Public Policy and Public Interest in International Law and EU Law

Czech Yearbook of International Law

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Advisory Board

Ján Azud Bratislava, Slovak Republic

Helena Barancová Trnava, Slovak Republic

Sir Anthony Colman London, United Kingdom

Jaroslav Fenyk Brno, Czech Republic

Karel Klíma Pilsen, Czech Republic

Ján Klučka Košice, Slovak Republic

Zdeněk Kučera Pilsen, Czech Republic

Pierre Lalive Geneva, Switzerland

Peter Mankowski Hamburg, Germany

Andrzej Mączyński Krakow, Poland

Maksymilian Pazdan Katowice, Poland

August Reinisch Vienna, Austria

Michal Tomášek Prague, Czech Republic

Vladimír Týč Brno, Czech Republic

Nikolay Natov Sofia, Bulgaria

Editorial Board

Filip Černý Prague, Czech Republic

Marcin Czepelak Krakow, Poland

Ludvík David Brno, Czech Republic

Jan Kněžínek Prague, Czech Republic

Oskar Krejčí Prague, Czech Republic

Petr Mlsna Prague, Czech Republic

Robert Neruda Brno, Czech Republic

Monika Pauknerová Prague, Czech Republic

František Poredoš Bratislava, Slovak Republic

Matthias Scherer Geneva, Switzerland

Vít Alexander Schorm Prague, Czech Republic

Miroslav Slašťan Bratislava, Slovak Republic

Václav Stehlík Olomouc, Czech Republic

Jiří Valdhans Brno, Czech Republic

Olexander Merezhko Kiev, Ukraine

Address for correspondence & manuscripts Czech Yearbook of International Law

Jana Zajíc 32, Praha 7, 170, 00, Czech Republic

www.czechyearbook.org

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Impressum

Institutions Participating in the CYIL Project Academic Institutions within the Czech Republic Masaryk University (Brno), Faculty of Law, Department of International and European Law [Masarykova univerzita v Brně, Právnická fakulta, Katedra mezinárodního a evropského práva] University of West Bohemia in Pilsen, Faculty of Law, Department of Constitutional Law & Department of International Law [Západočeská univerzita v Plzni, Právnická fakulta,

Katedra ústavního práva & Katedra mezinárodního práva] VŠB – TU Ostrava, Faculty of Economics, Department of Law [VŠB – TU Ostrava,

Ekonomická fakulta, Katedra práva]

Charles University in Prague, Faculty of Law, Department of Commercial Law, Department of European Law & Centre for Comparative Law [Univerzita Karlova v Praze, Právnická fakulta,

Katedra obchodního práva, katedra evropského práva & Centrum právní komparatistiky, PrF UK]

University College of International and Public Relations Prague [Vysoká škola mezinárodních a veřejných vztahů Praha] Institute of State and Law of the Academy of Sciences of the Czech

Republic, v.v.i. [Ústav státu a práva Akademie věd ČR, v.v.i.]

Impressum

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Non-academic Institutions in the Czech Republic Office of the Government of the Czech Republic, Department of Legislation, Prague [Úřad vlády ČR, Legislativní odbor, Praha] Arbitration Court attached to the Economic Chamber of the Czech Republic and Agricultural Chamber of the Czech Republic, Prague [Rozhodčí soud při Hospodářské komoře České republiky

a Agrární komoře České republiky] ICC National Committee Czech Republic, Prague [ICC Národní výbor Česká republika, Praha] Institutions outside the Czech Republic Participating in the CYIL Project Austria University of Vienna [Universität Wien], Department of European, International and Comparative Law, Section for International Law and International Relations Poland Jagiellonian University in Krakow [Uniwersytet Jagielloński v Krakowie], Faculty of Law and Administration, Department of Private International Law Slovak Republic Slovak Academy of Sciences, Institute of State and Law [Slovenská akadémia vied, Ústav štátu a práva], Bratislava University of Matej Bel in Banská Bystrica [Univerzita Mateja Bela v Banskej Bystrici], Faculty of Political Sciences and International Relations, Department of International Affairs and Diplomacy Trnava University in Trnava [Trnavská Univerzita v Trnave], Faculty of Law, Department of Labour Law and Social Security Law

| | | Proofreading and translation support provided by: Agentura SPA, s. r. o., Prague, Czech Republic, and Juris Publishing, Inc., USA.

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Contents

List of Abbreviations ........................................................................................... xiii ARTICLES Libor Klimek European Arrest Warrant: Procedural Instrument for Public Order Enforcement in the EU’s Area of Freedom, Security and Justice ........................................................................... 3

Ilona Jančářová │ Vojtěch Vomáčka Transboundary Impact Assessment from the Central European Perspective ........................................................................... 19

Veronika Burketová At What Price Competition? A View on the Role of Competition in the Development and Stability of Banking Markets with Reference to the EU .................................................. 39

Ihar Martynenka Public Order and the Protection of Cultural Heritage: Enforcement of UNESCO and UNIDROIT Conventions in CIS Countries ........................................................................... 63 Josef Mrázek Public Order (Ordre Public) and Norms of Jus Cogens ............................. 79

Natalia Viktorova Public Order in the Practice of Russian Courts ........................................... 101

Contents

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Alexander J. Bělohlávek Public Policy and Public Interest in International Law and EU Law ..................................................................................................... 117

Oleksandr Merezhko Public Policy (Ordre Public), Mandatory Norms and Evasion of Law in Ukrainian Private International Law ............................ 149

Josef Ostřanský Tobacco Investment Disputes – Public Policy, Fragmentation of International Law and Echoes of the Calvo Doctrine ............................ 161

Filip Černý Short Flight of the Phoenix: A Few Thoughts on Good Faith, Abuse of Rights and Legality in Investment Arbitration ........................................................................................ 183 CASE LAW Czech Republic

Alexander J. Bělohlávek Immigration, International Protection and Treatment, and the Status of Foreigners in the Czech Republic ................................... 211

Bohuslav Halfar Czech Supreme Court on Deportation ........................................................... 217 BOOK REVIEWS Michael P. Seng, Vladimír Týč, David Sehnálek | One or Many? The Law and Structure of the European Union and the United States. Essays by the Faculties of Masaryk University in Brno and the John Marshall Law School in Chicago ................ 231

Karel Klíma et al. | EU Law ................................................................................... 233

Ján Klučka | International Public Law (General and Specific Part) ..................................................................................................... 236

Miroslav Potočný, Jan Ondřej | International Public Law ............................. 238

Karl P. Sauvant | Yearbook on International Investment Law & Policy 2009 – 2010 ...................................................................................... 239

Contents

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Alexander J. Bělohlávek | Protection of Foreign Direct Investment in Energetics ......................................................................................... 243

Natália Štefanková, Peter Lysina | Private International Law ....................... 246 NEWS & REPORTS Prospects of European Investment Policy ......................................................... 253

A New Legal Regulation within Articles 25 and 26 in the Proposal for the Regulation Made by Recasting Council Regulation 44/2001 from 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (hereinafter “Brussels I Regulation”) ................................................................... 260

Report on Prague’s World Jurist Association’s 24th Biennial Congress on the Law of the World –“National Legal Cultures in a Globalised World” .......................................................................... 268

International Law Students Association Chapter Olomouc .......................... 277

Charles University in Prague Achieved Historic Success at the 18th Willem C. Vis Moot ........................................................................... 278

Interesting Czech Doctoral Theses in International, Private International Law and European Law ................................................................. 279

Current Events, Past & Ongoing CYIL/CYArb Presentations ....................... 286

Selected Bibliography of Czech and Slovak Authors for 2011 ....................... 293

Important Web Sites .............................................................................................. 316 Index ......................................................................................................................... 323 All contributions in this book are subject to academic review.

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List of Abbreviations

AFSJ Area of Freedom, Security and Justice BAT Best available technology BGB German Civil Code (Bürgerliches Gesetzbuch) BIT Bilateral Investment Treaty CFI Court of First Instance CIS Commonwealth of Independent States CJEU Court of Justice of the European Union CRD Capital Requirements Directives CrimC [CZE] Act [of the Czech Republic] No. 40/2009 Coll., Criminal Code CrimProcC [CZE] Act [of the Czech Republic] No. 141/1961 Coll., on Criminal Court Procedure (Criminal Procedure Code), as subsequently amended CZE Czech Republic EAW European Arrest Warrant EC European Commission ECJ European Court of Justice ECR European Court Reports EEC European Economic Community EEZ Exclusive economic zones ECHR European Convention on Human Rights EIA Environmental impact assessment ESFS European system of financial supervisors ESRB European Systemic Risk Board EU European Union FCTC Framework Convention on Tobacco Control FDI Foreign Direct Investment FTAs Free Trade Agreements

List of Abbreviations

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GDP Gross domestic product ICAC International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation ICJ International Court of Justice ICOMOS International Council on Monuments and Sites IIAs International investment agreements ILC International Law Commission ILSA International Law Students Association ISDS Investor-state dispute settlement MIDS Master’s in International Dispute Settlement OJ Official Journal of the European Union PCIJ Permanent Court of International Justice PIL Private International Law SC [CZE] Supreme Court of the Czech Republic SEA Protocol Protocol on Strategic Environmental Assessments SEPA Single Euro Payments Area SVK Slovak Republic TEC Treaty establishing the European Community TFA Task Force Argentina TFEU Treaty on the Functioning of the European Union TRIPS Trade-related Aspects of Intellectual Property Rights UK United Kingdom UNCITRAL United Nations Commission on International Trade Law UNECE United Nations Economic Commission for Europe UNESCO United Nations Educational, Scientific and Cultural Organization

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Articles

Libor Klimek European Arrest Warrant: Procedural Instrument for Public Order Enforcement in the EU’s Area of Freedom, Security and Justice ........................................................................... 3

Ilona Jančářová │ Vojtěch Vomáčka Transboundary Impact Assessment from the Central European Perspective ........................................................................... 19

Veronika Burketová At What Price Competition? A View on the Role of Competition in the Development and Stability of Banking Markets with Reference to the EU .................................................. 39

Ihar Martynenka Public Order and the Protection of Cultural Heritage: Enforcement of UNESCO and UNIDROIT Conventions in CIS Countries ........................................................................... 63

Josef Mrázek Public Order (Ordre Public) and Norms of Jus Cogens ............................. 79

Natalia Viktorova Public Order in the Practice of Russian Courts ........................................... 101 Alexander J. Bělohlávek Public Policy and Public Interest in International Law and EU Law ..................................................................................................... 117

Articles

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Oleksandr Merezhko Public Policy (Ordre Public), Mandatory Norms and Evasion of Law in Ukrainian Private International Law ............................ 149

Josef Ostřanský Tobacco Investment Disputes – Public Policy, Fragmentation of International Law and Echoes of the Calvo Doctrine ........................................................................................... 161

Filip Černý Short Flight of the Phoenix: A Few Thoughts on Good Faith, Abuse of Rights and Legality in Investment Arbitration ........................................................................................ 183

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Alexander J. Bělohlávek Public Policy and Public Interest in International Law and EU Law Abstract │Whereas civil law conceives the principles of ordre public as forming the pillars of legal and social order, forming a long-term constant, public policy according to the common-law understanding of the term belongs to a markedly broader legislative category. In this respect public interest and public policy, as categories, are much closer to one another than is the case in civil law systems. Even so, they remain separate categories. However, the increasing tendency to make one’s case by taking recourse in public interest and by conflating public interest with public policy (ordre public) (often owed to terminological inaccuracies) is alarming, as it leads to a broadening of the public policy defence, and increased application of the public policy objection, which is at odds with the interests of the international community. Public interest is not an indeterminate legal term. It represents an abstract term that can only be identified against the backdrop of specific legal rules (laws, standards). Its subject are persons who form a loosely defined, but essentially identifiable circle, and it is usually expressed in [absolute] mandatory rules (which in private international law customarily take the character of what is known as overriding mandatory rules). In contrast to the negative operation of public policy, mandatory rules operate as positive rules. However, it is only in exceptional cases that the concern for the public interest is thought to be so pervasive as to be qualified as public policy and to be protected by qualified legal means. In contrast to the [absolute] overriding mandatory rules, public policy does not require identification of the public interest and its specific subject, or vehicle.

