IN and JM v Belgium (C-469/18 and C-470/18)

Facts and legal query

Under Belgian law, the so-called ‘Antigone doctrine’ allows the administrative authorities under certain circumstances to take into account irregularly obtained evidence (e.g. when it has been obtained by disregarding legal safeguards, or by not respecting fundamental rights such as the right to privacy). This case law was developed for criminal law purposes, but according to the Belgian Supreme Court, the Antigone doctrine can also be applied in tax cases.[1]

The compatibility of this theory with the right to fair trial has been heavily debated in both doctrine and case law. From a Union law perspective, the Court of Justice (the ‘CJ’) already held in WebMindLicenses[2]  that in case the administrative authorities, in the area of value added taxation (‘VAT’), use information from a criminal file, which has previously been irregularly obtained (i.e. in violation of the right to privacy) in the framework of those criminal proceedings, that evidence cannot be used to assess VAT.

In the present case, the Belgian criminal prosecution authorities – in the context of an investigation into VAT carousel fraud – sought information from Luxembourg, which led to the seizure of bank documents at a Luxembourg bank. The Luxembourg authorities handed over the documents to the Belgian criminal prosecution authorities, however, in doing so they did not respect the legal requirement that they should have applied for authorization from a Luxembourg Court, in line with Article 20(2) of the Benelux Treaty.

Those documents subsequently accessed by the Belgian tax authorities. Based on this information, the Belgian tax authorities sent the taxpayers notices of assessment adjusting their income tax return. According to the taxpayer, the information had been irregularly obtained. However, on the basis of the Belgian Antigone doctrine, it could still serve as a basis to assess the taxpayer.

Following domestic proceedings, the Belgian Supreme Court asked the CJ whether the right to a fair trial, as enshrined in Art. 47 of the EU Charter of Fundamental Rights (the ‘Charter’) and as applied in the area of VAT, precludes in all circumstances the use of irregularly obtained evidence or whether it leaves room for application of the theory of the Antigone doctrine. If so, the (Belgian) principle of equality would require the same conclusion in the area of income taxation.

Court of Justice judgment

Although the CJ did not explicitly structure its judgment as such, in our opinion, three interrelated issues are at play in the case at hand, which may not be conflated.

Issue 1: Scope of the Charter of Fundamental Rights

A first, evident issue is to examine whether the situation at hand falls within the scope of application of the Charter of Fundamental Rights. If it does not, it is – from the perspective of the Charter – a so-called ‘purely internal situation’ within which the Charter does not bind (i.e. does not create rules of conduct which must be observed by) the Member States.

Further to its Article 51(1), the Charter only binds the Member States “when they are implementing Union law”. In accordance with the case-law[3], this phrase must be understood (more broadly) as the requirement that a Member State must act ‘within the scope of Union law’. Although the case-law law on this is still in flux, a Member State is definitely considered to act within such scope in two situations[4]:

  • Firstly, where Member State authorities are acting as ‘agents’ of the Union are and implementing Union law at a legislative, administrative and/or judicial level. This situation – which can be retraced to the Wachauf case[5] – is also referred to as the ‘agency situation’.
  • Secondly, where Member State authorities derogate from otherwise binding Union law obligations and seek to take advantage from a recognised justification ground. This situation – which can be retraced to the ERT case[6] – is referred to as the ‘derogation situation’.

Grosso modo, the ‘agency situation’ concerns cases where the Union institutions have been empowered to direct the Member States to take certain action, whereas the ‘derogation situation’ concerns cases where Union law imposes obligations upon the Member States which confer directly effective rights upon private individuals, which they may rely upon against conflicting Member State acts[7].

In the case at hand, the CJ concluded that the situation was not covered by the Charter, i.e. constituted a purely internal situation (paras. 18-19). This is quite logical: contrary to the implementation of the VAT directive, in the case at hand, the Belgian State did not act within scope of Union law. The case neither (i) concerns an ‘agency situation’ nor (ii) involves a ‘derogation situation’.

