Closing the Gap?
Impact of EU Accession on Transformation of Croatian Judiciary
Lecture delivered at Cornell University Law School, September 12, 2012
I will address the question whether efforts undertaken by the EU during Croatia's accession process have contributed to transformation of the national judiciary and in what respect. The answer to the question is affirmative. The transformation has taken place, primarily, in terms of institution building, judicial independence and, to limited extent, in development of technical capacity (e.g. publication of case law, integrated case management). However, as far as legal interpretation is concerned, the change was discrete or inexistent.
The reason for this is the nature of communication between the EU and different national actors. Institutional and organizational aspects of the judiciary were subject to guided exchange (Paul Feyerabend, Science in a Free Society, 1978), interpretative aspects were not addressed.
In other words, while adaptation of national law to institutional, procedural and value requirements of EU membership was set to be adjusted in pre-accession stage, legal interpretation remained an unaddressed problem, left for post-accession stage.
Following a brief overview of the general legal context of integration (1.) , I will present three examples of national adjudication that exemplify differences between national approach to interpretation and practice of European courts (2). In the remaining part (3.) of my talk I will argue that the differences are due to a pervasive information deficit which perpetuates legal textualism and conceptualism as dominant characteristics of national legal culture.
1. The three legal frameworks
Legal systems of EU Candidate Countries in Southeast Europe operate in at least 2 frameworks: legal framework of international law, primarily manifest through the European Convention for Protection of Human Rights and Fundamental Freedoms (EHRC) and the legal framework of their respective Stabilization and Association Agreements with the EU. While the former introduces pan-European human rights standards, the latter create a free trade area preparing the candidates for EU membership. Both legal frameworks are meticulously defined by case law of Strasbourg and Luxembourg courts. The two systems are interrelated in sense that the respect for and protection of fundamental human rights is a political criterion for EU membership.
2. Identification of problems
Case 1 – EHRC context – indirect discrimination / disparate effect
Children belonging to the Roma minority were, allegedly due to their poor knowledge of the Croatian language, and according to the applicable Croatian professional standards, placed in Roma-only classes in a number of elementary schools in northern Croatia. That practice was challenged on grounds of violation of Article 2 of Protocol 1 of the EHRC taken alone (right to education), or together with Art. 14 (non-discrimination). After having exhausted legal remedies before ordinary courts, the applicants brought a constitutional action before the Constitutional Court which (in March 2009) did not find an infringement of constitutional rights:
"None of the facts submitted to the Constitutional Court leads to the conclusion that the placement of the complainants in separate classes was motivated by or based on their racial and ethnic origin."
At that time, the European Court of Human Rights had already established its indirect discrimination / disparate effects doctrine (D.H. and Others v. the Czech Republic (Application no. 57325/00), Judgment of 13 November 2007). According to the EHRC, in order to establish discrimination it is sufficient to demonstrate disparate effect of an otherwise neutral state measure. Also, after an applicant brings a prima facie case, the burden of proof shifts to the State.
Croatian Constitutional Court requires a criminal law standard of proof – intention to discriminate that has to be demonstrated beyond reasonable doubt. The EHRC found Croatia in violation of the Convention on March 16, 2010. Measures have been taken on political level to eliminate discrimination. The case law, however, remains the same.
Case 2 – Stabilisation and Association Agreement context
Applicant, a company established in the EU submitted an application for opening of a secondary establishment in Croatia. National law requires foreign companies to register their commercial presence in form of a subsidiary. One of the requirements for registration of a subsidiary is annual financial report of the mother company. However, the mother company itself was established too recently in one of the EU Member states and did not have one. Croatian registration court refused registration. Deciding on constitutional complaint the Constitutional Court affirmed. Registration of a subsidiary without annual financial report is not possible. Freedom of establishment is guaranteed by the SAA and subject to a stand-still clause.
Case C-167/01, Inspire Art, para. 95: "… it is immaterial, having regard to the application of the rules on freedom of establishment, that the company was formed in one Member State only for the purpose of establishing itself in a second Member State, where its main, or indeed entire, business is to be conducted."
