22nd
25th
EUropa.S. 2016
– of April 2016 | University of Piraeus Organized by Institute of Research & Training on European Affairs EE
EUropa.S. 2016 ECJ
Case and Study Guide
EUropa.S. 2016 European Court of Justice Case and Study Guide
Contents
1. Greeting of the Board .............................................................................................................. 2 1.1 Composition of the Court ............................................................................................... 3 1.2 The jurisdiction of the Court of Justice of the European Union....................... 4 1.3 Precedent .............................................................................................................................. 5 1.4 Direct actions (infringement proceedings) ............................................................. 5 1.5 The stages of the infringement proceedings........................................................... 7 1.6 Table of equivalence......................................................................................................... 8 1.6.1. Renumeration concerning core Articles of the TFEU ..................................... 8 1.6.2 Articles of the chapter on competition ................................................................10 Old numbering of the (Amsterdam) Treaty establishing the European Community ...................................................................................................................................10 New numbering of the (Lisbon) Treaty on the Functioning of the European Union ..............................................................................................................................................10 2. EUropa.S. 2016 ECJ Case ......................................................................................................11 3.1 Basic EU legislation.........................................................................................................15 3.2 References ..........................................................................................................................15 3.3 Recommended for further research: .......................................................................16
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EUropa.S. 2016 European Court of Justice Case and Study Guide
1. Greeting of the Board
Dear Participants, It is our honor and pleasure to welcome you to EUropa.S 2016 and to the European Court of Justice. Awarded as the best committee of EUropa.S. 2015, the Court is being simulated again this year, in order to offer young students from Greece and abroad the chance to spend four days acting as judges, advocates, witnesses and experts learning, thus, how the most important judicial institution in the European Union functions. The case consists of an action of the European Commission against an EU member state, involving the intriguing issue of state aid to an airline company, which does not meet the security and safety criteria of the European law. We have prepared this study guide in order to facilitate you, providing all the essential information concerning the function of the European Court of Justice and the case. Of course, depending on your position, you may have to focus on different aspects of the case, which is totally fictitious, and you are deeply encouraged to make your own research. We are looking forward to meeting each one of you in EUropa.S. 2016.
Best regards, The Board of European Court of Justice
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Introduction to the Court of Justice of the European Union
1.1 Composition of the Court The EU is founded on Treaties that provide for the Union to have its own Court of Justice, in order to ensure that the law is observed in the interpretation and application of the Treaties. Article 19 of the Treaty of the European Union (hereinafter referred as TEU) provides that the Court consists of three judicial institutions: 1. The Court of Justice; 2. The General Court; 3. Specialized courts, currently only the European Civil Service Tribunal. As article 19 (1) TEU provides, the Court of Justice is composed by 28 Judges, one from each Member State. It is also assisted by 8 Advocates General. The role of the Advocates General is to make, in open court, impartial and independent submissions on any case brought before the Court. He or she acts not as a legal representative of one of the parties, but as a legal representative of the public interest. These Opinions are adopted in advance of the judgment so that the Court is granted sufficient time to consider them. However, they are not binding on the Court, although they are often referred to by the Court of Justice in its judgments.1 The Court of Justice works under the principle of collegiality and, therefore, a single judgment is given. For reasons of workload, cases are rarely examined and decided by the full Court (e.g. cases of “exceptional importance�). The majority of cases is, instead, heard by Chambers of either three or five Judges or by the Grand Chamber of thirteen Judges as envisaged under article 251 TFEU and article 16 of the Statute. The Court of Justice is itself governed by the TEU, article19, and the Treaty on the Functioning of the European Union (hereinafter referred as TFEU), articles 251-281, and the Statute of the Court of Justice of the European Union, which is 1
CHALMERS D., DAVIES G. & MONTI G., (2010), European Union Law, 2nd ed., Cambridge University Press, pg. 143- 146.
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appended to the TEU and TFEU as a protocol (Protocol No.3). Detailed effect is given to the Statute by the Court’s Rules of Procedure.2 The EU judicial institution simulated in EUropa.S. 2016 is the Grand Chamber of the Court of Justice. For the purposes of EUropa.S. 2016, the Court of Justice will only apply the Rules of Procedure of EUropa.S. 2016.