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Key words: civil law│Common law│natural person│ overriding mandatory rule│ infrastructure│ mandatory rule│ international law│private international law│public international law│ international public policy │treaty│indirect expropriation│working conditions│political interest│state under the rule of law│legal entity│ EU law│direct expropriation│private interest│social order│ social interest│ operativeness of a treaty│ authority of the state│ public policy (ordre public)│public interest│ common good│ expropriation│fundamental value │ fundamental right│ fundamental freedom

Alexander J. Bělohlávek holds the chair of legal studies at the Faculty of Economics of the Technical University of Ostrava [Czech Republic] and a visiting professorship at the Department of International and European Law of the Faculty of Law at Masaryk University in Brno [Czech Republic]. He is an attorney-in-law in Prague [Czech Republic] (with a branch office in N.J. [USA]), president of the World Jurist Association (Washington D.C.,

Alexander J. Bělohlávek

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USA), and acts as arbitrator in Prague [CZE], Vienna [Austria], Kyiv [Ukraine], Moscow [Russia], Almaty [Kazakhstan], Vilnius [Lithuania], Chisinau [Moldava], at the ICC, and under UNCITRAL rules, among others. e-mail: [email protected]

I. Terminologically Inconsistent Use of Two Qualitatively Distinct Categories

7.01. The terms public policy (ordre public) and public interest are certainly very much in use, although their application, and their perceived meaning, are not entirely unambiguous; unfortunately, even those authorities who use them to bolster their arguments sometimes do not differentiate between them, or only do so inconsistently. On the international (supranational) level, one of the reasons for this frequent inconsistency in differentiating between the terms is the divergent scope of meaning of public policy (ordre public) in civil law and in common law. While civil law understands [the principles of] ordre public to form the pillars of the legal system and of social order, (which ought to represent a long-term constant and upon which rest, not only, the constitutional and legal order, public policy in the common-law understanding represents a much broader legislative category. In common law, the term also expresses to a certain degree the prevailing political view of societal priorities. Public interest and public policy are thus categories that are much closer to one another in common law systems than in civil law systems. At any rate, and in all legal systems, the two categories are different, and must be distinguished. This distinction is particularly crucial in international law, in international private law, and in any supranational normative system, such as the EU. In this respect, one must exercise particular care in order to avoid imprecise statements due to terminological similarities, which – especially in a multilingual/international environment – may simply result in terminological mistakes. It is most often the language factor that causes people to speak of public policy in situations in which they really [only] mean the public interest, whereas [mere] public interest may, due to sloppy language, be elevated to a category that is on a qualitatively different (i.e. higher) level – by being referred to as public policy (ordre public). It should come as no surprise that we often encounter instances of inappropriate use of this terminology in EU law, given that most general normative acts (and many individual normative acts) are translated into all official languages of the EU. At the same time, many proceedings are conducted in certain languages, and decisions are then rendered in such languages, which are subsequently translated into other languages (at the very least as regards their interpretation in the scholarly

Public Policy and Public Interest in International Law and EU Law

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literature or their citation in later decisions). This often causes misinterpretations. However, the strict differentiation between public policy and public interest is an issue of utmost relevance.

II. Public Policy (Ordre Public)

7.02. The term ordre public is certainly subject to certain shifts in meaning in continental (civil law), but on the whole, is defined narrowly and is resistant to change. For this reason, it is unsurprising that the term was incorporated, in the post-WW II period, as an alternative to, and alongside, the term “public policy” (used usually in parentheses) in multilateral international treaties, which then began to be drafted (in a move away from the previous international practice, which had tended towards use of French as its language of contract), either bilingually (in English and French) or in English alone. This was done to stress the common understanding of the concept by all high contracting parties. The fact of international custom should not be taken to mean, however, that the terms are identical. The reference to public policy (ordre public) usually appears when used as public policy objection, i.e. as a corrective remedy for the undesirable effects of a treaty for a specific High Contracting Party, who finds individual arrangements to be unacceptable. This public policy objection is supposed to be an exception to the general rule, however, i.e. it is to be invoked in exceptional situations, for which not even an international treaty could have provided. The fact that international treaties reference both terms – public policy and ordre public – side by side as synonyms does not mean that the substance of these institutions is the same. On the one hand, the fixed use of both terms in conjunction in treaties (where public policy and ordre public always go hand in hand) is a technical convention in international contract drafting, and serves to express the fact that these institutions pursue the same objective. On the other hand, this usage is a manifestation of the desire to reach a compromise in terms of the application of these institutions in practice. This compromise is usually put to use in the term international public policy, which not only serves to highlight the exceptional character of the institution known as the public policy defence in international practice, but also to urge the parties to apply the respective remedial, or corrective, effects of treaties only in those cases which, in supranational practice, may be considered isolated excesses. Some treaties as well as a number of national conflict-of-law rules expressly provides for the application of public policy of a given state in which the treaty is to become operative (in the sense of “public policy exception”). Other instruments


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(international or national) restrains from using the qualifier “national” (in terms of “national public policy”). It would appear that an international public policy exception is given precisely in all those cases in which a treaty contains no reference to public policy limitations.1

7.03. Maybe it is because of the divergent approach of various legal cultures with respect to the difference between public policy and ordre public, that the distinction sometimes goes unnoticed in the day-to-day operation even of sophisticated international practice, maybe it is because of the hegemony (in the positive sense of the word) of English as the lingua franca of international practice after World War II – in any case, practitioners of the law are not seldom ignorant of the actual nature of the two terms. Thanks to its sweeping scope, public policy in the Anglo-American understanding of the term often overlaps with the term “public interest,” even though the two do not mean the same thing, and must not mean the same thing – even in common law. Ordre public, on the other hand, must strictly be differentiated from public interest by drawing a clear boundary between two fundamentally different terms. However, and in the light of the universal and global prominence of English in today’s international practice, in particular, one often finds that all these terms and categories are lumped together conceptually as public policy. We have been witnessing this even in a number of important acts on the supranational level, but it remains a conceptual mistake, which ultimately triggers an explosion of arguments invoking public policy and applying the public policy exception – something that ought to have remained completely exceptional. The international community (be it globally, or within its regional context) should, on the contrary, take an interest in minimizing the consequences inherent in the conflation of the terms public policy (ordre public), particularly (but not limited to) the application of the public policy exception.

III. Public Interest

III.1. National Underpinnings of the Historical Definition of Public Interest

7.04. Public interest as a term really has been developed, for the most part, on the level of national states. It denotes an interest of society as a whole, i.e. an interest that goes beyond the interest of the individual or 1 This interpretation is not universally shared, however, and there are those who argue that such cases are always public policy exceptions in the national sense – a view not held by the author of this paper.


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of mere factions. While public interest is an important institution, today’s laws give no definition for it (which is rather logical, if one gives it a moment’s thought). Public interest has been called an indeterminate concept, but rather than indeterminate, it is perhaps better understood as an abstract institution (or abstract category), which attains determinateness only when is juxtaposed with a specific legal rule – i.e. in particular, the purpose or objective of that specific rule. Public interest is understood to be opposite to the private interest,2 and differs from it in that the circle of persons to whom the public interest is attributable remains undefined. The public interest can refer to society as a whole (in the case of environmental issues), to a local interest (in the case of a local infrastructure building project), or to a group (in the case of the protection of disadvantaged contractual parties – say, consumers). In a democratic state under the rule of law, however, it is inadmissible to also include the “state interest,” to which citizens would be bound to defer. In those cases in which the public interest is not identical with interests protected by “public policy,” even public interest must not prevail over, but must yield to public policy, a category protected (ordre public), for representing the fundamental values (“pillars”) of the constitutional and social order.3

7.05. The fact that current law does not define public interest is a problem especially in those cases in which the state authority interferes with the sphere of private rights of natural persons and legal entities, citing the existence of a purported public interest. This manifests itself especially in measures leading to expropriation, be it direct4 or indirect5

2 See, for instance, Pavel Mates & Michal Bartoň, Public versus Private Interest – Can the Boundaries Be Legally Defined? in CYIL – CZECH YEARBOOK OF INTERNATIONAL LAW, Huntington (New York): JurisPublishing Inc. 171-190 (A. J. Bělohlávek & N. Rozehnalová eds., 2nd ed. 2011). 3 See, for instance, Judgment IV ÚS 557/09 by the Czech Constitutional Court of 18 August 2009 (which references the earlier judgment IV. ÚS 412/04 by the Czech Constitutional Court of 7 December 2005) (cit.): “[...in proceedings on the withdrawal of legal capacity], the legislature has made the individual a “subject” of the law, because they felt that a strong public interest was present in these matters. Nonetheless, public interest of this kind may not always, and may never completely – ‘automatically’, so to speak – prevail over the interest of the individual and strip them of their abovementioned fundamental rights.” 4 Direct expropriation has today become an exceptional rarity, but international practice has records of cases in which direct expropriation was classified as legal on grounds of a qualified public interest, and the decisions that set such precedent generally adopted the position that a policy of nationalization can meet the test of lawfulness. See, for instance: (▪) Amoco International Finance Corp. v. Iran, arbitral award, published in: US-Iran Claim Tribunal Reports (“US-Iran CTR”, 1987, Vol. 15, Marg. (145) through (146) (according to which the implementation of basic economic and political goals of the new


