European Legal Terms

Some of the terms commonly encountered in business or in media discussions of Europe and of the EU.

Accession Admission to the EU of a country which was not one of the founding members (Belgium, France, Germany, Italy, Luxembourg and the Netherlands). See also, "New EU Accession Countries", below.

Acquis communautaire A French term roughly meaning: "established EU law and practice". The term is much used in EU legal situations, to include EU Primary Legislation, EU Secondary Legislation and the Decisions of the ECJ (all those terms are explained below), plus the policy commitments of the relevant EU community treaties. Countries which are accepted for EU membership must adopt the acquis communautaire, as it exists at the time of their "accession" (admission to the EU). The fact that the Decisions of the ECJ are included in the "acquis" (as it is often abbreviated) means that member countries (old and new) accept Primacy and the Direct Effect of EU law.

Approximation/Harmonisation of Laws The elimination of major disparities in the laws of the EU member countries which might cause substantial distortion in the functioning of the Single Market.

Basel I + II These are guidelines enunciated by the Basel Committee on Banking Supervision addressed primarily at the relationship between banking practices and legal reserve requirements (Basel I, formulated in 1988, set a minimum, simple ratio at 8%), with Basel II (scheduled to go into effect in 2006) specifying more realistic, adaptable and sophisticated minimum capital requirements, within the context of supervisory review processes and market self-discipline (risk management). Many banks, including large ones in the USA, intend to apply only the so-called A-IRB ("Advanced Internal Ratings Based") version of Basel II.

Block exemption An exemption from Article 81(1) of the EU Treaty (prohibiting certain activities having an anti-competitive effect) and which applies to a defined group of activities, arrangements or agreements, without the need for formal notification to any governmental agency or need to obtain an individual exemption for each such activity, arrangement or agreement.

Blue Book A detailed report published by the European Central Bank in August 2002 dealing with the payment and security settlement mechanisms in all EU member countries and in all New EU Accession Countries, also focussing on their e-money arrangements and card-based payment systems.

CAP The EU's Common Agricultural Policy, highly controversial mainly because it is massively supported by public funds and has greatly reduced EU reliance upon imports.

Cassis de Dijon Principle See, "Rule of Reason", below.

CE Mark (also known as CE Marking). This is a mark placed upon a product and constitutes a declaration by its manufacturer (whether based in the EU or not) that the product (wherever manufactured) complies with the relevant EU health, safety and environmental protection legislation. Such a mark is also sometimes referred to the as "Trade Passport to Europe" because it ensures the free movement of the product within the EU Single

Market. (CE stands for the French words "Conformite Europeenne"). Please see Chart on page 11 (Directive 93/68/EEC).

CEFTA (Central Free Trade Agreement). A treaty among four central European countries (Poland, Hungary, Slovakia, Czech Republic, formerly sometimes called the "Visegrad Group" or "V-4"), later joined by Bulgaria and Romania, with a view to establishing a tariff-free zone as among themselves (preparatory to full membership in the EU). See, "New EU Accession Countries", below.

Common Market A term sometimes formerly used to describe the EU, as an entity. Should not be confused with "Single Market", which is just one part of the EU structure and is still a valid term.

Community Customs Code Please see Chapter on "Trade Policy".

Council of Ministers (Brussels and Luxembourg) (also called the Council of the EU) should not be confused with the European Council (please see below). The Council of Ministers is made up of representatives of the governments of all EU member countries. The presidency of the Council of Ministers is held in turn by each member country for six months. Voting may be weighted in accordance with member country populations (QMV: Qualified Majority Voting). Regulations, Directives am Decisions of the Council, however (together with the various underlying EU treaties), form the core of EU legislation and the legislative process, although since the Single European Act was ratified (please see below) more legislative activity is shared with the European Parliament.

Court of Auditors (Luxembourg). Not a judicial court but an EU organisation which audits the revenues and expenditures of the EU.

CPC ("Community Patent Convention"). Please see Chapter on "Intellectual Property", page 70-71.

Decision of the EU Under Article 249 of the EU Treaty, a Decision is a measure of Secondary Legislation adopted by the European Parliament acting jointly with the Council of the EU and the European Commission, which is binding upon those to whom it is addressed (normally to member countries). Decisions tend to focus on specific issues or transactions, such as Decision 2003/216 (which addresses government assistance in one EU country to a specific local bank) and Decision 2/2002 (which addresses a large array of Swiss equipment components entitled to mutual recognition with similar ones from within the EU).

Direct Effect The legal principle under which EU law directly confers rights (or imposes obligations) upon individuals and business entities. A leading ECJ case is Van Gend en Loos (Case 26/62) [1963] ECR 1, followed by numerous similar cases (including many in the employment field). Sometimes "Direct Effect" is phrased in terms of "invocability" (the ability of a litigant to "invoke" some provision of EU law before a national court in a member country but one also encounters terms such as "vertical direct effect", "horizontal direct effect", "indirect effect" and "incidental effect").