Issue 2: Competence of CJ to respond to requests for a preliminary ruling

A second issue, which is intricately related to the first one, involves the scope of competence of the CJ to respond to preliminary ruling requests under Article 267 TFEU. In principle, there is a complete overlap between the first and second issue: the CJ will (not) be competent to respond to preliminary ruling requests when the dispute before the referring court is (not) falling within the scope of Union law[8]

However, in exceptional circumstances, the CJ may even be competent to respond to references for a preliminary ruling where the situation at hand does not fall within the scope of application of Union law, i.e. concerns a ‘purely internal situation’. The case-law on this is quite inconsistent, but they include at least the following two types of situations[9]:

  • A first scenario is the so-called Dzodzi situation (C‑297/88 and C‑197/89; also applied e.g. in C‑28/95, Leur-Bloem and other cases). This situation refers to cases falling outside the scope of EU law but where the provisions of EU law have been rendered applicable by national law due to a direct and unconditional reference made by that law to the content of those provisions.
  • A second situation is the so-called Guimont situation (C-448/98). This is the case where a provision of national law – mostly the principle of equality in constitutional law – prohibits (reverse) discrimination, as a consequence of which situations without a link to Union law should be treated in the same way as situations falling within the scope of Union law.

In all such cases, it could be said that, whilst the Charter is not binding upon the Member States on the basis of Union law (as the situation at hand does not fall within its scope of application), national law has rendered the Charter relevant (binding?) to resolve a dispute before a national court. Outside such situations, the CJ will declare itself incompetent to respond to a preliminary ruling.[10]

In the case at hand, the CJ reiterated that it may be competent to respond to preliminary ruling requests, also in ‘purely internal situations’, provided that “provisions of EU law had been rendered applicable by national law due to a reference made by that law to the content of those provisions” (para. 21). Oddly, the CJ thus only seems to refer to its Dzodzi doctrine (also paras. 22-23).

Issue 3: Admissibility of request for a preliminary ruling

Even if one would fall within one of the ‘exceptions’ within which the CJ is competent to respond to a preliminary ruling request, despite that request pertaining to a purely internal situation, a final issue arises. In particular, the referring court must still ‘do its homework’, in the sense of sufficiently substantiating the reference for a preliminary rulings.

In this respect, Article 94 of the CJ’s Rules of Procedure sets forth the requisite content of a reference for a preliminary ruling, which includes “a statement of the reasons which prompted the referring court […] to inquire about the interpretation […] of certain provisions of European Union law, and the relationship between those provisions and the national legislation applicable to the main proceedings” (cf. littera c).

In recent years, one may observe that the CJ has enforced this provision more strictly. In particular, the CJ requires the national courts “to indicate to the Court […] in what way the dispute pending before it, despite its purely domestic character, has a connecting factor with the provisions of EU law […] that makes the preliminary ruling on interpretation necessary[11].

If the national court fails to substantiate its claim, the reference for a preliminary ruling will be declared inadmissible.[12] It should be noted that, in such situation the CJ is still theoretically competent to respond, as a consequence of which a national court may seize the CJ by referring a new preliminary ruling request which does comply with the formal requirements enshrined in such provision[13].

In the case at hand, referring to Article 94 of its Rules of Procedure, the CJ held that it is up to the national court to indicate in what way the dispute before it is connected to Union law that makes the preliminary ruling necessary(para. 24). Subsequently, it found that there was likely no such Dzodzi-like connecting factor; in any case, this did not transpire from the reference itself (para. 25).

Conclusion

In conclusion, it could be said that this case is not exclusively relevant in the debate regarding the scope of application of the Charter. The case also (and predominantly) concerns (i) the competence of the CJ to respond to references for a preliminary ruling in the case of such ‘purely internal situations’ and (ii) the formal requirements that need to be fulfilled in this respect in order for the reference to be admissible.

