Part III - Pushing the Boundaries

8 Strategic Litigation

Kris van der Pas

8.1 Introduction

In the context of fundamental rights violations, we can observe an increase in the use of litigation strategies to call responsible actors to account.¹ This ‘strategic’ litigation can be described as ‘the (intention of) legal action through a judicial mechanism in order to secure an outcome, either by an affected party or on behalf of an affected party … used as a means to reach objectives which consist of creating change (e.g. legal, political, social) beyond the individual case or individual interest’.² Thus, litigation is pursued as a strategy as opposed to or in combination with (for example) lobbying or protesting, in order to achieve certain goals that have a broader purpose than winning a case.³ The phenomenon has become widely known in the European context over the last few years especially in relation to climate change.⁴ However, also in the migration context, strategic litigation is broadly pursued.⁵

Strategic litigation can be seen as a form of legal mobilisation. Legal mobilisation entails ‘any type of process by which individual or collective actors invoke legal norms, discourse, or symbols to influence policy, culture or behavior’.⁶ Litigation, in that sense, is one of these processes. In legal mobilisation literature, different explanations have been offered for why social movements, organisations, or individuals ‘turn to the courts’.⁷ One of these explanatory theories focuses on legal opportunities that either encourage or discourage litigation. As has become clear from the previous chapters, the EU remedies system and especially the Court of Justice of the European Union (CJEU) does not offer many of these legal opportunities that enable strategic litigation. Nevertheless, the CJEU has become a forum where NGOs and other actors have taken their cases to attempt to achieve change beyond the individual.⁸

This begs the question: How are these actors (NGOs, lawyers, individuals) making use of this avenue and what lessons can be drawn therefrom? Relying on literature on legal mobilisation, this chapter first discusses how the EU remedies system enables or disables strategic litigation (Section 8.2). It then delves into several cases of mobilisation of the EU remedies system and describes the way in which the actors involved worked with or around the legal opportunities provided by this system (Section 8.3). This perspective contributes to a more bottom-up perspective (of the litigants) as opposed to the top-down approach taken in Part I of the book. The selection of cases is by no means exhaustive but rather serves to illustrate mobilisation of the EU remedies system in relation to different fundamental rights violations. Section 8.4 discusses actions that are not necessarily formal legal procedures but nevertheless ways in which actors have tried to call the EU to account for fundamental rights violations. The lessons drawn from these actions can inform future action in this field (Section 8.5).

8.2 The EU as a System with Closed Legal Opportunity Structures

As the other chapters in this volume have highlighted, it is not easy to address fundamental rights violations by the EU within the EU remedies system. Among other aspects, the dependency on the national judge in the preliminary reference procedure and the Plaumann⁹ criteria in direct actions create a hostile environment for pursuing broad social and/or legal change through the available avenues.¹⁰ Moreover, while the European Court of Human Rights (ECtHR) has a flourishing practice of third-party interventions, the CJEU does not easily allow access to interveners.¹¹ When discussing (im)possibilities of legal procedural rules and how these encourage or discourage strategic litigation, socio-legal scholars have referred to the concept of legal opportunity structures.¹² Legal opportunity structures find their origin in earlier theories on political opportunity structures that influence the choice of strategy of social movements.¹³ Simply put: ‘open’ political opportunity structures entail access to political actors and these actors being receptive towards the claims of the social movement.¹⁴ When this is the case, political strategies (such as lobbying) are turned to by a social movement. If political opportunity structures are closed, a different (‘outside’) strategy is much more attractive, such as protesting or litigation.¹⁵ Legal opportunity structures, then, focus on the legal factors that influence strategy choice. When ‘open’, legal opportunity structures enable litigation and therefore this strategy is used.¹⁶

These legal opportunities entail different dimensions according to different authors. Andersen distinguishes four different dimensions, including access to justice, the ‘configuration of elites’ (receptiveness of judges towards the claims made), ‘alliance and conflict systems’ (in the courtroom), and ‘cultural and legal frames’ (societal views that shape legal opportunity structures).¹⁷ This approach has been criticised by Vanhala, who agrees to some extent with the first two dimensions but argues that the last two dimensions are not really ‘structures’.¹⁸ De Fazio argues for three dimensions: access to the courts, availability of justiciable rights, and receptivity of the judiciary.¹⁹ Although it is not the purpose of this chapter to provide a definitive approach to legal opportunity structures, these dimensions identified and applied to the EU remedies help to see how ‘open’ or ‘closed’ the system is. It should also be emphasised that legal opportunity structures are not static: they can change over time and even be the target of instances of litigation, trying to ‘loosen’ rules on standing, for example.²⁰

