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CJEU rules that it has jurisdiction over breaches by a Member State of WTO law

  • 08/10/2020
  • Articles

On 6 October 2020, the Court of Justice of the European Union (CJEU) issued its judgement in Case C-66/18. The case related to the infringement proceedings brought by the Commission against Hungary in relation to its treatment of the Central European University (CEU) and more in general the requirements which Hungary applied to foreign higher education institutions seeking to supply services in its territory. The Court ruled that its jurisdiction in infringement proceedings brought by the European Commission against a Member State on the basis of Article 258 of the Treaty on the Functioning of the European Union (TFEU) extends to a Member State’s failure to fulfil its obligations under World Trade Organization (WTO) law. The CJEU found breaches of the national treatment obligation under the WTO General Agreement on Trade in Services (GATS), provisions relating to academic freedom, the freedom to found higher education institutions and the freedom to conduct a business in the Charter of Fundamental Rights of the European Union, and the freedom of establishment and the free movement of services.

The judgment signals that the CJEU may review any Member State measure falling within the scope of the WTO agreements and affecting trade with third States. The reasoning of the CJEU is that those agreements, which are an integral part of EU law, fall within the European Union’s exclusive competence for the common commercial policy (Article 207 TFEU) and the European Union must ensure that it observes its WTO obligations. By exercising jurisdiction in this type of proceeding, the CJEU found that it could contribute to avoiding that the European Union be held responsible for a Member State’s breach of WTO law by the WTO dispute settlement bodies. The CJEU also relied on the consideration that its judgments do not bind the WTO dispute settlement bodies or any third State seeking resort to WTO judicial remedies. The CJEU did not address the distinction between that legal effect of its judgments and the compulsory and exclusive jurisdiction of WTO dispute settlement bodies to resolve disputes between WTO Members, such as Hungary or the European Union and third States, about the interpretation and application of the WTO agreements.

This judgment indicates that third States or economic operators outside the European Union having concerns about a Member State’s compliance with WTO law may now consider the benefits of judicial remedies available under both EU and WTO law. The judgment’s relevance extends also to other international agreements that could be breached as a result of a Member State measure affecting third States or foreign actors. At the same time, the judgment was limited to the context of infringement proceedings. The judgment does not mean that WTO law is now directly applicable and can be invoked by private parties before the CJEU.

The French version of the judgment is available here. An English version will become available at a later date.

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