Croatian Constitutional Court (U-III / 2340 / 2008): Croatian law is applicable, national requirements have to be met. There is an obligation of equal treatment of EU companies, that requirement has been met. Proportionality of legal requirements can not be tested in constitutional complaint (accessory review) but only in abstract constitutional review procedure.
Differences: In EU law freedom of establishment is a de facto concept. In Croatian law it is a normative concept. Registration of a subsidiary appears to be constituent act of establishment. In EU law national measures that hinder or make less attractive exercise of one of fundamental freedoms are per se illegal unless justified. European court performs a proportionality test. Croatian Constitutional Court presents the problem in terms of "applicable law." It fails to perform proportionality review. The only criterion is non-discrimination.
The SAA guarantees the "treatment not less favorable" than that afforded to domestic companies. However, domestic companies can operate in Croatia without any formalities while EU companies need to register a subsidiary. National rules have disparate effect on EU companies.
Case 3 – national constitutional context
Croatian Constitution, Art. 49 provides that entrepreneurial and market freedoms are the fundamentals of the economic order of the Republic (section 1) and that the State guarantees to all entrepreneurs an equal market position (section 2). Article 50(2) lays down justifications for restriction of market freedoms which are protection of interest and security of the Republic, nature, environment and health. The exact meaning of "entrepreneur" and "market" remains undefined.
In a decision of June 26, 2006, the Constitutional Court had to address the issue whether compulsory retirement of medical doctors who, as private entrepreneurs, offer their services in primary medical care, have to retire at age of 65, provided 20 years of pension insurance, restricts entrepreneurial freedoms under Art. 49. Applicants argued that similar age restriction does not apply to other professions. The Constitutional Court dismissed the application saying that:
"It is not justified, from Constitutional perspective, to compare position of medical workers with other private entrepreneurs (craftsmen or individual entrepreneurs), since medical workers who work in primary network of medical protection, unlike other mentioned categories, perform public service which is not subject to guarantees of free entrepreneurship, under Art. 49(2) of the Constitution."
The Constitutional Court solved the case on grounds of a descriptive concept of public service (public service as defined by black letter law), and did not look into the economic function which a member of profession was performing, i.e. whether the activity represents an economic activity, and what are the consequences of performing such economic activity.
European Court of Justice interprets the public service exception functionally. Art. 51 TFEU lays down an exception from free movement of services, establishment and workers. While the provision exempts "activities which in that State are connected, even occasionally, with the exercise of official authority", the concept of official authority is interpreted restrictively, as being applicable only to "…what is strictly necessary for safeguarding the interests which that provision allows the Member States to protect".
The Constitutional Court relies on the descriptive conceptual approach, the European Court on functional. Knowing that EU law is defined in functional way (e.g. economic activity, worker, undertaking, official authority, etc.), insistence on national descriptive legal concepts sets national courts on the collision course with case law of the European Court.
3. Explaining the gap
In my analysis the reason for failure of Croatian courts to apply the EHRC and the SAA properly can be explained by the a specific form of cultural imperialism of the traditional legal profession, "… universalization of a dominant group's experience and culture, and its establishment as a norm." (Iris Marion Young, Justice and Politics of Difference, Princeton UP, p. 60). Such entrenched experience, formed during times of communist rule, became resistant to change. Being a part of dominant legal culture judges fail even to notice the rapidly unfolding change in their legal environment.
Decade long isolation from European mainstream developments created an information deficit which made the transition even more difficult. The deficit itself is multi-dimensional and can be described as one of the four types.
a. Lack of understanding of a proper role of a judge
There is a widespread and historically routed self-understanding of judges as "administrators", not as an independent branch despite of their appointment for life after an initial 5 year probation period. Following the reform, selection of judges has become more objective and is de-politicized.
