Procedural Issues Relating to EU Law in the Estonian Supreme Court

• Author: Carri Ginter
• Position: LL.M., Lecturer of European Law, University of Tartu, Attorney-at-law, Sorainen Law Firm
• Pages: 67-79

Carri Ginter

LL.M., Lecturer of European Law, University of Tartu, Attorney-at-law, Sorainen Law Firm

Procedural Issues Relating to EU Law in the Estonian Supreme Court

1. Introduction

Estonia, being a small but very 'pro-European-Union' country with a liberal approach to economy ¹ and law, has shown a remarkable willingness to adapt to European Community (EC) principles such as supremacy, direct effect, and consistent interpretation, led in this by its Supreme Court (Riigikohus). The Supreme Court has not hesitated to confirm unconditional supremacy of EC law (even over the Constitution) or apply directive consistent interpretation of national law. These questions have been addressed in other publications of this author². This article seeks to address aspects of procedural law that have surfaced during the first three years of post-accession jurisprudence. Although the relevant case law in Estonia is not voluminous, there are important questions nonetheless, which deserve academic attention.

In the pre-accession period, Estonian legislation was significantly amended to implement the substantive law of the EC. Few or no amendments were made to the laws regulating court procedure. On the date of accession, the procedural laws even lacked provisions referring to the existence of the European Court ³ and the preliminary rulings procedure⁴. Equally, there was no regulation regarding other possible procedural nuances arising out of the need to apply EC law. As a result of this lack of regulation, internal courts were faced with challenging choices when interpreting and applying internal rules, which were not designed to work in 'the new legal order'.

Although there were no references for preliminary rulings until 2007 by Estonian courts ⁵ , this article still focuses on issues related to the preliminary rulings procedure. This includes discussing acte clair and acte éclairé ⁶ and questions regarding what effect arises from a pending challenge to secondary Community law in the European Court to internal proceedings that relate to the same issue or norm. In some contexts, alternative solutions to those used by the courts are proposed.

It was almost two years after Estonia's accession to the European Union (EU) when in late April of 2006 issues relating to preliminary rulings were first addressed by the Supreme Court⁷. An administrative court (halduskohus)had suspended a pending case regarding tax claims for surplus stock during accession⁸. The Supreme Court had to deal with the question of whether Poland having challenged the validity of the regulation under an action for annulment in the Court of First Instance ⁹ (CFI) would serve as sufficient grounds for suspending the administrative court case where the same regulation was of significance and of what would be the correct legal basis for such suspension.

In March 2006, the Civil Chamber of the Supreme Court decided not to ask for a preliminary ruling in a case demanding interpretation of national law in the light of the Trade Mark Directive¹⁰. In this case, the court for the first time relied on the concept of acte éclairé and elaborated on the grounds on which a national court against whose decisions there is no further recourse is permitted to refrain from making a reference to the Court of Justice of the European Communities (ECJ).

In October 2006, the Administrative Law Chamber of the Supreme Court decided not to ask for a preliminary ruling in a case relating to taxation of surplus stocks at the time of Estonia 's accession to the EU¹¹. This time, the court decided that it was relieved of the obligation to make a reference, on the basis of acte clair.

Three years after Estonia 's accession in - mid-May 2007 - the first reference for a preliminary ruling was made by the Supreme Court, in a case concerning support for rural development¹². This first reference serves as a potential demonstration of style for further references by the Estonian courts.

In June 2007, the Administrative Law Chamber of the Supreme Court applied EC law discussing agricultural supports¹³. Even though the Estonian Agricultural Registers and Information Board (ARIB)asked the court to make a reference for a preliminary ruling, the Supreme Court resolved the matter without asking the ECJ for its assistance. The Supreme Court annulled the administrative discretionary measure on the basis of lack of reasoning.

The few rulings and decisions referred to above serve as a basis for drawing preliminary conclusions regarding how the rules related to the system of preliminary rulings have been accepted and applied by the Supreme Court.