1.2 The jurisdiction of the Court of Justice of the European Union – Preliminary references from national courts: national courts may or must refer to the Court of Justice requesting for an interpreting ruling on an the challenged point of EU law, which is necessary to enable them to decide a dispute [(article 267 TFEU)]. – Enforcement or direct actions brought by the Commission or Member States against other Member States: the Commission, or, in rare cases, another Member State, is entitled to bring a Member State before the Court of Justice for a declaration that the latter is in breach of EU law [articles 258 and 259 TFEU]. – Sanctions for failure to comply with Court judgments: if a Member State fails to comply with a Court of Justice judgment, the Commission can arraign it before the Court in order to impose a payment penalty on it forits behaviour [article 260(2) TFEU]. – Judicial review of EU institutions by other EU institutions and judicial review of the Parliament or Council by Member States. [articles 263 (2) and 265 (1) TFEU accordingly]. – Opinions on the conclusion of international agreements [article 218 (11) TFEU]. –
Appeals from the General Court on points of law [article 256 (1) TFEU].
– Disputes concerning the application of European Intellectual Property Rights, if jurisdiction has been conferred by the Council. [article 262 TFEU]3.
FAIRHURST J., (2010), Law of the European Union, 8th ed., Pearson Education Limited, pg. 152. CHALMERS D., DAVIES G. & MONTI G., (2010), European Union Law, 2nd ed., Cambridge University Press, pg. 146. 2 3
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1.3 Precedent The doctrine of precedent (stare decisis) does not apply to the Court of Justice. However, the Court generally is consistent with its own previous decisions. It is usual for lawyers to cite previous case law when arguing a point of law before the Court. Indeed, the Advocate General in his Opinion, and the Court in its judgment, will generally refer to previous cases4.
1.4 Direct actions (infringement proceedings) The case of EUropa.S. 2016 consists of a direct action of the Commission against a Member State, under the article 258 TFEU. The TFEU gives the Commission, an institution that is independent of the Member States and is required to act in the general interest of the EU, the power to initiate proceedings before the Court against any Member State which fails to comply with the requirements of the Treaty. That power stems principally from article 258 TFEU. All Member States are automatically subject to the jurisdiction of the Court as provided under Article 258: no express declaration to that effect is necessary and no reservations are permitted. Rulings of the Court under Article 258 have been originally purely declaratory. Member States are simply required under Article 260 (ex 228, ex 171 EC) to take the necessary steps to comply with the Court’s judgment. Since the entry into force of the TEU, the Court has enjoyed the power to impose financial sanctions on Member States which fail to take such steps. Complaints from individuals and businesses represent the largest single source of detected infringements. Significant number of cases falls by the wayside as the procedure advances, so that only a small proportion of the total number of cases, in which proceedings are formally lunched, is ultimately referred to the Court of Justice. It is important to stress out that complaints are often essential to alert the Commission for potential infringements. Infringement proceedings that lead to a direct action involve two principal actors beside the Court of Justice: the Commission and the Defendant State5.
FAIRHURST J., (2010), Law of the European Union, 8th ed., Pearson Education Limited, pg. 161162. 5 ARNULL A., The European Union and its Court of Justice, 2nd ed., (2006), Oxford Law Library, pg 34. 4
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Once infringement proceedings are set in motion, the Court insists on strict compliance by the Commission with the procedural requirements laid down by Article 258 TFEU. The deadline is of particular importance and must be laid down in the reasoned opinion for compliance by the Member State [Article 258 (2)]. Where the Commission decides to make an application to the Court, it bears the burden of proving that the alleged infringement actually took place. In Commission v. Belgium, the Court concluded that: “It is for the Commission to prove the existence of the alleged infringement and to provide the Court with the information necessary for it to determine whether the infringement is made out, and the Commission may not rely on any presumption for that purpose[…]” 6. Accordingly, the essential question in nearly all infringement actions is whether the situation in the Defendant State is consistent with the requirements of Community Law. In Commission v. Italy, the Court underlined the departure Article 258 (ex 226) represented from the classic mechanisms of public international law, declaring that: “In permitting Member States to profit from the advantages of the Community, the Treaty imposes on them also the obligation to respect its rules. For a State unilaterally to break, according to its own conception of national interest, the equilibrium between advantages and obligations flowing from its adherence to the Community brings into question the equality of Member States before Community Law and creates discriminations at the expense of their nationals, and above all of the nationals of the State itself which places itself outside the Community rules” 7. In Commission v. Ireland the Court stated that: “It is well established in t he case law of the Court… that a Member State may not plead internal circumstances in order to justify a 6Commission
of the European Communities v. the Kingdom of Belgium, Case C-287/03 [OJC 200 of 23.08.2003], Judgment of 12.05.2005 [OJC 205 of 20.08.2005], para 27. 7Commission of the European Communities v. the Italian Republic, Case 39-72 [ECR 1973-00101], Judgment of 07.02.1973 [1973], para 24.
