thursday class
Tomorrow we will continue to think about the relationship between the EU courts and national courts. We have learned that the EU’s court system is different from that in the US. There are EU courts but there isn’t a whole system of EU courts distributed throughout the EU (no equivalent to federal district courts and federal courts of appeals). As a practical matter the ECJ/CFI operate under severe resource constraints. In addition, EU legislation works differently from US federal legislation, and that has implications for jurisdiction.
Let’s consider an example. If Bill in Florida wants to complain that he has been defrauded by Ted he has a claim under state law which will (usually) be heard in state court. Diversity would make a difference but there is no equivalent in the EU system, although there are rules which are applied to decide which state’s courts have jurisdiction over the dispute. There is a European Judicial Network on Civil and Commercial Matters with a website which helps people decide where and how they should bring their claims.
If Bill wants to complain that Ted defrauded him when Ted misled him about the value of a security Bill bought from Ted, and an instrumentality of interstate commerce was used, Bill may be able to sue Ted in federal court under the federal securities laws.
If Alice in the UK wants to sue Brenda for fraud she would sue in the UK. Actually she would have to decide which bit of the UK to sue in as the law in the different parts is different, and the court systems are different too (although not completely separate). In particular English and Welsh law is different from Scots law. Let’s imagine Alice is suing in England.
If Alice wants to sue for securities fraud, there may be relevant EU rules. For example there is a prospectus directive which harmonises the rules about what information disclosures should be made in the context of a public offering of securities. But although these directives may require the Member States to have effective measures in place to ensure compliance by issuers of securities with EU rules, there aren’t yet EU rules on civil liability for securities fraud. Even if the EU did harmonise rules on liability for fraud in securities transactions these rules would be likely to be contained in a directive which the Member States would be required to implement. So in such a case Alice would bring her case in the English court and would claim a right to damages based on the UK’s implementation of the EU directive.
If there was an issue about whether the UK had properly implemented the directive this issue could give rise to a preliminary reference to the ECJ. And there would be some complex questions about what would happen next (we’ll get to this part later).
So some of the differences between the US and the EU are structural (the court systems are different). Others derive from different characteristics of the legislative instruments (directives (which are generally used for harmonisation) are different from federal statutes (although regulations are less different)). Others derive from differences in the content of the EU and US rules.
After we have spent some time on preliminary references we will look at Arts. 226 and 227 again. If you read through to page 49 you should be well prepared for the class.