Defective vaccines and burden of proof : no need for scientific consensus to compensate victims and no irrebutable presumption at the expense of the pharmaceutical industry

Judgment
C-621/15
21.06.2017
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Request for a preliminary ruling N. W and others
v.
Sanofi Pasteur MSD SNC and others
Court of Justice2nd ChamberA. PrechalM. BobekLiability for defective products
Keywords“Reference for a preliminary ruling — Directive 85/374/EEC — Liability for defective products — Article 4 — Pharmaceutical laboratories — Vaccination against hepatitis B — Multiple sclerosis — Proof of defect of vaccine and of causal link between the defect and the damage suffered — Burden of proof — Methods of proof — Lack of scientific consensus — Serious, specific and consistent evidence left to the discretion of the court ruling on the merits — Whether permissible — Conditions”
Significant pointsThis request for a preliminary ruling concerned the interpretation of Article 4 of Directive 85/374/EEC on liability for defective products. It involved Mr J. W’s three heirs acting against the pharmaceutical producer Sanofi Pasteur, as well as an independent pension and insurance fund. The applicants invoked Sanofi Pasteur’s liability for an allegedly defective vaccination against hepatitis B produced by the latter that would have led to Mr W’s multiple sclerosis causing his death.

The three members of the family first sought, on the basis of the French Civil Code, compensation for the damage they and Mr W had suffered due to the administration of the vaccine. The main issue in the present case was to prove the causal link between the defect in the product and the damage suffered by the person injured. In this regard, the French Cour de cassation referred three preliminary questions to the CJEU, which had to interpret Article 4 of Directive 85/374 operating a complete harmonisation of the laws, regulations and administrative provisions of the Member States.

According to Article 4 of the aforementioned directive, the burden of proof lied with the victim but no other provision specified how such proof was to be made out. Therefore it was for the national courts to establish the rules in compliance with the principles of procedural autonomy, of equivalence and of effectiveness (para. 25). The CJEU considered that the victim was not obliged to produce in all circumstances certain and irrefutable evidence of the defect, the damage and the causal link between them. In fact national courts were allowed to accept serious, specific and consistent evidence in order to prove, with a sufficiently high degree of probability, that the alleged facts corresponded to the reality of the situation (para. 28 and 43). Especially when, as in the present case, proof based on medical research neither confirmed nor ruled out the existence of a causal link, excluding any method of proof other than certain proof based on medical research would have made it excessively difficult or even impossible to establish producer liability (para. 31).

However national courts had to ensure that the evidence provided was sufficiently serious, specific and consistent to consider that the defect in the product had to be the most plausible explanation for the occurrence of the damage. Accordingly, the defect and the causal link could reasonably be considered as established (para. 37). In the present case, the CJEU judged that the temporal proximity between the administering of a vaccine and the occurrence of the disease, the lack of personal and familial history of that disease and the existence of a significant number of reported cases of the disease occurring following such vaccines being administered were sufficiently serious, specific and consistent in order to discharge the victim’s burden of proof (para. 41).

Finally, for the cases where medical research neither established nor ruled out the existence of a link between the vaccine and the disease, the CJEU added that Article 4 of Directive 85/374 precluded national evidentiary rules that would automatically presume the existence of a causal link between the defect attributed to the vaccine and the damage suffered by the victim if certain predetermined causation-related factual evidence was present (para. 55). Assuming the contrary would create an irrefutable presumption with the risk of compromising the effectiveness of the liability system created by the directive and would be contrary to the principle that the victim had to bear the burden of proof (para. 53).
NoteworthyThis is a very sensitive topic as it implies public health issues as well as the sustainable level of financial responsibility burdening on the pharmaceutical industry which remains one of the key sectors of the European economy. On the one hand, one could criticize the fact that the vaccine producer’s liability had been established even if no scientific proof had been provided to confirm that its vaccine did lead to multiple sclerosis. However, any other conclusion would render the proof excessively difficult for every layperson having become a victim of such medical procedures. On the other hand, the reject by the CJ of an irrebuttable presumption if certain predetermined causation-related factual evidence is present has to be welcomed and is in line with its case law and that of the European Court of Human rights, according to which presumptions of responsibility – at least in criminal matters in a wide sense (including competition law) - must always be rebuttable.