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failure to comply with obligations and time -limits resulting from Community Law” 8. In Commission v. Poland the Polish Government tried to justify the prohibition of the marketing of genetically modified seeds basing upon a domestic law, on the ground that their release violated important tenets of Catholic thought. But the Court stressed that this polish law violated EU Directives allowing, therefore, the marketing of those seeds, if they had been authorized by the EU authorities. As it stated: “A Member State cannot rely in that manner on the views of a section of public opinion in order unilaterally to challenge a harmonizing measure adopted by the Comm unity institutions […].A Member State may not plead difficulties of implementation which emerge at the stage when a Community measure is put into effect, such as difficulties relating to opposition on the part of certain individuals, to justify a failure t o comply with obligations and time limits laid down by Community law […]” 9.
1.5 The stages of the infringement proceedings The infringement proceedings consist of a series of stages: 1)
An informal letter to the Member State;
2)
A letter of formal notice to the Member State that it is in breach of EU law;
3)
The submission of observations by the Member State;
4) The issuing of a reasoned opinion by the Commission setting out the breach of EU law; 5) A period for the Member State to comply with the reasoned opinion and submit observations; 6)
Judgment by the Court10.
8Commission
of the European Communities v. Ireland, Case C-39/88 [OJC 319 of 19.12.1990], Judgment of 27.11.1990 [ECR 1990 I-04271], para 11. 9Commission of the European Communities v. Republic of Poland, Case C-165/08 [ECR 2009 I06843], Judgment of 16.07.2009, [OJC 12.09.2009]. CHALMERS D., DAVIES G. & MONTI G., (2010), European Union Law, 2nd ed., Cambridge University Press, pg. 332. 10
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1.6 Table of equivalence After the Lisbon Treaty (id est: Treaty on the Function of the European Union, TFEU) the enumeration of many articles of the previous treaties was modified. Given that most of the Court’s cases have been delivered prior to 2009, under the previous regime, it is useful to know the equivalence of the articles before and after 2009. These changes can be easily tracked via the following table of equivalence11: 1.6.1. Renumeration concerning core Articles of the TFEU Articles from the (Amsterdam) Treaty establishing the European Community
Equivalent Articles on the Treaty of the Functioning of the European Union
Part one-Principles
Article 2 (repealed)
Replaced in substance by Article 3 Treaty of the European Union
Article 3 paragraph 1 (repealed)
Replaced in substance by Articles 3, 4, 5 and 6
Article 4
Article 119
Article 10 (repealed)
Replaced in substance by Article 4, § 3, Treaty of the European Union
Article 16
Article 14
Part three — Community policies Title II — Agriculture
Part three — Policies and internal actions of the Union Title III — Agriculture and fisheries
Article 31
Article 37
Article 36
Article 42
11Retrievedby:http://fdslive.oup.com/www.oup.com/orc/resources/law/eu/hartley7e/resourc
es/table/eulaw_table.pdf & http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2007:306:0202:0229:EN:PDF
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Title III — Free movement of persons, services and capital Chapter 2 — Right of establishment
Title IV — Free movement of persons, services and capital Chapter 2 — Right of establishment
Article 44
Article 50 Title V — Transport
Article 73
Article 93
Title VI: Common rules on competition, taxation and approximation of laws Chapter 3: Approximation of laws
Title VII: Common rules on competition, taxation and approximation of laws Chapter 3: Approximation of laws
Article 95
Article 114
Article 98
Article 120
Article 99
Article 121
Part five — Institutions of the Community Title I — Institutional provisions Chapter 1 — The institutions Section 4 — The Court of Justice
Part six — Institutional and financial provisions Title I — Institutional provisions Chapter 1 — The institutions Section 5 — The Court of Justice of the EU
Article 226
Article 258
Article 228
Article 260
Article 234
Article 267
Part six — General and final provisions
Part seven provisions
—
General
Article 296
Article 346
Article 308
Article 352
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1.6.2 Articles of the chapter on competition Old numbering of the (Amsterdam) Treaty establishing the European Community
New numbering of the (Lisbon) Treaty on the Functioning of the European Union
