GW Law Faculty Publications & Other Works Faculty Scholarship 2000 Subsidiarity and Self-Interest: Federalism at the European Court of Justice Edward T. Swaine George Washington University Law School, [email protected] Follow this and additional works at: https://scholarship.law.gwu.edu/faculty_publications Part of the Law Commons Recommended Citation Harvard International Law Journal, Vol. 41, No. 1, Winter 2000 This Article is brought to you for free and open access by the Faculty Scholarship at Scholarly Commons. It has been accepted for inclusion in GW Law Faculty Publications & Other Works by an authorized administrator of Scholarly Commons. For more information, please contact [email protected]. Volume 41, Number 1, Winter 2000 Subsidiarity and Self-Interest: Federalism at the European Court of Justice Edward T. Swaine* INTRODUCTION The problems of federalism are both profound and urgently prac- tical. No one is entirely sure what the term “federalism” means,1 or why it is desirable.2 Almost everyone, however, appreciates the * Assistant Professor of Legal Studies, The Wharton School, University of Pennsylvania. A.B., Harvard, 1985; J.D., Yale, 1989. Research for this Article was begun at the Centre for Advanced Legal Studies at the Katholieke Universiteit Leuven, and I would like to thank staffs at the C.A.L.S. and the University of Pennsylvania Law School for their assistance. I received valuable comments at a Wharton faculty workshop, and from Richard Shell and Eric Orts on an earlier draft. 1. See Ivo D. Duchacek, Comparative Federalism: An Agenda for Additional Research, in Constitutional Design and Power-Sharing in the Post-Modern Epoch 23 (Daniel J. Elazar ed., 1991) (noting that “students of federalism remain severely handicapped in their search for explanations by their failure to agree on what federalism is”); see also Frederick K. Lister, The European Union, the United Nations, and the Revival of Confederal Governance 19 (1996) (observing that the estimated number of federal systems ranges from 4 to 44); Ingolf Pernice, Harmonization of Legislation in Federal Systems: Constitutional, Federal, and Subsidiarity Aspects, in Harmonization of Legislation in Federal Systems: Constitutional, Federal and Subsidiarity Aspects—The European Union and the United States of Amerika Compared 13 (Ingolf Pernice ed., 1996) (noting that as of 1984, some 497 different adjec- tives had already been employed before the term “federalism” in the scholarly literature). This Article employs the term broadly to facilitate comparison. See Koen Lenaerts, Con- stitutionalism and the Many Faces of Federalism , 38 Am. J. Comp. L. 205, 263 (1990) (“Federalism is present whenever a divided sovereign is guaranteed by a national or suprana- tional constitution and umpired by the supreme court of the common legal order.”); see also Koen Lenaerts, Federalism: Essential Concepts in Evolution—The Case of the European Union, 21 Fordham Int’l L.J. 746, 747–52 (1998); Larry Kramer, Understanding Federalism, 47 Vand. L. Rev. 1485, 1488 n.5 (1994). 2. See David L. Shapiro, Federalism: A Dialogue 34–58 (1995) (summarizing case to be made for strong national authority); id. at 75–106 (case for preserving state authority); Barry Friedman, Valuing Federalism , 82 Minn. L. Rev. 317, 378–412 (1997); see also Gerald L. Neuman, Subsidiarity, Harmonization, and Their Values: Convergence and Divergence in Europe and the United States, 2 Colum. J. Eur. L. 573, 574–76 (1996) (distinguishing be- tween virtues of federalism in U.S. and European contexts). Compare, e.g., George A. Ber- mann, Taking Subsidiarity Seriously: Federalism in the European Community and the United States, 94 Colum. L. Rev. 331, 339–43 (1994) (summarizing values potentially promoted by subsidiarity), and Robert P. Inman & David L. Rubinfeld, Subsidiarity and the European Union 2–13 (NBER Working Paper 6556, May 1998) (same), and Kramer, supra note 1, with 2 Harvard International Law Journal / Vol. 41 risks involved when a central government accretes power, or when local governments refuse to enforce federal law—commonly, when the law applies to the rights of individuals against those govern- ments themselves. The profound and practical dimensions of federalism are closely interwoven in the European Community. 3 This interplay of power between the Community and its Member States, as George Ber- mann observed, has “fostered a remarkable renewal of interest in the problems of American federalism.”4 The American problem, however, lies in developing meaningful and stable safeguards against encroachment by the federal government.5 For the Commu- nity, on the other hand, the relative absence of an independent fed- eral check on Member States raises the question of whether it can be described as a federal system in the ªrst place.6 Revealingly, A.E. Dick Howard, The Values of Federalism , 1 New Eur. L. Rev. 143, 156–60 (1993) (not- ing drawbacks to localism), and Edward L. Rubin & Malcolm Feeley, Federalism: Some Notes on a National Neurosis, 41 UCLA L. Rev. 903 (1994) (questioning U.S. pursuit of federalism), and Edward L. Rubin, Henry J. Miller Lecture Series and Symposium: “New Frontiers of Federalism”: The Fundamentality and Irrelevance of Federalism , 13 Ga. St. U. L. Rev. 1009, 1009 (1997) (same). 