#crossposting: Larry Catá Backer’s contribution to the MEPLI/HiiL workshop on CSR enforcement (Maastricht, 17 October)

I was fortunate enough to participate On October 17 in a “Workshop on research by the UM-HiiL-Chair on the Internationalisation of Law, the theme of which was “Enforcing Corporate Social Responsibility: Transforming voluntary corporate codes into private law obligations?”, held at the Theater aan het Vrijthof, Vrijthof 47, Maastricht, Netherlands under the sponsorship of the University of Maastricht, the Hague Institute for the Internationalisation of Law, and their UM-HiiL Chair.  The workshop description and program follow below. I spoke to the “Implications for the effective regulation of companies.”  My remarks, “A Lex Mercatoria for Corporate Social Responsibility Codes without the State?: On the Regulatory Character of Private Corporate Codes” also follows.
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Recent MEPLI working papers




– Janwillem Oosterhuis, Unexpected Circumstances Arising from Word War I and Its Aftermath: ‘Open’ versus ‘Closed’ Legal Systems, No. 2014/18.

– Katri Havu, Fault in EU Law Based Competition Restriction Damages Cases, No. 2014/16.

Find them here:


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Enforcing Corporate Social Responsibility: Transforming voluntary corporate codes into private law obligations? – 17 October (Maastricht)

Floral Folk-3


Workshop on research by the UM-HiiL-Chair on the Internationalisation of Law – Friday 17 October (Theater aan het Vrijthof, Vrijthof 47, Maastricht)

Corporate codes are voluntary policies that companies frequently develop in order to show the public their commitment to respect human rights, to improve workplace standards, and to protect the environment in their global operations. The research conducted by the UM- HiiL-Visiting Chair on the Internationalisation of Law has focussed in one of its research projects on these codes. As one of the core outcomes, the argument has been developed that such voluntary corporate codes, in order to be successful in the long run, would need to be transformed into private law obligations. This result has been reached by engaging in an interdisciplinary socio-legal analysis, which suggests treating the codes as unilateral declarations that reveal a serious effort of companies to regulate public interest matters in the absence of global government. It is this specific character that private law is accordingly called upon to support by enforcing these codes.

This workshop aims to discuss and critically evaluate the outcome of this research in general and this core suggestion in particular. The first part of the conference seeks to analyse the implications that a suggested enforcement of initially voluntary corporate commitments on CSR will have on specific areas of law.

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Registration open for ‘200 Years Savigny and Thibaut: The Codification Debate Revisited’ (MEPLI Round Table, 10 October 2014)


We already wrote about the next Round Table that MEPLI will host in Maastricht on 10 October.

Registration is now open via this link, where you can also find more information about the location as well as the programme of the event.



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Surrogacy agreements and public policy in France in the light of recent ECtHR case law


(The Mennessons with their two daughters)

That surrogacy agreements need some form of international consensus, putting to rest public policy divergences, I have briefly addressed before (see my earlier post). Recent case law of the European Court of Human Rights (ECtHR) seems to confirm this point.

On 26 June 2014, the ECtHR delivered its rulings in two cases dealing with a very similar fact pattern: Mennesson v. France and Labassee v. France [1]. In each of the cases, a French couple unable to get pregnant sought pregnancy by means of using a surrogate mother in the United States (California and Minnesota). Also, in each of the cases, the father is the biological parent of the children (two children for the Mennessons and one for the Labassees), which led to parentage recognition under the rules of the states where the surrogacy was arranged. However, upon their return to France, the two families found themselves unable to register the births of the children. Taking matters to court, the Court of Cassation finally dismissed the applications of the two families in 2011 on the grounds that no effect can be given under French law to surrogacy agreements, as such arrangements are prohibited by the Civil Code – rendering them null and void – since they are in violation of public policy [2].

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The net of EU law tightens on the Member States: Case C-390/12 Pfleger on the application of the EU Charter on Fundamental Rights

On 30 April 2014 the Third Chamber of the Court of Justice of the European Union (CJEU) delivered a landmark decision on the application of the EU Charter on Fundamental Rights. Although the case does not concern private law, its implications will certainly have its effect in this area.

The facts of the case are relatively simple: there were four entrepreneurs in Austria that used ‚gaming machines’ to allow their customers to gamble. These machines allowed the participation in a lottery, where the machine delivered the outcome of the lottery. Under relevant Austrian legislation, like in most -if not all- Member States, the offering of participation in a game of chance is subject to state control. In Austria this is a matter for federal and regional law. However, the four entrepreneurs in this case did not obtain the relevant permits and hence we fined by the local authorities for violating the regulation.

In the national proceedings the entrepreneurs relied on the freedom to provide services of Article 56 TFEU as well as Articles 15 to 17 of the EU Charter on Fundamental Rights to claim that the Austrian gambling prohibition was invalid, or at least too broadly formulated to be applicable (para 16 of the judgement). The Austrian government defended itself by offering justification for the existence of gambling legislation in the form of national public policy. The Unabhängiger Verwaltungssenat des Landes Oberösterreich decided to stay proceedings and asked four prejudicial questions to the CJEU, of which the first of general interest:

‘1.Does the principle of proportionality laid down in Article 56 TFEU and in Articles 15 to 17 of the Charter preclude national legislation such as the relevant provisions in the main proceedings, namely Paragraphs 3 to 5 and Paragraphs 14 and 21 of the GSpG, which permits the organisation of games of chance using machines only on the condition — which may be enforced by both criminal penalties and direct intervention — of the prior issue of a licence, which are available only in limited numbers, even though — as far as can be seen — the State has not shown thus far in a single judicial or administrative procedure that associated crime and/or addiction to gambling actually constitute a significant problem which cannot be remedied by a controlled expansion of authorised gaming activities to a large number of individual providers, but only by a controlled expansion, coupled with only moderate advertising, by one monopoly holder (or a small number of oligopolists)?’