De Fazio’s dimensions here are taken as point of departure, as they are most suitable to adapt to the EU.²¹ The first, access to the courts, is severely limited in the EU context: accessing the CJEU (as described above) is difficult. The second and third dimension, on the other hand, are more favourable in the EU remedies system: EU law has (generally speaking) created a set of rights that can be invoked in court, some more justiciable than others (for example, the Charter of Fundamental Rights of the European Union,²² in the following ‘the Charter’).²³ Moreover, EU judges have not always shied away from delivering judgments on politically salient issues.²⁴ This paints a mixed picture: on the one hand, the EU courts can be a valuable avenue for strategic litigation but, on the other hand, access is limited.

8.3 Examples of Successfully Mobilising before the CJEU

Despite the closed first dimension of EU legal opportunities (access to the EU courts), examples of successful mobilisation of this system can be found in practice: in the preliminary reference procedure, in some direct actions before the CJEU, and in third-party interventions. Next to that, the EU system offers more quasi-legal avenues, which have been explored by different actors in different fields of law as well. The following sections will explore these examples, focusing on the ‘closed’ aspects of EU legal opportunities and investigating how the litigants worked with or around these obstacles.

8.3.1 Mobilising the Preliminary Reference Procedure

In several instances, actors have mobilised by making use of Article 267 Treaty on the Functioning of the European Union (TFEU).²⁵ This procedure, primarily intended for resolving conflicts between national laws and policies and EU law or interpreting EU legislation, has the major downside of a dependency on national judges to pose a question to the CJEU. This has notably been explored by Passalacqua, who has researched how from the bottom up, focusing on the litigants, the decision to refer can be influenced with Euro-expertise (EU legal expertise) in the field of migration law.²⁶ By having better resources available (i.e., knowledge), litigants are more likely to succeed in their endeavours (i.e., getting a judge to refer to the CJEU).²⁷ Passalacqua focuses in her article on three instances of mobilisation against national laws and policies in the United Kingdom, the Netherlands, and Italy. Other such examples exist, for example, in the field of gender equality and non-discrimination law.²⁸ The procedure has also been used to challenge acts of EU institutions due to alleged fundamental rights violations.²⁹. One field of law where this has been particularly successful is explored here, looking at the cases, the actors behind them, the procedural hurdles they have had to overcome, and how they did so. This field of law is data protection.

The first widely known example is the case of Digital Rights Ireland, decided by the CJEU in April 2014.³⁰ In that case, the EU Data Retention Directive was declared invalid due to non-compliance with Articles 7 and 8 of the Charter. The Directive required Internet Service Providers (ISPs) to retain internet data for a period of six months to two years.³¹ The successful challenge was started in 2006 before an Irish court by the digital rights lobbying and advocacy NGO Digital Rights Ireland.³² It challenged both the EU Directive and the Irish implementation thereof. Importantly, the NGO was allowed to conduct the proceedings in actio popularis, meaning that the organisation litigated for a public interest (namely the privacy rights of individuals).³³ This possibility is not present in all EU Member States, highlighting the importance of beneficial national procedural rules. Moreover, among the members of the NGO (which has no staff or office) are practicing lawyers and legal academics.³⁴ Digital Rights Ireland was supported by many other similar organisations, such as the Electronic Frontier Foundation and Privacy International.³⁵ This means that the level of (Euro-)expertise within the NGO and in its relations with others was high. Despite significant delays that were suffered by the NGO in the national proceedings, eventually a preliminary reference was sent to the CJEU by the Irish court, which led to the CJEU judgment.³⁶