Title VI — Common rules on competition, taxation and approximation of laws Chapter 1 — Rules on competition
Title VII — Common rules on competition, taxation and approximation of laws Chapter 1 — Rules on competition
Section 1 — undertakings
Section 1 — undertakings
Rules
applying
to
Rules
Article 81
Article 101
Article 82
Article 102
Article 83
Article 103
Article 84
Article 104
Article 85
Article 105
Article 86
Article 106
Section 2 — Aids granted by States
applying
Section 2 — Aids granted by States
Article 87
Article 107
Article 88
Article 108
Article 89
Article 109
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2. EUropa.S. 2016 ECJ Case
EUROPEAN COMMISSION vs. THE KINGDOM OF SPAIN 1. "Air-Andaluz" is an airline company of Spanish nationality, which was incorporated in 1976. After an agreement signed with the Spanish government in 1980, it was the company’s policy to offer several social packages and sale tickets at very low prices, particularly for residents of outlying and overseas regions of Spain (e.g. the residents of the island of Tenerife were given the possibility to travel to the mainland with a 50% discount). In exchange, "AirAndaluz" has been granted an exemption of its tickets from VAT (Value Added Tax), a 30% exemption from airport charges and a 30% tax discount on its annual profits. 2. The agreement was ratified by the Spanish Parliament with a law, in 1981, and "Air-Andaluz" continued to offer its airways services, being from that time on the largest private airline in Spain. When Spain joined the European Economic Community, the Commission asked Spain to amend the pertinent law, in order to harmonize it with the acquis communautaire. But Spain ignored this recommendation and the Commission did not revert to this issue. 3. A couple of decades later, “Air-Andaluz” managed to be recognized as one of the best regional airlines in Europe executing the highest percentage of internal and external flights from and to the country. Having developed strong ties with the Spanish government, the company operated in an inadequately regulated legal framework and continued to enjoy all the aforementioned exemptions and advantages. This successful route was interrupted vehemently when" Alpino airlines", an Italian low cost company, made its appearance to the Spanish market in 2010. Alpino airlines" is a low fare airline, which has risen the last 8 years in Europe, in light of the financial crisis that is plaguing the EU, taking the lead with regards to the number of transported passengers per year amongst all European airlines. 4. The Italian company soon established itself in the Spanish air transport network competing "Air-Andaluz" with its very attractive and affordable prices. Whilst the Spanish airline began to falter and face a huge loss of profits, the Spanish government decided to adopt a law that would increase the percentage of VAT to air-tickets and airport taxes, of which as mentioned above, the "AirAndaluz" was offered a 30% exemption. As it was reported by the Spanish press, the days before the adoption of that law took place a considerable number of visits of “Air-Andaluz” officials to some members of the Spanish cabinet,
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including the minister of finance and the minister of Transports. Finally this law was adopted in 2011. 5. Soon, "Alpino airlines", unable to adjust its prices in a way that they would be competitive to those of "Air-Andaluz" faced a sharp and sudden loss of profits and from 2014 is facing the risk to declare bankruptcy and has no other choice than withdrawing from the Spanish market. Nonetheless, the Italian company choose not to leave the Spanish market, but instead to proceed against the Spanish government before the national courts, denouncing the agreement on the exemption of "Air-Andaluz" from VAT as illegal and unconstitutional, since it constitutes an infringement of the general layout of VAT to legal persons. 6. The Spanish courts rejected the suit of "Alpino airlines" claiming that the exemption of "Air-Andaluz" from VAT had been provided by a specific formal law of the State. The final verdict of the Tribunal Supremo de España was delivered on December 17th, 2014, and reiterated the previous decisions in favor of “Air-Andaluz”. 