3. In keeping with the prevailing practice and the ordinary scope of the Court of Justice’s jurisdiction, this Article will refer to “Community” or “EC” law, rather than “European Un- ion” or “EU” law, notwithstanding the formation of the European Union in 1992. The Court of Justice, for its part, continues to be known as the Court of Justice of the European Com- munities. 4. George A. Bermann, European Community Law from a U.S. Perspective, 4 Tul. J. Int’l & Comp. L. 1, 5 (1995); for a small sample, see, for example, Paul Dubinsky, The Essential Function of Federal Courts: The European Union and the United States Compared, 42 Am. J. Comp. L. 295 (1994); Denis J. Edwards, Fearing Federalism’s Failure: Subsidiarity in the European Union, 44 Am. J. Comp. L. 537 (1996); Barry Friedman, Federalism’s Future in the Global Village, 47 Vand. L. Rev. 1441 (1994); Lord Mackenzie-Stuart, Problems of the European Community—Transatlantic Parallels, 36 Int’l & Comp. L.Q. 183 (1987); G. Fredrico Mancini, The Making of a Constitution for Europe, 26 Common Mkt. L. Rev. 595, 595–96 (1989); Pernice, supra note 1, at 17, 19; Eric Stein, On Divided-Power Systems: Adventures in Comparative Law, 1983/1 Legal Issues of Eur. Integration 27 (1983); W. Gary Vause, The Subsidiarity Principle in European Union Law—American Federalism Com- pared, 27 Case W. Res. J. Int’l L. 61 (1995). The way was forged by 1–3 Mauro Cappelletti et al., Integration Through Law: Europe and the American Federal Experience (1985–1988). 5. See Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985) (overruling Na- tional League of Cities v. Usery, 426 U.S. 833 (1976) (overruling Maryland v. Wirtz, 392 U.S. 183 (1968))). 6. See, e.g., Diarmuid Rossa Phelan, Revolt or Revolution: The Constitutional Boundaries of the European Community 160–62 (1997) (citing characteristics of European legal federal- ism); Jacques Pelkmans, Governing European Union: From Pre-Federal to Federal Eco- nomic Integration?, in Rethinking Federalism: Citizens, Markets, and Governments in a Changing World (Karen Knopp, et al. eds., 1995) (concluding that “[t]he present European Union is still only half-way along the path to federalism”); Thomas C. Fischer & Stephen C. Neff, Some American Thoughts About European “Federalism”, 44 Int’l & Comp. L.Q. 904, 905–06 (1995); Lenaerts, Federalism: Essential Concepts, supra note 1, at 746–51 (con- cluding that “the essential aspect of federalism, namely the balance of sovereignty between the central authority and the component entities, may be said to be present”); Thomas Merrill, A New Age of Federalism?, 1 Green Bag 2d 153, 154 (1998) (concluding that “im- partial observers” would agree that Community “is at least headed [toward federalism]”); see 2000 / Federalism at the European Court of Justice 3 while the American notion of federalism is often associated with states’ rights, European critics not infrequently use the “F” word to connote centralization. 7 This contrast is apparent in the Community’s approach to the practical problem of applying federal law against Member States. Much like in the United States, the European Court of Justice has generally held that Member States charged with enforcing Commu- nity law may determine their own rules, so long as they do not de- feat or discriminate against Community rights.8 But the European approach diverges from the American approach when it comes to punishing Member States for the breach of Community rules. Fol- lowing its seminal decision in Francovich v. Italy,9 the Court has held Member States liable for breaching Community law in a vari- ety of circumstances—most notably, for their failure to implement directives10 when that failure allows one private party to commit wrongs against another.11 Francovich is widely celebrated for hav- also Deborah Z. Cass, The Word That Saves Maastricht? The Principle of Subsidiarity and the Division of Powers within the European Community, 29 Common Mkt. L. Rev. 1107, 1109 & nn.3, 5 (1992) (surveying diverse views). As Professor Hartley has observed, the most compelling argument is the fact that “[t]he decisions of the Community derive their binding force from the fact that they are taken by organs endowed with the appropriate power by the Treaties—the constitution of the Community—and not because they have been agreed to by Member States.” T.C. Hartley, The Foundations of European Community Law 10 (4th ed. 1994). 7. Drafters of the Maastricht Treaty were forced to avoid what was dubbed the “F” word because of persistent disagreement between the British, who thought the term connoted greater centralization, and those on the continent, who felt to the contrary.