In this respect, it is odd that the CJ only referred to and applied its Dzodzi doctrine. In other words, it is strange that the CJ did not refer to and apply its Guimont doctrine (which was arguably at stake)[14]. One could thus wonder whether the CJ has restricted or even abandoned its Guimont doctrine, which has already been argued by other authors.[15]

This could be seen as a way in which the CJ (unfortunately) manages its ever-increasing workload.[16] Just like adopting a more stringent approach in the enforcement of Article 94 of the Rules of Procedure[17], and in line suggestions made by several advocates-general[18], adopting a stricter approach towards the Dzodzi and Guimont doctrines could prove to be a ‘workload reduction tool’.

One may wonder whether that solution is acceptable.[19] In the case at hand, the Belgian Supreme Court will have to determine itself what the content of Union law is, which it then has to extend to some purely internal situations further to the principle of equality. And an incorrect interpretation of Union law may then, further to that same principle of equality, influence situations covered by Union law …

Joris Luts – Filip Debelva


[1] E.g. Supreme Court 4 November 2016, F.15.0106.N/1.

[2] CJ 17 December 2015, C‑419/14, WebMindLicenses.

[3] CJ 7 May 2013, C-617/10, Åkerberg Fransson.

[4] See e.g. K. Lenaerts, “Die EU-Grundrechtecharta: Anwendbarkeit und Auslegung”, Europarecht 2012, 3 et seq. and M. Dougan, “Judicial Review of Member State Action Under the General Principle and the Charter: Defining the ‘Scope of Union Law’”, CML Rev.  2015, 1211.

[5] CJ 13 July 1989, 5/88, Wachauf.

[6] CJ 18 June 1991, C-260/89, ERT.

[7] K. Lenaerts & J.A. Gutiérrez-Fons, “The EU Internal Market and the EU Charter : Exploring the ‘Derogation Situation’”, in in Essays in Honour of Laurence W. Gormley, Cambridge, CUP, 2019, 50.

[8] In some situations, the national courts may even be obliged to make a reference for a preliminary ruling to the CJ.

[9] See e.g. S. Iglesias Sanchez, “Purely internal situations and the limits of EU law: a consolidated case law or a notion to be abandoned?”, ECL Review 2018, 15 et seq. and J. Langer, “Article 267 TFEU – Celebrating the Jewel in the Crown of the Community Legal Architecture and Some Hot Potatoes”, in Essays in Honour of Laurence W. Gormley, Cambridge, CUP, 2019, 461.

[10] S. Prechal, “Interne situatie en prejudiciële vragen”, SEW 2015, 495.

[11] E.g. CJ 15 November 2016, C‑268/15, Ullens de Schooten, para. 55; CJ 20 September 2018, C‑343/17, Fremoluc, para. 22 and CJ 13 December 2018, C‑298/17, France Télévisions, para. 33.

[12] S. Prechal, “Interne situatie en prejudiciële vragen”, SEW 2015, 495.

[13] Ibid.

[14] See already D. Sarmiento, “The Scope of Application of the Charter of Fundamental Rights is Redefined Once Again – A Comment on IN and IM/Belgium”, https://eulawlive.com/2019/10/25/. Although a new preliminary reference is possible in the case of an inadmissible request, the fact that the Guimont situation was not referred to by the CJ seems to exclude that a second reference for a preliminary ruling would be succesful.

[15] Ibid.

[16] Indeed, in recent years, the amount of cases brought to the CJ, particularly references for a preliminary ruling, has significantly increased (CJEU, Annual Report 2018 – Judicial Activity, link), which triggers – according to judge Lenaerts – “the need for measures to relieve the Court of Justice” (ibid., 8).

[17] Guest lecture by K. Lenaerts, KU Leuven, 9 May 2019.

[18] E.g. AG Wahl, Opinion of 12 March 2015, C‑497/12, Gullotta.

[19] See for a further development of that conclusion, D. Sarmiento, “The Scope of Application of the Charter of Fundamental Rights is Redefined Once Again – A Comment on IN and IM/Belgium”, https://eulawlive.com/2019/10/25/.

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