President has the authority
to issue these statements.49
The President’s use of the term “nutcases” (Spinner) in the specific context, the Court
explained, was also unobjectionable under constitutional law. With this term, the President
made a negative judgment about the applicant and its members and supporters. If
considered in isolation and out of context, the Court conceded, the term might be regarded
as defamatory and could indicate an objectionable discrimination against the persons
44 Id.
at 336.
45 Id.
46 Id.
47 Id.
at 336–37.
48 Id.
at 337.
49 Id.
200
German Law Journal
Vol. 18 No. 01
against whom the statement was directed. Here, however, from the Court found that the
term was less offensive when considered in the context of the overall style of the President’s
statements, throughout which he used the term “nutcases” and terms such as “ideologists”
and “fanatics” to refer to people who have not learned the lessons of history and who,
unimpressed by the dreadful consequences of National Socialism, hold nationalist and antidemocratic opinions.50 The Court reasoned that the exaggeration contained in the term
“nutcases” was intended to make clear to the participants in the discussion that the persons
thus labeled would never change; it was also meant to emphasize that they hoped in vain to
succeed with their ideology if the citizens “show them their limits.” Building on the lessons
to be learned from the tyrannical rule of National Socialism, the Court concluded that the
President was merely calling for the involvement of citizens against political views that pose
threats to the free and democratic basic order. In so doing, the President was merely
identifying a way of dealing with these views that conforms to the Basic Law. For all of these
reasons the Court held that the President did not cross the boundaries regarding negative
remarks about political parties set by the Constitution.51
II. 2 BvE 2/14 (Minister Schwesig)52
1. General Principles
On the basis of the Court’s 1977 decision (described above) and the decision concerning the
Federal President, the Court again emphasized that the right of political parties to equal
participation in the political process is violated if state organs seek to influence the political
process by favouring or disfavouring individual parties. But the standards the Court applied
to statements made by the Federal President are not applicable to members of the Federal
Government because they are directly derived from the particular role the Basic Law assigns
to the Federal President.53 As opposed to the Federal Government and its members, the
Federal President does not participate directly in the contest with other political parties and
he does not possess comparable means to influence public opinion.
Due to the Federal Government’s status under the Constitution and to its powers and
functions, public statements by its members must be reviewed by a different standard. The
Court reasoned that the Federal Government exercises functions of governing the state,
which include the power to maintain public relations. This function encompasses, inter alia,
50 Id.
51
Id. at 338.
52
See Schwesig Case, at 108–24.
53
Id., at 111–13.
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
201
the power to present and explain the government’s policies as well as to inform the public
about questions of general interest - even outside of its own political actions. In exercising
these functions, the Court explained, the Federal Government is bound by the fundamental
rights as well as by law and order (Articles 1(3)54 and 20(3)55 of the Basic Law). This fact alone
bars the government from engaging in what, in a different context, would be judged as “vile
criticism” in the meaning of §§ 185 et seq. of the Penal Code.56 This aspect notwithstanding,
the Court insisted that Federal Government is obliged to respect the political parties’ right
to equal participation that is secured by the first sentence of Article 21(1)57 of the Basic Law
as well as the resulting principle of neutrality.58
Since the Government’s agenda reflects the positions of the parties of which it is composed,
and since the public associates its actions with these parties, public perception of such
actions influences the governing parties’ chances of success in the political contest. This fact
is part of the free democracy envisaged by the Basic Law and must be accepted as such.59
The Court insisted, however, that the Federal Government must refrain from any actions
that are apt to influence the political contest and are not part of its official functions. 60 The
Constitution bars the government from identifying with any political party and from using
the possibilities and state assets at its disposal to aid or hinder any party in its work.61 The
Court insisted that the same standards apply to individual members of the Federal
54 Article
1 of the German Basic Law [Human dignity – Human rights – Legally binding force of basic rights]
(1) Human dignity shall be inviolable. To respect and protect it shall be the duty of all state authority.
(2) The German people therefore acknowledge inviolable and inalienable human rights as the basis of every
community, of peace and of justice in the world.
(3) The following basic rights shall bind the legislature, the executive and the judiciary as directly applicable law.
55
56
See supra note 7.
See English version of the German Penal Code under https://www.gesetze-im-
internet.de/englisch_stgb/.
57
See supra note 12.
58
See Schwesig Case, at 114.
59
Id., at 115.
60
Id.
61
Id.
202
German Law Journal
Vol. 18 No. 01
Government.62 The Court acknowledged that this standard constitutes a fine-line because
government ministers and other high-ranking officials cannot be barred from participating
in political competition outside their official capacity. Such a limitation would create the
opposite problem and constitute an unjustified form of discrimination on the governing
parties.63
The Court nevertheless affirmed that those in government office who participate in political
competition must ensure that in doing so they do not make use of the means and
possibilities of their office.64 Of course it is impossible to strictly place actions of government
members in the categories of “Federal Minister,” “party politician,” or “private individual.”
Public perception, too, views holders of government office both as Federal Ministers and as
members of their party. The role to which any particular statements belong, must be
established on a case-by-case basis. Statements will usually fall into the field of “Federal
Minister” if they make express references to the government office or if they exclusively
concern actions of the respective ministry. The same goes for statements that are made
through official channels such as press releases or the official homepage of the public
authority. A statement’s context may also warrant subtler classification: e.g. using state
insignia or public funds or making the statement on the ministry’s premises. The same
applies to statements made in the context of government events or events in which the
minister participated exclusively in his or her official capacity. Participating in party events
like conventions etc., however, qualifies as mere participation in the political contest.65
The Court concluded that events of general political discussion (such as talk shows,
discussions, and interviews) must be examined in a differentiated manner: Holders of
government office may participate in any one event both in their official capacity and as
private individuals or members of their party.66 Limiting holders of government office to
official statements would violate the parties’ right to equal participation. But statements
that make specific use of the office’s authority must comply with the principle of neutrality.
The question of whether the principle of neutrality applies and whether it has been
respected, is subject to complete judicial review by the Federal Constitutional Court.67
62
Id., at 116–17.
63
Id., at 117.
64
Id., at 117–19.
65
Id. at 119.
66
Id., at 119–20.
67
Id., at 120–21.
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
203
2. Application of the Principles to the Case
Applying these standards, the Court held that the challenged statement did not violate the
NPD’s right to equal participation under Article 21(1)68 of the Basic Law. Minister Schwesig’s
statements, the Court concluded, constituted a mere act of participation in the political
contest and were not subject to the principle of neutrality under the first sentence of Article
21(1) of the Basic Law. If the NPD wishes to counter such statements, the Court explained,
the party must do so using the means of political competition.
III. 2 BvQ 39/15 (Minister Wanka)69
Referring to the Court’s 1977 decision and the two judgments discussed above, the Court
repeated that a violation of the right of political parties to equal participation in the political
competition occurs when holders of government office make use of the means and
opportunities associated with their office in the political struggle of opinions. It is especially
problematic that these resources are not available to other political competitors.70
The Court held that the press release published by Minister Wanka appeared on the
ministry’s homepage without any link to the assigned tasks of the ministerial office. The fact
that the press release did not refer to the ministerial office was not enough to avoid
constitutional problems in this case. The Court expressed concern about the fact that the
Minister used official resources by spreading the statement over the ministerial homepage.
Of course, these are resources that are available to her only because of her government
office and that are not available to political competitors. For these reasons the Court could
not exclude the possibility of a violation of the AfD´s right to equal participation in the
political competition.71
The Court also could not exclude the possibility of a violation of the basic right of freedom
of assembly secured by Article 8(1)72 of the Basic Law, because the Minister voiced her
68
See supra note 12.
69
See Wanka Case, at paras. 6–15.
70
Id., at para. 9.
71
Id., at para. 10.
72
Article 8 of the German Basic Law [Freedom of assembly].
(1) All Germans shall have the right to assemble peacefully and unarmed without prior notification or permission.
204
German Law Journal
Vol. 18 No. 01
opposition against the assembly of the AfD explicitly. The Court concluded that the press
release could therefore be understood as an official demand for boycott.73
Against this background and after balancing the consequences the Court granted the
requested provisional measures. If the preliminary injunction were not issued but the
substantive Organstreit74 were later to be successful, the Court explained, then the rights of
the AfD would be severely violated. If the preliminary injunction were issued but the
Organstreit were unsuccessful, then the Minister would not be prevented from repeating
the uttered opinion.75
E. Critique and Impact of the Decision on the Law76
I. The Person Making the Statement
In these three recent judgements, the Second Senate drew a very clear distinction between,
on the one hand, statements77 made by the Federal President and, on the other hand,
statements by holders of government office (or other public officials)78 concerning political
parties. This fundamental distinction was justified by reference to the different
(2) In the case of outdoor assemblies, this right may be restricted by or pursuant to a law.
73
See Wanka Case, at para. 12.
74
See supra note 6.
75
See Wanka Case, at para. 15.
76
See, e.g., Kliegel, supra note 1, at 424–37.
77
This case-law of the Second Senate affects, of course, written as well as oral statements. Differently Mandelartz,
Informations- und Öffentlichkeitsarbeit der Bundesregierung, DIE Ö FFENTLICHE VERWALTUNG 326, 328 (2015), who
draws an unnecessary distinction at this point.
78
This case-law of the Second Senate is not limited to holders of government office. All public officials with an
important office and the ability to make public statements that could influence the decision of voters, are bound
by the established rules. That counts, of course, for mayors if they make negative statements concerning political
parties. See Verwaltungsgericht Düsseldorf, Court Order on January 9, 2015 - 1 L 54/15 -, BeckRS 2015, 40408;
Oberverwaltungsgericht Münster, Court Order on January 12, 2015 - 15 B 45/15 -, BeckRS 2015, 40521); Barczak,
Die parteipolitische Äußerungsbefugnis von Amtsträgern, NEUE ZEITSCHRIFT FÜR VERWALTUNGSRECHT 1014, 1019 (2015).