Transmission of orders for financial instruments does not necessarily come within the scope of MiFID

Judgment
C-678/15
14.06.2017
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Request for a preliminary ruling Mohammed Zadeh Khorassani
v. Kathrin Pflanz
Court of Justice4th ChamberC. VajdaM. Campos Sánchez-BordonaMarkets in financial instruments
KeywordsReferences for a preliminary ruling — Directive 2004/39/EC — Markets in financial instruments — Article 4(1)(2) — Definition of ‘investment services’ — point 1 of Section A of Annex I — Reception and transmission of orders in relation to one or more financial instruments — Potential inclusion of brokering with a view to concluding a portfolio management contract
Significant pointsThis case concerned the interpretation of Article 4(1)(2) of Directive 2004/39/EC on markets in financial instruments (MiFID) regarding the notion of ‘investment services”. It related to a brokering performed by Ms Pflanz of an asset management agreement concluded between Mr Khorassani and a third party. Ms Pflanz did not hold any authorisation for providing financial services in accordance with the German law on the financial services and therefore the question arose as to whether she did or not provide Mr Khorassani with investment brokering services by encouraging him to sign an asset management agreement.

The German Federal Court of Justice referred a preliminary question to the CJEU asking whether Article 4(1)(2) of Directive 2004/39, read in conjunction with point 1 of Section A of Annex I of the aforementioned directive, meant that brokering with a view to concluding a contract covering portfolio management services was considered as an investment service knowing that the latter consisted in the reception and transmission of orders in relation to one or more financial instruments.

First of all, the CJEU clarified that the relevant provision had to be interpreted in consideration of its wording but also of the context in which it occurred and the objectives of the legal framework of markets in financial instruments. On the one hand, the CJEU judged that even if the notion of “orders” was not defined in the directive, orders were deemed to be an investment service under point 1 of Section A of Annex I to the directive, which is defined as the purchase or sale of one or more financial instruments (para. 32). This interpretation was in line with the definition of Article 4(1)(5) and the other provisions of Directive 2004/39 (para. 31).

On the other hand, even if one of the objectives of Directive 2004/39 was to guarantee investor protection (para. 41), the latter could not justify such a broad interpretation of “investment service” that would include the brokering with a view to concluding a contract covering portfolio management services (para. 42). In fact, such an interpretation would run counter to the context of which point 1 of Section A of Annex I to Directive 2004/39 formed part (para. 43).
NoteworthyThe present judgment reinforces the legal certainty as it clarifies the notion of “investment services” under Article 4(1)(2) of Directive 2004/39, read in conjunction with point 1 of Section A of its Annex I and the context of the Directive. The reception, transmission and execution of orders fall within the ambit of MiFID only if they directly relate to a financial instrument. The sole fact that MiFID aims at protecting investors is not sufficient to extend its field of application in a way which would be incompatible with its wording and its general scheme. Reasoned in a rigourous and rather detailed way, this judgment has to be approved.

Discrimination between banks providing savings accounts: a judgment good on principle but short on clear guidance

Judgment
C-580/15
08.06.2017
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Reference for preliminary rulingMaria Eugenia Van der Weegen v. Belgische StaatCJEU5th Ch.M. BergerN. WahlFreedom to provide services
KeywordsReference for a preliminary ruling — Free provision of services — Tax legislation — Income tax — Tax exemption reserved to interest payments by banks complying with certain statutory conditions — Indirect discrimination — Banks established in Belgium and banks established in another Member State
Significant pointsThe question referred to the CJ was whether or not the free provision of services and the free movement of capital must be interpreted as precluding a national tax exemption system, which is reserved de facto to income from savings deposits held with banks in Belgium. It followed upon a judgment of the CJ in June 2013 (C-383/10) holding that by reserving in an absolute way such an exemption to the savings deposits located in Belgium, a tax system infringed the free provision of services and required a (rather cosmetic) change to the regime. In this case, although the tax system was applicable without distinction to income received from savings deposits held with both banking service providers established in Belgium and also those established in other Member States of the EEA, the conditions which needed to be complied with in order for the tax exemption to apply meant that in effect it was reserved to banks in Belgium.