The second example from the field of data protection is a fraction of a multitude of legal challenges brought by activist Maximilian Schrems. A preliminary ruling decided by the CJEU in October 2015, in the case of Schrems I, had significant consequences for the transfer of personal data from companies in the EU to the United States.³⁷ The judgment invalidated the ‘Safe Harbor’ agreement between the EU and the United States, which allowed for the transfer of such data.³⁸ The CJEU found that there were not enough safeguards in this agreement in light of Articles 7 and 8 of the Charter. Maximilian Schrems, an Austrian citizen (then law student) and Facebook user, challenged the transfer of his personal data from Facebook’s servers in Ireland to those in the United States (after the revelations made in 2013 by Edward Snowden).³⁹ The Irish High Court was uncertain about the validity of the underlying Safe Harbor decision and decided to pose a question about its validity to the CJEU. The CJEU largely followed the arguments made by Schrems and declared the Decision invalid. Notably, as a third-party intervener, Digital Rights Ireland was involved in the case. Schrems himself is now a privacy lawyer and founder of an organisation (noyb) fighting for digital rights.⁴⁰ Schrems I is one of the many legal challenges brought by the activist and his organisation.⁴¹

These cases tell us several things. Firstly, the NGO Digital Rights Ireland benefitted from the possibility of starting an actio popularis in an Irish court, which is not possible in every EU Member State. Secondly, all litigants described in this section benefitted from legal, and specifically EU law, expertise, either through their own resources or with the help of a coalition of other individuals and organisations (sometimes formally through a third-party intervention).⁴² This is necessary at times to provide a counterweight to the power of the national government to delay a procedure, such as in the Irish proceedings leading up to Digital Rights Ireland. It should be emphasised that these instances of mobilisation are rather exceptional: national implementation is necessary as litigation against EU acts cannot be brought before national courts. Therefore, challenging EU legislation or EU complicity in fundamental rights violations needs to be combined with a Member State ‘element’, so to say.

8.3.2 Direct Actions

The second type of mobilisation before the CJEU addressed here are direct actions, based on Article 263, 265, or 340 TFEU. Addressing fundamental rights violations by the EU through these procedures is difficult for a variety of reasons. Most obviously, the plaintiffs in the action for annulment and failure to act run into the difficulties of the Plaumann criteria of direct and individual concern.⁴³ As emphasised in Chapter 2, the conditions under which compensation is granted in the action for damages are strict. Most likely related to these difficulties, only very few strategic procedures as direct actions before the CJEU have been initiated.⁴⁴ Many attempts have been made to overcome these criteria especially in the field of environmental law. This line of case law, and case law more generally before the CJEU on environmental issues, is set out first in this section. The second part of this section focuses on two cases brought against the European Border and Coast Guard Agency, Frontex. One is an action for annulment, brought on behalf of two individuals by the NGO front-LEX.⁴⁵ The other is an action for damages, brought on behalf of a Syrian family by Prakken d’Oliveira Human Rights Lawyers.⁴⁶

The requirement of individual concern that follows from Plaumann is especially difficult to satisfy in environmental litigation: environmental measures are of a general nature and do not concern specific individuals.⁴⁷ The first case in which this was explicitly dealt with was a case initiated by Greenpeace before the General Court (then the Court of First Instance) and later the Court of Justice.⁴⁸ In relation to the procedural hurdle, Greenpeace defended the view that the environmental legal field is separate from other fields of law, as there is a particular type of public and shared interest at stake, unsuitable for a requirement such as individual concern.⁴⁹ If locus standi was not granted in the case, Greenpeace argued that a legal vacuum would come into being. This case did not succeed. Shortly thereafter, the Aarhus Convention was signed by the EU in 2005.⁵⁰ The third pillar of that Convention ensures access to justice in environmental matters, also (and specifically) for NGOs.⁵¹ This led to a series of challenges to the strict locus standi rules in CJEU direct actions.⁵² Still, no substantial change to the Plaumann criteria could be realised. Also attempts by individuals (together with an NGO) to overcome these criteria have proven unsuccessful.⁵³ A different strategy was adopted by ClientEarth, who questioned the EU’s implementation of the Aarhus Convention before the Aarhus Convention Compliance Committee. This Committee found the EU to be incompliant with the Convention. This was subsequently used in litigation by the NGO Mellifera before the CJEU, but the Court rejected the Aarhus Committee’s finding alleging it is non-binding (a ‘draft version’).⁵⁴ Environmental NGOs have not given up in this regard and continue to bring claims before the CJEU to overcome the Plaumann criteria. These cases form an example of the challenging of legal opportunity structures as part of strategic litigation: the NGOs in the cases purposefully litigate about procedural requirements to ‘loosen’ them.⁵⁵