Putzer points out correctly that the constitutional situation changes when the mayor refers to non-party
organizations. This is neither a question of Article 21 nor of Article 38 of the Basic Law, but might be a violation of
the freedom of speech and the freedom of assembly of the affected organization. Putzer, Verfassungsrechtliche
Grenzen der Äußerungsbefugnisse staatlicher Organe und Amtsträger, DIE ÖFFENTLICHE VERWALTUNG 417, 424-5
(2015). See also Barczak, supra, at 1019.
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
205
constitutional functions the Basic Law assigns to the Federal President and holders of
government office:
The Federal President has a broad margin of assessment when it comes to such statements.
This deference is amplified by the limited judicial oversight the Constitutional Court will
exercise in these cases. The boundaries of the President’s freedom will be transgressed only
if the statement contains (criminal) defamation or violates the integrative task of his office
in an arbitrary manner.79 Apart from this, the President’s statements need not comply with
the principle of neutrality. It is his personal decision, one that is not judicially reviewable, to
determine the extent to which he adapts the role model of a “neutral Federal President.”80
Even the use of a usually defamatory term like “nutcases” (Spinner) can be justified, the
Court held, if the Federal President has good reasons for using it. In the case of the NPD, the
Court explained, the President had the good reason that he was combating those who deny
the dreadful consequences of National Socialism. For obvious reasons this is a particularly
important concern in Germany.81 In other cases, however, the use of such a term could be a
violation of the party´s right to equal opportunity.82
Those who occupy government offices, on the other hand, do not benefit from a margin of
assessment when they make use of the means and possibilities of their office in order to
issue negative comments regarding (other) political parties. In exceptional cases a negative
statement of a member of Government concerning a political party can be justified due to
governmental responsibilities to provide information, e.g. the Minister of the Interior can
inform the public about a political party’s unconstitutional activities in the yearly report of
the intelligence services.83 However, the constitutionality of (negative) statements by public
79
Putzer is critical concerning this broad margin, which “will hardly ever be violated in the constitutional reality.”
See Putzer, supra note 78, at 421. Barczak disagreed and would limit the broad margin of the Federal President to
statements referring to parties or organizations that identify themselves with the NSDAP. See Barczak, supra note
78, at 1020.
80
See Federal President Case, at 336. Barczak affirmed this position. See Barczak, supra note 78, at 1020.
Tanneberger and Nemeczek were critical. See Tanneberger/Nemeczek, Anmerkung zu Schwesig, NEUE ZEITSCHRIFT
FÜR VERWALTUNGSRECHT 215 (2015).
81
See the disputable Wunsiedel Case of the First Senate of the Constitutional Court, which permits (criminal)
restrictions of the freedom of speech for statements glorifying the National Socialism. Wunsiedel Case, 124
BVerfGE 300 (2009); critical also Barczak, supra note 78, at 1020 (with further references).
82
See also Barczak, supra note 78, at 1020.
83
See Putzer, supra note 78, at 423; Barczak, supra note 78, at 1016–17.
206
German Law Journal
Vol. 18 No. 01
officials concerning political parties is usually not a question of permissible governmental
information activity, but rather of the function or position the speaker is using while making
the statement.84 Holders of government office have therefore generally to refrain from
making negative statements concerning political parties if they make specific use of the
authority or the resources of their government office. By doing so nevertheless, they violate
the principle of neutrality. Moreover, the question of a violation of the principle of neutrality
is – in contrast to the Federal President – subject to complete judicial review by the
Constitutional Court.
The reason for that is the Federal President’s different role. The Court held that the President
does not participate directly in the contest with other political parties and does not possess
comparable means to influence public opinion. The Government, by comparison, is
composed of members of political parties. Their actions as public officials always influence
public opinion, so they must refrain from actions influencing the public opinion that are not
part of their public office if they do not make it clear that they are acting outside of their
official capacity.
The distinction between the President and the government has been criticized.85 One could
also reverse its assumptions and hold that the actions by the Federal President as a neutral
figurehead of the country have much more impact on the people than actions by holders of
government office, who belong - obviously and discernible - to a certain party.86 Thus, one
could also advocate the theory that because public opinion is more easily influenced by
statements made by the Federal President, he should refrain from negative statements
concerning political parties. Furthermore, some scholars argue that it is doubtful whether
the distinction is really a question of resources.87 After all, the Federal President also has a
reasonable budget at his disposal, and he does not necessarily need it to attract the voters’
attention.
84
Barczak views this differently. See Barczak, supra note 78, at 1016-18. Mandelartz complains that the Court did
not clarify whether the statement of Minister Schwesig was made within her competences as Minister for Family,
Senior Citizens, Women and Youth. See Mandelartz, supra note 77, at 327. This criticism is quite surprising because
no Federal Minister can intervene like this in the electoral campaign of one of the states (Länder) using the means
of his or her office because of his/her competences. This would surely be the case for the Federal Minister for
Family, Senior Citizens, Women and Youth. It seems obvious that the statement would have been a violation of the
party’s right to equal opportunities if Schwesig had used the specific authority of her office.
85
See Putzer, supra note 78, at 421; Tanneberger & Nemeczek, supra note 80, at 215.
86
See Putzer, supra note 78, at 422–23; Tanneberger & Nemeczek, supra note 80, at 215.
87
See Tanneberger & Nemeczek, supra note 80, at 215.
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
207
In the end, however, the argumentation of the Second Senate is consistent and convincing.88
The Federal President is not part of the fight for votes, does not participate in electoral
campaigns, and operates as a neutral figurehead. Even if the Court could have been stricter
regarding his very wide margin of assessment,89 the standards concerning statements made
by public officials are undoubtedly necessary limits to their freedom of speech, which they
can still exercise in electoral campaigns and in circumstances in which they do not make use
of the authority or resources of the office they hold. To illustrate this argument one has only
to imagine the Chancellor making public statements in television one week before the
federal elections concerning other political parties in a negative way, or even suggesting that
the public refrain from voting for a certain party, all while sitting in her office with the
insignia of her power in the background, having been introduced as Chancellor of the Federal
Republic of Germany. In those circumstances, it would be very clear that the parties’ right
to equal opportunity is violated. In fact, it is very similar to the case the Court decided in
1977, concerning the production and publishing of informational material in favour of the
governing parties. That does not mean that the Chancellor cannot participate in the struggle
for votes and in electoral campaigns. Obviously, she can, for example, appear in the federal
convention of her party and make negative statements concerning other political parties. In
this case, she is clearly participating in the political competition outside of her official
capacity. That is important because the right to equal opportunity also prohibits putting the
governing parties at a disadvantage for the mere fact that they are governing the country.
II. The Circumstances of the Statement
The delineation of whether the holder of government office is appearing as a “public
official,” as “party politician,” or “private individual” (the distinction of the latter is not
relevant for the principle of neutrality) can, of course, be much more difficult than in the
given example and sometimes even impossible. Yet it is a necessary delineation90 that has
to be made on a case-by-case basis:91
88
See, e g., Barczak, supra note 78, at 1017, 1020.
89
See Putzer, supra note 78, at 421; Barczak, supra note 78, at 1020 (arguing for limits on the wide margin of the
Federal President - too strictly - to statements referring parties or organizations that identify themselves with the
NSDAP).
90
See Barczak, supra note 78, at 1016. Tanneberger and Nemeczek have a different view. See Tanneberger &
Nemeczek, supra note 80, at 216 (criticizing Barczak’s “all-or-nothing-solution”). But the separation of the different
roles as far as possible is the exact purpose of the judgment.
91
Schwesig Case, at 118.
208
German Law Journal
Vol. 18 No. 01
Delineation of some statements is easy. For example, statements that make express
reference to the government office concerning actions of the ministry, using official channels
(such as ministerial publications, press releases, or the homepage of the ministry). In these
cases, the office-holder makes specific use of the authority and/or the resources of his or
her office. The circumstances of a statement can also indicate that the means and
possibilities of the office are being used, for example, for a statement made on the premises
of the ministry, the use of state insignia, or using the ministry’s financial resources. It might
be possible to clarify that a public official is acting as “party politician,” such as when he or
she makes an appearance or a speech at a party’s convention, appears at a party’s event
during an electoral campaign, makes a statement on the premises of the head office of the
party, or makes a statement with an unambiguous reference to the speaker’s party function.
The same goes for statements with a clear reference to the private life of the office-holder.
As the Schwesig judgment demonstrates, however, it can be very difficult to classify
statements made during events that are neither official nor party nor private appointments.
Contrary to opinions in legal scholarship,92 even if a classification of a statement is not
possible, a legal solution is available, due to a simple rule of doubt. Such events, which can
be talk shows, discussions, or interviews, are mixed events that must be classified depending
on the content of the discussion. While one sentence can be strictly official, the other
sentence may refer to the private opinion of the public official, and the next question may
refer to the person as a party official.93 It is also common that in events like this the person
is introduced as both holder of government office and with a reference to his or her status
in a political party. In those cases, the public official is responsible for the public perception
of his or her statement. If the topic changes from private or party content to official content,
he or she has to make clear that he or she is talking as a party politician or private individual,
especially when he or she is attacking a political party.
It is very important to bear in mind that in such cases public officials are not given the benefit
of the doubt.94 Thus, if a negative statement concerning a political party cannot be clearly
assigned to the public or party/private function of an office-holder, then it has to be
92
See Putzer, supra note 78, at 423; Tanneberger & Nemeczek, supra note 80, at 216; Krüper, Anmerkung,
JURISTENZEITUNG 414, 417 (2015); Mandelartz, supra note 77, at 329.
93
Mandelartz disagrees. See Mandelartz, supra note 77, at 329 (speaking of an artificial separation of one
statement, but does not offer a practical solution).
94
Barczak disagrees. See Barczak, supra note 78, at 1016. See also Putzer, supra note 78, at 423. Tanneberger &
Nemeczek appear to say that the holder of government office should not be given the benefit of the doubt, which
is, in fact, already the case. The reason for rejecting the application was not that Minister Schwesig has been given
the benefit of the doubt but that there was no doubt about the role she used when making the statement. See
Tanneberger & Nemeczek, supra note 80, at 216.