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expropriation. Even expropriation is not in principle unlawful, if basic standards are upheld, which find strong support not only in national law, but also in various treaties.6 It is alarming to see, however, how the reach of invocations of the public interest has been growing, and in particular, to see the efforts made to use this category to breach what should have remained inviolate: the protection of those fundamental values covered by public policy. Doubtlessly, the protection of ownership and of certain concomitant rights integral to ownership belong in this category. Often, protection of the public interest is the rationale given for compromising these fundamental imperatives, which form a part of the conceptual public policy (ordre public) dyad. The efforts to shift the boundaries of public interest towards an ever more extensive understanding give cause for great concern.7

regime was a valid public interest. Financial aspects cannot make their actions illegitimate, unless they were the only consideration). Award cited in: Para. (146); (▪) The American Independent Oil Co. v. The Government of the State of Kuwait, award of 24 May 1982, published in: ILM, 1982, Vol. 21, pp. 976 et seq., Paras. (85) and (86), as well as Para. (109) (national policy aimed at taking complete ownership of the country’s crude oil reserves was a valid public interest and the stabilization clause did not result in an elimination of the state’s right to nationalize industries.) Award cited in Para. (95); (▪) Libyan American Oil Co. v. The Government of Libyan Arab Republic, award of 12 April 1977, 62 ILR, 1982, Vol. 62, pp. 141 et seq., Para. (194) (conclusion: the commonwealth principle is not a prerequisite for lawful expropriation). 5 For a general take on the matter, see, for instance, Veijo Heiskanen, The Doctrine of Indirect Expropriation in Light of the Practice of the Iran-United States Claims Tribunal, 8 (2) JOURNAL OF WORLD INVESTMENT & TRADE 215 et seq. (2007); Veijo Heiskanen, The Contribution of the Iran-United States Claims Tribunal to the Development of the Doctrine of Indirect Expropriation, 5 (3) INTERNATIONAL LAW FORUM DU DROIT INTERNATIONAL 176 et seq. (2003). 6 See, for instance, Alexander J. Bělohlávek, Hmotněprávní standardy ochrany přímých zahraničních investic (Substantive Law Standards of Protection of Foreign Direct Investments), 151 (1) PRÁVNÍK 1-51 (2012), among others. 7 A typical example would be the finding of excessive profit (what is known as “luxury profit”) in AES Summit Generation Limited AES-Tisza Erömű Kft v. The Republic of Hungary, ICSID Case No. ARB/07/22, Award of September 23, 2010, Para. (10.3.34). This paragraph may have been added to the award only in passing (obiter dictum), but in my view is a manifestation of the undesirable expansion of “public interest.” In this respect, the cited award went too far; this kind of excess must meet with criticism, even when the award is issued by a highly renowned senate – not because I agree (or don’t agree) with the finding in the above-cited paragraph, but because it is a finding outside the boundaries of the subject matter in dispute, on which the senate was to take position. This, then, is an example of the expansion of public interest as a legal institution, which is harmful for the international legal environment and jeopardizes the proper functioning of its basic mechanisms.


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III.2. Origin and Formation of Public Interest 7.06. Rochdi Goulli8 has described how the concept of public interest has

manifested itself in a great variety of forms since the dawn of the first human societies. Hippodamos of Miletus spoke of it as he summed up his experiences in building a public arena, when he specified the role of private and public buildings in the establishment of municipalities and cities. Plato certainly refers to the public interest in his Politeia and Nomai, in his observations of municipalities, their structure and governance. However, public interest as a term was only consolidated with the rise of the Roman Republic, when public law was established alongside private law – defined by Ulpian in his interesting, now classic theory.9 But even the original Law of the Twelve Tables contains principles of public interest, “Utilitas Publica,” which helped to define private (civil) interest, as well as provisions on how the violation of common interests should be punished. At the time, public interest was vested in municipalities and collegia (associations of citizens).10 However, these groups did not live in harmony, were frequently in conflict, which devalued the substance and original objectives of this institution.11 This ultimately paved the way for the creation of a new category, the national interest, which came into existence as governance moved from the municipal level to the state level.12

8 Rochdi Goulli, Problémy definování a prosazování veřejného zájmu (The Issues of Defining and Enforcing Public Interest), in SBORNÍK REFERÁTŮ Z TEORETICKÉHO SEMINÁŘE POŘÁDANÉHO KATEDROU VEŘEJNÉ EKONOMIE ESF MU V BRNĚ VE SPOLUPRÁCI S ASOCIACÍ VEŘEJNÉ EKONOMIE (Anthology of Papers Presented at the Theory Seminar Organized by the Department of Public Economy of the Faculty of Economics and Administration at Masaryk University in Brno in Cooperation with the Public Economy Association), Brno: Masaryk University 10 (I. Malý ed., 1999). 9 “Publicum ius est quod ad statum rei romanae spectat; privatum, quod ad singulorum utilitatem.” (Public law is that which concerns the state of the Roman commonwealth; private law is that which is useful to the individual). ULPIAN, DIGESTA 1, 1, 1, 2. Public interest, here, is to be understood as “state interest.” 10 Regarding the historical excursion, see also ROMAN MÜLLER, ORGÁNY OCHRANY VEŘEJNÉHO ZÁJMU (NEJVYŠŠÍ KONTROLNÍ ÚŘAD A ÚŘAD PRO ZASTUPOVÁNÍ STÁTU VE VĚCECH MAJETKOVÝCH) (Bodies Protecting the Public Interest (Supreme Audit Office and Office for Government Representation in Property Affairs)), Diploma thesis, defended before the Department of Administrative Studies, Administrative Law, and Financial Law of the Faculty of Law at Masaryk University in Brno 2009/2010, accessible in electronic format through the faculty’s online database available at: www.law.muni.cz (accessed on January 14, 2011). 11 In the view of the author of this paper, we are also witnessing similar excessive inflation of the term public interest in the international arena. 12 Rochdi Goulli, supra note 8, at 10.


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7.07. The historical changes brought about by the transformation of the Roman Republic into an Empire (and, later, the medieval monarchy) ultimately had to have an impact on the perception of “public interest” as a term. Given the role of the potentate in these forms of government – i.e. that of representative of the state, and thus of enforcer and enunciator of the public interest – the original meaning of the term was perverted, such that the sovereign himself came to be conflated with the public interest. During this period Regalian doctrine (or jure regalia) was being formulated, and public interest made part of what is now known as the Regalian rights (rights vested in the royalty by virtue of their prerogatives, and made to extend to the judiciary, fiscal measures – tax collection, etc.).13

7.08. Further developments in the 19th century prepared the ground for the fall of absolutism and introduced liberal ideas that influenced the concept of public interest. The meaning of the public interest was removed, at least in part, from absolutist control, was subjected to reforms, and acquired a new, distinct structure. Even so, it never returned to its original sense. Not that this would have been possible in the first place: Rektořík has called public interest an interactive term, one which, in his words, must always be interpreted in its respective historical context.14 Other authors tend to refer to it simply as an “indeterminate legal term,”15 but while public interest might thus be thought to form a rather abstract concept, it is one whose very significance should be seen as residing in its abstract nature.

7.09. After the Great Depression and World War II, the importance of the public sector rose dramatically, especially in communist countries, and the concept of the public interest grew in importance along with it. However, the term had been redefined and gained currency along with this development, which simply served to conceal the very individual interest of the ruling elite. What enabled this manipulation was the doctrine under which only one subject (namely, the state) was made to be the only possible bearer of the public interest. Since the fall of Communism, these countries have begun to abandon this doctrine, in 13 Ibid. 14 Jaroslav Rektořík, Problémy definování a prosazování veřejného zájmu (The Issues of Defining and Enforcing Public Interest), in SBORNÍK REFERÁTŮ Z TEORETICKÉHO SEMINÁŘE POŘÁDANÉHO KATEDROU VEŘEJNÉ EKONOMIE ESF MU V BRNĚ VE SPOLUPRÁCI S ASOCIACÍ VEŘEJNÉ EKONOMIE (Anthology of Papers Presented at the Theory Seminar Organized by the Department of Public Economy of the Faculty of Economics and Administration at Masaryk University in Brno in Cooperation with the Public Economy Association), Brno: Masaryk University 29 (I. Malý ed., 1999). 15 PETR PRŮCHA, ZÁKLADNÍ POJMY A INSTITUTY SPRÁVNÍHO PRÁVA (Basic Terms and Institutions of Administrative Law), Brno: Masaryk University 355 (1998).


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favour of one where the public interest is entrusted to individual hubs of decision-making power and citizens’ associations.16

7.10. As we have seen, public interest has manifested itself throughout recorded human history. One interesting aspect noted by the academic literature on the subject17 is that growing population density and the increased sophistication of technology (which, among other things, makes it possible and likely that people become aware of new personal needs) go hand in hand with the need to enforce the public interest; but this same aspect might lead one to fear that if this tendency continues it could signal a detrimental development at least for the international arena. The international community strives to reach a broad compromise regarding many important issues.18 In this regard, it is of no concern whether the purpose of a specific treaty or other legal instrument makes itself manifest in an individual case within the territory of one (or of only a few) state(s), or only temporarily, or on the international scene as a whole. Nor is it relevant whether the objective is pursued by a bilateral or multilateral (regional or universal, closed or open) international treaty. In any case, the public interest should not be added to the lexicon of international law, nor much less confused with public policy (ordre public).

III.3. Definition of the Term “Public Interest”

7.11. As mentioned earlier, according to some, “public interest” is an indeterminate legal term.19 However it is not that the term is ill defined, but that the term’s meaning changes depending on the time and place of its usage, which is why the “carrier” of the public interest who is tasked with its enforcement has been granted the interpretive leeway to establish whether a given case falls within the reach of the term. For this reason, “public interest” belongs to a highly abstract category, which would miss its purpose without this high degree of abstraction. It

16 Rochdi Goulli, supra note 8, at 10-11. 17 Daniela Dostálková & Kateřina Křivková, Problémy definování a prosazování veřejného zájmu (The Issues of Defining and Enforcing Public Interest), in SBORNÍK REFERÁTŮ Z TEORETICKÉHO SEMINÁŘE POŘÁDANÉHO KATEDROU VEŘEJNÉ EKONOMIE ESF MU V BRNĚ VE SPOLUPRÁCI S ASOCIACÍ VEŘEJNÉ EKONOMIE (Anthology of Papers Presented at the Theory Seminar Organized by the Department of Public Economy of the Faculty of Economics and Administration at Masaryk University in Brno in Cooperation with the Public Economy Association), Brno: Masaryk University 28 (I. Malý ed., 1999). 18 See ROMAN MÜLLER, supra note 10. 19 DUŠAN HENDRYCH, SPRÁVNÍ PRÁVO, OBECNÁ ČÁST (Administrative Law, General Part), Praha: C. H. Beck 86 (7th ed. 2009). This view has been scrutinized in various sources, such as ROMAN MÜLLER, supra note 10.