In the case at issue, Belgian residents had applied for the tax exemption regarding the income generated by savings deposits which were held with banking service providers established in Member State other than the Belgium. The Belgian administration refused the exemption to these taxpayers on the grounds that those financial institutions could not demonstrate that the savings deposit held with them complied with conditions similar to those applicable to Belgian regulated savings deposits. The applicants brought an action, therefore, before the national court which referred the ruling to the CJ.

The CJ decided to examine first the ruling in the light of Article 56 TFEU. Then, the CJ recalled that banking services constitute a service within the meaning of Article 57 TFEU.

The judges then looked at the conditions of the tax exemption at issue, namely that the deposits must be limited in order to distinguish them from a current account and that the remuneration received on savings deposits must necessarily and exclusively consist of basic interest and a fidelity premium. The judges held that there was no system of saving deposits in the EU that complied with the conditions laid down by the Belgian legislation other than those in Belgium. Thus, the CJ found that the national law, although applicable without distinction, has the effect of discouraging Belgian residents form using the services of banks established in those other Member States and from opening or keeping savings accounts with those latter banks since those deposits cannot benefit from the tax exemption.
Then, in a second step, the CJ determined whether such impediment could be justified by the reasons presented by the Belgian government. The latter argued that the national legislation aimed at contributing to consumer protection since it was crucial for Belgian residents to have a savings account that was sustainable, protected, stable and risk-free so as to cover their significant or unforeseen expenses. Even though it will be for the national judges to verify whether the restriction can be justified, the CJ stated that none of the arguments presented would be necessary to attain the objective argued by the Belgian government.

As a result, the CJ ruled that Article 56 TFEU and Article 36 of the EEA Agreement must be interpreted as precluding such national legislation which provides tax exemptions only to saving deposits held by Belgian banking service providers.
NoteworthyEven though not completely wrong, this judgment lacks coherence, precision, clarity and forcefulness.

First, the judgment states, on the one hand, that it is up to the referring national court to verify whether the legislation at issue addresses an overriding objective in the public interest, such as consumer protection (paragraph 40) and, if so, whether it does not go beyond what is necessary to attain that objective and complies with the principle of proportionality (paragraph 41). On the other hand, the CJ states that none of the arguments presented before it calls for the need for the conditions laid down in the national provision to attain the objective of consumer protection so that the latter cannot be invoked. Finally, the Court took the view that the national provision at hand infringes the free provision of services since it imposes conditions for access to the Belgian banking market on service providers established in other Member States, this being however a matter for the referring court to verify (paragraph 45 and operative provision of the judgment). What an excessively flexible reasoning! It leaves the door open for the national court to “save” an unjustifiable restriction to the free provision of services and could result in dozens of disputes before the national courts, like the former Parodi judgment (C-222/95 on 9 July 1997) of the CJ regarding banking loans. In our opinion, such a low level of argumentation does not fulfil the task assigned to the CJ to ensure that the interpretation and application of the Treaties is observed. After a first statement of non-fulfilment of its EU duties against Belgium in 2013 and the lack of a second request of statement of failure to enforce this judgment by the EU Commission, this recent judgment is unsatisfactory. It does not contribute in a decisive way to the effective application of EU law and to some extent constitutes an implicit encouragement to the Member States not to comply with judgments on the failure to meet their EU obligations.

Second, on the level of the legal principles, the CJ has missed an opportunity to acknowledge at least partially a principle of mutual recognition of services comparable to the principle of mutual recognition of goods as expressed in the Cassis de Dijon judgment. According to the latter, products lawfully produced in a Member State can also be marketed and sold in another Member State without restriction, except in case of overriding reasons of public interests. Indeed, where clients resort to banks located in another Member State (hypothesis of passive free provision of services), it is sufficient that the service provider complies with the law of the Member State of the bank.

On this judgment, see also Philippe GALLOY, “L’Europe condamne à nouveau le compte d’épargne belge », L’Echo, 8 June 2017.