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
209
gathered that he or she is acting as a public official using the authority of his or her office
and, therefore, is violating the principle of neutrality. Critical opinions in legal scholarship
tend to overlook this crucial point and merely speak of the impossibility to differentiate.95
The rule is simple: When a holder of government office harshly criticizes a political party and
leaves the objective debate on a certain topic,96 then he or she has to be aware of the role
he or she plays in this moment. If, due to the nature of the event, this role is not clear, then
it is his or her obligation to clarify what role he or she is exercising at the time. Thus, every
office-holder can still objectively debate political issues with other parties’ politicians
without having to be afraid of violating their right to equal opportunity. This goes especially
for debates in parliament where the office-holder usually speaks about his or her area of
responsibility and where he or she can confront the opposition with factual matters. Of
course, in this setting the opposition can reply and defend themselves or attack the speaker
in the same arena.97
The office-holder may even criticize another party in a way that is harsh, discriminating, and
biased. In such cases, which he or she should be able to notice without difficulties, the officeholder has to be sure of the role he or she is exercising. This role is usually evident. The past
year shows that the distinction appears to work in practice without greater difficulty. The
Constitutional Court had to deal with only one case of a possible violation of a party’s right
to equal opportunity due to a negative statement of office-holder (the Wanka Case – which
contains some factual differences).
But it should also be clear that not every use of the means and possibilities of the office
signifies that the statement is made in the function of an office-holder. The mere use of the
official car, a ministry’s driver, or of the official mobile phone does not necessarily imply that
the public official is acting in his or her official function. In a difficult and time consuming job
it is simply not possible and cannot be expected that the public official changes “his or her
entire gear” just for one statement. Therefore, it was not a problem in terms of using the
resources of the public office when Minister Schwesig was taken in her official car to the
95
See Krüper, supra note 92, at 417; Putzer, supra note 78, at 423. Contrary to this opinion the legal certainty for
holders of government office is not a great issue because it is their decision where and when to attack other political
parties in a disparaging way.
96
It is important to mention that an objective debate on a political topic between politicians is not the subjectmatter of the legal question discussed in this article. The statement must always in some way be subjective and
evidently take one side and thereby transgress the boundaries of the usual political debate.
97
This is misunderstood by Tanneberger & Nemeczek, who hold the opinion that real debate is no longer possible
in Parliament. See Tanneberger & Nemeczek, supra note 80, at 216.
210
German Law Journal
Vol. 18 No. 01
event in Thuringa. Firstly, it was an official appointment and the interview was just a side
event.98 The Minister probably would not have given the interview, at least not in Weimar,
had she not been there for the official event. Secondly, a Minister of the Federal Republic of
Germany can use his or her official car for private appointments, too; it is, so to speak, part
of the job description.99
III. The Timing of the Statement
The preliminary injunction the Constitutional Court granted the AfD against Minister Wanka
was almost a typical case, taking into account the Schwesig judgment. As this judgment
emphasizes, it is a clear indicator of acting in the public function if the office-holder uses
official channels – particularly the ministry’s homepage – for his or her (negative) statement.
The objection of Minister Wanka that her press release concerning the assembly of the AfD
made no reference to her governmental office appears rather weak in this context. A press
release of the minister on the homepage of the ministry does not need any reference to the
minister’s office in order to represent an official statement of the minister. It is even doubtful
whether the minister was allowed to make an express private statement in form of a press
release on the homepage of the ministry. A minister is definitely not allowed to publish
statements of his political party as ministerial press releases.
A new legal point is made in this decision because the statement of Minister Wanka was not
made in the preparation of an election or during an electoral campaign, but in the context
of a (ordinary) public assembly of a political party. Therefore, it is not a combination of
Article 21(1)100 and Article 38(1)101 of the Basic Law that was jeopardized here. Instead it
was a combination of Article 21(1) and Article 8102 of the Basic Law (the freedom of
assembly). That also demonstrates that the case-law of the Second Senate concerning
negative statements made by office-holders regarding other political parties is not restricted
to statements made during the election process or before, in electoral campaigns.103 In fact,
the principle of neutrality is violated by every negative statement an office-holder makes
regarding another political party, if he or she uses means in the political competition that
98
Mandelartz disagrees. See Mandelartz, supra note 77, at 328–29 (combining unnecessarily the two separate
events into one).
99
See Barczak, supra note 78, at 1016.
100
See supra note 12.
101
See supra note 9.
102
See supra note 72.
103
See Wanka Case, para. 9. See also Barczak, supra note 78, at 1019. But see Putzer, supra note 78, at 423.
2017
Freedom of Speech vs. Parties’ Right to Equal Opportunity
211
are only available due to his or her office and that are not available to political
competitors.104 The gravity of the violation of the principle of neutrality and the necessary
level of justification rise with the proximity of elections (or a public assembly),105 which is
not a matter of a certain time frame but of a case-by-case decision,106 taking into account
the direct reference to such elections (or the assembly) and, of course, the wording and the
extent of the recourse to public resources. The intensity of the Court’s review changes
according to the changes in these circumstances.
E. Conclusion
In two judgments and one preliminary injunction the Second Senate of the Constitutional
Court has laid down the principles applicable to public officials when they make negative
statements regarding other political parties. The Federal President possesses a broad margin
of assessment, which he abuses only if he violates the integrative task of his office in an
arbitrary manner. Government office-holders, to the contrary, have to abide by the principle
of neutrality, which does not allow them to make negative statements regarding other
political parties in their political function. This is always the case when they make specific
use of the authority or the resources of their office. The principle of neutrality becomes
stricter when the statement refers to upcoming elections or assemblies of the party that is
being attacked. The public official has to ensure that the role he or she is using while making
the statement is not misinterpreted by the public. He or she is not given the benefit of doubt.
Any statement made in his or her official capacity that could be understood as negative will
be a violation of the principle of neutrality and the right of political parties to equal
opportunity.
Lastly, it has to be pointed out that the fact that the attacked political party is a right-wing
extremist party is of no legal importance whatsoever. There is no “good cause” that justifies
a violation of political parties’ right to equal opportunity, even if it concerns an allegedly
“unconstitutional” party. The Basic Law provides for party ban proceedings to declare a
political party unconstitutional. As long as a party is not prohibited by the Constitutional
Court, it enjoys the same rights as every other party. Article 21(2)107 of the Basic Law, which
104
See Wanka Case, para. 9.
105
That goes for written statements as well as for oral statements. But see Mandelartz, supra note 77, at 327.
106
See Barczak, supra note 78, at 1019 (favoring a period of three months before any election, during which time
the “rule of the utmost reserve” applies for holders of government office when referring to other political parties).
107
See supra note 12.
212
German Law Journal
Vol. 18 No. 01
contains the requirements for a party’s prohibition, is an exception to the rule laid down in
Article 21(1)108, which guarantees the freedom of political parties and their right to equal
opportunities.109 Even pending party ban proceedings against the NPD do not allow
violations of the party’s right to equal opportunity before a judgment banning the party is
issued by the Court.110 This is a core principle of German democracy that is of great
importance because - unlike in other democracies - the Basic Law already provides for the
possibility to ban a party from the political competition. Any misuse of this ultima ratio of
the parliamentarian democracy must be prevented.
108
See supra note 12.
109
See Henke, Art. 21, in BONNER KOMMENTAR ZUM GRUNDGESETZ para. 346 (1991). See also the recent judgment of
the Constitutional Court rejecting the application to prohibit the NPD BVerfG -- 2 BvB 1/13, January 17, 2017,
para. 524,
http://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/DE/2017/01/bs20170117_2bvb000113.h
tml [hereinafter Prohibition Case] with an English press release available at
http://www.bundesverfassungsgericht.de/SharedDocs/Pressemitteilungen/EN/2017/bvg17-004.html.
110
See Prohibition case, at para. 526.
Developments
Saving Face? The German Federal Constitutional Court
Decides Gauweiler
By Asteris Pliakos and Georgios Anagnostaras *
Abstract
The German Federal Constitutional Court has issued its long-awaited judgment in the
Gauweiler Case. The Court ruled that the policy decision on the Outright Monetary
Transactions programme (OMT programme) does not manifestly exceed the
competences attributed to the European Central Bank (ECB) and does not manifestly
violate the prohibition of monetary financing of the budget, if interpreted in accordance
with the preliminary ruling of the European Court of Justice (Court). This article surveys
the Court’s decision and offers a critical commentary on this important case.
* Asteris Pliakos, Professor of European Union Law at the Athens University of Economics and Business and
Director of the Scientific Committee of the Hellenic Parliament. Georgios Anagnostaras, Legal Advisor at the
Hellenic Radio and Television Council and Teaching Associate at the Hellenic Open University. This paper was
funded by ELKE/AUEB and it was coordinated and managed by the Special Research Account of the Athens
University of Economics and Business. All views expressed are personal.
214
German Law Journal
Vol. 18 No. 01
A. Introduction
The policy decision on the Outright Monetary Transactions programme (OMT
programme) does not manifestly exceed the competences attributed to the European
Central Bank (ECB) and does not manifestly violate the prohibition of monetary financing
of the budget, if interpreted in accordance with the preliminary ruling of the European
Court of Justice (Court). This is the essence of the long awaited judgment of the German
Federal Constitutional Court (FCC) in Gauweiler, which rejected the constitutional
complaints against the validity of the OMT programme.1
The facts of the case are well known and equally well documented. The legal
proceedings before the FCC concerned the legality of the OMT programme announced
by the ECB.2 This programme authorizes the European System of Central Banks (ESCB)
to purchase on the secondary market government bonds of the Member States of the
euro area, if and so long as these states participate in a reform programme agreed upon
with the European Financial Stability Facility (EFSF) or the European Stability Mechanism
(ESM). Although the ECB has not yet implemented this programme, a number of citizens
and a fraction of the Bundestag instituted legal proceedings against it before the
German FCC. The applicants argued that the programme exceeded the legal mandate of
the ECB and violated the prohibition of monetary financing of the Member States
pursuant to the Treaty on the Functioning of the European Union (TFEU). The applicants
maintained that these violations of the TFEU contravened the constitutional principle of
democracy and impaired the national constitutional identity.
