A Trip to Luxembourg (Part 1)

27 March 2017

27 March 2017 by Glyn Edwards

For the first time in a long career in VAT Litigation, I recently took a client’s VAT dispute to the Court of Justice of the European Union (the CJEU) in Luxembourg. I will share the technical details of the case after the outcome of the appeal, but I thought I would explain how the hearings are conducted.

Relatively few VAT cases are referred to the CJEU. This is as it should be – UK Courts are competent to make decisions about the application of VAT to UK businesses even when complex questions of European Law are involved. 

A UK Court, having found itself unable to decide a case will invite both sides to an appeal to assist with the drafting of questions to be referred. This is a critical part of the process, because the role of the CJEU is not to decide a case, but simply to answer questions to aid in the interpretation of EU Law. A dispute can therefore only be resolved properly, if the right questions are asked. 

Some months after the questions are lodged, the CJEU contacts the parties concerned to invite written submissions. This invitation is also extended to the European Commission and to every member state. In my case, the French government and the Commission made written representations. 

Following this, an oral hearing is called, hence my ‘trip to Luxembourg’. From the outside, the Court building is dwarfed by two gold towers, each 24 storeys high which house the interpreters and translators on whom the everyday business of the Court rely, given that the CJEU’s work can be conducted in up to 23 languages.

In the Court room there are glass fronted side galleries where interpreters work providing a real time translation of oral submissions in the language of the judges and other attendees.  In my case the bench consisted of 5 judges plus an Advocate General (AG). The role of the AG is to give a written opinion to the Court on how the questions should be answered. An AG’s opinion is a useful guide to what to expect, but it is not unusual for the Court itself to take a completely different view.

My impression of the hearing was that it was far less confrontational than equivalent proceedings in the UK. The Court respects the traditions of the member state and so UK barristers appear gowned and wigged and address the Judges as ‘My Lords’. In contrast to the higher UK Courts there are no interruptions or challenges from the bench at this stage, but each side is limited to 15 minutes of address. At this point the proceedings also take on an unfamiliar feeling as a barrister from the Commission made his own observations on the case. The French government apparently decided not to send a representative to the hearing, presumably relying on their written submissions to persuade the Court.

After these opening submissions, both the AG and Judges asked questions of both the Commission and HMRC. My client’s barrister was not asked any questions, but only the outcome will tell us whether this is a good sign.

We now await the AG opinion which he has promised to deliver in 3 months time. The Court will then deliver its answers and these should be clear enough to enable the Upper Tribunal (the referring Court in my case) to make a judgement on the case.

A fascinating experience, but Brexit may mean that this is one-off. The role of the CJEU is one of many great unknowns and will depend on the nature of the UK’s trading relationship with the EU and to what extent we are still required to comply with EU law.

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If you would like further information on the topics discussed in this article please speak to Glyn Edwards or your usual MHA MacIntyre Hudson advisor. 

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