Like Ireland, Portugal was granted assistance by the EU with a view to remedying its excessive budget deficit resulting from the financial crisis of the latter half of the last decade. As part of the EU programme, Portugal was required to introduce various measures with a view to reducing, at least on a temporary basis, its public-sector pay bill.
In a 2014 statute, therefore, Portugal adopted a series of temporary cuts to the salaries of senior office-holders (including the president, the prime minister and senior judges – including members of the Court of Auditors – plus other public-sector employees. These reductions took effect on October of that year.
Ultimately, these pay cuts were gradually abolished as and from 1 January 2016, with full salaries being restored on 1 October of the same year.
Trade union of judiciary
The ASJP, a trade union of the Portuguese judiciary acting on behalf of the judges on the Court of Auditors, challenged the implementation of the 2014 law before the Portuguese Supreme Administrative Court (PSAC) on the basis that the relevant salary reductions infringed the principle of judicial independence under both the Portuguese constitution and EU law.
The PSAC stayed the proceedings and, in January 2016, referred a question to the CJEU for preliminary ruling under article 267 of the Treaty of the Functioning of the EU (TFEU).
In essence, the PSAC requested the CJEU to rule on whether article 19(1), second subparagraph, of the Treaty on European Union (TEU) means that the principle of judicial independence prevents the imposition of pay cuts on national judges.
Treaty on European Union
Article 2 TEU provides that the EU is founded on various common values, including respect for both democracy and the rule of law. Article 7 TEU aims at ensuring that all member states respect these common values.
Specifically, article 7(1) TEU contains a preventative mechanism that would only be activated in case of a ‘clear risk of a serious breach’ by a member state of one of the relevant common values, whereas the sanctioning mechanism enshrined in article 7(2) TEU may only be actioned in case of a ‘serious and persistent breach’ by a member state.
Broadly speaking, article 19 TEU provides for the establishment of the EU judicial system, including the CJEU and the general courts.
Specifically, article 19(1) TEU, first subparagraph, stipulates that each member state shall provide remedies to ensure effective legal protection in the fields covered by EU law.
The Charter of Fundamental Rights of the EU enshrines certain civil, political, social, and economic rights for EU citizens and residents into EU law.
The charter is split into various titles containing the main categories of rights, including dignity, freedoms, equality, solidarity, citizen’s rights, and justice.
For example, article 47 of the charter guarantees everyone the right to a fair and public hearing, within a reasonable time, by an independent and impartial tribunal established by law. The charter took full legal effect as and from the entry into force of the Treaty of Lisbon on 1 December 2009.
Under the charter, the EU must act and legislate consistently with each of the seven titles. Indeed, the European courts should annul the relevant provisions of any EU regulations, directives or decisions that contravene the charter.
In addition, article 51 of the charter stipulates that these titles are relevant to member states when they are implementing EU law.
For example, the charter applies when member states adopt or apply a national law implementing a directive.
National legislation that conflicts with the charter is subject to the doctrines of supremacy and direct effect of EU law, and national courts therefore must disapply any national laws that conflict with the charter.
However, in purely national situations, the charter is not justiciable – it is only binding on a member state when the latter acts within the scope of EU law.
Effective judicial protection
After rejecting the argument of the Portuguese government that the request for preliminary ruling should be declared inadmissible, the court considered whether the principle of judicial independence prevented the October 2014 to October 2016 salary cuts.
Focusing on the substance, the court stated that the second subparagraph of article 19 TEU applies to the “fields governed by [EU] law”, irrespective of whether member states are implementing EU law.
In short, this means that the material scope of article 19 TEU is broader than that of the charter. Accordingly, a case under national law may fall under the jurisdiction of the CJEU if the relevant court may potentially apply EU law.
(The fact that the CJEU’s judgment suggests that the scope of EU law is wider than that of the charter has been met with some surprise by commentators.)
Referring to article 2 TEU, the CJEU stated that the EU is based on various common values, including the rule of law. Member states and the trust between member states are based on these same values.