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is probably best explained by way of contradiction to private (i.e. individual) interest.20

7.12. Public interest is an interest vested in a loosely defined, but basically identifiable circle of persons that allows the label “public.”21 However, it doesn’t need to represent an aggregate of individual interests.22 It is quite misleading to attempt this straightforward conjunction of individual interests. The quality of public interest is in fact distinct from the individual interest of persons who, as a collective, pass for the general public – i.e. the (supposed) addressee of acts that are conditional upon, or influenced by, public interest. That said, the idea of the public interest may well arise from individual interest. Interest becomes public if and when a broader group of (potential) individuals draws benefits from it. At this notional fault line in the transition from individual interest to public interest, the concept takes on a materially different quality. Only because of this qualitative change is it possible to determine public interest, unlike individual interest, by way of the overriding mandatory rules in generally binding legal acts.

7.13. Despite the apparent relation between public interest and public law, the public interest concept cannot be confined to the sphere of public law. This is all the more significant in an international context, given that civil law and common law are often at odds when it comes to their respective understanding of the differences between public law and private law – differences that are much less pronounced (and in some jurisdictions possibly entirely disregarded) under common law. In an international environment, it is in fact hardly possible to speak of private law and public law. True, terms such as public international law and private international law are in use, but the comparison is not advisable, given that the defining qualities are diametrically opposed to those that we, on a national level, understand to be the differences between private law and public law (presumably with the exception of the attributes of public law subjects [entities] under private

20 Analogous in the ECJ decision of joined Cases T-109/05 and T-444/05 of 24 May 2011 (in matters of Navigazione Libera del Golfo Srl. /formerly Navigazione Libera del Golfo SpA/ v. EU Commission) (unpublished). 21 See PETR PRŮCHA, supra note 15, at 54. 22 Vladimír Hyánek, Problémy definování a prosazování veřejného zájmu (The Issues of Defining and Enforcing Public Interest), in SBORNÍK REFERÁTŮ Z TEORETICKÉHO SEMINÁŘE POŘÁDANÉHO KATEDROU VEŘEJNÉ EKONOMIE ESF MU V BRNĚ VE SPOLUPRÁCI S ASOCIACÍ VEŘEJNÉ EKONOMIE (Anthology of Papers Presented at the Theory Seminar Organized by the Department of Public Economy of the Faculty of Economics and Administration at Masaryk University in Brno in Cooperation with the Public Economy Association), Brno: Masaryk University 60 (I. Malý ed., 1999).


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international law23). According to some authors, public interest on the national level is also a term of significance for private law,24 finding its reflection, e.g. in the adherence to private law principles. This is probably acceptable, since adherence to these principles contributes to improved legal certainty – and the strengthening of legal certainty may surely be seen to be a kind of public interest. This view is also supported by certain opinions in the field of administrative law. One may, e.g. encounter the view25 that any legal rule (law, regulation) is in the public interest – in other words, that both private law rules and public law rules serve to protect, promote, and uphold the public interest.

7.14. Others26 have argued that the issue in defining public interest rests in the fact that anything that is in the public interest is presupposed to be generally beneficial – in short, “good for society.” The problem here is how to define the “good,” which “opens a can of worms” in practical terms. One is then faced with the question of whether action A or action B is “more” in the public interest – or rather, whether one thing is “better” than the other. It is conceivable that one side might put economic interests (say, a new motorway) into the balance, but faces opposition from the other side due to its declared interest in protecting the environment.

23 Even this does not hold as universally true. Consider that modern international law, in certain cases, also attributes rights to private law entities – typically in the case of investment protection. In this respect, it is irrelevant whether the right of private investors guaranteed by international mechanisms is an original right of those entities, or has been derived from the rights of the investor’s home country. Examples of situations in which international law infers and acknowledges direct claims and titles held by private-law entities can also be found in other areas, e.g. in certain cases in connection with consular protection, but also in connection with international mechanisms aimed at the protection of human rights, among others. 24 Josef Bejček, Veřejný zájem v obchodním právu (Public Interest in Commercial Law), in SBORNÍK PŘÍSPĚVKŮ Z VI. MEZINÁRODNÍ VĚDECKÉ KONFERENCE POŘÁDANÉ KATEDROU OBCHODNÍHO PRÁVA (Anthology of Conference Submissions, VI. International Academic Conference Hosted by the Department of Commercial Law), Brno: Masaryk University 6 (J. Bejček ed., 2008). 25 PETR HAVLAN, VEŘEJNÉ VLASTNICTVÍ V PRÁVU A SPOLEČNOSTI (Public Ownership in Law and Society), Praha: C. H. Beck 48, 54 (2008). 26 Ivan Malý, Problémy definování a prosazování veřejného zájmu (The Issues of Defining and Enforcing Public Interest), in SBORNÍK REFERÁTŮ Z TEORETICKÉHO SEMINÁŘE POŘÁDANÉHO KATEDROU VEŘEJNÉ EKONOMIE ESF MU V BRNĚ VE SPOLUPRÁCI S ASOCIACÍ VEŘEJNÉ EKONOMIE (Anthology of Papers Presented at the Theory Seminar Organized by the Department of Public Economy of the Faculty of Economics and Administration at Masaryk University in Brno in Cooperation with the Public Economy Association), Brno: Masaryk University 21-22 (I. Malý ed., 1999).


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7.15. Current law largely takes recourse in the term “public interest” as an argument for regulating certain specific actions. But only rarely are attempts made to truly define the term – as it were, and attempts usually take the form of mere non-exhaustive lists of elements of public interest which, moreover, are themselves customarily limited to the scope of the given law or regulation.

IV. Public Policy and Public Interest in EU Law

IV.1. Autonomous Concepts of Public Policy, Public Interest of Public Policy, and Public Interest; Derogation from Freedoms Guaranteed under EU Primary Law

7.16. The term “public policy” is a stand-alone term in the acquis (EU law), which helps to determine (in addition to other institutes) the reach of fundamental freedoms, and as such must be defined autonomously, as opposed to being defined, e.g. on the basis of one or several national legal systems.27 As such, the term is open to interpretation by the ECJ. The member states are not in a position to unilaterally stipulate the scope of “public policy,” removed from the oversight of EU authorities.28 (However, this does not rule out that special circumstances may justify invoking the public policy defence, and member states are, under certain circumstances, being given some discretionary leeway, within the boundaries drawn exclusively by the

27 See, for instance, these ECJ Judgments: (▪) ECJ Judgment of 2 April 1998, C-296/95, The Queen v. Commissioners of Customs and Excise, ex parte EMU Tabac SARL, The Man in Black Ltd, John Cunningham, [1995] ECR I-1605, Marg. (30); (▪) ECJ Judgment of 23 March 1982, 53/81, D.M. Levin v. Staatssecretaris van Justitie, [1982] ECR 01035, Marg. (10) through (12). 28 According to established case law, recourse by national authorities to “public policy” always presupposes that, aside from societal perturbation (which is inherent in any breach of law), basic interests of society are being affected by a genuine and sufficiently serious threat. See, for instance, these ECJ Judgments: (▪) ECJ Judgment of 28 October 1975, 36-75, Roland Rutili v. Ministre de líntérieur, CELEX: 61975J0036, Marg. (35); (▪) ECJ Judgment of 27 October 1977, 30/77, Regina v. P. Bouchereau [1977] ECR, 1999, Marg. (33); (▪) ECJ Judgment of 29 April 2004, jointed cases C-482/01 and C-493/01, Georgios Orfanopoulos et al. et Raffaele Oliveri v. Land Baden Württemberg [2004] ECR I-5257, Marg. (64) and (66); (▪) ECJ Judgment of 31 January 2006, C-503/03, EC Commission v. Spain [2006] ECR p. I-1097, Marg. (46); (▪) ECJ Judgment of 27 April 2006, C-441/02, EC Commission v. Germany [2006] ECR I-3449, Item (35); (▪) ECJ Judgment of 7 June 2007, C-50/06, EC Commission v. Netherlands [2007] ECR I-4383, Item (43).


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TEC29). The above-described restrictions only apply with respect to public policy in terms of EU law, but not in terms of international law – i.e. outside EU member states, or in cases concerning EU member states, but not involving the application of EU law – regardless of the fact that EU primary law forms a part of international law with regional scope of application. In spite of these common principles, a variety of meanings have been attributed to the term “public policy,” depending on the respective rule’s position and role within the system of EU law.30 As mentioned elsewhere in this paper, the term is used with a certain degree of promiscuity, especially where found in conjunction with “public interest” – but the two terms are not identical.

IV.2. Free Movement of Persons and Protection of

Security 7.17. The term(s) public policy and/or public interest are probably most

often interpreted in connection with the idea of the free movement of persons. Limitations of the right of residence in exercising the freedom of the free movement of goods, workers, and services and the freedom of establishment on public policy or on security grounds have a comparable foundation. For this reason, the principles embodied in ECJ judgments on the restriction of this law are presumably applicable to all freedoms.31 That said, one must note that, it is public policy doctrine as connected to security and protection against security risks that is here discussed – a somewhat different dimension of public policy as compared to that of public policy (ordre public) as understood in terms of international law. While the category is indeed sometimes labelled public policy, it would be more appropriate to resort to terms such as public security, or security policy. Of course, interests related to security 29 ECJ Judgment of 4 December 1974, 41-74, Yvonne van Duyn v. Home Office [1974] ECR 1337, Marg. (18) and (19). 30 These are found in that set of EU legal provisions of which, on the level of primary law, Article 30 TEC, Article 39 (3) TEC, Article 46 TEC, Article 55 TEC, and Article 58 (1) (b) TEC, in particular, have acquired the meaning of “limitations of the fundamental freedoms,” which under certain circumstances allow a restriction of the free movement of goods, persons, services, and capital, which is otherwise guaranteed by primary law. However, the term “public policy” also appears to a limited degree in EU secondary law, either as an exemption clause or as an interpretational rule or refining rule in secondary law (on this, see HARTMUT SCHNEIDER, DIE ÖFFENTLICHE ORDNUNG ALS SCHRANKE DER GRUNDFREIHEITEN IM EG-VERTRAG, Baden-Baden: Nomos Verlag 53 (1998)). 31 Hana Karlová, Omezení a ukončení práva na vstup a pobyt občanů Unie z důvodu veřejného pořádku a bezpečnosti (Restriction and Abolition of Rights of Entry and Residence for EU Citizens on Grounds of Public Policy and Security Concerns), 146 (8) PRÁVNÍK 923-924 (2007).