The action for failure to act and the action for damages brought against Frontex are pending at the time of writing, and it is uncertain whether the use of these procedures will be successful, that is, whether the applicants will have their cases declared admissible by the CJEU. Nevertheless, it is interesting to look at these cases in more detail, as they are one of the few examples in which these actions have been purposefully mobilised to address fundamental rights violations by the EU. The failure to act brought by front-LEX alleges a failure by Frontex to terminate its operation in the Aegean Sea, in the context of which the applicants suffered fundamental rights violations on their journey to Greece.⁵⁶ Frontex argues that the complaint should be declared inadmissible as the actors that invited Frontex to act in the first place are the NGOs behind the complaint and not the applicants themselves.⁵⁷ Moreover, the argument of a lack of locus standi (once again based on the Plaumann criteria) is put forward by Frontex as well.⁵⁸ The second procedure, the action for damages initiated by human rights lawyers, is on behalf of a Syrian family who were allegedly victims of a ‘pushback’ by Frontex.⁵⁹ The family applied for asylum in Greece but were deported by Frontex and Greek authorities on a plane to Turkey, where they were subsequently imprisoned.⁶⁰ It is noteworthy that in both procedures, a more ‘strategic’ actor is acting on behalf of individuals, namely a human rights law firm and an NGO. The procedural reality of Articles 265 and 340 TFEU require this, as these actors (NGO and law firm) themselves cannot prove that they suffered damage or were directly harmed by a failure to act. Similar to the environmental field, these legal actions do not stand alone but are part of a multitude of political and legal efforts undertaken by different actors.⁶¹ This shows the deployment of ‘integrated advocacy’, using a multitude of strategies simultaneously alongside litigation efforts.⁶²

As can be seen from these examples, the procedural barriers in direct actions are high for strategic litigators. Direct access to the CJEU is limited, which requires legal action to overcome these barriers or legal action by making use of individual complainants. As stated in Section 8.2, EU legal opportunity structures are more ‘open’ when it comes to the availability of rights: an aspect that is used by the environmental NGOs to their advantage, by arguing for procedural flexibility due to strong substantive protection. EU legal expertise here is, once again, vital to successfully mobilise these procedures. Alongside this, relations need to be established with individuals on behalf of whom strategic litigation can be initiated. Moreover, a persistent strategy with multiple legal actions brought could increase the chances of success, but only time will tell. If the Frontex procedures prove unsuccessful, they can still provide a compelling argument for civil society in Europe that there is a lack of access to justice for fundamental rights violation by EU agencies.⁶³ This could feed into the discussion of accession to the European Convention on Human Rights as well (see also Chapter 7).

8.3.3 Third-Party Interventions

In both the preliminary reference procedure and direct actions, there is the possibility for actors to intervene as a third party. Third-party intervention can be compared to the practice of using an amicus curiae, ‘friend of the court’, who can provide information to the judges to help them decide on the case.⁶⁴ By providing the CJEU with arguments, the result of a court procedure can potentially be influenced. This is, therefore, a useful tool in strategic litigation. Moreover, as accessing the Court as a direct litigant is difficult, third-party intervention ensures participation in the proceedings.⁶⁵ Nevertheless, intervening in CJEU cases is not an easy feat either, as is described below. In any case, the third party must ‘accept the case as he finds it’, meaning that no new grounds can be put forward.⁶⁶ Still, this tool has been used by several actors before the CJEU. This section first delves into third-party intervention in the preliminary reference procedure, after which intervention in direct actions is discussed.