7. The decision of the Spanish courts created once again conditions totally favorable for “Air-Andaluz”, but this did not last for a long time. On March 15th, 2015, an aircraft of Air-Andaluz was flying from Madrid to Moscow. The aircraft was following a route above Eastern Ukraine, even though the clashes in that region were posing a lethal threat for the security of any civil aircraft. While flying above Ukraine, the signal of the aircraft disappeared and a few hours later, the company announced that it crushed in a rural area of the northeastern Ukraine. None of the 117 passengers of the aircraft and the 5 members of the crew survived. 8. The relatives of the victims accused “Air-Andaluz” of not complying with the common rules and common basic standards on aviation security that were set by the Regulation 300/2008. This Regulation covers –inter alia- security measures that apply on board an aircraft, or during a flight, of Community air carriers. The company's spokesperson responded to the aforementioned accusations on March 17th, 2015, highlighting that it was not obliged to meet these standards, since the existing Spanish legislation on the issue did not require such high standards. Indeed, Spain never ratified the Regulation 200/28 by law or transferred the relevant provided requirements to its national legislation nor it compelled the Spanish airline companies to respect them. 9. Investigations for the conditions of the air disaster were commenced on March 17th, but due to the fragile situation on the ground and the ongoing turmoil in Eastern Ukraine, the investigators were unable to approximate the
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aircraft. Therefore, it was impossible for a coherent and incontestable final conclusion for the causes of the accident to be delivered. 10. “Alpino Airlines” decided to take advantage of the situation and asked from an independent investigator to compile a study concerning the actual security and safety standards that were met by the “Air-Andaluz” aircrafts. The investigator concluded that the company respected only the national legislation, which imposed much lower standards than the European one. 11. That being the situation, “Alpino Airlines” informed the European Commission about the regime under which “Air-Andaluz” was operating, sending a written notice of complaint to the European Commission. In the written notice it mentioned the conclusions of the investigator, the exemptions and tax discount that were granted to “Air-Andaluz”, as well as the fact that Spain had adopted a law thereby increasing the percentage of VAT to air-tickets and airport taxes of the airline companies, with the exemption of “Air-Andaluz”. Regarding the latter law, “Alpino Airlines” stressed that it constituted a blatant discrimination on the ground of nationality, because it intended predominantly to damage the Italian company, which was a foreign company. 12. Thereafter the Commission, respecting the preliminary of the Article 258 TFEU, sent initially an informal letter and after that a warning letter (formal notice) asking the Spanish authorities to make their observations, requesting thus for information, details and objections. 13. In response to the warning letter (formal notice) from the Commission, Spain first referred to the need to serve the citizens of remote regions and vulnerable social groups as a justification for providing "Air-Andaluz" with the exemption from VAT and some other of tax privileges. Besides, it supported that the agreement between the company and the Spanish Government was ratified by a specific formal law of the State, legally and constitutionally voted by the Spanish Parliament that predominates over the general provisions. It also highlighted the contribution of the "Air-Andaluz" in boosting Spanish tourism, serving vulnerable social groups and guaranteeing employment for thousands of Spanish citizens, thus strengthening the Spanish economy, which is plagued by unemployment and recession. 14. Subsequently, the Commission was not convinced by the explanations and the argumentation of the Spanish side, and returned with a reasoned opinion that urged Spain to end the infringement of the EU Law and set a deadline of three months.
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15. The Kingdom of Spain refused vehemently to comply with the guidelines of the Commission. The latter submitted a reasoned opinion in which all the factual and legal grounds were included concerning the alleged violation of EU law by Spain, as a member state, announcing simultaneously the necessary measures that should be taken in order to end the violation and offered a twomonth deadline for the Spanish State to take action. However, the two month deadline expired without any further reciprocation by the Kingdom of Spain, and the Commission brought the case before the European Court of Justice. 16.