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issues certainly contain elements of public interest. Even so, conceptual and terminological inaccuracy and imprecision is rampant in this area, which facilitates the ever frequent (mis-)use of public policy in international practice.32 Even so, the above-described case concerns use of the public policy exception in terms of international law – an exception from EU primary law (which is subject to international law), whereas it is most often and primarily EU law (and particularly its application in practice) that indulges in extremely extensive constructions of the term public policy, including those situations that do not qualify as a public policy exception (in the sense that the application of EU primary law, as a source of international law, has been rejected). In connection with the restriction of the movement of persons, one usually finds the terms public policy and security used in conjunction – not because they make a natural pairing, but probably because public policy has connotations that are thought to be intimately concerned with security. The ECJ has entrusted the further specification of the term to the member states, with respect to their essential interests and the interests of their citizens, but even this option to liberally interpret the term is not without limits; on the whole, a restrictive approach is favoured.33 Unlike the case of the term “public policy,” the ECJ has attempted a definition of “external security”34 and “internal security.”35 The application of the public policy exception (here 32 See, for instance, Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States, amending Regulation (EEC) No. 1612/68 and repealing Directives 64/22/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC. Security order may be the subject matter of public policy (ordre public), but one must always assess whether it is indeed so in the individual case. 33 See, for instance, these ECJ decisions: (▪) ECJ Judgment of 28 October 1975, 36-75, Roland Rutili v. Ministre de líntérieur, CELEX: 61975J0036 (EU member states may determine the weight of the public policy defence in accordance with national legislation, as long as they respect the boundaries drawn by EU authorities); (▪) ECJ Judgment of 4 December 1974, 41-74, Yvonne van Duyn v. Home Office, CELEX: 61974CJ0041 (this concerned an exemption from the basic freedom of free movement of workers, which must be interpreted restrictively so as to ensure that EU member states cannot unilaterally determine its meaning without EU oversight); (▪) ECJ Judgment of 20 November 2001, C-268/99, Aldona Malgorzata Jany and Others v. Staatssecretaris van Justitie et al., CELEX: 61999J0268 (EU law does not prescribe a uniform scale of values which to endanger is tantamount to endangerment of public policy). 34 ECJ Judgment of 17 October 1995, C-83/94, criminal proceedings against Peter Leifer, Reinhold Otto Krauskopf et Otto Holzer, CELEX: 61994CJ0083 (foreign military threat, imminent serious disturbance to foreign relations or to peaceful national existence). 35 ECJ Judgment of 15 October 1987, 222/86, Union nationale des entraîneurs et cadres techniques professionnels du football (Unectef) v. Georges Heylens et al), CELEX:


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in relation to fundamental freedoms) presupposes, aside from a violation of laws by the respective person, that the actions of that person represent a real36 and sufficiently grave threat to society’s fundamental interest.37 One must always consider whether there aren’t more moderate means to adequately protect the fundamental societal interest.38 The only decisive criterion for whether derogation from fundamental freedoms (in the sense of the public policy exception) may be applied is always the concrete conduct of a person enjoying these freedoms, whereas application of the exception for the purpose of what is known as general deterrence is not allowed.39 At the same time,

61986J0222 (preservation of existence of the state, its institutions, and its key functions, preservation of the continued existence of the population). 36 See ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary, ICSID Case No. ARB/03/16, Award of October 2, 2006. Regarding the public policy criterion, the arbitration senate reached the following conclusion in this (expropriation-related) matter (cit.:) “ [...] ‘public interest’ requires some genuine interest of the public. If mere reference to ‘public interest’ can magically bring such interest into existence and therefore satisfy this requirement, then this requirement would be rendered meaningless, since the Tribunal can imagine no situation where this requirement would not have been met.” This is why established case law indicates, in spite of the consideration and deference vis-à-vis the expropriating states, that the act of expropriation must satisfy a real societal interest in order to be considered legitimate. 37 See, for instance, Article 27(2) of Directive 2004/38/EC of the European Parliament and the Council of 29 April 2004. See, for instance, ECJ Judgment of 26 November 2002, C-100/01, Ministre de l’Intérieur v. Aitor Oteiza Olazabal, CELEX: 62001J0100 (tax fraud and terrorism). 38 Typical examples include, e.g. a traffic violation committed while driving a motor vehicle, which does not call for nor allow any restriction of the “freedom of movement” (in that imposing a ban of driving is a perfectly sufficient and adequate sanction), or e.g. failure to produce a personal ID, or a violation of registration duties in the case of a foreigner. However, it is not necessary that the actions of the foreigner qualify at the same time as a criminal offense. For a more detailed analysis of this issue, see also I & II ALEXANDER J. BĚLOHLÁVEK, ROZHODČÍ ŘÍZENÍ, ORDRE PUBLIC A TRESTNÍ PRÁVO: INTERAKCE MEZINÁRODNÍHO A TUZEMSKÉHO PRÁVA SOUKROMÉHO A VEŘEJNÉHO (Arbitration, Ordre Public and Criminal Law: Interaction of International and Domestic Private and Public), Praha: C. H. Beck (2008) and Kyiv [Ukraine]: Taxon (bilingual in English and Russian) (2009). 39 See, for instance, these ECJ decisions: (▪) ECJ Judgment of 28 October 1975, 36-75, Roland Rutili v. Ministre de líntérieur, CELEX: 61975J0036; (▪) ECJ Judgment of 26 February 1975, 67/74, Carmelo Angelo Bonsignore v. Oberstadtdirektor der Stadt Köln, CELEX: 61974CJ0067; (▪) ECJ Judgment of 4 December 1974, 41-74, Yvonne van Duyn v. Home Office, CELEX: 61974CJ0041. This decision represents an exemption of sorts: a Dutch citizen had accepted an offer for employment in Great Britain with the Church of Scientology – an organization that was officially considered harmful to society by the British government, but whose activities had not been legally restricted. According to the ECJ, while the employment of “domestic” persons must in such a case not be prohibited, in the case of a foreigner, the said position represents a manifestation of their current mind-


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member states must respect the general principles of EU law, i.e. in particular, the prohibition of discrimination on grounds of nationality.40 However, abuse in the form of creating a fictitious scenario aimed at exploiting the applicability of the right of free movement (in terms of EU law) is forbidden.41 The ECJ also requires that a given threat be weighed against the response – in the sense that it must be impossible to avert the threat in any other way than by invoking public policy.42

7.18. Another area of interest as far as public policy is concerned relates to exceptions in connection with the free movement of workers in the context of providing services. This case law largely deals with member states that demand that businesses sending workers to their territory automatically adjust salaries (other than the minimum wage) to the cost of living,43 although even here, a restrictive interpretation is called for.44 While the concrete specification is always left to the respective

set, which may lead to a threat to the public security of the host country; (▪) ECJ Judgment of 18 May 1982, in joined Cases 115/81 and 116/81, Rezguia Adoui v. Belgian State and City of Liège; Dominique Cornuaille v. Belgian State, CELEX: 61981CJ0115: this decision is a correction of sorts to the judgment in the van Duyn case, in that in the more recent matter, the expulsion of two French women from Belgium [BEL] for being prostitutes (whereas prostitution is not prohibited in Belgium) was found incompatible with EU law. Here it was found that conduct that is immoral, but at the same time not unlawful cannot give cause for a restriction of the freedom of movement. See also PAVEL SVOBODA, ÚVOD DO EVROPSKÉHO PRÁVA (Introduction to European law), Praha: C. H. Beck 194 (3rd ed. 2010), among others. 40 Article 18 of the TFEU. 41 See the following ECJ decisions: (▪) ECJ Judgment of 31 March 1993, C-19/92, Dieter Kraus v. Land Baden-Württemberg, CELEX: 61992CJ0019; (▪) ECJ Judgment of 23 September 2003, C-109/01 Secretary of State for the Home Department v. Hacene Akrich, CELEX: 62001J0109. 42 See the following ECJ decisions: (▪) ECJ Judgment 157/79, Regina v. Stanislaus Piech, [1980] ECR 2171 (▪) ECJ Judgment of 4 December 1974, 41-74, Yvonne van Duyn v. Home Office, CELEX: 61974CJ0041; (▪) ECJ Judgment of 19 January 1999, C-348/96, criminal proceedings against Donatella Calfa [1999] ECR I-11, Para. (23). 43 Here in the particular sense of the obligation pursuant to Article 3 (10), first bullet point, of Directive (EC) 96/71, concerning the posting of workers in the framework of the provision of services, Member states may impose conditions on businesses that post workers to their territory, and these conditions may also concern areas other than those listed in Article 3 (1), first bullet point, of Directive 96/71, with the caveat that they are set out in public policy provisions. 44 NIKOLAOS A. GEORGIADIS, DEROGATION CLAUSES: THE PROTECTION OF NATIONAL INTERESTS IN EC LAW, Athens: Sakkoulas (Publication of the Hellenic Institute of international and Foreign Law) 72 (2006), points to the fact that all derogation clauses, particularly the public policy exemption, are principally subject to a restrictive interpretation. In the view of JULIA WICHMANN, DIENSTLEISTUNGSFREIHEIT UND GRENZÜBERSCHREITENDE ENTSENDUNG VON ARBEITNEHMERN, Frankfurt a. M.: Peter Lang 104, 105 (1998), systemic considerations speak against an extensive interpretation, as it


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member state, these are exceptions from EU fundamental rules, the scope of which the member states must not determine unilaterally.45 These additional conditions must be substantiated by reference to the public interest, according to domestic needs, but a restrictive approach is always required. For instance, conditions that arise from generally binding collective bargaining agreements do not qualify as exceptional, as was ruled by the ECJ, e.g. in Commission v. Luxembourg (C-319/06).46 This decision in particular, however, demonstrates how inadmissibly and with what leisure the terms “public policy” and “public interest” are bandied about for while the original case speaks of “public policy,” more than one translation of it employs “public interest.”47 Recall that application of the public policy exception must relate to a threat to fundamental legal and social principles!48 In the case of working conditions, then, the issue must be one that the host country

follows from the very character of a “contractual provision on an exemption” (which is the definition of derogation clauses) that the public policy exception must be interpreted restrictively – i.e. invoking public policy presupposes and requires that paramount interests in the domain of the respective member state are in danger. 45 See the following ECJ decisions: (▪) ECJ Judgment of 26 February 1975, 67/74, Carmelo Angelo Bonsignore v. Oberstadtdirektor der Stadt Köln, [1975] ECR 297, Para. (6); (▪) ECJ Judgment of 28 October 1975, 36-75, Roland Rutili v. Ministre de líntérieur, CELEX: 61975J0036, Marg. (27); (▪) ECJ Judgment of 27 October 1977, 30/77, Regina v. P. Bouchereau [1977] ECR 1999, Marg. (33). See also, for instance, ROGER BLANPAIN, EUROPEAN LABOUR LAW, The Hague: Kluwer Law International 314 (9th ed. 2003), among others; (▪) ECJ Judgment of 19 January 1999, C-348/96, criminal proceedings against Donatella Calfa [1999] ECR I-11, Marg. (23); (▪) ECJ Judgment, of 29 April 2004, joined cases C-482/01 and C-493/01, Georgios Orfanopoulos et al. et Raffaele Oliveri v. Land Baden Württemberg [2004] ECR I-5257, Marg. (64) and (65); (▪) ECJ Judgment of 31 January 2006, C-503/03, EC Commission v. Spain [2006] ECR I-1097, Marg. (45); (▪) ECJ Judgment of 27 April 2006, C-441/02, EC Commission v. Germany [2006] ECR I-3449, Item (34) and (▪) ECJ Judgment of 7 June 2007, C-50/06, EC Commission v. Netherlands [2007] ECR I-4383, Marg. (42). 46 ECJ Judgment of 19 June 2008, C-319/06, EC Commission v. Luxembourg, CELEX: 62006J0319. 47 Among them, e.g. the inaccurate Czech translation. 48 See, for instance, MAXIMILIAN FUCHS & FRANZ MARHOLD, EUROPÄISCHES ARBEITSRECHT, Vienna: Springer Vienna 322 (2006); STEFFEN GÖRRES, GRENZÜBERSCHREITENDE ARBEITNEHMERENTSENDUNG IN DER EU, Vienna/Graz: BWV Berliner-Wissenschaft 122 (2003), among others. The authors acknowledge that in applying Article 3 (10) of Directive 96/71, certain criteria must be upheld, among them necessarily the free movement of services and the exact objectives of the legislature of Community law (EU law). According to GA Mengozzi (see Item (212) of his opinion submitted on 23 May 2007 in Laval un Partneri (ECJ procedure in the matter C-341/05 [2007] ECR I-11767), the fact that domestic rules belong in the category of public policy rules or mandatory rules alone does not relieve the member states of their obligation to respect the provisions of the TEC as follows from Article 3 (10) of Directive 96/71/EC.