Directives (more accurately "Council Directives"). Under Article 249 of the EU Treaty, a Directive is Secondary Legislation enunciated by the Council of Ministers, which is binding upon the EU member countries as regards the objective to be achieved, but leaving it to the national authorities to decide upon how the agreed objective is to be incorporated into their domestic legal system. See also, Primacy and Direct Effect, below. Older Directives (many still valid) were issued in the name of the "Council of the European Communities" (e.g., 76/207/EEC; 93/104/EEC). More recent ones are issued in the name of the "Council of the European Union" but may still retain the designation "EC" (e.g., 2000/78/EC). There is no legal difference.

Directorate General (DG) (Brussels). Agency divisions within the European Commission responsible for various political and commercial issues, such as: trade and industry; antidumping and countervailing duties; antitrust and competition; employment; environment; telecommunications; research and development; energy. Please see chapters on each subject.

EC European Commission (as below) but also sometimes used to mean "European Community", now the EU.

EEA (European Economic Area). A region of internal free trade (similar to the EU's Single Market). It consists of the 15 EU members, plus Iceland, Liechtenstein and Norway.

EEA (European Environment Agency) (Copenhagen). Information agency focussing on EU environmental issues.

EEC European Economic Community, former term for the EU, still encountered in older statutes and case law.

EFTA ("European Free Trade Association"), a free trade zone set up in 1960 under the Stockholm Convention by various countries that are now members of the EU. The remaining EFTA countries are Iceland, Liechtenstein, Norway and Switzerland.

EMU (Economic & Monetary Union). Platform through which a single currency was created (the Euro) and having as goals the completion of the Single Market by removing the uncertainty and the costs inherent in currency-changing transactions and by moving toward a common monetary and fiscal policy.

Euro (€) The EU monetary unit adopted pursuant to EMU by most EU member countries (12 out of 15). Countries that have adopted the Euro have their monetary policies administered by the European Central Bank.

Europe Agreements Agreements of association between the EU and candidate countries for EU membership, namely Central and Eastern European Countries ("CEEC"), establishing commercial, economic, social and political relationships and helping to prepare them for EU accession.

European Agency for Evaluation of Medicinal Products

(EMEA) (London). Agency that is responsible for granting marketing authorisation through a centralised procedure for specific pharmaceutical products. They grant successful applicants an EU authorisation valid in all member countries.

Law of Europe

European Central Bank (ECB) (Frankfurt). Intended to act like the Federal Reserve Bank in the USA (such as by imposing minimum reserve requirements and indirectly influencing interest rates and the monetary aggregate) but with primary emphasis on protecting the value of the Euro ("price stability") and on promoting market liberalisation. The ECB publishes monthly reports with useful data on member country economic activity (similar to the Federal Reserve's various periodical Bulletins).

European Commission (EC) (Brussels). Executive and civil service body of the EU, which also takes a role in promulgating and enforcing EU policy making and implements the legislation enunciated by the Council of Ministers. Regulations are sometimes issued in the name of the Council and sometimes in the name of the Commission. They also issue Recommendations, Notices and Guidelines.

European Community Treaty (ECT). A term sometimes used to refer to the Treaty of Rome, as variously amended and supplemented.

European Council This is a gathering of the Heads of State or Governments of the EU member countries, plus the current President of the European Commission. The function of the European Council is mainly to establish policy guidelines for EU member country integration.

European Court of Human Rights (Strasbourg). This is not a court which only operates with respect to the EU, since it also extends to all countries which have ratified the European Convention on Human Rights of 1950. All EU countries have ratified the Convention. Hence, claimants may assert rights under the EU "acquis", as well as via the Convention.

European Court of Justice (ECJ) (Luxembourg) and Court of First

Instance (CFI). The ECJ is the highest judicial authority in matters of EU law (although national courts also make decisions applying EU law). One of the ECJ's most important roles is to clarify the meaning and scope of EU law when cases are referred to it from national courts. The Court of First Instance is responsible for all direct actions against EU legal acts brought by natural and legal persons for actions for damages and for actions by EU staff, albeit subject to the legal supervision of the ECJ.

European Parliament (Brussels and Strasbourg). Not the EU primary legislative body (despite its name) and with considerably less power than legislative bodies in the member countries. Its elected members are called MEPs.

European Patent Office (EPO) (Munich). Agency for filing of applications for patents valid throughout the EU and some other European countries.

European Trademark and Designs Office (Alicante, Spain). Agency similar to the EPO but for trademarks and designs, operated by OHIM (Office for Harmonisation of the Internal Market), exclusively for EU countries.

