We surmise that the European law of finance may possibly work as an interesting test-case for hybrid commercial courts in Europe. In this context, effectiveness of EU law is increasingly at odds, in its private-law dimension, with Member States' procedural autonomy, due to national causes of actions which are not (but for one exception) harmonized following the principle of procedural autonomy. This is so although substantive law is increasingly uniform or subject to maximum harmonization at Union level and a convergent interpretation and application of EU law, or of its national transposition, is clearly essential to ensure both the competitive level playing field and the overall European (and Eurozone) financial stability.

SOMMARIO:

1. The problem in a nutshell. Effectiveness of EU law and its challenging implications - 2. A snapshot of specialized commercial courts and hybrid commercial courts from Asia to Europe. Lessons from abroad - 3. A test-case for Europe? Effectiveness of the EU law of finance in its enforcement and its implications for the development of hybrid commercial courts in Europe - NOTE

1. The problem in a nutshell. Effectiveness of EU law and its challenging implications

We surmise that the European law of finance may possibly work as an interesting test-case for hybrid commercial courts in Europe. In this context, effectiveness of EU law is increasingly at odds, in its private-law dimension, with Member States’ procedural autonomy, due to national causes of actions which are not (but for one exception) harmonized following the principle of procedural autonomy. This is so although substantive law is increasingly uniform or subject to maximum harmonization at Union level and a convergent interpretation and application of EU law, or of its national transposition, is clearly essential to ensure both the competitive level playing field and the overall European (and Eurozone) financial stability. The Court of Justice has traditionally adopted a “hands off” approach on private causes of action, leaving Member States with a broad margin of appreciation to determine the conditions for the exercise of any private-law action. In Bankia [[1]], for example, the Court held that Article 6(2) of Directive 2003/71 grants Member States a broad margin of appreciation to determine the conditions to exercise an action for damages for false information in the prospectus and despite its cautioning that the principles of equivalence and effectiveness must also be respected, the leeway left to procedural autonomy remained wide and unchecked. This is in line with other previous cases law, such as Hirmann [[2]] and Craeynest [[3]]. Yet, over time, the Court’s acrobatics between procedural autonomy and effectiveness has become an elegant, tiptoeing on a tight rope suspended between past and future. If private litigation is an essential component of the enforcement of EU law, as it is in the Capital Markets Union and in the Banking Union, the current situation is less than optimal, because civil remedies for private law disputes in the EU law of finance are in a sorry state, if from a procedural angle, they remain balkanised in a variety of national modes [[4]] and, from a substantive angle, this creates visible national divergencies in the enforcement of EU law [[5]]. A clear example is offered by the Genil case. [[6]] The CJEU held that, in case an investment firm did not comply with MiFID [[7]] duties of transparency, suitability and appropriateness MiFID Article 51 provides for administrative sanctions but does not dictate the consequences under the contract, which is left to the [continua ..]

2. A snapshot of specialized commercial courts and hybrid commercial courts from Asia to Europe. Lessons from abroad

The irony is that, in discussing hybrid commercial courts as a possible tool of choice for Europe, we necessarily must draw on the experience of domestic systems which, originally, were mostly established outside Europe and the EU has not taken a position on the issue. Yet, our claim for more specialized courts in the law of finance nicely intersects with a clearly visible international judicial trend. A first example is the successful experience of the Financial List in the United Kingdom, a specialized list of judges set up in December 2015 to handle claims related to financial markets [[9]] operating as a joint initiative involving the Chancery Division and the Commercial Court in London, whose declared objective has been ‘to ensure that cases which would benefit from being heard by judges with particular expertise in the financial markets or which raise issues of general importance to the financial markets are dealt with by judges with suitable expertise and experience’ [[10]]. Yet this follows the pattern of experiences of the same breed, which feature a distinct new phenomenon of global competition which has been nicely described in the literature as ‘plural adjudicatory unilateralism’ [[11]]: the emergence of hybrid dispute resolution fora, and in particular hybrid specialized courts [[12]]. Among them, also recent initiatives in continental Europe in response to Brexit, all aimed at establishing specialized courts for international commercial disputes (in most cases related to financial contracts) to offer alternative judicial venues to London after the United Kingdom departure from the EU [[13]]. As noted by Sir William Blair [[14]]: ‘together, commercial courts provide: authoritative development of the content of commercial law; the essential basis upon which international arbitration functions; a specialised forum of choice for businesses that prefer courts to arbitration; a specialised forum for commercial disputes which cannot be arbitrated; a route to capacity building amongst the judiciary; procedure that can be/has been developed first in a commercial court for later wider use across a legal system; an ability both to optimise the potential of technology, and to develop it under high ethical standards; where methods of dispute resolution currently fall below best standards, the potential to raise standards across the whole system’. The institutional design of these [continua ..]

3. A test-case for Europe? Effectiveness of the EU law of finance in its enforcement and its implications for the development of hybrid commercial courts in Europe

The establishment of a European court for cross-border commercial disputes grounded on Article 81 TFEU is not a new idea and has already been nicely voiced in the literature and advocated in policy making [[28]]. It could also work as a complement of the existing national commercial courts’ system and thus as an optional “28th regime”. Proponents have argued that Article 81 TFEU ‘allows the EU to adopt self-standing European procedures that replace national procedures’ and that ‘based on this broad understanding of its competences, the EU legislature has for example adopted the Small Claims Regulation, the Payment Order Regulation and the Insolvency Regulation’. The European commercial court, in the design of its proponents, would primarily apply national law and would work under the control of the CJEU (it should be expressly granted the right to make requests for preliminary ruling under Article 267 TFEU) [[29]]. Building on those proposals, we surmise [[30]] that the EU law of finance would be the ideal context to experiment this, without impinging on the current organization of the Court of Justice at the apex of the system and with no recourse to Article 257 TFEU. Also in our view a not too ambitious, yet pragmatic reform based on Article 81(2) and Article 67(4) TFEU (that grant a legislative competence for the EU to take measures aimed at ensuring ‘effective access to justice’ in civil matters having cross border implications) [[31]] would be desirable. More specifically, we argue that the needs of the EU law of finance would be nicely served by a two-step judicial reform as follows: a) First, an interconnected system of (one or a limited number per country) specialized commercial courts, established in each Member State along the lines of the specialized courts for intellectual property under the Community Design Regulation[[32]] and the EU Trademark Regulation[[33]] to hear domestic and cross border private law disputes in the law of finance, where the applicable law is either EU law with direct effect or national law implementing EU law. It would be left to the procedural autonomy of each Member State to organize those courts, in compliance with the principles of equivalence and effectiveness. Cross-border disputes, however, may be further concentrated in one single court per country, where the use of English, as the language customary in international finance, could be [continua ..]

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