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considers a principle of such fundamental importance that its violation would threaten the integrity of its labour market and of the working conditions and social fabric of that country. The Advocate General sought to define the interplay between public policy and public interest in the opinion she submitted in Commission v. Luxembourg (C-319/06),49 when she defined the scope of public policy as arising from “mandatory rules from which there can be no derogation and which, by their nature and objective, meet the imperative requirements of the public interest.” This definition does not fully hit the mark however, in that it shifts the meaning of public policy to mere “binding law / mandatory rules” or, as understood within private international law, to what at best is known as “overriding mandatory rules.” Even though one may concur with the Advocate General, that for public policy to be invoked, there must at the same time exist a public interest, public interest as distinguished earlier in this paper must aim toward a certain group of addressees of the legal imperative (concrete normative rule), while public policy implicates the fabric of the normative system. Clearly, these are not wholly identical categories of meaning, and public interest thus cannot constitute the only aspect of public policy, but rather must form only one of its several aspects or components. Nor should this aspect even be indispensable to it, considering the essential role played by public policy in law. That being said, one may further agree with the Advocate General’s view expressed in the same matter (regarding the conditions for posted workers) that “only those labour conditions set out in the law may be subsumed under public policy which are indispensable for the legal order of the given member state,” although the question of whether the required conditions meet this criterion must always be tested on a case-by-case basis. Incidentally, this position was illustrated rather trenchantly by the ECJ in C-36/02 (“Omega”50), when it held that measures restricting the free movement of services are only covered by the public policy defence if those measures are: justified by overriding reasons relating to the public interest; are such as to guarantee the achievement of the intended aim; and do not go beyond what is necessary in order to achieve it. At the same time, the need for, and the proportionality of such measures cannot be ruled out merely because another member state has chosen 49 ECJ Judgment of 19 June 2008, C-319/06, EC Commission v. Luxembourg, CELEX: 62006J0319. 50 ECJ Judgment of 14 October 2004, C-36/02, Omega Spielhallen- und Automatenaufstellungs-GmbH v. Oberbürgermeisterin der Bundesstadt Bonn, CELEX: 62002J0036, Paras. (36) through (38) (ban of a computer game that simulated acts of killing, in an infringement upon human dignity).


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different protection measures.51 In other words, measures that restrict the free movement of services are only justified by public policy if they are indispensable for the protection of those interests that they are supposed to uphold, and if this goal cannot be achieved by more moderate measures, and it is not necessary for restrictive measures imposed by the authorities in one member state to correspond to the policy pursued by all member states in protecting the given fundamental right or legitimate interest. In other words, measures cannot be said to fail the test of necessity and proportionality only because one member state follows a different system of protection than another. In any case, we reiterate public policy may only be invoked in the event of a genuine and sufficiently serious threat to the fundamental interests of society,52 even if the specific circumstances in support of the public policy defence differ from country to country, or from one situation at a given time to another, nor must all the member states share a “common understanding” regarding the given question. In this respect, the competent national authorities must be granted discretionary rights within the boundaries drawn by the Treaty.53 Under what conditions may one rule out that fundamental interests have come under threat? Certainly in those cases where the principles given in justification of the public policy defence have been stripped of their original purpose and have been in fact used to further purely commercial goals.54 In the same manner, a member state cannot “adopt measures against a national of another member state by reason of conduct which, when engaged in by nationals of the first member state, does not give rise to punitive measures or other genuine and effective

51 Leeway is granted to the member states to make an assessment in line with their set of values. See the following ECJ Judgments: (▪) ECJ Judgment of 21 September 1999, C-124/97, Markku Juhani Läärä, Cotswold Microsystems Ltd et Oy Transatlantic Software Ltd v. Kihlakunnansyyttäjä (Jyväskylä) et Suomen valtio [1999] ECR I-06067; (▪) ECJ Judgment of 21 October 1999, C-67/98, Questore di Verona v. Diego Zenatti [1998] ECR I-7289, Marg. (33). 52 See ECJ Judgment of 14 March 2000, C-54/99, Association Eglise de scientologie de Paris and Scientology International Reserves Trust v. The Prime Minister [2000] ECR I-1335, Marg. (17). 53 See the following ECJ Judgments: (▪) ECJ Judgment of 4 December 1974, 41-74, Yvonne van Duyn v. Home Office, CELEX: 61974CJ0041, Marg. (18); (▪) ECJ Judgment of 27 October 1977, 30/77, Regina v. P. Bouchereau [1977] ECR 1999, Marg. (34). 54 See the following ECJ Judgments: (▪) ECJ Judgment of 28 October 1975, 36-75, Roland Rutili v. Ministre de líntérieur [1975] ECR 1279, Para. (27); (▪) ECJ Judgment of 14 March 2000, C-54/99, Association Eglise de scientologie de Paris and Scientology International Reserves Trust v. The Prime Minister [2000] ECR I-1335.


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measures intended to combat that conduct.”55 In the above-cited Omega case, the ECJ arrived at the conclusion that (cit.) [a] national public order notice banning a commercial activity found by the national courts to be incompatible with basic principles of constitutional law is compatible with the provisions of the Treaty establishing the European Community relating to freedom to provide services if that order is genuinely justified for public policy purposes relating to the public interest, and it is ensured that that purpose cannot be achieved by measures that are less restrictive of the freedom to provide services. Here, the ECJ again failed to sufficiently differentiate between public policy and public interest, but its legal opinion may be interpreted such that public policy may give grounds for a restriction of fundamental freedoms as guaranteed by primary EU law, provided that the public interest criterion is fulfilled, i.e. provided that the principle of public policy incorporates at the same time an (optional, but in my opinion neither indispensable nor a necessarily sole) element of public interest. To put it differently – a contrario, if you will: concerns over the public interest in those cases must be so intense as to be equal to public policy. The very ECJ opinion cited above confirms that the two categories are distinct from one another and represent different levels of normative order, which, however, share (and indeed, must share) a common point of intersection. If and when such point of intersection exists, there also exists the principal possibility, in the individual case, of restricting fundamental freedoms guaranteed by EU primary law. At this point, we must stress that this argument makes sense on the level of EU law, but not so much on the level of international law. Public policy (and the exception that it allows) in international law is a specially qualified category compared to EU law, and must be interpreted irrespective of whether public interest is present – even though the public policy exception may at the same time express (and indeed very often does express) the public interest of a given country, and does so also in international law. However, as shown, public interest in international law is (save for rare exceptions) not an indispensable criterion that would have to be examined. The difference between the concepts of public policy and public interest in private international law is even

55 See the following ECJ Judgments: (▪) ECJ Judgment of 26 November 2002, C-100/01, Ministre de l’Intérieur v. Aitor Oteiza Olazabal, CELEX: 62001J0100, Marg. (42); (▪) ECJ Judgment of 18 May 1982, in joined cases 115/81 and 116/81, Rezguia Adoui v. Belgian State and City of Liège; Dominique Cornuaille v. Belgian State, CELEX: 61981CJ0115, Marg. (9); ECJ Judgment of 6 November 2003, C-243/01, criminal proceedings against Piergiorgio Gambelli et al., CELEX: 62001J0243, Marg. (69); (▪) ECJ Judgment C-42/02 Diana Elisabeth Lindman, CELEX: 62002J0042, Marg. (114).


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more pronounced than in public international law, especially as regards the difference between the public policy exception and the overriding mandatory rules, a brief examination of which will be made in the closing section of this paper.

IV.3. Access to Information

7.19. With respect to the access to documents, the ECJ (General Court) decided in 201156 that public authorities of the respective member state should enjoy broad discretion in determining whether the disclosure of documents covered by exceptions57 could undermine the public interest. The ECJ justified these discretionary powers by pointing out that the decision to deny access or disclosure in such cases is of a complex and delicate nature, calling for particular care, whereas the criteria set out in the applicable legal provisions58 are too general.59 The provisions the interpretation of which was in question in this case stipulate that disclosure may be denied in the presence of a (substantiated and concretely defined60) public interest, where any of the following is concerned: (i) public security, (ii) matters of defence and military affairs, (iii) international relations, and (iv) the financial, currency, or economic policy of the community or of a member state. It follows from the cited legal opinion that these fields are not in the public interest in and of themselves, but that public interest may be manifest in them. Clearly, the list given in the cited provision is non-exhaustive, and public interest may also be present in a variety of other fields. Interestingly, the cited rule (i.e. Regulation 1049/2001), as well as the cited decision of 2011, rather consistently speak of public interest, and make no mention of public policy, even though the area of public security, for instance, may in qualified instances also be a part of public policy, according to special legislation concerning the restriction of 56 See ECJ Judgment (General Court) of 13 January 2011, T-362/08, IFAW Internationaler Tierschutz-Fonds v. Commission, CELEX: 62008TJ0362. 57 Granting access to documents, and exceptions pursuant to Article 4 (1) (a) of Regulation (EC) No. 1049/2001 of the European Parliament and the Council, regarding public access to European Parliament, Council and Commission documents. 58 I.e., here, in Article 4 (1) (a) of Regulation 1049/2001. 59 See ECJ Judgment (General Court) of 23 November 2011. T-341/07, Jose Maria Sison v. Council of the European Union, CELEX: 62007TJ0341(01), Paras. (34) through (36). 60 See, for instance, the following ECJ decisions: (▪) ECJ Judgment of 1 July 2008, in joined cases C-39/05 and C-52/05, Sweden et Maurizio Turco v. Council of the European Union [2008] ECR I-4723, Marg. (49); (▪) ECJ Judgment (General Court/First-instance court) of 11 March 2009, T-166/05, Borax Europe Ltd. v. EC Commission, though this was more a case of an exemption under Article 4 (1) (b), i.e. an exemption based on the protection of privacy.