In a historic move, the FCC decided to stay the judicial proceedings and to make its first
ever preliminary reference to the Court.3 However, the FCC clearly indicated in its
reference that it intended to consider the OMT programme as ultra vires unless the
Court gives it a restrictive interpretation that would confirm its supportive nature with
regard to the economic policies in the EU and would not undermine the conditionality
1
Bundesverfassungsgericht [BVERFG] [Federal Constitutional Court], 2 BvR 2728/13, 2 BvR 2729/13, 2 BvR
2730/13,
2
BvR
2731/13,
2
BvE
13/13,
June
21,
2016,
http://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/DE/2016/06/rs20160621_2bvr2728
13.html [hereinafter Gauweiler]. For a detailed press release of this judgment in English, see Press Release,
Bundesverfassungsgericht, Constitutional Complaints and Organstreit Proceedings Against the OMT
Programme
of
the
European
Central
Bank
Unsuccessful
(June
21,
2016),
http://www.bundesverfassungsgericht.de/SharedDocs/Pressemitteilungen/EN/2016/bvg16-034.html.
2
The technical features of the programme were announced in a press release available online. See Press
Release, European Central Bank, Technical Features of Outright Monetary Transactions (Sept. 6, 2012),
http://www.ecb.europa.eu/press/pr/date/2012/html/pr120906_1.en.html.
3
Bundesverfassungsgericht [BVERFG] [Federal Constitutional Court], 2 BvR 2728/13, 2 BvR 2729/13, 2 BvR
2730/13,
2
BvR
2731/13,
2
BvE
13/13,
Jan.
14
2014,
http://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/EN/2014/01/rs20140114_2bvr2728
13en.html [hereinafter Gauweiler Reference]. For more on this case see Mattias Wendel, Exceeding Judicial
Competence in the Name of Democracy: The German Federal Constitutional Court’s OMT Reference, 10 EUR.
CONST. L. REV. 263 (2014); Ingolf Pernice, A Difficult Partnership Between Courts: The First Preliminary Reference
by the German Federal Constitutional Court to the CJEU, 21 MAASTRICHT J. EUR. & COMP. L. 3 (2014); see also
Special Issue - The OMT Decision of the German Federal Constitutional Court, 15 GERMAN L.J. 108–382 (2014).
2017
The Constitutional Court’s Gauweiler Judgement
215
of the reform programmes. The FCC also specified in its preliminary request the
particular requirements that had to be met in order to rule the contested bonds
purchase programme as intra vires.4 The FCC clarified that it would revisit the alleged
violation of the national constitutional identity on the basis of the answers given to its
preliminary request.5
In its preliminary ruling, the Court confirmed the legality of the contested OMT
programme on the basis of substantive arguments and the application of the principle
of proportionality.6 It applied in this respect a teleological interpretation of the bonds
purchase scheme that placed confidence in its announced objectives and the
submissions of the ECB. The ruling stressed at the same time the wide margin of
appreciation possessed by the ECB in the performance of its powers, suggesting that it
is not in principle for the judicial institutions to substitute their own choices and
assessments for those made by the ECB in the adoption and implementation of
monetary policy.
Seen against this background, the FCC attempts in its follow-up judgment to convince
that it considers the bonds purchase programme as valid because the Court interpreted
it in essence in the restrictive terms that the FCC had requested in its preliminary
reference. It will nevertheless be argued that the converse is actually true and that the
FCC was reluctantly obliged to accept the submissions of the ECB and the much more
generous interpretation of the programme made by the Court in order to save face and
to avoid an institutional conflict that it could no longer win. However, it will also be
explained that this was ultimately a wise move on the part of the FCC that may well have
been facilitated by the reconciliatory tone of the preliminary ruling of the Court and the
indirect dialogue that has taken place recently between the two courts in the area of
fundamental rights.
4
Gauweiler Reference at paras. 99–100.
5
Id. at paras. 102–03.
6
Case C-62/14, Gauweiler v. Deutscher Bundestag, (June 16, 2015), http://curia.europa.eu/ [hereinafter OMT
Ruling]. For more on this case, see generally Paul Craig & Menelaos Markakis, Gauweiler and the Legality of
Outright Monetary Transactions, 41 EUR. L. REV. 1 (2016); Georgios Anagnostaras, In ECB We Trust…The FCC
We Dare! The OMT Preliminary Ruling, 40 EUR. L. REV. 744 (2015); Vestert Borger, Outright Monetary
Transactions and the Stability Mandate of the ECB: Gauweiler, 53 COMMON MKT. L. REV. 139 (2016); Alicia
Hinarejos, Gauweiler and the Outright Monetary Transactions Programme: The Mandate of the European
Central Bank and the Changing Nature of Economic and Monetary Union, 11 EUR. CONST. L. REV. 563 (2015);
Monica Claes & Jan-Herman Reestman, The Protection of National Constitutional Identity and the Limits of
European Integration at the Occasion of the Gauweiler Case, 16 GERMAN L.J. 917 (2015); Heiko Sauer, Doubtful
it Stood...: Competence and Power in European Monetary and Constitutional Law in the Aftermath of the
CJEU’s OMT Judgment, 16 GERMAN L.J. 971 (2015); Federico Fabbrini, After the OMT Case: The Supremacy of
EU Law as the Guarantee of the Equality of the Member States, 16 GERMAN L.J. 1003 (2015); Sven Simon, Direct
Cooperation Has Begun: Some Remarks on the Judgment of the ECJ on the OMT Decision of the ECB in Response
to the German Federal Constitutional Court’s First Request for a Preliminary Ruling, 16 GERMAN L.J. 1025 (2015);
Special Issue - The European Court of Justice, the European Central Bank and the Supremacy of EU Law, 23
MAASTRICHT J. EUR. & COMP. L. 1 (2016).
216
German Law Journal
Vol. 18 No. 01
B. The Arbitrary Reading of the Preliminary Ruling and the Criticism against the Court
The judgment of the FCC centers on the argument that the preliminary ruling of the
Court took up the issue of the almost unlimited potential of the OMT programme and
imposed additional restrictive requirements that preclude its unrestrained extension,
making it thus acceptable to consider it as a legally valid act.7 The FCC attempts in this
respect to make a distinction between the adoption of the contested bonds purchase
programme by the ECB and the conditions for its implementation, as specified in the
preliminary ruling of the Court.8 The FCC suggests therefore that its judgment is totally
consistent with the position that it expressed on the matter in its preliminary reference
to the Court. Accordingly, the programme was ultra vires in its original form, but the
additional compelling parameters set by the Court as concerns its implementation allow
the FCC to conclude that the preliminary ruling has essentially performed the restrictive
interpretation that it had required in its preliminary request.9
However, closer analysis attests that the FCC purposely misconstrues the content of the
preliminary ruling in order to obscure the fact that the Court rejected in essence its
request to impose additional restrictions on the bonds purchase programme. It is also
apparent that the specific requirements set by the judgment for the participation of the
Bundesbank in the implementation of the OMT programme result immediately from the
press release of the programme and the explanations of the ECB. This suggests in turn
that the FCC ultimately adheres to the position put forward by the Court that the
announced programme already provides sufficient guarantees to be considered as valid.
That being said, it will be explained that this reluctant adherence serves the judicial
politics of the FCC and must not be interpreted as an indication that the two courts share
the same views about the legal mandate of the ECB and the measure of the judicial
review that can be exercised over the policy acts that it adopts in the performance of its
powers. All of the above will now be examined in turn.
I. Adoption versus Implementation: The Unconvincing Reasoning of the FCC
According to the FCC, the Court went beyond the framework conditions of the
programme indicated in its press release and specified additional compelling
requirements stemming particularly from the principle of proportionality that set
binding limits to the implementation of the programme.10 It is nevertheless submitted
that the proportionality assessment of the programme made by the Court in the
preliminary ruling was not at all intended to have the restrictive effect suggested by the
FCC. Furthermore, there is nothing in the preliminary ruling to suggest that the Court
made the implementation of the contested programme contingent on requirements
7
Gauweiler at paras. 195–96.
8
Id. at paras. 191, 197.
9
Id. at para. 190.
10
Id. at para. 177.
2017
The Constitutional Court’s Gauweiler Judgement
217
that were not already apparent from its announced conditions and the explanations
provided by the ECB.
Indeed, the preliminary ruling referred to the announced objectives of the programme
and concluded that these confirmed its nature as a monetary policy measure.11 This
already implied that the Court would follow the view of the ECB about the legality of the
bonds purchase programme, contrary to the allegations of the referring FCC, which had
claimed that the immediate objective of the contested scheme was to neutralize spreads
of government bonds of selected Member States and to safeguard the composition of
the euro currency area and that it therefore clearly fell outside the realm of monetary
policy.12 This approach of the Court becomes even more apparent if one looks at the
way the preliminary ruling examines the specific features of the programme and
concludes that they constitute concrete evidence of the intention of the ECB to confine
its interference within precise limits.
Consider, for example, the selectivity of the programme. For the FCC, this indicated its
nature as an economic policy measure since the exercise of monetary policy cannot be
targeted at specific Member States of the euro area.13 By contrast, the preliminary ruling
concluded that selectivity actually serves to concentrate the intervention of the ECB only
on those parts of the Eurozone where monetary policy transmission is weakened.
Selectivity thus prevents the scale of the programme from being needlessly increased.
In other words, the Court accepted that selectivity constitutes an act of prudence on the
part of the ECB.14
The same is the case as concerns the conditionality of the programme. The referring FCC
considered that this confirmed the invalidity of the scheme, since it tied its
implementation to the operation of the financial assistance measures and their
economic policy requirements.15 The Court thought otherwise. It stressed that
conditionality is essential in order to prevent that the implementation of the programme
provides an incentive to the Member States concerned to cease carrying out the
structural reforms necessary to improve their economic situation. Under this
interpretation, conditionality serves the effectiveness of the reform programmes and
the economic policies followed by the Member States. It also encourages the impetus
of national governments to adopt a sound budgetary policy.16
A similar approach was followed as concerns the argument of the FCC that the contested
programme violated the prohibition of monetary financing of the budget. The Court
11
OMT Ruling at paras. 47–49.