Europol A European police organisation (operational since July 1999) which is adjunct to the national police authorities and is based in the Hague. Created pursuant to the Maastricht Treaty its main function hasbeen limited to information services directed at combatting drug trafficking, money laundering and terrorism. There is no "European police force", as such.

Eurostat European Union Statistical Office, based in Luxembourg, which publishes statistical information relating to the economies and trade of the EU member countries, often giving comparisons with major non-EU trading areas (USA, Japan).

European Union Treaty (EU Treaty). Term used herein to refer to the aggregate of EU treaties currently in effect which constitute EU Primary Legislation.

Exhaustion of Rights See, "Trademark Exhaustion", below.

Framework Program EU legislation in the form of outlines and guidelines by way of previewing and structuring forthcoming Secondary Legislation. A framework may be preceded by an EU "White Book" (also known as "White Papers") (proposing community action in some specific subject) and an EU "Green Book" (also known as "Green Papers") (carrying the process to a stage of political implementation, prior to proposing specific legislation). Examples are the 1985 White Book on the achievement of the Single Market (incorporating some 300 interrelated measures), the 1993 White Book on growth, competitiveness and employment, the 1995 White Book on an energy policy for the EU, the 1995 White Paper on steps to be followed by the New EU Accession Countries, the 2000 White Paper on environmental liability, the 2000 White Paper on food safety, the 2001 White Paper on a future EU chemicals policy. Numerous papers relate to an overall Trans-European Networks system ("TENs"), covering the fields of transportation, energy and the "information superhighway". There are also many Green Papers addressing general aspects of social welfare (such as two 2002 Green Papers on litigation and alternative dispute resolution mechanisms), the 2001 Green Paper on corporate responsibility and the 2000 Green Paper on problems confronting the cross-border litigant).

Harmonisation of Laws See, "Approximation/Harmonisation of Laws", above.

ICSID ("International Centre for Settlement of Investment Disputes"). A specialised agency of the United Nations, set up in 1966, for the voluntary arbitration and conciliation of disputes between UN member countries and foreign private investors.

Isoglucose Doctrine Named after an ECJ case referred from France and involving certain product quotas laid down by the EC without prior consultation with the European Parliament. The ECJ held that the quotas were void because they had been promulgated in violation of "the fundamental democratic principle that the people should take part in the exercise of power, through the intermediary of a representative assembly". Roquette Freres v. EC (Case C-138/79, decided 29 October 1980) [1980] ECJ 3333.

Lome Convention A Treaty (1975) among the EU and more than 70 countries in Africa, in the Caribbean and in the Pacific ocean region, granting the latter (known as "ACP" countries) certain non-reciprocal trading relationships. The Treaty has been superseded by the Cotonou Agreement of 23 June 2002 which envisages the establishment of an EU-ACP free trade area by the year 2020.

Marleasing Doctrine Named after an ECJ case arising out of a corporate dispute in Spain, the doctrine states that national courts have a duty to interpret and apply EU Secondary Legislation whether or not it has been specifically adopted into local legislation and even if national legislation on the same subject precedes the EU legislation (i.e., national legislation is the only current legislation on the "books" in the EU member country). Marleasing v. La Comercial International de Alimentation (Case C-106/89, decided 13 December 1990) 11990] ECR 1-4135.

Mutual Recognition Agreements (MRAs). Treaties which (e.g.) set up the basis for the US and the EU to recognise each other's testing, certification and inspection requirements, enabling US products to become more competitive in the EU. Compare "CE Mark", above.

Negative Clearance A declaration by the EC that in a specific case there is no basis for acting under the EU's antitrust rules with respect to an activity, arrangement or agreement.

New EU Accession Countries Term used to describe countries that have applied to join the EU by March 2004 (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia) and by 2007 (Bulgaria and Romania).

Official Journal of the EU ("OJ"). Where to find EU legislation. Formerly known as the Official Journal of the European Communities.

Parallel Import An importation into any EU member country of goods

through a distribution system which has not been set up or authorised by

the manufacturer or by the manufacturer's authorised distributors. Compare

"Trademark Exhaustion". /

Pillars Of the EU Common Foreign & Security Policy (CFSP); the ECJ; the Maastricht Treaty; various agreements on Justice & Home Affairs (JHA).

Preliminary Ruling A Decision by the European Court of Justice of a judicial case referred to it by a national court pursuant to Article 234 but treated as binding and of full legal effect, although called "preliminary". Since it was set up in 1952, the ECJ has issued thousands of Decisions on all aspects of EU Primary and Secondary Legislation (the latter now comprising more than 20,000 items of legislation by way of EU Regulations, EU Directives and EU Decisions).

Primacy The EU's constituent treaties do not specifically state that EU law takes precedence over national law. However, the ECJ took an early lead in reaching this conclusion, in order to establish uniformity and consistency in the overall legal order. Two leading cases are Costa v. ENEL

(Case 6/64) [1964] ECJ 585 and Simmenthal v. European Commission (Case 92/78) [1978] ECJ 629. Primacy and Direct Effect tend to be linked both conceptually and in practice.