The Austrian government – of course – argued that this is a purely internal situation and hence EU law does not apply. The CJEU did not have any difficulties dismissing this claim as one of the entrepreneurs originates from the Czech Republic and hence a cross border dimension was deemed to exist (para 21-24 of the judgement). This, once more, shows how arbitrary the application of EU law is becoming, something I wil return to below.

The CJEU then proceeds by recognizing the right of a Member State to decide on its own legislation in the absence of existing EU law, and reconfirms that the EU Charter on Fundamental rights does not apply to national legislation if it is not legislation implementing EU Law (para 30-33). This was an issue also raised by the Austrian, Belgian, Dutch and Polish governments and it would have been impossible for the Court to hold otherwise. However, the CJEU then continues in paragraph 34 and 36 by stating:

34. Since the fundamental rights guaranteed by the Charter must therefore be complied with where national legislation falls within the scope of European Union law, situations cannot exist which are covered in that way by European Union law without those fundamental rights being applicable. The applicability of European Union law entails applicability of the fundamental rights guaranteed by the Charter (Åkerberg Fransson EU:C:2013:105, paragraph 21).

35. In that regard, the Court has already held that, where a Member State relies on overriding requirements in the public interest in order to justify rules which are liable to obstruct the exercise of the freedom to provide services, such justification, provided for by European Union law, must be interpreted in the light of the general principles of European Union law, in particular the fundamental rights henceforth guaranteed by the Charter. Thus the national rules in question can fall under the exceptions provided for only if they are compatible with the fundamental rights the observance of which is ensured by the Court (see, to that effect, Case C-260/89 ERT EU:C:1991:254, paragraph 43).

36. As follows from that case-law, where it is apparent that national legislation is such as to obstruct the exercise of one or more fundamental freedoms guaranteed by the Treaty, it may benefit from the exceptions provided for by European Union law in order to justify that fact only in so far as that complies with the fundamental rights enforced by the Court. That obligation to comply with fundamental rights manifestly comes within the scope of European Union law and, consequently, within that of the Charter. The use by a Member State of exceptions provided for by European Union law in order to justify an obstruction of a fundamental freedom guaranteed by the Treaty must, therefore, be regarded, as the Advocate General states in point 46 of her Opinion, as ‘implementing Union law’ within the meaning of Article 51(1) of the Charter.

[emphasis by author]

In other words, the EU Charter on Fundamental Rights does not apply to national legislation per se, but when this national legislation is somehow involved in the application of EU law, and this includes the potential applicability of EU internal market law where the application of national law must be justified in the light of one of the four freedoms (like the free movement of services in this case). As a part of the proportionality test, therefore, the CJEU now holds that national law must also comply with the EU Charter on Fundamental Rights.

Of course this does not automatically lead to the non-application of national law when it is confronted with EU law, it merely means that EU law also applies in these situations and hence Member States must take the EU Charter into account when drafting national legislation because of its potential infringement of one of the four freedoms. With the increased movement of goods and persons on the EU internal market, the likelihood of this will only increase in the coming years.

A point of criticism on the criteria for the application of EU law seems in place. It is not at all certain that a similar case in which there were only Austrian entrepreneurs would have also included the application of EU law in this case. After all, without a cross-border element, there is no hindrance to the access of a Member State’s market, and hence EU law does not apply. Coincidentally – I emphasize – this case concerns once foreign company and hence does not pose a problem, and the outcome of the case also directly affects the other three Austrian parties. This seems very arbitrary to me and more and more the CJEU needs to find creative ways to apply EU law to situations where EU law must provide an answer. A classic example is the case Reisch in which the CJEU holds that it answers the prejudicial question in a purely internal situation as the principle of equality in Austrian law (the Member State defendant in this case) may resist its application, after AG Geelhoed had held in his conclusion that purely internal situations are purely coincidental in a single market. Another example is Zambrano in which the CJEU also applies the Charter based on EU citizenship, after AG Sharpston proposed to basically overhaul the whole system of using cross-border connecting factors.

It seems therefore that parties that successfully manage to raise issues of EU law in their national proceedings are at an advantage to those who fail to do so. The justification from the EU side is of course that in such a case there actually is an EU dimension to the case, but that is of course not always immediately the case. This can hardly be the purpose of the effective application of EU law.


PS: for those who are curious how the case ended, the CJEU Held:

‚65 (…) Article 56 TFEU must be interpreted as precluding national legislation, such as that at issue in the main proceedings, where that legislation does not actually pursue the objective of protecting gamblers or fighting crime and does not genuinely meet the concern to reduce opportunities for gambling or to fight gambling-related crime in a consistent and systematic manner.’


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