|
|
Previous |Next |Title |Contents
In response to the turbulent changes in the Eastern part of Europe starting at the end of the 1980's, the European Communities had to show great flexibility in its policy towards the region. Nevertheless, following the adoption of trade agreements [1] and the long-awaited establishment of diplomatic relations [2] between the European Communities and the countries in the region, the European Communities decided to treat these countries in a uniform way by dividing them into two categories. Accordingly, on the legal level the European Communities developed its relationship with these countries by concluding two types of agreements. Most of the countries emerging on the territory of the former Soviet Union were offered Partnership and Co-operation Agreements, whereas other former soviet bloc countries, known as Central and Eastern European Countries ('CEECs') concluded Europe Agreements with the European Communities and its Member States leading to membership of the European Union on the long term.
Hungary is one of the CEECs and, indeed, since the fall of the communist regime she has pursued a policy aiming at 'euro-atlantic integration', including the intention of joining the European Communities ('EC')/European Union ('EU'). [3] Recent developments of the EU-Hungary relationship show that such an intention might gradually be realised. [4] Nevertheless, notwithstanding the various documents issued on the way to Hungary's EU accession, the primary legal basis of the relationship between the European Union and Hungary remains the Europe Agreement ('EA'). [5]
The Europe Agreement with Hungary, which entered into force on 1 February 1994, is mixed and complex. It is mixed in that it was concluded by Hungary, on one part, and by the European Communities and its Member States, on the other part, because its extensive scope covers fields which the European Communities did not have the (exclusive) competence to negotiate and contract. [6] Furthermore, it is a complex agreement including various political, economic and social aims. Even economically, the Europe Agreement is not only a simple free trade agreement, but it also intends to create a so-called 'wider market' including the market of the European Communities and the Hungarian market.
This 'wider market' is based on the model of the Single Market of the European Communities. Accordingly, similar to the EC Treaty, a two-way approach was adopted by the Europe Agreement for the establishment of that market. On the one hand, the Europe Agreement reproduces the four basic freedoms of the Single Market in a limited way in order to combat public barriers to free trade. On the other hand, in order to combat private barriers to free trade, a special competition co-operation regime is established. According to Article 62 EA [7] and its Implementing Rules ('IR') [8], in the case of anti-competitive practices that may affect trade between the parties, the parties' competition authorities ( i.e., the Hungarian Office of Economic Competition ('OEC') and the European Commission) are bound to co-operate in the enforcement of the competition regime based on the principles of the application of Articles 85 and 86 EC.
Moreover, in addition to the two-way approach of trade liberalisation, Articles 67 and 68 EA set out that Hungary shall approximate its competition laws to Community law. [9]
Competition law is a significant issue under the Europe Agreement and it is decisive for the parties' relationship, in particular from the viewpoint of Hungary's preparation for her future EU accession. [10] Hungary's extensive and complex competition law obligations not only raise the issue of how the Europe Agreement can work effectively and efficiently; they might not only serve as a tool for the implementation of the 'wider market.' Competition law has a special future relevance, inasmuch as it is the field of law where, under the Europe Agreement, the emerging Hungarian democratic legal system has its first historic encounter with Community law. [11] In particular, the Hungarian legal system is expected to elaborate its approach towards supranational Community law in the course of meeting its complex competition law obligations under the Europe Agreement. Consequently, the approach of Hungarian law towards Community competition law might serve as a model for other fields of Hungarian law, for the entire Hungarian legal system and possibly for other CEECs, too. [12]
The latter statements are not mere assumptions or predictions. The above process has already started and the first encounter of the Hungarian and the Community legal systems has already taken place. The fulfilment of competition law obligations under the Europe Agreement has already triggered serious implications for one of the most important fields of the domestic legal system: Hungarian constitutional law.
In 1996 Professor Berke of ELTE University (Budapest) filed a submission [13] with the Hungarian Constitutional Court ('Court') contesting the constitutionality of certain provisions of the competition co-operation regime established by Article 62 EA and its Implementing Rules. Berke argued, that " [i]n the context of Article 62 (2) EA, as implemented, the fundamental problem is that a Hungarian legislative act is not a precondition for the application of EC law (the criteria of application of articles 85, 86 EC) by national authorities, according to the state of the art at any time in the future. 'Criteria' of a foreign law (EC law) must be given effect in the normal practice of the [OEC] ."[14] In particular, Berke claimed that by accepting to directly apply the law of a foreign sovereign the future formation of which cannot even be influenced by Hungary, the Hungarian Republic unconstitutionally transferred part of her legislative powers to that foreign sovereign.
The submission raised a number of important preliminary issues, including whether the Court is authorised to control the constitutionality of a Hungarian law proclaiming an international treaty in the domestic legal system in accordance with the traditionally dualist nature of Hungarian law. [15] More significantly, it involved whether the constitutionality of an international treaty, like the Europe Agreement, which has already been proclaimed in the Hungarian legal system, may be controlled by the Constitutional Court.