Primary Legislation The treaties whereby the EU is created and member countries join it. See also, "Secondary Legislation".

Regulation. Under Article 249 of the EU Treaty, a Regulation is a form of EU Secondary Legislation which is binding within the EU member countries, without room for discretionary adoption. Examples of topics affected by Regulations: mergers; government subsidies; trade law; some banking law (especially as to EMU and the Euro, where adopted); most agricultural policy law; some laws on insolvency, insurance, Pharmaceuticals, telecommunications. Regulations are sometimes issued in the name of the Council (Council Regulations) and sometimes in the name of the Commission (Commission Regulations). There is no legal difference. Please see Chart at page 90-97.

Rule of Reason (also known as the Cassis de Dijon rule, after an ECJ case involving the French liqueur of that name). The principle of EU law that goods lawfully sold in one member country can be lawfully sold in all the other ones. The rule is sometimes referred to in the context of approximation/harmonisation of laws and sometimes in the antitrust context (in connection with Article 28 of the EU Treaty, prohibiting quantitative import restrictions between member countries). Rewe Zentral v. Bundesmonopolverwaltung filr Branntwein ("Cassis de Dijon" case) (Case 120/28 decided 29 February 1979) [1979] ECJ 649. The "rule of reason" concept entered the EU vocabulary in this context because the Court left open the possibility that there might be cases in which, such as for reasons of public health and safety, some quantitative import restrictions might be permissible.

Schengen Agreements Intergovernmental agreements whereby all EU countries except Ireland and the UK have relaxed or abolished their border controls, as to citizens from the other EU Schengen signatory countries. Not to be confused with the similar Schengen Convention (19 June 1991), to which Norway and Iceland are also signatories. Schengen is the town in Luxembourg where the original Schengen Agreement was signed (14 June 1985).

Secondary Legislation Regulations, Directives, EC Decisions and case law (Decisions of the ECJ and the CFI). See also, "Primary Legislation", above.

Single European Act (SEA). This treaty (1 July 1987) was the first significant treaty amending the terms of the Treaty of Rome and most of its terms have been taken up into later treaties. However, it advanced the notion of a Single Market and closer political cooperation among the EU member countries.

Single Market (sometimes called the "Internal Market" and "Single European Market" (SEM)). Based upon the original premise of the EU, that there should be free movement of people, capital, goods and services within the union (sometimes also variously referred to as a "right of

establishment" and the "four freedoms"). Not to be confused with the EEA (above), although the free trade aspects of the EU (SEM) and the EEA are quite similar. In addressing issues inherent in the concept of a "Single Market", it is helpful to distinguish among a "free trade area" (members abolish internal tariffs and quotas but have their own policies with non-members), a "customs union" (same as the foregoing but the members have a common policy towards non-members), a "common market" (same as a customs union with the added liberalisation of free movement among members of the means of production, such as labour and capital) and an "economic union" (a common market in which there is also complete unification of monetary and fiscal policy).

Subsidiarity An EU legal doctrine suggesting that EU decisions should be taken at the lowest local political level consistent with effective action.

TEU (Treaty of European Union). Another name for the Treaty of


Trademark Exhaustion. Concept that if a trademark owner has consented to the distribution of the trademarked products in any member country of the EU, the owner has exhausted (that is: used up, forfeited) any right to object to their distribution in any other EU member country. Compare "Parallel Import", above.

Treaties: Rome. (25 March 1957). Basic instrument establishing economic integration among the original six founding member countries (France, Germany, Italy, Benelux countries).

Maastricht. (7 February 1992). Launch of EMU and formal establishment of the EU, with enhancement of powers of certain EU government agencies.

Amsterdam. (2 October 1997). EU becomes a "legal personality" and some central power is further consolidated. The principal focus areas of the treaty include (a) placing citizen and employment rights at the centre of the EU's social agenda; (b) the concept of EU citizenship; (c) confirming the means whereby to eliminate any remaining obstacles to freedom of movement and (d) affirming a general commitment to create "an ever closer union among the peoples of Europe".

Nice. (26 February 2001). Further moves towards centralisation and EU enlargement (including admission of former Soviet satellites, as "New EU Accession Countries").

Wasenaar Arrangement Named after the town in the Netherlands where it was formulated (12 July 1996), this is an agreement among all the EU member countries (plus Norway, Switzerland and most of the New EU Accession Countries, as well as Canada, Japan, Russia and the USA) to contribute to regional and international security and stability, by monitoring and controlling the export of conventional arms and dual-use goods and technologies. Please see the Chapter on "Trade Policy" and EU Regulations 1334/2000 and 149/2003 (Chart on pages 96-97).

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