To Be or Not to Be… “a Jurisdiction”. A Comment on the Banco Santander Case

Yesterday, Advocate General Hogan delivered an eagerly awaited Opinion in the case of Banco Santander, in which the Court of Justice will review its position on the concept of “jurisdiction” eligible to make a preliminary reference. The case is highly relevant for several reasons.

First, the Court is signalling its intention to make a statement by sending the case to the Grand Chamber. Although the substance deals with a hugely relevant issue for corporations (the amortization of goodwill under Spanish tax law and its compatibility with State aid rules), according to the AG the Court has decided to rule in Grand Chamber to solve the jurisdictional question, not the substance. In fact, the substance is back at the General Court after the Court ruled on it on appeal back in 2016.

Second, the case sits at the Grand Chamber probably because the Court has already ruled on this issue, and any reversal of past precedent should come from a significant formation. In Gabalfrisa, and contrary to the proposal of Advocate General Tesauro, the Court ruled that Spanish Tribunales Económico-Administrativos should be considered to be “jurisdictions” pursuant to Article 267 TFEU. The decision shocked many, particularly Spanish lawyers who were familiarized with the functioning of these bodies. It was Gabalfrisa that pushed Advocate General Ruiz-Jarabo Colomer, in his well-known De Coster Opinion, to provocatively claim that the Court’s case-law would allow Sancho Panza to comply with the conditions to make a preliminary reference as a Governor of the Island of Barataria. In Banco Santander the Court seems willing to review its traditional stance and side, twenty years later, with its Advocates General of the nineties.

Third, the case has a peculiar domestic context, because under Spanish law, as amended in 2015, the Tribunales Económico-Administrativos are empowered to make preliminary references under Spanish statutory rules. If the Court rules that these bodies are not “jurisdictions” under Article 267 TFEU it will be an embarrassing reversal for Spanish lawmakers, who relied on the Court’s past case-law to give official standing to the references coming from the Tribunales.

And fourth, this case comes not in isolation. The Spanish Competition Authority has recently made a preliminary reference in a similar context (having been accepted as a “jurisdiction” decades ago by the Court itself). In Asoport the Court will have to look into its case-law once again, particularly after the significant changes that the Spanish Competition Authority has undergone since the sole time in which it made a reference. Those changes also concern the case-law of the Court, that restricted quite tightly in Syfait the conditions under Article 267 TFEU for competition authorities. Whatever the Court makes out of Banco Santander, its impact will loom large over the Asoport case and the role of competition authorities in holding a dialogue with the Luxembourg court.

The Court, like any jurisdiction with a speck of self-esteem, is not inclined to change its mind in open public, although it has done so in the past. Its recent rulings show a stick and carrot strategy when it comes to deal with Article 267 TFEU: Flexible and understanding with procurement review bodies within public administrations (Consorci Sanitari del Maresme), but strict and harsh when it comes to dispute settlement panels of the European schools system (which are not reviewable in national court, as in Miles). Finding the exact spot in which the balance lies is a tricky task for lawyers at this time.

To make matters even more tortuous, the Court is currently embarked on the fleshing of an autonomous concept of independence of courts under Article 19 TEU. The impact that such a definition may have on the conditions of Article 267 TFEU is still too early to call. However, AG Hogan doesn’t hide the fact that both issues are related. After the Opinion in Banco Santander, the Court’s ruling will be one more building block in the complex and sensitive process of defining what the rule of law is in Europe.