Owing to the special significance of the preliminary issues and the eventual unconstitutionality of the co-operation regime, the Court decided to deal with those two questions separately. Accordingly, Judgment 4 of 22 January 1997 addresses the Courts competence to control the constitutionality of international treaties and their proclaiming laws ( 'Preliminary Issues Judgment' /'PIJ'), whereas Judgment 30 of 25 June 1998 deals with the merits of the submission, i.e., with the constitutionality of the competition co-operation regime ( 'Europe Agreement Judgment' / 'EAJ' ).
Due to the different status of the parties to the Europe Agreement and the mixed nature of the latter, the Europe Agreement and its competition co-operation regime can be analysed and interpreted according to four distinct benchmarks: (i) the law of international treaties between states [16] and between states and international organisations [17]; (ii) the law on the external relations and competences of the European Communities; (iii) the Constitutions and the laws on international law adopted by the Member States; and (iv) the Hungarian Constitution and Hungarian laws concerning international law. [18] The present paper elaborates on the Hungarian constitutional issues arising in connection with the competition law duties of Hungary under the co-operation regime of the Europe Agreement, in particular on the way Community competition law is allowed to become effective in the Hungarian legal system by the Europe Agreement Judgment .
The analysis of the Europe Agreement Judgment will focus on two points which make that judgment exceptionally significant. Firstly, it is the first occasion on which the principles and competence established by the Preliminary Issues Judgment [19] are applied in practice by the Court with the result of declaring the competition co-operation regime partly unconstitutional. Secondly, the Europe Agreement Judgment is the first judgment in which the Court deals with the law of the European Communities. Further, although Hungary is not a Member State of the European Union, the arguments of the Court might be instructive concerning its future approach towards Community law and the relation between Hungarian domestic law, in particular the Hungarian Constitution, and Community law following Hungary's EU accession. The constitutional issues analysed by this paper might also have great relevance for those CEECs that are not in a position to join the European Union in the short term and whose relationship with the EU will be determined by similarly worded Europe Agreements for a longer period. Finally, the concerns raised by the Court might also be instructive for the future shaping of the external relations of the European Communities.
[1]The first general trade agreement between Hungary and the European Communities was concluded in 1988: Council Decision 88/595/EEC 21 November 1988 concerning the conclusion of an Agreement between the European Economic Community and the Hungarian People's Republic on trade and commercial and economic co-operation, [1988] OJ L327/1. The agreement was published in Hungary as International Agreement 1 of 1989.
[2] Diplomatic relations between the European Communities and Hungary had been established on 19 January 1989.
[3] This intention is included in the Preamble of the Europe Agreement. (Decision of the Council and Commission 93/742/Euratom, ECSC, EC 13 December 1993 on the conclusion of the Europe Agreement between the European Communities and their Member States, of the one part, and the Republic of Hungary, of the other part, [1993] OJ L347/1. The Europe Agreement was proclaimed in Hungarian law by Act I of 1994).
[4] Pursuant to the resolution of the Luxembourg Summit of the European Council on 12-13 December 1997, accession negotiations between the European Union and Hungary started on 31 March 1998. (8 January 1998, Hungarian daily economic newspaper Világgazdaság [World Economy] ). In November 1998 the second round of accession negotiations were held on the acquis communautaire . The next round is planned for 22 June 1999. (17 March 1999, Világgazdaság).
[5]'The Europe Agreement' in singular and 'EA' shall hereinafter denominate the Europe Agreement concluded with Hungary. Note 3 supra.
[6] Owing to that limitation, parts of the Europe Agreement falling under the exclusive external competence of the European Communities were concluded with Hungary and entered into force as an Interim Agreement until the ratification of the Europe Agreement by all Member States of the European Communities: Council Decision 92/230/EEC 25 February 1992 on the conclusion by the European Economic Community of the Interim Agreement between the European Economic Community and the European Coal and Steel Community, of the one part, and the Republic of Hungary, of the other part, on trade and trade-related matters, [1992] OJ L116/1. The Interim Agreement was published in Hungary by the Minister of International Economic Relations in 1992.
[7] Article 62 EA: "(1) The Following
are incompatible with the proper functioning of the Agreement, in so far as
they may affect trade between the Community and Hungary:
(i) all
agreements between undertakings, decisions by associations of undertakings and
concerted practices between undertakings which have as their object or effect
the prevention, restriction or distortion of competition;
(ii)
abuse by one or more undertakings of a dominant position in the territories of
the Community or of Hungary as a whole or in a substantial part thereof;
[...]
(2) Any practices contrary to this Article shall be
assessed on the basis of criteria arising from the application of the rules of
Articles 85 [and] 86... of the [Rome] Treaty.
(3) The Association
Council shall, within three years of the entry into force of this Agreement,
adopt by decision the necessary rules for the implementation of paragraphs 1
and 2."