12
Gauweiler Reference at paras. 70–72.
13
Id. at para. 73.
14
OMT Ruling at paras. 55, 89.
15
Gauweiler Reference at paras. 74–78.
16
OMT Ruling at paras. 60–61.
218
German Law Journal
Vol. 18 No. 01
once again paid attention to the specific features of the programme as announced in its
press release and concluded that these effectively exclude the possibility that the
programme would lessen the impetus of the Member States to follow a sound
budgetary policy. It stressed in this respect that the programme provides for the
purchase of government bonds only in so far as is necessary to safeguard the monetary
policy transmission mechanism and the singleness of monetary policy and that those
purchases will cease as soon as the above mentioned objectives are achieved. It also
underlined that the programme is accompanied by a series of specific guarantees that
are intended to confine its impact to the extent required in order to attain its monetary
policy objectives. The Court made particular reference in this regard to the
conditionality of the programme and to the fact that it is confined only to those Member
States that have regained access to the bond market.17
Furthermore, in several parts of its preliminary ruling the Court relied explicitly on the
explanations provided by the ECB in order to support the legality of the contested bonds
purchase programme. Very illustrative in this respect is the way the Court established
that the implementation of the announced programme would not have a practical effect
equivalent to that of the purchase of government bonds on the primary market. The
Court noted that the ECB had established sufficient safeguards that prevented the
issuance of government bonds from being unduly affected by the certainty that those
bonds would be eventually purchased by the ESCB on the secondary market. Indeed, the
ECB had clarified that its Governing Council would be responsible to ascertain both the
scope and the length of the intervention envisaged by the programme. It had also
indicated that it intended to observe a minimum period between the issue of a security
and its purchase on the secondary market and that it would not announce in advance
its intention to proceed to bond purchases. The Court concluded that these safeguards
limit the influence of the programme on the functioning of the market to an extent that
is considered acceptable by the Treaties.18
It is apparent therefore that the preliminary ruling did not impose additional restrictions
on the announced bonds purchase programme and placed confidence in the ECB to
implement it in such a way that would respect the limits of its competences. This is also
confirmed by the proportionality review of the scheme performed by the Court. The
Court employed in this respect the same test that it applies in the exercise of its judicial
review over the acts of the EU legislature. This so called “manifestly inappropriate test”
aims to respect the complex policy choices that the EU legislature is often obliged to
make in the exercise of its rule making powers. 19 Under this test, a violation of
proportionality only exists if the act in question is evidently inappropriate in relation to
17
Id. at paras. 111–21.
18
Id. at paras. 105–08.
19
See Wolf Sauter, Proportionality in EU Law: A Balancing Act? (Tilburg L. & Econ. Ctr., Discussion Paper No.
2013-003), http://ssrn.com/abstract=2208467; see also Tor-Inge Harbo, The Function of the Proportionality
Principle in EU Law, 16 EUR. L.J. 158 (2010).
2017
The Constitutional Court’s Gauweiler Judgement
219
the objectives pursued.20 Certainly, this is not to say that a legislative measure can never
be considered invalid.21 However, the odds of successfully contesting the validity of
legislative acts are rather slim so long as the contested measure is explicit as to the
public interest objectives that it pursues and provides some concrete evidence that the
EU legislature took into account methods of confining its interference within reasonable
limits.22
The preliminary ruling testifies that similar considerations apply also as concerns the
judicial review of the acts of the ECB. The Court stressed in this respect that the ECB is
required in the performance of its powers to make choices of a technical nature and to
undertake forecasts and complex assessments. As a result, it must be allowed a wide
margin of appreciation.23 The Court examined then the appropriateness of the OMT
programme, having regard to the information contained in its press release and the
explanations provided by the ECB. It concluded that the information placed before it
suggested that the analysis by the ECB of the economic situation of the euro area at the
time of the announcement of the programme was not vitiated by a manifest error of
assessment. The Court underlined that matters of economic policy were usually of a
controversial nature and added that nothing more could be required by the ECB than to
use its economic expertise and all the necessary technical means in order to carry out
its analysis with due care and accuracy. Accordingly, the ECB could legitimately take the
view that the programme announced in its press release was appropriate to restore the
monetary policy transmission mechanism and to maintain price stability. 24
The Court concluded then that the contested programme was not going manifestly
beyond what was necessary to achieve the objectives of monetary policy. Referring
again to the press release of the ECB, it noted that this permitted the purchase of
government bonds on the secondary market only within a confined framework. The
Court reiterated that the programme is also restricted in volume since it concerns only
a limited part of the government bonds issued by the Member States of the euro area.
Consequently, the commitments that the ECB is liable to enter into are circumscribed
and limited. In those circumstances, the ECB could legitimately adopt the programme
20
Case C-380/03, Germany v. Parliament and Council, (Dec. 12, 2006), http://curia.europa.eu/; see also Case
C-343/09, Afton Chemical Ltd. v. Sec’y of State for Transp., (July 8, 2010), http://curia.europa.eu/.
21
See, e.g., Joined Cases C-293 & 594/12, Digital Rts. Ireland v. Minister for Comm. Marine & Nat., Kärntner
Landesregierung,(Apr. 8, 2014), http://curia.europa.eu/. For more on this ruling, see generally Orla Lynskey,
The Data Retention Directive is Incompatible with the Rights to Privacy and Data Protection and is Invalid in its
Entirety: Digital Rights Ireland, 51 COMMON MKT. L. REV. 1789 (2014). See also Marie-Pierre Granger & Kristina
Irion, The Court of Justice and the Data Retention Directive in Digital Rights Ireland, 39 EUR. L. REV. 835 (2014).
22
See, e.g., Case C-283/11, Sky Österreich GmbH v. Österreichischer Rundfunk, (Jan. 22, 2013),
http://curia.europa.eu/. For more on this case, see generally Georgios Anagnostaras, Balancing Conflicting
Fundamental Rights: The Sky Österreich Paradigm, 39 EUR. L. REV. 111 (2014; Wouter Hins, The Freedom to
Conduct a Business and the Right to Receive Information for Free: Sky Österreich, 51 COMMON MKT. L. REV. 665
(2014).
23
OMT Ruling at para. 68.
24
Id. at paras. 72–81.
220
German Law Journal
Vol. 18 No. 01
without setting a quantitative limit prior to its implementation. This was even more so
since the imposition of such a limit could potentially reduce its effectiveness. 25
The above analysis clearly illustrates that the preliminary ruling of the Court accepted
the legality of the bonds purchase programme at the time of its adoption, having regard
to the specific restrictions and safeguards introduced by its announced conditions and
also taking into account the wide margin of appreciation possessed by the ECB in the
performance of its competences. Apparently then, the distinction that the FCC attempts
to make between the adoption and the implementation of the programme is purely
artificial and can only be explained as a pretext intended to facilitate the retreat of the
court from the position that it had expressed in its preliminary reference as regards the
ultra vires nature of the scheme. This becomes even more evident if one looks at the
conditions that the FCC sets in order to allow the participation of the Bundesbank in the
implementation of the OMT programme.
II. The Conditions for Participating in the Implementation of the Programme: Hiding
Retreat behind Verbalism
According to the FCC, since the bonds purchase programme constitutes an ultra vires
act if the framework conditions set by the Court are not met, the Bundesbank may only
participate in its implementation if and to the extent that the following six conditions
are satisfied.26 First, that bond purchases are not announced in advance. Second, that
the volume of purchases is limited from the outset. Third, that there is a minimum
period between the issue of government bonds and their purchase by the ESCB that is
agreed upon from the outset. Fourth, that the ESCB purchases only government bonds
of Member States that have bond market access enabling the funding of such bonds.
Fifth, that purchased bonds are only in exceptional cases held until maturity. Sixth, that
purchases are terminated and purchased bonds are remarketed should continuing the
intervention becomes unnecessary.
Compared to the conditions that it had set in its preliminary reference in order to regard
the programme as valid, the FCC no longer requires that the possibility of a debt cut
must be excluded.27 This certainly reflects the position put forward in the preliminary
ruling that even if it were established that the contested programme could indeed
expose the ECB to a significant risk of losses, this would in no way weaken the
guarantees that are built into the programme in order to ensure that it does not reduce
the impetus of the Member States to follow a sound budgetary policy. The Court added
in this respect that those guarantees are also likely to reduce the risk of losses that the
ECB is exposed to. It also noted in this regard that all central banks are inevitably
exposed to similar risks in the performance of their powers. After all, the Treaties
authorize the ECB to purchase government bonds on the secondary market even at the
25
Id. at paras. 82–92.
26
Gauweiler at para. 205.
27
Gauweiler Reference at para. 100.
2017
The Constitutional Court’s Gauweiler Judgement
221
risk of a debt cut decided upon by the other creditors of the Member State concerned
without making this operation conditional on the acquisition of a privileged creditor
status.28
Turning then to the new legality requirements set by the FCC in the light of the
preliminary ruling of the Court, it is immediately apparent that three of them simply
replicate the framework conditions indicated in the press release of the programme. 29
Indeed, the press release makes it clear that the scope of the announced programme
only concerns Member States that have access to the bond purchase market and that
transactions will be focused in particular on sovereign bonds with a short maturity
between one and three years. It also clarifies that the Governing Council of the ECB will
consider outright monetary transactions only to the extent that they are warranted from
a monetary policy perspective and will immediately terminate them once their
objectives have been achieved. The preliminary ruling has not altered the nature and
the magnitude of the legal commitments voluntarily undertaken in this respect by the
ECB. On the contrary, it has confirmed that they provide sufficient guarantees that the
programme is properly circumscribed and that it could be legitimately adopted as a valid
monetary policy measure.30
Furthermore, closer analysis reveals that both the prohibition on the prior
announcement of bond purchases and the observance of a minimum period between
the issue of a security on the primary market and its purchase by the ESCB were not
imposed by the Court as additional requirements intended to remedy the alleged
illegality of the announced programme. The preliminary ruling rather accepted in this
respect the explanations of the ECB that its practical intervention under the OMT
programme will be such as to cause the least possible interference with the operation
of the primary bond market.31 By referring thus to the relevant passages of the
preliminary ruling, the FCC accepts in essence the validity of the submissions of the ECB
and its capacity to impose voluntary restraints on the exercise of its powers. This is
certainly not the same as to suggest that the preliminary ruling introduced additional
framework conditions as concerns the implementation of the contested bonds purchase
programme.