The main appointing authority – State Judiciary Council – is dominated by members of the judiciary (7 out of 11) what contributes to political independence but at the same time creates a hermetic and not entirely transparent system. Typically, members of the SJD (and judges of high courts) will have graduated from a national law school before 1991, and will have a little international exposure if any.
b. Lack of information about social relationships that shape law
This deficit is systemic. Eugen Ehrlich demonstrated how social reality determines creation of legal rules. "The Legal Provisions of marriage and family law pre-suppose the existence of marriage and family." Similarly, anti-trust rules pre-suppose the existence of monopolies and abuse of their dominant position. Post-communist states lack huge parts of social experience that facilitated creation of legal rules. Obvious areas where such social experience is missing are anti-trust, gender equality, asylum and extradition.
This type of deficit translates into typical problems, such as:
- anti trust: "agreement between undertakings" – effects doctrine is not applied;
- gender equality: no shifting of burden of proof, insistence on intent in discrimination cases, absence of disparate effect reasoning…;
- asylum and extradition: courts do not control non-refoulement.
Being unable to relate legal rules to social facts, judges often recourse to textual interpretation, or demonstrate "selective blindness", ignoring legal rules that are new and unknown, and applying legal rules that they are familiar with (On the Perception of Incongruity: A Paradigm" by Jerome S. Bruner and Leo Postman. Journal of Personality, 18 (1949) , pp. 206-223).
c. Lack of information about sources of law
National legal education insists on memorization of legislation. When it comes to international and European legal sources, language becomes a problem. Major legislative texts are translated, but case law of the ECtHRts and of the CJEU are not. Translation activity is performed by different actors, such as public administration and legal scholars, however, judges are fed only official translations coming from one of government sources. Cases are selected and judges receive incomplete overview of case law. As far as ECtHRts cases are concerned, only cases involving Croatia as a party are translated and put on disposal of judges. As a consequence, judges often disregard arguments based on European case law.
d. Lack of information about interpretative methodology
Hayek (The Use of Knowledge in Society, American Economic Review, (1945) 35(4), pp. 519-530) contended that only markets are able to determine relative value of goods. State lacks information. Similarly, only courts are able to determine relative value of rights (by balancing them). Parliaments lack information and due to that fact legislate retrospectively, not prospectively (Ehrlich, The Sociology of Law).
Yet, post-communist courts rely, almost exclusively on law made in parliament. This creates an information-lag which prevents the courts from determining relative value of rights. Value assessments are expected to be made in parliamentary arena. The result is that ordinary courts do not perform proportionality test and accept all legislative statements of public interest as final and untouchable. Constitutional Court does perform proportionality review but only in abstract constitutional review procedure (see Case 2 above). Standard of review does not go beyond rationality review and there is no strict scrutiny.
This situation is perpetuated by both legal scholarship or practice. Law schools minimize relevance of case law and insist on "knowledge of positive law", i.e. legislative enactments. Cases decided by the Supreme Court are published on internet, but are de-contextualized. Process of de-contextualization begins in the first instance courtroom where judge dictates the minutes to a typist. Appelate courts thus receive partial and de-contextualized information. The Supreme Court itself is in habit of making extra-judicial "opinions" which are followed in practice. Such opinions, abstract and de-contextualized are followed by judges at all levels of judicial hierarchy.
European union invested significant effort and funding into a newly established judicial academy. The merit of this enterprise is yet to be seen having in mind that the first generation of judges will graduate in one or two years from today. While the academy and the new system of professional judicial education and appointment can probably not hurt, the real challenge will be initiation of the direct judicial dialogue between national courts and the CJEU. Until now, Croatian judges did not have an opportunity to receive information directly, in communication with their peers, but only through agency of the executive branch.
It is unlikely that Croatian interpretative paradigm is going to shift before confronted with a serious crisis (Thomas S. Kuhn, Structure of Scientific Revolutions, 1962). The crisis is likely to occur at point where traditional "predictions of incidence of public force" (Holmes, Path of Law) start proving wrong. In the EU context this will be channeled through the infraction proceedings (Arts. 258-260) and preliminary references (Art. 267 TFEU).