The questions that have to be addressed by the Court are:
(a) Whether the exemption from VAT and other tax obligations, may be considered as a financial aid from the Kingdom of Spain to "Air-Andaluz", consisting thus a distortion of the fair competition. (b) Whether the VAT imposed by the Spanish government to the airline companies constitutes discrimination on the ground of nationality. (c) Whether Spain violated the civil aviation security EU Regulation 300/2008.
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3. Bibliography 3.1 Basic EU legislation Treaty on the Functioning of the European Union (TFEU),(articles 18, 90-100, 107, 108)12, Official Journal of the European Communities of 26.10.2012, OJC C 326/47-389 Council Directive 2006/112/EC of 28th November 2006 on the common system of value added tax13, Official Journal of the European Communities of 11.12.2006, OCJ L 347/1-118 Council Regulation No 300/2008 of 11th March 2009 in the common rules in the field of civil aviation security and repealing Regulation No 2320/200214, Official Journal of the European Communities of 09.04.2008, OCJ L97/72-84 Council Regulation No 2320/2002 of the European parliament and of the Council of 16.12.2002 establishing common rules in the field of aviation security, Official Journal of the European Communities of 30.12.2002, OCJ L 355/1-21 Council Regulation No300/2008 of the European parliament and of the Council of 29.4.2008 on common rules in the field of civil aviation security and repealing Regulation (EC) No 2320/2002, Official Journal of the European Communities of 11.3.2008, OCJ L 97/72-84
3.2 References CHALMERS D., DAVIES G. & MONTI G., (2010), European Union Law, 2nd ed., Cambridge University Press FAIRHURST J., (2010), Law of the European Union, 8th ed., Pearson Education Limited ARNULL A., The European Union and its Court of Justice, 2nd ed., (2006), Oxford Law Library
All ECJ Cases can be found on http://curia.europa.eu/jcms/jcms/j_6/ &
http://curia.europa.eu/juris/recherche.jsf?pro=&nat=or&oqp=&dates=&lg=&la nguage=en&jur=C%2CT%2CF&cit=none%252CC%252CCJ%252CR%252C2008 E%252C%252C%252C%252C%252C%252C%252C%252C%252C%252Ctrue http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:12012E/TXT&from=en http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32006L0112&from=EN 14 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:097:0072:0084:EN:PDF 12 13
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3.3 Recommended for further research: 1) GEOFFREY GARRETT, R. DANIEL KELEMEN and HEINER SCHULZ, The European Court of Justice, National Governments, and Legal Integration in the European Union, (1998)“International Organization 52, 1, Winter 1998”- The IO Foundation and the Massachusetts Institute of Technology publications, pp. 149–17615 2) CLIFFORD J. CARRUBBA, MATTHEW GABEL and CHARLES HANKLA, Judicial Behavior under Political Constraints: Evidence from the European Court of Justice, (2008), American Political Science Review, Vol. 102, No. 4 November, American Political Association16 3) NIAL FENNELLY, Legal Interpretation at the European Court of Justice, (1996), Fordham International Law Journal, Volume 20, Issue 3 1996 Article 4 17 4) ALEC STONE SWEET and THOMAS BRUNELL, The European Court of Justice, State NonCompliance, and the Politics of Override, (2012), Yale Law School Legal Scholarship Repository, Faculty Scholarship Series Paper 463118
15 Retrieved by: http://www.seep.ceu.hu/alpsa/articles/garrett.pdf -lastaccess on 06.12.2015 16
Retrievedby:http://isites.harvard.edu/fs/docs/icb.topic741392.files/EuropeanJudges.pdf -lastaccess on06.12.2015
17Retrievedby:http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1526&context=ilj&seiredir=1&referer=http%3A
%2F%2Fscholar.google.gr%2Fscholar%3Fstart%3D50%26q%3D%2522european%2Bcourt%2Bof%2BJustice%2522 %26hl%3Del%26as_sdt%3D0%2C5#search=%22european%20court%20Justice%22–lastaccesson06.12.2015 18Retrievedby:http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=5639&context=fss_papers&seiredir=1&referer=http%3A%2F%2Fscholar.google.gr%2Fscholar%3Fstart%3D80%26q%3D%2522european%2Bcour t%2Bof%2BJustice%2522%26hl%3Del%26as_sdt%3D0%2C5#search=%22european%20court%20Justice%22 last accesson06.12.2015
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