That leaves to examine the requirement that the volume of bond purchases must be
limited from the outset. This was one of the conditions that the FCC had explicitly set in
its preliminary reference in order to consider the contested programme as valid.32
However, its reiteration in the final judgment is very puzzling for two principal reasons.
28
OMT Ruling at paras. 123–26.
29
See Technical Features of Outright Monetary Transactions, supra note 2.
30
For limited coverage and short maturity period of purchased bonds, see OMT Ruling at paras. 86–87, 116–
19. For purchases linked to the attainment of the objectives of the programme, see id. at paras. 82, 112.
31
Id. at para. 106.
32
Gauweiler Reference at para. 100.
222
German Law Journal
Vol. 18 No. 01
First, because the programme makes it clear that no prior quantitative limits are set on
the size of outright monetary transactions.33 Second, because the Court confirmed in its
preliminary ruling that the programme already contains sufficient guarantees that limit
its volume to an acceptable extent without it being necessary to set a quantitative limit
prior to its implementation that can potentially reduce its effectiveness.34
Could it be then that the FCC attempts to introduce an additional requirement to the
implementation of the bonds purchase programme by reading arbitrarily into the
preliminary ruling a restriction that is not actually there? However likely this may seem
at first sight, such an interpretation of the judgment nevertheless is not correct.35 It is
important in this respect to examine the reasoning employed by the FCC in order to
reach the conclusion that the preliminary ruling requires the imposition of prior
quantitative limits on the volume of bond purchases. In the key passage of its judgment
the FCC argues that unlike the parameters resulting from the announced programme
and the press release of the ECB, the Court rejected the unlimited extension of the OMT
programme. According to the FCC, the preliminary ruling requires that the volume of
future purchases must be specified in a binding manner in advance and must not go
beyond what is necessary to restore the monetary policy transmission mechanism. It
also requires that both the intention of the ECB to carry out bond purchases and the
volume of the purchases envisaged cannot be announced in advance.36
It appears therefore that the FCC infers from the preliminary ruling that the volume of
future purchases is specifically limited from the outset because the announced
programme provides for the purchase of government bonds only in so far as is necessary
to safeguard the policy transmission mechanism. However, it cannot be announced in
advance when and to what extent the ECB will proceed to the acquisitions that are
required in order to achieve the objectives of the scheme. Seen in this perspective, the
requirement of a prior quantitative limit on the volume of purchases reproduces in
essence the conditions that the outright monetary transactions carried out by the ECB
must be restricted from the outset to what is proportionate to achieve the objectives
pursued by that policy, and that they will be terminated as soon as the impaired policy
transmission mechanism is restored. Consequently, the inclusion of this requirement in
the judgment must be interpreted as a simple verbalism that serves the argument of the
FCC that the preliminary ruling imposed additional restrictions on the implementation
of the programme that allow to consider it as valid. Practically though, the ECB remains
free to ascertain the volume of purchases necessary to restore its monetary policy
33
See Technical Features of Outright Monetary Transactions, supra note 2.
34
OMT Ruling at para. 88.
35
See, e.g., Lorenzo Pace, And Indeed It Was a (Failed) Nullification Crisis: The OMT Judgment of the German
Federal Constitutional Court and the Winners and Losers of the Final Showdown in the OMT Case, SIDIBLOG
(Italian Society of International Law) (Sept. 1, 2016), http://www.sidiblog.org/2016/09/01/and-indeed-it-wasa-failed-nullification-crisis-the-omt-judgment-of-the-german-federal-constitutional-court-and-the-winnersand-losers-of-the-final-showdown-in-the-omt-case/.
36
Gauweiler at para. 195.
2017
The Constitutional Court’s Gauweiler Judgement
223
transmission mechanism. It is also free to increase it at a later stage if it considers that
its initial intervention on the secondary market failed to attain the pursued objectives
of the programme.
The conclusion therefore is that all the requirements that the FCC imposes for the
participation of the Bundesbank in the implementation of the programme are not
actually additional to those indicated in the original press release of the ECB but rather
result immediately from the framework conditions of the announced scheme and the
explanations provided by the ECB. Just like the artificial distinction made in the judgment
between the adoption and the practical implementation of the bonds purchase
programme, these conditions attempt to obscure the fact that the outcome of the
preliminary ruling obliged the FCC to retreat from the position taken in the preliminary
reference regarding the ultra vires nature of the contested scheme. It will now be
explained that this retreat was in fact inevitable for the FCC and that its judgment cannot
be interpreted as approving the legal methodology employed by the Court in the
preliminary ruling and the conclusions that it reached about the measure and intensity
of the judicial review of the policy decisions of the ECB.
III. “Yes, But”: The Objections of the FCC against the Legal Reasoning of the Court
Although the FCC applies in essence the preliminary ruling of the Court, it expresses at
the same time serious objections against its legal reasoning and its interpretation of the
mandate of the ECB. This criticism is basically twofold. First, the FCC accuses the Court
of accepting uncritically the announced objectives of the programme and the
explanations provided by the ECB in order to qualify the contested scheme as an
instrument belonging to the field of monetary policy, overlooking completely the factual
assumptions that contradict such a conclusion.37 Second, the FCC criticizes the Court for
not providing a convincing answer to the issue that the independence of the ECB leads
to a noticeable reduction of the democratic legitimacy of its actions and should
therefore give rise to a restrictive interpretation as well as to a particularly strict judicial
review of its mandate.38
The first criticism does not appear to be justified because in its preliminary reference,
the FCC ignored completely the announced objectives of the programme and replaced
them with its own understanding of the monthly bulletins of the ECB, reading into them
arbitrarily an intention to reduce rising spreads of government bonds of selected
Member States and to serve thus an economic policy objective. 39 The FCC arrived at this
conclusion without even explaining the reasons why it contested the official motivation
37
Id. at paras. 182–86.
38
Id. at paras. 187–89.
39
ECB
Monthly
Bulletin
September
2012,
Eur.
Cent.
Bank,
(Sept.
2012),
https://www.ecb.europa.eu/pub/pdf/mobu/mb201209en.pdf; ECB Monthly Bulletin October 2012, Eur. Cent.
Bank, (Oct. 2012), https://www.ecb.europa.eu/pub/pdf/mobu/mb201210en.pdf.
224
German Law Journal
Vol. 18 No. 01
of the programme and without providing any convincing arguments in support of its
claims.40
Furthermore, the FCC rejected the argument of the ECB that the extreme spreads on the
government bonds of certain Member States were partly caused by an unfounded fear
of a reversibility of the euro. It relied in this respect on the “convincing expertise of the
Bundesbank”, without considering it necessary to corroborate its conclusions with
additional authorities.41 It did not further explain why this particular interpretation of a
single national bank should prevail over that of the majority opinion of the other
national banks that participate in the Governing Council of the ECB. This raised in turn
suspicions that the FCC was not actually motivated by objective legal reasoning but
rather intended to give priority arbitrarily to the economic analysis of the Bundesbank
over that of the ECB.42 Seen in this perspective, it seems at least ironic that the FCC now
criticizes the Court for the way it established the facts of the case and ignored the
indications that cast doubt on the classification of the programme as an act of monetary
policy.
Turning then to the second criticism voiced by the FCC, this seems to concern primarily
the considerable margin of appreciation that the ECB possesses in the performance of
its powers as recognized in the preliminary ruling. In fact, the FCC had clarified in its
preliminary request that it considered necessary the exercise of a strict judicial review
over the policy acts of the ECB. It had underlined in this respect that the independence
of the ECB diverged from constitutional requirements regarding the democratic
legitimacy of political decisions. The FCC had therefore held that the mandate of the ECB
should be interpreted narrowly, in order to meet those requirements. 43 However, there
are several observations that can be made in this respect.
In the first place, this interpretation ignores the fact that the independence of the ECB
is expressly embedded in the Treaties and is intended to protect it against external
influences which would be likely to interfere with the performance of its powers.44 It is
submitted though that the imposition of a rigorous judicial review over the acts of that
institution is liable to circumvent the independence of the ECB in practice. It would
oblige the ECB to operate under the constant threat that every single policy choice it
makes may potentially be interpreted by the courts as a transgression of its powers.
Hence, the refusal to recognize any leeway to the ECB in the performance of its
40
In this regard, see Alexander Thiele, Friendly or Unfriendly Act? The Historic Referral of the Constitutional
Court to the ECJ Regarding the ECB’s OMT Program, 15 GERMAN L.J. 241, 256–57 (2014); Thomas Beukers, The
Bundesverfassungsgericht Preliminary Reference on the OMT Program, 15 GERMAN L.J. 343, 347–49 (2014);
Pernice, supra note 3, at 11–12.
41
Gauweiler Reference at para. 71.
42 To this end, see Carsten Gerner-Beurle, Esin Küçük & Edmund Schuster, Law Meets Economics in the
Federal Constitutional Court, 15 GERMAN L.J. 281, 302 (2014).
43
Gauweiler Reference at paras. 58–60.
44
OMT Ruling at para. 40.
German
2017
The Constitutional Court’s Gauweiler Judgement
225
competences practically amounts to the exercise of indirect control over it and compels
it to adapt its course of action to the monetary policy views of the courts.
This leads to a second point. In the performance of its powers, the ECB is called upon to
make complex technical assessments of an economic nature. It cannot be seriously
argued that courts possess comparable expertise to adjudicate economics.45 If they
were to exercise a full judicial review over the acts of the ECB, they would normally need
to rely on external economic expertise. This would turn their review into a matter of
prioritization of one economic expertise over the other. Given the complexity of
monetary economics, courts would rarely be in a position to explain convincingly the
reasons for their choice. As already explained, this would ultimately raise suspicions
about the objectivity of the judicial review carried out by that court.