According to Articles 96 and 97 of the Court’s Rules of Procedure, only parties to the main proceedings can submit their observations to the CJEU in a reference for a preliminary ruling. In practice, this means that actors have to be involved at the national level already, otherwise the gates to intervene are closed.⁶⁷ In turn, national rules on third-party intervention or submitting amicus briefs differ greatly among the twenty-seven EU Member States.⁶⁸ This creates an uneven playing field. In the common law jurisdictions, submitting amicus briefs is relatively easy. This has resulted in some ‘strategic’ third-party interventions in important cases coming from UK and Irish preliminary references. Most notably, in the case of N.S. and M.E., there were multiple NGOs who intervened, such as UNHCR, Amnesty, and the AIRE Centre.⁶⁹ The involvement of the NGOs in this case, a landmark case on the ‘Dublin system’ and the transfer of asylum seekers in the European Union, was the result of strategic involvement that started at the national level, otherwise intervention at CJEU level would not have been possible. The UK-based AIRE Centre has intervened in multiple CJEU cases in the field of migration and social policy.⁷⁰ UNHCR has also intervened in a few CJEU cases, but when formal access was closed, it has turned to informally submitting its views (see Section 8.4.3).⁷¹ As well as these examples from the migration field, interventions are also common in the aforementioned data protection cases.⁷² Similarly, these cases originate from a common law jurisdiction and it can be assumed that the actors keep one another involved. This procedural framework places a heavy burden on NGOs who want to be involved in preliminary reference procedures at CJEU level, as they need to be aware of cases at the national level and national rules need to allow for intervention.⁷³

In direct actions, the possibilities to intervene are a bit broader, as any person that ‘can establish an interest in the result of a case submitted to the Court’ can intervene.⁷⁴ This interest is generally interpreted by the CJEU as meaning that the economic situation of the intervener is directly affected, but there has been a more flexible approach towards associations promoting collective interests.⁷⁵ Several environmental cases can be found before the CJEU where parties intervened; however, a problematic aspect for the interveners is that if the applicants in the main proceedings lack standing, there is no possibility to intervene on the merits.⁷⁶ Thus, the strict locus standi requirements in direct actions have an effect on third-party intervention as well. It is only exceptionally that third-party intervention in direct actions happens in practice.⁷⁷

In sum, although third-party intervention could be a way for NGOs to be involved in strategic litigation, only a few successful examples can be found. A dependency on national rules and the strict requirements in direct procedures before the court form obstacles for this strategic litigation avenue. This makes this avenue resource-intensive: there needs to be awareness of cases brought at the national level for third-party intervention in preliminary rulings and intervening in direct actions is a waste of time if a case does not pass the admissibility stage. Moreover, relations among organisations seem to be of importance: keeping each other informed so that third-party interventions can be submitted.

8.4 Other (Creative) Ways of Using the EU Remedies System

The sections above have elaborated on the most common and well-known form of strategic litigation within the EU remedies system: going to the CJEU. Nevertheless, other avenues are also thinkable and have been used by different actors already. This section elaborates on some of these.

8.4.1 Petition to the European Court of Auditors

One institution that has been called upon regarding alleged fundamental rights violations by the EU is the European Court of Auditors (ECA). The ECA is responsible for carrying out the EU’s external audit, supervising control over the EU budget.⁷⁸ In April 2020, three NGOs submitted a complaint to the ECA about the mismanagement of EU funds through the ‘Support to Integrated Border and Migration Management in Libya’ (IBM) Programme.⁷⁹ These NGOs are repeat-players in strategic litigation, especially when it comes to the field of migration law.⁸⁰ In a novel way, the NGOs link fundamental rights obligations of the EU to the management of funds, alleging that the EU budget is used to violate fundamental rights (in Libya). The ECA responded in May 2020 that it would not initiate a review of the IBM programme at that time, partly due to its limited resources.⁸¹ Still, this complaint presents an interesting case study of a route that could be used successfully. As a downside, the actors submitting such a complaint can do no more than that: submit information to the institution. There is no possibility of formal involvement in any procedure that follows.⁸² Nonetheless, if a formal review is initiated by the ECA, this could lead to more accountability of the EU for possible fundamental rights violations and could become a useful avenue in fields other than migration as well.

8.4.2 Calling upon Other (Non-Judicial) European Institutions

The aforementioned strategies relate to the use of courts, but other EU institutions can also be called upon to challenge alleged fundamental rights violations by the EU. Under Article 227 TFEU, natural and legal persons are given the right to address a petition to the European Parliament on EU activities that affect them directly. The same three organisations that submitted the complaint to the ECA have made use of this right of petition on the same topic, the mismanagement of EU funds leading to fundamental rights violations in Libya.⁸³ The argument made to use Article 227 TFEU is that the organisations consist of EU taxpayers, hence the mismanagement of funds affects them directly.⁸⁴ A Committee on Petitions of the European Parliament considers and can follow up on these petitions.⁸⁵ For strategic purposes, a downside is that the petition must be brought by the ones directly affected by the EU’s activities. Therefore, a strategic litigator cannot send the petition on behalf of a large group of individuals who suffer from EU fundamental rights violations.