The court noted that, throughout the EU, justice should prevail. This means that any legal or natural person may seek to challenge the legality of any national measure based on EU law.
Considering that article 19 TEU makes flesh of the value of the rule of law contained in article 2 TEU, the CJEU held that the responsibility for ensuring the availability of judicial review in the fields covered by EU law falls not only on the CJEU/General Court but also on national courts and tribunals.
In other words, any national court or tribunal that may be called upon to adjudicate on a matter of EU law is part of the EU’s judicial system.
Accordingly, member states, by virtue of their duty of sincere cooperation contained in article 4(3) TEU, must ensure effective judicial protection in the fields covered by EU law, including the establishment of a system of legal remedies and procedures.
The CJEU stipulated that the existence of effective judicial review is of the very essence of the rule of law.
The court found that, since the Court of Auditors may, under national law, rule on questions of the use of the EU’s financial resources and/or on EU public-procurement issues, Portugal must ensure that it meets the requirements essential to effective judicial protection.
Noting article 47 of the charter, which provides that an independent tribunal is key to the fundamental right to an effective remedy, the CJEU found that the guarantee of independence of the European courts, as enshrined in article 19(2) TEU, also applies to national courts (when they operate in the fields governed by EU law.)
However, article 19 TEU is entirely silent regarding the independence of national judges.
The CJEU thus looks to other EU law provisions to support its reasoning, including the provisions of article 267 TFEU, whereby a court or tribunal must satisfy various criteria (including independence) before it can make a reference to the CJEU.
However, independence is a condition that a court/tribunal must meet, not a generalised obligation on member states.
Moreover, it is again curious that the CJEU finds support in the charter for the independence of judges, notwithstanding the fact that this body of law was sidelined for the purposes of its overall reasoning.
The court elaborates on what judicial independence entails. It found that this principle presupposes that any court in the EU system should exercise its adjudicatory role autonomously, without being subject to any hierarchical constraints.
Such courts should be able to take their decisions without any external interventions.
Moreover, judges should enjoy certain protection against removal from office and, also, be remunerated commensurate with the importance of their function. (The former finding sends a clear and unambiguous message to all member states.)
Focusing on the challenge by the ASJP, the court found that the temporary salary cuts for members of the Court of Auditors were broadly applied to senior office-holders/staff across the Portuguese political class/public service.
Accordingly, the court held that these reductions cannot be considered to undermine the independence of the relevant judges.
The CJEU’s reasoning in ASJP can best be understood by shifting attention from the south-west to the east of the EU.
While Poland is not mentioned in the judgment (indeed, there was no intervention before the court by it or other any third-party member state), the deterioration in the rule of law (in particular the reform of the national judicial system) in that member state is clearly at the forefront of the CJEU’s mind.
The court is also undoubtedly aware that the European Commission has initiated article 7(1) TEU proceedings against Poland.
However, there are significant hurdles in this process, not least in reaching the requisite majority of 80% of member states.
The threat to the rule of law in Poland has also been examined by the Irish courts. In a recent case, Poland sought the extradition of a Mr Celmer to face trial on drug-trafficking charges.
Celmer contested this request, grounding his plea on the risk of an unfair trial due to the apparent lack of independence of the Polish courts. In its 25 July 2018 judgment on a preliminary ruling in Case C-216/18 PPU – LM, the CJEU advised that the High Court must assess whether there was a real risk to the proposed defendant’s fundamental right to a fair trial.
On 19 November last, Donnelly J rejected Celmer’s application, stating that, although there appeared to be deficiencies in the Polish judicial system, they did not amount to a real risk to his right to a fair trial. (Celmer has since appealed this decision to the Supreme Court.)
In its Celmer judgment, the CJEU relied heavily on its reasoning in the ASJP case, again stating that independence is essential to effective judicial protection.
Indeed, given its justiciability, ASJP is likely to serve as a bedrock for other referrals from national courts under article 267 TFEU on matters arising from threats to the rule of law.
Moreover, it could also provide the legal basis for the European Commission to initiate infringement actions against Poland, Hungary (and other errant member states) in the event of continuing threats to this core EU value.