[8] Decision 2/96 96/652/Euratom, ECSC, EC of the Association Council, association between the European Communities and their Member States, of the one part, and the Republic of Hungary, of the other part, 6 November 1996 adopting the rules necessary for the implementation of Article 62 (1) (i), (1) (ii) and (2) of the Europe Agreement between the European Communities and their Member States, of the one part, and the Republic of Hungary, of the other part, and the rules implementing Article 8 (1) (i), (1) (ii) and (2) of Protocol 2 on ECSC products to that Agreement, [1996] OJ L295/30. The Implementing Rules have been proclaimed in Hungarian law by Government Decree 230/1996.
[9] Article 67 EA: "The Contracting Parties recognise that the major precondition for Hungary's economic integration into the Community is the approximation of that country's existing and future legislation to that of the Community. Hungary shall act to ensure that future legislation (Article 68 EA: "in particular... rules on competition") is compatible with Community legislation as far as possible ."
[10] "Introducing a competition policy and effectively enforcing it must... be considered to be a precondition for the opening of the wider internal market or ultimately of accession to the Union. " White Paper on the Preparation of the Associated Countries of Central and Eastern Europe for Integration into the Internal Market of the Union, COM (95) 163 final, 3 May 1995, 49.
[11] This is true even with regard to the " [a]pproximation of competition law, [which]... is... an immediate priority, whereas approximation in the remaining areas... is linked to the prospects of accession... to the European Union." Commission Communication on relations with the associated countries of Central and Eastern Europe, Task Force on Approximation of Laws (Follow-up of the European Council of Copenhagen), COM (94) 391 final, 16 September 1994, 7.
[12] The relevance of the arguments of this paper for other CEECs is based on the textual similarity of the Europe Agreements. However, an important difference of the Polish Europe Agreement is that a Joint Declaration relating to Article 63 thereof, the equivalent of Article 62 EA, provides that "[p]arties may request the Association Council at a later stage, and after the adopting of the implementing rules..., to examine to what extent and under which conditions certain competition rules may be directly applicable." [1993] OJ L438/180.
[13] For an analysis of that submission, see B. Berke, 'Implementation of the Association Agreement, Approximation of Laws, Eventual Accession - Some Constitutional Implications', in F. Mádl (ed.), On the State of the EU Integration Process - Enlargement and Institutional Reforms (Studies on European Law - 3rd International ECSA Conference in Budapest, 6-10 November 1996) , 1997, EU Centre for Research and Documentation/ELTE University, Budapest.
[14] Ibid.
[15] "Pendant presque quarante années, le droit hongrois, suivant la pratique soviétique en matière de rapports entre le droit interne et le droit international, s'est adapté à la conception dualiste sous une forme assez traditionaliste. Il faut toutefois noter que la doctrine et la pratique hongroises d'avant-guerre étaient également dualistes." V. Lamm and A. Bragyova, 'Systèmes et normes: L'application du droit international dans le système juridique interne' 1993, No spécial vol. 15, Journées de la Société de législation comparée, Revue internationale de droit comparé , 95-118, 114.
[16] See the 1969 Vienna Convention on the Law of Treaties as the main source in this field.
[17] See the 1986 Vienna Convention on the Law of Treaties. Although none of the Vienna Conventions was signed by the European Communities, the EC is bound by the rules concerning treaty interpretation, as the relevant articles of the 1969 Convention on the Law of Treaties have become part of customary international law. See M. N. Shaw, International Law (Cambridge University Press, 1997), n. 117, p. 656.
[18] Not only might these benchmarks lead to conflicting outcomes, but it seems that a fifth benchmark, the understanding of the parties to the Europe Agreement and the authorities implementing the co-operation regime, also emerges as a distinct approach because of the vague and contradictory nature of the relevant EA and IR provisions. The Europe Agreement Judgment shows the unbridgeable gap between the pragmatic arguments of the Ministries based on the "proper understanding of the national interests in conformity with the exigencies of contemporary international life" (V.S. Vereshchetin, 'Some Reflections on the Relationship between International Law and National Law in the Light of New Constitutions', in R. Müllerson, M. Fitzmaurice and M. Andenas, Constitutional Reform and International Law in Central and Eastern Europe , 1998, Kluwer Law International, The Hague, 5-13, 6-7) and the more legalistic and theoretic arguments of both Berke and the Constitutional Court.
[19] In the Preliminary Issues Judgment the Court introduced significant changes as regards (i) the hierarchy of Hungarian domestic norms, in particular the Hungarian Constitution, and international law; (ii) its powers to control the constitutionality of international treaty law; and (iii) public access to constitutional control procedures regarding international treaties. It established the a posteriori constitutional control of international treaties and of Hungarian proclaiming rules thereof in the framework of actio popularis , i.e., procedures that can be initiated by any - even personally non-affected - Hungarian citizen. For a summary of the Preliminary Issues Judgment , see Bulletin on Constitutional Case Law , Edition 1/1997, Secretariat of the Venice Commission, Council of Europe, Strasbourg, 49-50.
Previous |Next |Title |Contents