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certain freedoms guaranteed by EU primary law. But again, a distinction is to be made between the two categories. Public policy may (but does not necessarily) comprise elements of public interest, seeing as it constitutes the foundations of the given legal environment, through which both public interest and private interest express themselves and which may be present in substantive law and procedural law. By contrast, public interest is a category that falls exclusively under substantive law, which also expresses itself through other means than through public policy, depending on its intensity. Incidentally, the very ECJ (General Court) decision of 2011 cited above described public interest inter alia by way of comparison to private interest.

7.20. In another decision (also from 2011), the ECJ explained the meaning of public interest by way of the example of interest in the discussion over legislation (i.e. handing down general normative rules) versus individual (administrative) normative acts. While even in the second case, there may exist interest in a public debate (public interest), it will not reach such levels of intensity as in the case of legislative procedure.61 In another case, the ECJ highlighted the public interest in cases of EU law disputes, e.g. those concerning competition matters, but ultimately found that this interest did not prevail over the interest in the protection of pending judicial proceedings.62 In its decision in this case, however, the ECJ speaks of political interest, rather than of public interest. This example demonstrates that public interest, unlike public policy, which ought to be (at least in the understanding of continental civil law) essentially apolitical, may to a significant degree overlap with political interest – after all, politics may be considered the management of public affairs. It is important to stress, however – to recall what was said earlier in this paper – that public policy, especially within a Common law environment, is often infused with substantial political interest, so that the boundaries between public policy and public (political) interest become somewhat blurred, as opposed to the continental (civil law) understanding in which the boundaries between public policy and public interest are to be observed very strictly.

61 See ECJ Judgment of 21 July 2011, C-506/08P, Sweden v. My Travel et Commission (not published yet); in this matter, the court moreover stressed the claimant’s obligation to demonstrate public interest by providing evidence; however, the court gave no indication as to how to define the boundaries of the term, even though it would have made sense in a case in which prevailing / extraordinary public interest had to be demonstrated. 62 See the ECJ Judgment of 21 September 2010, joined cases C-514/07 P, C-528/07 P and C-532/07 P, Sweden v. Association de la presse international ASBL /API/ et al., CELEX: 62007CJ0514, Paras. (157) et seq.


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IV.5. Consumer Protection 7.21. In the area of consumer protection, the distinction between public

policy and public interest in EU law takes on special weight. Even though it is in this area, in particular, that the two terms are conflated “promiscuously,” consumer protection should be the subject matter of public interest, but not of public policy. For instance, Article 4 of Directive 85/577 on the protection of consumers in respect of contracts “negotiated away from business premises” (i.e. doorstep contracts) does not prevent national courts from declaring doorstep contracts null and void, even without a prior request by a participant, on the grounds of failure to instruct the consumer of their right of withdrawal from the contract – even if the consumer never invoked the nullity of contract before the competent national courts.63 This typically concerns situations that fall within the scope of public interest thanks to the positive effect of mandatory rules of special importance; in private international law, these rules would qualify as overruling mandatory rules, which, however, need not be (and often are not) a part of public policy.

7.22. It cannot be ruled out, however, that the required level of protection may also be accomplished by other measures, such as resetting the time periods for withdrawal from the contract, which allows consumers to exercise their rights afforded under Article 5 (1) of Directive 85/577. Aside from this, the national court may, under certain circumstances, also be forced to take into account the consumer’s will that the affected contract not be declared null and void. It is these aspects – i.e. the possible resort to other legal mechanisms that attain the same purpose, and the degree to which the court is required, in public-interest cases, to consider and review the facts of the case and the legal state of affairs – which set these rules apart from public policy – which, by contrast, carries such fundamental legal importance that the intensive impact of public policy rules allows for no other outcome than that certain legal aspects be considered inoperative.

7.23. Consumer protection is an example that allows us to bring the difference between the two categories into stark relief. Notice how the national courts need not apply the consequences arising from a violation of EU law if the review of such violation would force them to go beyond the dispute between the parties and to rely on facts and circumstances other than those on which the claimant, who is interested in seeing the said provisions enforced, built the case of his 63 See ECJ Judgment of 17 December 2009, C-227/08, Eva Martín Martín v. EDP Editores SL, CELEX: 62008P0227C(01).


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claim.64 The courts only afford this kind of discretionary power in cases based on public interest, but not in cases based on public policy. The basis of this limitation of powers of the national court is a principle according to which the initiative in proceedings lies with the parties, whereas the court, barring a request by the parties, may only act in special cases in which the court’s interference is mandated by public interest.65 This clearly shows that consumer protection is a matter of public interest, but not a matter of public policy.

7.24. In other words, in consumer protection matters, one must determine the main obligations set out in the given source. Let us revisit, e.g. Directive 85/577: at its core is the obligation to provide instructions pursuant to Article 4 of the Directive, as well as to ensure the effective exercise of a right of withdrawal from the contract, and thus the effective protection of consumers as envisioned by the community legislature. As a consequence, this legal provision may be subsumed under the term “public interest” in the terms of the above-cited case law, and as such give cause for positive intervention by domestic courts in order to remove the imbalance between the consumer and the commercial business entity in contracts made in doorstep transactions. Under these circumstances, it is fair to assume that the national court may, even without a request by the parties, impose the consequences envisioned for a violation of the requirements set out in Article 4 of Directive 85/577, in cases in which the consumer did not receive adequate instruction regarding their right to withdraw from the contract.66 That said, the term “appropriate consumer protection measures” used in Article 4 (c) of Directive 85/577, for instance, leaves 64 In this spirit, see, in particular, the following ECJ Judgments: (▪) ECJ Judgment of 14 December 1995, C-430/93, Jeroen van Schijndel et Johannes Nicolaas Cornelis van Veen v. Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR I-4705, Marg. (22), CELEX: 61993J0430, as well as (▪) ECJ Judgment of 7 June 2007, in the joined cases C-222/05 and C-225/05, J. van der Weerd et al. /C-222/05/, H. de Rooy sr. et H. de Rooy jr. /C-223/05/, Maatschap H. et J. van ‘t Oever et al. /C-224/05/ et B. J. van Middendorp /C-225/05/ v. Minister van Landbouw, Natuur en Voedselkwaliteit [2007] ECR I-4233, Para. (36), CELEX: 62005CJ0222. 65 In this spirit, see, in particular, the following ECJ Judgments: (▪) ECJ Judgment of 14 December 1995, C-430/93, Jeroen van Schijndel et Johannes Nicolaas Cornelis van Veen v. Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR I-4705, Marg. (21), CELEX: 61993J0430, as well as (▪) ECJ Judgment of 7 June 2007, in joined cases C-222/05 and C-225/05, J. van der Weerd et al. /C-222/05/, H. de Rooy sr. et H. de Rooy jr. /C-223/05/, Maatschap H. et J. van ‘t Oever et al. /C-224/05/ et B. J. van Middendorp /C-225/05/ v. Minister van Landbouw, Natuur en Voedselkwaliteit [2007] ECR I-4233, Para. (35), CELEX: 62005CJ0222. 66 See ECJ Judgment of 17 December 2009, C-227/08, Eva Martín Martín v. EDP Editores SL, CELEX: 62008P0227C(01).


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much leeway for national authorities to stipulate the consequences of the said absence of instruction, as long as they operate within the spirit of the Directive and such that consumer protection is preserved on adequate terms, given the circumstances. At the same time, we ought to stress that a number of consumer protection directives only provide a perfunctory standard (see Article 8 of Directive 85/577).67

7.25. The inconsistency with which the ECJ has been using the terms “public policy” and “public interest,” especially in consumer protection cases, is debatable. Case in point: the Mostaza Claro decision.68 In this landmark decision, the ECJ approved the use of arbitration clauses in consumer contracts (subject to the fulfilment of conditions set out in the Directive) as long as national law allowed them. In other words, EU member states retain autonomy when it comes to the arbitrability of consumer disputes. The ECJ also used the occasion of the Mostaza Claro case to rule that the courts may review the fairness of an arbitration clause, at the very least in proceedings on the annulment of the award, even if rules of domestic origin do not provide for a judicial review of the fairness of arbitration clauses. In Eco Swiss,69 the ECJ had already ruled that if national (domestic) courts are obliged to annul awards upon request, which were rendered in conflict with the mandatory rules of national law, then this obligation also extends to Article 81 TEC (Article 101 TFEU). In Mostaza Claro, the ECJ expanded this obligation to cover all those provisions of Community law (EU law) that are similar in nature to public policy (assuming that the national court has the authority to annul an arbitral award on grounds of its conflict with public policy). However, one could argue they did not mean public policy, but [merely] qualified public interest, expressed through absolute mandatory (i.e. internationally mandatory, i.e. – from the vantage point of private international law – overriding mandatory) rules, rather than part of the public order. This is a salient example of how even the ECJ frequently fails to differentiate between public policy and a mere qualified public interest (made manifest through absolute 67 See ECJ Judgment of 10 April 2008, C-412/06, Annelore Hamilton v. Volksbank Filder eG., CELEX: 62006CJ0412, Para. (33). 68 ECJ Judgment of 26 October 2006, C-168/05, Elisa María Mostaza Claro v. Centro Móvil Milenium SL [2006] ECR I-1421, a decision which is being annotated in more detail further below in this publication. 69 ECJ Judgment of 1981, C 126/97, EcoSwiss China Time v. Benetton International N.V. [1999] ECR I-03055. However, this matter did not concern a consumer contract, in that the ECJ took a position on issues to do with the protection of competition. The ECJ has consistently been identifying the protection of competition as a part of European [Community] public policy. In the view of this author, the latter-cited category is highly debatable.


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mandatory (overriding mandatory) rules), which unfortunately must often be chalked up to terminological misconceptions and the legal/cultural diversity of the justices that form the ECJ.

IV.6. Public Interest, Overriding Mandatory Rules and

Comparison to Public Policy 7.26. Especially in private international law, the issue of overriding

mandatory rules – which have become an important part of modern-day conflict-of-law rules – continues to play an ever more important role. A typical example would be Article 9 of the Rome I Convention.70 To a significant degree, overriding mandatory rules share common denominators with public policy, as enforced in the area of substantive law through the conflict-of-law defence of the public policy exception. In both cases, the eminent interest of the given country (which qualifies as public interest) is being protected.

7.27. Public policy encompasses a general category of values, whereas an overriding mandatory rule is a normative means to enforce public interest. Public interest is the subject of protection of overriding mandatory rules, which, however, may also serve a number of other objectives as well.