Furthermore, it is very contestable whether courts possess the necessary legitimacy to
intervene extensively in areas that are considered to be politically sensitive. The
monetary policy choices made by the ECB affect all Member States of the euro area and
their reversal by the courts is likely to upset the stability of the common currency,
imperiling the very existence of the euro zone. However, it should not be for the courts
to undertake an essentially political role that could affect to such an extent the process
of European integration.46 This would clearly overstep the limits of their mandate and
the boundaries of their judicial competence.
Arguably then, the choice made by the Court to extend the application of its classic
“manifestly inappropriate test” to the acts of the ECB was indeed correct. Judicial
control should be confined only to matters that the courts are objectively capable and
politically legitimated to examine. Judges should not in principle substitute their own
interpretation of monetary policy for that of the ECB. This is especially so since the ECB
is much better equipped than any judicial body to specify the measures that are
necessary in order to pursue the monetary policy objectives. Judicial intervention into
the acts of the ECB should therefore take place only in exceptional circumstances if there
is conclusive evidence that the measure manifestly exceeds the mandate of the ECB and
is clearly inappropriate to attain its alleged monetary policy objectives.
IV. Saving Face: The Escape of the FCC from its Own Game of Chicken
The conclusion reached thus far is that the FCC is not particularly content with the
answers given to its preliminary request but nevertheless proceeds reluctantly to the
application of the ruling, pretending that the Court performed in essence the restrictive
interpretation of the programme that it had required in its preliminary reference. The
FCC chose therefore to interpret the ruling in a clearly erroneous manner in order to
45 See Matthias
Goldmann, Adjudicating Economics? Central Bank Independence and the Appropriate Standard
of Judicial Review, 15 GERMAN L.J. 266, 271–72 (2014).
46
See Franz Mayer, Rebels Without a Cause? A Critical Analysis of the German Constitutional Court’s OMT
Reference, 15 GERMAN L.J. 111, 134–36 (2014).
226
German Law Journal
Vol. 18 No. 01
avoid declaring it as ultra vires as one might have expected on the basis of the strong
language it had used in its preliminary request. One possible explanation is that the FCC
simply conceded to the binding nature of the ruling and respected its obligations under
the preliminary reference procedure. After all, it expressly acknowledged in its judgment
that the Court still remained within its mandate when finding that the programme is
within the bounds of the respective competences of the ECB and does not violate the
prohibition of monetary financing of the budget. 47 It is nevertheless submitted that in
the same judgment the FCC reiterated emphatically its reserve competence to rule on
the invalidity of EU law on the basis of ultra vires and constitutional identity grounds,
contesting thus once again the exclusive prerogatives of the Court as the sole arbiter of
the legality of EU acts.48 It is therefore unlikely that the FCC retreated from the legal
positions expressed in its preliminary reference simply because it conceded
unconditionally to the interpretative authority of the Court.
A much more convincing explanation is that the FCC was eventually trapped into the
peculiar game of chicken that it chose to play in order to oblige the Court to give a
preliminary ruling that would introduce additional restrictions on the OMT
programme.49 According to this interpretation, the FCC attempted to preconceive the
outcome of its preliminary reference by imposing its own interpretation of the bonds
purchase programme and by overtly warning with an ultra vires pronouncement in case
of an unfavorable ruling. Arguably, the FCC assumed that the Court would eventually
swerve away and accept its requirements in order to avoid collision. If that was indeed
the intention of the FCC, there are two important considerations that it failed to take
into account.
From a legal point of view, the FCC overlooked the fact that the case could not easily
meet the strict ultra vires conditions of its famous Honeywell case law.50 According to
Honeywell, an act of the EU institutions can only be considered as ultra vires if there
exists a manifest transgression of powers on the part of the institution concerned that
leads to a structurally significant alteration in the arrangement of competences between
the EU and its Member States.51 In its preliminary reference in Gauweiler, the FCC
47
Gauweiler at para. 176.
48
Id. at paras. 136–52.
49
See Mattias Kumm, Rebel Without a Good Cause: Karlsruhe’s Misguided Attempt to Draw the CJEU into a
Game of Chicken and What the CJEU Might do About it, 15 GERMAN L.J. 203, 207 (2014); see also Mayer, supra
note 46.
50
Bundesverfassungsgericht [BVERFG] [Federal Constitutional Court], 2 BvR 2661/06, July 6, 2010,
http://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/EN/2010/07/rs20100706_2bvr2661
06en.html [hereinafter Honeywell]. For more information on this case, see generally Asterios Pliakos &
Georgios Anagnostaras, Who is the Ultimate Arbiter? The Battle over Judicial Supremacy in EU Law, 36 EUR. L.
REV. 109 (2011); Mehrdad Payandeh, Constitutional Review of EU Law After Honeywell: Contextualising the
Relationship Between the German Constitutional Court and the Court of Justice of the European EU, 48
COMMON MKT. L. REV. 9 (2011); Matthias Mahlmann, The Politics of Constitutional Identity and its Legal Frame—
The Ultra Vires Decision of the German Federal Constitutional Court, 11 GERMAN L.J. 1407 (2010).
51
Honeywell at paras. 61–66.
2017
The Constitutional Court’s Gauweiler Judgement
227
seemed to suggest that any violation of the mandate of the ECB and any breach of the
prohibition of the monetary financing of the budget constitutes a manifest and
structurally significant transgression of powers on the part of the ECB.52 However, the
existence of an ultra vires act cannot be examined in the abstract but only in relation to
the specific circumstances of the case at issue. 53 Hence, the real question that the FCC
had to ask in its final judgment was whether the specific bonds purchase programme
could be interpreted as a manifest and structurally significant breach. 54 In the light of
the response given to its preliminary request, this question could only be answered in
the negative. Indeed, both the Court and all the national governments that intervened
in the legal proceedings considered that the ECB could not be accused of overstepping
its mandate as regards the adoption of the contested programme. Even if the FCC
arrived at the opposite conclusion, it would still need to ascertain the manifest and
structurally significant nature of the breach. This would be an extremely challenging
venture, given that the establishment of a blatant infringement logically presupposes
that there exists at least a wide consensus around the perpetration of the violation
concerned. That was certainly not the case in the Gauweiler proceedings.
The FCC also seems to have underestimated the political sensitivity of the case and the
enormous economic repercussions that a potential ultra vires pronouncement could
possibly entail. Indeed, such a ruling would not only nullify the contested bonds
purchase programme. It would also compromise the ability of the ECB to perform its
powers in an independent manner and to respond quickly and effectively to the
impulses of the markets. This could ultimately lead to the revival of the euro zone crisis,
adversely affecting the national economies of the Member States. That risk was clearly
underlined in the minority opinions of two of the members of the FCC. For one of those
members, the possibility that a few independent national judges might invoke the
constitutional interpretation of the principle of democracy in order to make a judicial
pronouncement with incalculable economic consequences appeared as an anomaly of
questionable democratic character. 55 The democratically accountable political actors
should be left free to choose the appropriate course of action against measures that
they considered to be politically inadequate.56
Seen in this perspective, it is not all surprising that the FCC found itself perfectly isolated
in the legal proceedings before the Court and that none of the eleven intervening
governments shared its proposed interpretation of the programme. In this political
environment, it was not at all easy for the FCC to arrive at an ultra vires ruling against
the declared position of so many democratically elected national governments. This
52
Gauweiler Reference at paras. 36–43.
53
Honeywell at paras. 67–77.
54
See Jürgen Bast, Don’t Act Beyond Your Powers: The Perils and Pitfalls of the German Constitutional Court’s
Ultra Vires Review, 15 GERMAN L.J. 167, 179–80 (2014); Thiele, supra note 40, at 254–55; Meyer, supra note
46, at 137–39.
55
Gauweiler Reference at para. 28 (Lübbe-Wolff, J., dissenting).
56
Gauweiler Reference at para. 23 (Gerhardt, J., dissenting).
228
German Law Journal
Vol. 18 No. 01
would have been particularly ironic, given that its rejection of the bonds purchase
programme was based on the principle of democracy. Ultimately then, the attempt of
the FCC to adjudicate economics and to influence the outcome of its preliminary request
produced an important boomerang effect against it.
Trapped in its own game of chicken, the FCC chose therefore the only available escape
route that allowed it to save face without risking a major institutional and economic
crisis. It intentionally misread the ruling of the Court and saw in it an implicit
confirmation of the restrictive requirements that it had set in its preliminary reference.
At the same time, it imposed on the constitutional organs a continuous obligation to
monitor the exercise by the EU institutions of their transferred powers and to actively
promote respect for the European integration agenda using any legal and political
means that they consider as necessary in order to pursue the revocation of EU acts that
are not covered by that agenda.57 As concerns particularly the announced bonds
purchase programme, this obligation practically means that the federal government and
the parliament are required to closely monitor any future implementation of the
scheme. The purpose of this compulsory scrutiny is not only to ascertain that the
conditions for the participation of the Bundesbank in the programme are indeed met
but also to examine whether there is a specific threat to the federal budget resulting in
particular from the volume and the risk structure of the purchased bonds. 58 The
implication is indeed clear. The responsibility to ensure the correct implementation of
the programme is now in the court of the political institutions. The FCC will only
intervene if these institutions patently fail to exercise their obligation in an appropriate
manner.59
C. Facilitating Judicial Dialogue: Gauweiler and the Recent Fundamental Rights Case
Law
Although the judgment of the FCC can therefore be interpreted as a specious way of
avoiding embarrassment, it is nevertheless submitted that its adoption may also have
been facilitated by the rather conciliatory tone of the preliminary ruling of the Court.
Indeed, the Court chose not to respond to the criticism voiced by its Advocate General
against the self-proclaimed capacity of the FCC to exercise ultra vires and identity review
control over the acts of the EU institutions.60 That certainly constituted a conscious
political choice, intended to illustrate that the Court would give its ruling in a truly
cooperative spirit regardless of the rather offensive language of the preliminary request.