2. Challenging the validity of Community acts as a basis for suspending internal proceedings

It is a known fact that at times court cases are put on hold for compelling reasons. On the basis of the principle of procedural autonomy, the Member States of the EU are more or less at liberty to lay down their own rules regarding this issue, provided that the general principles of European law are abided by¹⁴. In Estonia , the suspension of proceedings in administrative court cases used to be covered by the Code of Administrative Court Procedure ¹⁵ (CACP).

The CACP provided for situations where the administrative court was required to suspend proceedings and where suspension of the proceedings was at the court's discretion. The administrative court was required to suspend proceedings when the party to the proceedings had died or the relevant legal person had been dissolved or when a person's legal capacity had been restricted¹⁶. The administrative court was required to suspend the proceedings also "if the hearing of a matter is not possible before the adjudication of another matter, until the entry into force of the decision"¹⁷. The administrative court had the right to suspend proceedings upon certain conditions in cases of illness, in the event of long-term official business travel, and upon the request of the parties to a public-law contract. The administrative court also had the right to suspend the proceedings "during the time when the constitutional review matter is adjudicated in the proceedings of the Supreme Court, until entry into force of a judgement made in the matter, if this may affect the validity of legislation of general application subject to application in the administrative matter".

The CACP contained no explicit reference to proceedings taking place in the ECJ or CFI. The Code of Civil Procedure(CCP) contains from 1 September 2006 a clear obligation for the internal court to suspend proceedings where it has made a reference for a preliminary ruling¹⁸. The CCP does not address other potential types of litigation in Luxembourg . Therefore it was not, and still is not, obvious how a pending action for annulment in the CFI initiated by a third party or a preliminary rulings procedure in the ECJ commenced in a different case relates to the court's right or obligation to suspend the proceedings.

In the case analysed here ¹⁹ , the applicant challenged a directive of the Ministry of Agriculture determining the amount of surplus stocks of rice and a tax notice of the Estonian Tax and Customs Board, which ordered the applicant to pay approximately 25,000 EUR in additional tax on the surplus stock.

Regulation EC 1972/2003 (the Surplus Stock Regulation) places an obligation on Estonia to levy charges on holders of surplus stocks as of 1 May 2004, for products in free circulation²⁰. On the basis of the Surplus Stock Regulation, Estonia adopted the Surplus Stock Fee Act ²¹ (SSFA), introducing rules on determination of surplus stocks. This legal framework will be of importance also for the discussion of the application of the acte clair exception, below²². For the case at hand, it is sufficient to note that the applicant did not want to pay the tax that was claimed from it on the basis of the SSFA (which, in turn, was related to the Surplus Stock Regulation). As mentioned above, the Surplus Stock Regulation was challenged by Poland in the CFI under article 230 EC proceedings²³.

The applicant in the proceedings challenged provisions of the SSFA, arguing that they were contrary to the Estonian Constitution ²⁴ ; namely the principle of proportionality; the right to freely choose one's own area of activity, profession, and place of work; the right to engage in enterprise and to form commercial undertakings and unions; the right to property and principles of legal certainty; and others. The applicant also considered the ex post imposition of taxes to be retroactive punishment. The administrative court found that Poland 's action for annulment of certain provisions of the Surplus Stock Regulation could in principle have an effect on the amount of tax to be imposed on the applicant and thus suspended the internal proceedings²⁵. The administrative court held that, before ruling on a case, the court must ascertain whether the provisions of the SSFA are in accordance with European law and whether the provisions of the Surplus Stock Regulation are legally applicable. Should the Surplus Stock Regulation be partially annulled, the question arises of whether the SSFA can still be applied. Interestingly enough, the court pointed out that the court would have no doubts as to the validity of the regulation except for the fact of the existing challenge by Poland ²⁶. The court relied by analogy on the provision of the CACP that allowed suspension of the proceedings during the time when the constitutional review matter was being adjudicated in the Supreme Court²⁷.

The ruling suspending the proceedings was appealed by the Estonian Tax and Customs Board. The appellant argued primarily that if the court...