The EU General Court awards damages to a company for the excessive length of time taken to deal with its appeal

Judgment
T-673/15
07.06.2017
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Non-contractual liabilityGuardian Europe S.à r.l.General CourtThird Chamber, Extended CompositionE. Bieliūnas/Non-contractual liability
KeywordsNon-contractual liability — Representation of the European Union — Barring of actions — Nullification of the legal effects of a decision which has become final — Precision of the application — Admissibility — Article 47 of the Charter of Fundamental Rights — Obligation to adjudicate within a reasonable time — Equal treatment — Material damage — Losses sustained — Loss of profit — Non-material damage — Causal link
Significant pointsIn its judgement, the GC ordered the EU, represented by the institution of the Court of Justice, to pay compensation to Guardian Europe Sàrl for the material damage sustained by that company because of the infringement by the EU General Court of its obligation to adjudicate within a reasonable time.

In the case at issue, Guardian Europe Sàrl, a Luxemburgish company, was fined € 148 million by the EC for its participation in a cartel in 2007. The company brought an action for annulment before the GC against the Commission’s decision. However, the ruling was only rendered in 2012 (Case T-82/08), more than four years after Guardian Europe Sàrl introduced its appeal. The company decided to bring an action before the CJ for liability under Article 340 TFEU on the part of the EU in order to seek compensation for the damages which it allegedly sustained. It pleaded, first, a sufficiently serious infringement of the principle of equal treatment in the Commission’s decision and in the 2012 GC’s judgment and secondly that there was an infringement of the obligation to adjudicate within a reasonable time as regards the 2012 judgement. The CJ rendered its judgment in 2014 finding the table and sent EU the case back to the GC/

The GC recalled that, according to settled case law, Article 340(2), TFEU required the satisfaction of three cumulative conditions in order to create a right of compensation. These conditions are the unlawfulness of the conduct of which the institutions are accused, the fact of damages incurred and the existence of a causal link between that conduct and the damages complained of.

As regards the GC’s judgment, the applicant alleged that the length of the proceedings at first instance infringed the obligation to adjudicate within a reasonable time and thus that the infringement caused Guardian Europe damage, which had to be compensated.

The GC found that the procedure Case T-82/08 infringed Article 47(2) of the Charter of Fundamental Rights of the European Union by holding that the length of the proceedings, which took four years and seven months, could not be justified. Notably, the judges pointed out that three years and five months (forty-one months) elapsed between the end of the written part and the opening of the oral part of the procedure (the hearing). According to case law, the GC recalled that a period of 15 months between the end of the written part of the procedure and the opening of the oral part of the procedure is, in principle, an appropriate length of time for cases dealing with the application of competition law. In the present case, the GC found that, during the period of forty-one months, a period of 26 months of inactivity was thereby unjustified. Consequently, the GC judged that Case T-82/08 infringed Article 47(2) of the Charter by exceeding the reasonable time for adjudicating in that case and that constituted a sufficiently serious breach of a rule of EU law intended to confer rights on individuals.

On the alleged damages and the alleged causal link, the GC only accepted to acknowledge the existing link between the infringement of the obligation to adjudicate within a reasonable time in Case T 82/08 and the occurrence of the damages sustained by the applicant as a result of its having paid bank guarantee costs during the period in which the reasonable time for adjudication was exceeded. The damages were estimated at EUR 654 523.43, which was adjusted for compensatory interest. However, the GC did not accept the non-material damages invoked by the applicant since the latter did not prove that the infringement of the obligation to adjudicate within a reasonable time in Case T 82/08 was such as to damage its reputation.
NoteworthyThe present case follows the ruling in Gascogne (T-577/14) and Kendrion (T-479/14) where the GC also ordered the EU to pay compensation because of the excessive length of the proceedings before the ECJ. Although the sum of damages accorded is significant and shows the material impact that long judicial proceedings can have on undertakings, the amount obviously pales in comparison to the fine of € 148 million imposed by the European Commission (0.4%). The comparison offers a reminder of how high fines for competition law infringements can be, their calculation being based on the companies’ turnover on the market concerned. Nonetheless, the award of damages demonstrates that the General Court must process cases within a reasonable time.