In the same vein, the ruling did not expressly criticize the conclusions arrived at by the
FCC as to the nature of the contested programme and the need for its restrictive
interpretation. It only explained the reasons why the scheme should be considered as a
57
Gauweiler at paras. 163–73.
58
Id. at para. 220.
59
Id. at para. 169.
60
Opinion of Advocate General Cruz Villalón at paras. 30–61, Case C-62/14, Gauweiler v. Deutscher Bundestag
(Jan. 14, 2015), http://curia.europa.eu/.
2017
The Constitutional Court’s Gauweiler Judgement
229
valid act of monetary policy, on the basis of substantive arguments that purported to
prove that the announced programme already provided sufficient safeguards. Rightly
then, the preliminary ruling of the Court has been characterized as a model of judicial
restraint.61
It is also interesting to note that only a couple of months before the follow up judgment
of the FCC in Gauweiler, the Court gave an important preliminary ruling in Aranyosi and
Căldăraru. That ruling could be interpreted as an indication that the Court takes
particularly seriously the case law of the FCC and that it is not at all insensitive to the
concerns that this court expresses about the application of EU law and its effect on the
national constitutional requirements. 62
The case concerned the interpretation of the Framework Decision on the European
Arrest Warrant.63 The crux of the preliminary questions asked by the referring national
court was whether the competent judicial authorities of a Member State can refuse the
surrender of a requested person on the basis of strong indications that her fundamental
rights would be infringed as a result of a systemic flaw in the prison conditions of the
issuing Member State, which gives rise to a real risk of inhuman treatment of the
individuals concerned.
Recalling its famous Melloni case law, the Court confirmed the exhaustive nature of the
grounds for the non-execution of a European arrest warrant provided for by the EU
legislature.64 It also stressed in this respect the importance of the principles of mutual
confidence and mutual recognition for the creation and maintenance of the area of
freedom, security and justice.65 At the same time though, it underlined the absolute
nature of the prohibition of inhuman treatment and its close connection to respect for
human dignity that constitutes one of the fundamental values of the EU and of its
61
See Thomas Beukers & Jan-Herman Reestman, Editorial, On Courts of Last Resort and Lenders of Last Resort,
11 EUR. CONST. L. REV. 227 (2015).
62
Joined Cases C-404 & 609/15 Aranyosi, Căldăraru v. Generalstaatsanwaltschaft Bremen, (Apr. 5, 2015),
http://curia.europa.eu/ [hereinafter Aranyosi & Căldăraru]. For more on this case, see generally Georgios
Anagnostaras, Mutual Confidence is not Blind Trust! Fundamental Rights Protection and the Execution of the
European Arrest Warrant, 53 COMMON MKT. L. REV. 1675 (2016).
63
Council Framework Decision 2009/299/JHA of Feb. 26, 2009, Amending Framework Decisions
2002/584/JHA, 2005/214/JHA, 2006/783/JHA, 2008/909/JHA and 2008/947/JHA, Thereby Enhancing the
Procedural Rights of Persons and Fostering the Application of the Principle of Mutual Recognition to Decisions
Rendered in the Absence of the Person Concerned at the Trial, 2009 OJ (L 81) 24.
64
Case C-399/11, Melloni v. Ministerio Fiscal, (Feb. 26, 2013), http://curia.europa.eu/. This preliminary ruling
gave rise to an abundance of academic literature. See generally Nik de Boer, Addressing Rights Divergences
Under the Charter, 50 COMMON MKT. L. REV. 1083 (2013); Maartje de Visser, Dealing with Divergences in
Fundamental Rights Standards, 20 MAASTRICHT J. 576 (2013); Asteris Pliakos & Georgios Anagnostaras,
Fundamental Rights and the New Battle Over Legal and Judicial Supremacy: Lessons from Melloni, 35 Y.B. EUR.
L. 97 (2015).
65
Aranyosi & Căldăraru, supra note 62, at paras. 75–81.
230
German Law Journal
Vol. 18 No. 01
Member States.66 It concluded therefore that if the executing judicial authorities are in
possession of objective and reliable evidence that prisoners in the issuing Member State
face a real risk of inhuman treatment, they must postpone the enforcement of the
European arrest warrant until they obtain supplementary information that allows them
to rule out the existence of this risk as concerns the requested person at issue. 67
The recognition that the rights that are closely linked to human dignity must be
considered as absolute irrespective of the conduct of the individual concerned seems to
echo the position of the FCC, as evidenced in its Identity Review Order.68 In that case,
the FCC clarified that the protection of fundamental rights can never fall below the
minimum standard required by the essential core of these rights. It stressed to this end
that the constitutional identity includes the protection of human dignity, as enshrined
in the Basic Law.69 As a consequence, the principle of supremacy of EU law and the
Melloni case law do not relieve national courts from their obligation to ensure that the
right to human dignity – in that case in its manifestation as the principle of individual
guilt – is protected in the context of surrender procedures based on the provisions of EU
law.70
Apparently, there is not an immediate connection between the legal and factual
background of Gauweiler and that of the legal proceedings in the Aranyosi and Căldăraru
preliminary ruling. However, a possible interpretation of that latter ruling could be that
the Court responded to the criticism raised by the FCC against the absolute
understanding of the principle of supremacy expressed in Melloni. It therefore
introduced a limited exception to the core principles of mutual confidence and mutual
recognition in order to prevent the FCC and other national courts from doubting the
equivalence of the EU standard of fundamental rights protection to the requirements of
the national constitution. Seen in this perspective, Aranyosi and Căldăraru could very
well be the outcome of an indirect judicial dialogue that took place in a particularly
important and sensitive legal area that has been traditionally perceived as part of the
core business of constitutional courts. In the same line of reasoning, the ruling provides
evidence that the Court recognizes the special legal weight of the FCC and the lead role
that it can play in the process of European integration. Coupled with the conciliatory
66
Id. at paras. 82–87.
67
Id. at paras. 88–104.
68
Bundesverfassungsgericht [BVERFG] [Federal Constitutional Court], 2 BvR 2735/14, Dec. 15, 2015,
http://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/DE/2015/12/rs20151215_2bvr2735
14.html
[hereinafter
Identity
Review
Order]
(available
in
English
at
http://www.bundesverfassungsgericht.de/SharedDocs/Pressemitteilungen/EN/2016/bvg16-004.html). For
more on this case, see generally Georgios Anagnostaras, Solange III? Fundamental Rights Protection Under
National Identity Review, 42 EUR. L. REV. (forthcoming in April 2017); see also Julian Nowag, EU law,
Constitutional Identity, and Human Dignity: A Toxic Mix?, 53 COMMON MKT. L. REV. 1141 (2016).
69
Id. at paras. 48–49.
70
Id. at paras. 76–83.
2017
The Constitutional Court’s Gauweiler Judgement
231
tone of the Gauweiler ruling, this acknowledgement may have had some positive impact
on the final judgment of the FCC.
D. Conclusions
“Today is not a good day for democracy in Europe!” That was the first reaction of one of
the main applicants in the Gauweiler proceedings to the rejection of his constitutional
complaint by the FCC. According to his interpretation of the judgment, the FCC backed
down in its first serious conflict with the Court and failed to effectively protect the
European allocation of competences and the budgetary autonomy of the parliament as
it had originally promised in its preliminary reference. 71 On the contrary, the European
Commission expressed its satisfaction and read the judgment as a welcome
confirmation in substance of the preliminary ruling of the Court.72 The judgment must
also have come as a relief to the ECB. Although it is not likely that its OMT programme
will ever be implemented in practice, this institution has already launched its long
awaited Quantitative Easing programme which also provides for the purchase of
government bonds on the secondary market.73 That being so, the outcome of the
Gauweiler proceedings may also provide an indication as to the position that the FCC is
likely to adopt in relation to the constitutional complaints that are currently pending
before it against the new bonds purchase programme of the ECB.74
Beyond its apparent significance for the operation of the Eurozone and the mandate of
the ECB, Gauweiler is also important for the institutional relations between the Court
and the German FCC. Despite its pretextual reasoning and its criticism against the
manner of judicial specification of the Treaty evidenced by the Court, the FCC eventually
relied on the preliminary ruling and adopted its interpretation of the contested
programme. The Court on its part testified its readiness not to pass up the opportunity
to embark on a judicial dialogue with the referring FCC, regardless of the controversial
circumstances of the preliminary reference. It is characteristic in this respect that the
Court rejected the various inadmissibility objections that were raised by eight national
governments and three EU institutions and examined the legality of a programme that
had not been implemented yet.75 Furthermore, the remarkable restraint of its ruling is
indicative of its intention to avoid any reference that could be considered as offensive
71
See Mehreen Kahn, ‘Not a Good Day for Democracy’ – German Critics Attack ECB Court Ruling, FIN. TIMES
(June 21, 2016), http://www.ft.com/fastft/2016/06/21/critics-hit-out-at-German-ecb-bailout-ruling/.
72
European Commission Statement 16/2266, Commission statement on judgment of German Constitutional
Court (June 21, 2016), http://europa.eu/rapid/press-release_STATEMENT-16-2266_en.htm.
73
See Press Release, European Central Bank, ECB Announces Expanded Asset Purchase Programme (Jan. 22,
2015), https://www.ecb.europa.eu/press/pr/date/2015/html/pr150122_1.en.html. Purchases were officially
started in March 2015. See Getting the Machines Revving, ECONOMIST: FREE EXCHANGE (Mar. 9, 2015, 3:26 PM),
http://www.economist.com/blogs/freeexchange/2015/03/quantitative-easing-and-euro.
74
See Karin Matussek, ECB Faces Three Suits Over Quantitative Easing in Germany, BLOOMBERG (Nov. 10, 2015,
3:44 AM), https://www.bloomberg.com/news/articles/2015-11-10/ecb-faces-three-suits-over-quantitativeeasing-in-german-court.
75
See OMT Ruling at paras. 18–33
232
German Law Journal
Vol. 18 No. 01
by the FCC. Will this experience reinforce then the stimulus of that FCC to avail itself
more regularly of the preliminary reference procedure? That still remains to be seen.