7.28. Public policy, as a category, is far more narrowly defined than public interest. Public policy denotes absolutely fundamental values, on which the existence of the state depends, the violation of which may compromise these values. This need not necessarily be the case (and in fact usually will not be the case) for overriding mandatory rules. Historically speaking, public policy will be subject to certain changes, but these are more evolutionary in nature. Take, for instance, the issue of same-sex partnerships: some time ago, these partnerships were deemed socially (and, for that matter, legally) unacceptable. To give legitimacy to such a relationship was then taken to imply an unsustainable interference with the general normative principles of society, which could have overthrown the social order. Today, these relationships are regarded as acceptable by a major part of society and considered a natural phenomenon. The purpose of public policy is to protect the basic canon of societal values from phenomena that are at odds with it, through negation. These values are subject to change, but only within narrow limits and do so only very gradually. By contrast, 70 Regulation (EC) No. 593/2008 of the European Parliament and the Council on the law applicable to contractual relations (17 June 2008). This regulation, “Rome I,” contains special conflict-of-law rules for insurance contracts, consumer contracts, individual employment agreements, etc.


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overriding mandatory rules are aimed at actively influencing concrete conduct in certain areas, and are amenable to future change, setting trends in the pursuit of public interest. A possible example would be developments on the capital market, which require that corrective or restrictive influence on individual investors be taken. Not by chance, overriding mandatory rules are very often rules of administrative or financial law, but we may also encounter examples of overriding mandatory rules limiting the autonomy of contract of parties entering into contractual relationships, for instance, restrictive provisions in deposit account agreements, current account agreements, agreements on the management of security portfolios and, especially in recent times, consumer contracts (i.e. contracts made between a consumer and a commercial business entity). These rules influence the conduct of market participants and of parties to such relationships, and regulate societal development. Not seldom are they attempts to eradicate certain undesirable behaviour. The purpose of such overriding mandatory rules may only manifest itself within the territory of the given concrete state, if the adverse circumstances addressed by these rules by and large only occur in the territory of that state, or if it is only there that they have harmful societal consequences. However, this does not necessarily mean that the other member states do not generally pursue the same interest. It may be the case that in those other countries, the state of society is not in such peril as to compel the legislature to pass strict rules governing the conduct of parties, or to deny them any autonomy of contract (or to restrict their autonomy of contract) in certain areas. In other words, a certain area of commerce or of transactions may be subject to the same (or very similar) rules in several states, but only in a few of them are these rules elevated to become overriding mandatory rules. An in-depth analysis is often required before assessing the purpose of a given legal provision (and before we may classify the provision as an overriding mandatory rule). Compared to public policy, the protection of which may appear to be the purpose of a specific legal regulation, interests protected by overriding mandatory rules may be subject to rapid change and respond to current developments in society (or, as it were, within the territory of a specific member state).

7.29. In contrast to public policy, which may be characterized as a more general – and substantially “graver” – value, the value (and thus interest) protected by an overruling mandatory rule must be far more specific, clearly determinable, and definable. In other words, public interest, as protected by an overriding mandatory rule, must always be designated precisely, in terms of the subject of protection and of the


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reasons that led the legislature to draft and adopt the given rule. On the other hand, the respective rule must be fit to protect the given interest. This does not mean that several overriding mandatory rules cannot serve the same purpose, but that each of them must have sufficient operative impact on the protected (public) interest. In contrast to those standards that form a part of public policy, overriding mandatory rules must clearly and specifically define the public interest, and identify it by way of denoting a specific group of persons. Public interest manifests itself through one or several concrete legal provisions, which are enforced through the body of current law and applied in legal practice. The protection of public policy, conversely, may be pursued through a host of interconnected legal provisions, which interact in order to preserve this (particularly intensive) interest. In the case of public policy, it is not necessary to define the addressees of a qualified (i.e. narrowly defined) interest – public policy often applies broadly and across several legal fields. The important thing to remember here is that overriding mandatory rules represent positive law, as a positive order to adhere to specific conduct, unlike the negative application of public policy (and, in particular, the institution of the public policy exception), which restricts and contains the occurrence or operation of certain fundamentally undesirable influences. In this sense, overriding mandatory rules positively shape the relationship between parties (in contractual relationships) or determine the behaviour of certain participants to legal relations (both within and outside the context of contracts, and both under private and public law). A typical example is consumer protection, which is the subject matter of public interest, and manifests itself in rules of mandatory character (within the national context) and in internationally mandatory (i.e. overriding) rules (in the supranational context of private international law). It does not attain the kind of gravity that would allow us to speak of public policy (and, therefore, to take recourse in the public policy exception). A typical example is Decision 3 Ob 144/09m by the Austrian Supreme Court of 22 July 2009 concerning the application of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, wherein the Supreme Court held that the violation of consumer protection legislation in arbitration proceedings in a given country is not sufficient cause for refusing the recognition and enforcement of the award in Austria on grounds of the public policy defence pursuant to Article VI (2) (b) of the New York Convention. Even though Austria has opted for a restrictive model in terms of the admissibility (or, as it were, inadmissibility) of arbitration clauses in consumer contracts, and does not allow avoidance of non-enforcement of foreign awards


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rendered in Denmark, which incorporate similar restrictive standards as in Austria and which, obviously, have breached in the particular case.

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Summaries

FRA [Notions d’ordre et d’intérêt publics dans le droit international et le droit de l’UE]

Si le principe d’ordre public est envisagé par les juridictions de droit civil comme un pilier de l’ordre public et social créateur de constance, son interprétation selon la méthodologie du droit commun est plus large. Les notions d’intérêt et d’ordre publics sont bien plus proches dans le droit commun que dans le droit civil. Elles n’en restent pas moins des notions toujours distinctes. La tendance à fonder de plus en plus son argumentation sur la notion d’intérêt public en la confondant avec celle d’ordre public (en profitant souvent des imprécisions des termes) est préoccupante. Les argumentaires se fondant sur la notion d’ordre public et son application se développent. Une telle approche est contraire aux intérêts de la communauté internationale. L’intérêt public n’est pas un concept juridique vague. Il s’agit d’une catégorie abstraite, mais qui n’est identifiable que dans des normes concrètes. Le dépositaire de l’intérêt public est un groupe d’individus aux contours certes flous, mais définissable et généralement exprimé dans le cadre des normes prescriptives (lesquelles ont le plus souvent un caractère impératif en droit international privé). Ces normes impératives ont un effet positif que n’a pas l’ordre public. Il est rare que la défense de l’intérêt public atteigne une telle acuité qu’elle nécessite de recourir à l’ordre public. Lorsqu’on invoque l’ordre public, on n’a plus besoin d’identifier l’intérêt public avec ses dépositaires concrets, contrairement à ce qui se passe avec les normes prescriptives (impératives).

CZE [Veřejný pořádek a veřejný zájem v mezinárodním právu a v právu

EU] Zatímco kontinentální právo pojímá principy veřejného pořádku (ordre

public) jako pilíř právního a sociálního řádu tvořící jeho dlouhodobou konstantu, veřejný pořádek tak, jak jej chápe Common law, patří do značně širší legislativní kategorie. V tomto pohledu jsou si veřejný zájem a veřejný pořádek, jako dvě různé kategorie, mnohem bližší, než je tomu dle právních řádů kontinentálního práva. Přesto však zůstávají kategoriemi separátními. Nicméně rostoucí tendence argumentovat poukazováním na veřejný zájem a směšování veřejného zájmu s veřejným pořádkem (ordre public) – často v důsledku terminologických


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nepřesností – je alarmující, neboť vede k rozšiřování námitky veřejného pořádku a k častějšímu užívání výhrady veřejného pořádku, což je v rozporu se zájmy mezinárodního společenství. Veřejný zájem není neurčitým právním pojmem. Představuje abstraktní pojem, který je možné určit pouze na pozadí zvláštních právních norem (předpisů, standardů). Jeho subjektem jsou osoby, které tvoří volně určenou, nicméně v zásadě určitelnou skupinu, a je obvykle vyjádřen formou [absolutně] kogentních norem (které mají v mezinárodním právu soukromém obvykle podobu norem imperativních). Zatímco institut veřejného pořádku má účinky negativní, kogentní normy působí jako normy pozitivní. Avšak pouze ve výjimečných případech je veřejný zájem považován za natolik převažující, aby byl kvalifikován jako veřejný pořádek a byl chráněn kvalifikovanými právními prostředky. Na rozdíl od absolutních imperativních norem veřejný pořádek nevyžaduje určení veřejného zájmu a jeho konkrétního subjektu či prostředku.

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POL [Porządek publiczny i interes publiczny w prawie

międzynarodowym i prawie UE] Porządek publiczny i interes publiczny to dwie odrębne i wyjątkowo

konsekwentnie rozróżniane kategorie. Zazwyczaj interes publiczny wyrażany jest przy użyciu [absolutnie] bezwzględnie wiążących (norm imperatywnych), dla których konieczne jest skonkretyzowanie interesu publicznego i zidentyfikowanie grupy osób – nosicieli tego interesu. Porządek publiczny, co prawda, bardzo często ma na uwadze interes publiczny, jednak nie ma konieczności obiektywnego i subiektywnego określenia interesu publicznego w ramach porządku publicznego. Porządek publiczny ma za zadanie wyrażać długookresową stałą i należy go uznać za wyjątek.

DEU [Öffentliche Ordnung und öffentliches Interesse im internationalen

Recht und EU-Recht] Öffentliche Ordnung und öffentliches Interesse sind zwei voneinander

verschiedene, aber nur in Ausnahmefällen konsequent voneinander unterschiedene Kategorien. Öffentliches Interesse drückt sich zumeist vermittels [absolut] zwingender [Eingriffs-]Normen aus, in denen das öffentliche Interesse zu konkretisieren und seine Träger (als Personengruppe) zu identifizieren sind. Öffentliche Ordnung hingegen verfolgt nicht selten ein öffentliches Interesse, welches aber in seinem Fall nicht objektiv und subjektiv identifiziert zu werden braucht. Öffentliche Ordnung soll eine langfristige Konstanz zum Ausdruck bringen und muss als Ausnahme gelten.


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RUS [Публичный порядок и публичный интерес в международном праве и в праве ЕС]

Публичный порядок и публичный интерес - это две различные и в редких случаях тщательно разделяемые категории. В основном публичный интерес выражается путем [абсолютно] когентных (императивных норм), у которых необходимо конкретно определить публичный интерес и идентифицировать группу лиц, которая является его носителем. Хотя публичный порядок часто связан с публичным интересом, однако, нет необходимости последний в публичном порядке объективно и субъективно определять. Публичный порядок должен отражать долгосрочную константу и его необходимо рассматриваться как исключение.

ESP [El orden público y el interés público en el derecho internacional y

de la UE] El orden público y el interés público son dos categorías diferentes, sin

embargo, pocas veces se diferencian con exactitud. La mayoría de las veces, el interés público está expresado mediante [de forma absoluta] normas de policía (normas imperativas) en las cuales el interés público ha de ser concretado e identificado el grupo de personas sujeto al mismo. Es cierto que el orden público, muchas veces, persigue el interés público, pero el interés público no ha de ser identificado en el orden público de forma objetiva o subjetiva. El orden público debe expresar un fenómeno constante a largo plazo y ha de considerarse una excepción.

Documents

Public Policy and Public Interest in International Law and EU Law