A second available route that makes use of an EU non-judicial institution is the submission of information to an EU body such as the European Data Protection Board (EDPB). The NGO noyb of privacy activist Maximilian Schrems has made use of this option, by submitting a complaint to multiple Data Protection Authorities (DPA) in May 2018 about the tech company Meta running personalised ads without user consent.⁸⁶ Four years later, in December 2022, news broke that Meta will have to pay a fine of almost 400 million euros.⁸⁷ Although the decision on the fine was taken by the Irish DPA, it was pushed by the EDPB to do so. The EDPB coordinates the consistent application of EU privacy rules throughout the EU.⁸⁸ Similar to the procedures mentioned before, the involvement of strategic actors stops after submitting a complaint and information. Nevertheless, if the consequent procedure has a positive outcome, the desired impact can become a reality.

A last avenue that is already elaborated on elsewhere in this volume (Chapter 5) is the submission of complaints to the EU Ombudsman. As the Ombudsman is responsible for investigating complaints about maladministration of the EU, fundamental rights issues have also been brought to the attention of the EU Ombudsman.⁸⁹ For example, several environmental NGOs have submitted a complaint on the European Investment Bank not disclosing information about the environmental impacts of financed projects.⁹⁰ This led to the Ombudsman issuing decisions on this topic in April 2022.⁹¹ However, such decisions are non-binding, which poses limits to the effectiveness of this option (if decisions are positive for the strategic actors in the first place).

8.4.3 Informal Involvement

Strategic litigation is not always visible: at times, strategic involvement by actors is ‘hidden’, behind individual clients or other organisations. Such informal involvement can still be a way of influencing legal procedures, including within the EU remedies system, and therefore deserves attention here. For example, as described above, formal third-party intervention in the preliminary reference procedure before the CJEU is rather difficult. In that regard, it is interesting to note that UNHCR has resorted to informal third-party intervention submissions in the form of ‘written observations’ or ‘public statements’.⁹² Although the influence of such informal involvement is difficult to measure, it is a way for actors to have their voice heard in Luxembourg. Another way of being involved is through the provision of expert opinions or expertise to lawyers who have cases pending before the CJEU. This is the strategy deployed by the Dutch Council for Refugees (DCR). Due to their network with Dutch migration lawyers, the DCR and their Committee Strategic Litigation is able to (at times) provide arguments to lawyers in preliminary references before the CJEU that originate from the Netherlands.⁹³ Additionally, in their written submissions before Dutch courts, the Committee often pushes for preliminary questions to be asked.⁹⁴ Similarly from the Dutch context, the informal involvement of a law clinic can be pointed out. At the Vrije Universiteit Amsterdam, the Migration Law Clinic has been submitting ‘expert opinions’, which support the reasoning of the lawyers in the preliminary ruling procedure.⁹⁵ Through these lawyers’ pleadings, the submissions of the DCR and the law clinic are brought into the case. Again, these types of involvement show the relevance of coalitions and networks, such as contact with national lawyers and knowledge of pending preliminary references and the importance of Euro-expertise.

8.5 Conclusion

The collection of examples above warrants several questions. Firstly, how did these actors manage to successfully mobilise or litigate? The answer to that question differs by procedure, but some common denominators can be found. Most importantly, all actors involved have a certain (high) level of EU legal expertise, also referred to as Euro-expertise. In his seminal 1974 article, Galanter already referred to the notion and importance of being a litigating ‘repeat-player’.⁹⁶ The more resources, knowledge, and experience a litigant has, the higher the chances of success, according to Galanter. Applying this to the present chapter, the same seems to hold true within the EU context. This indicates that more investment into Euro-expertise is worth it. Substantively, Euro-expertise makes benefitting from the availability of rights within the EU remedies system possible. Procedurally, Euro-expertise helps litigants to access the rather closed system and make use of this substantive protection that the EU offers. This chapter has shown the relevance of relations, networks, and coalitions in this respect. A lack of Euro-expertise in one organisation can be compensated with the involvement of another.

Moreover, as litigants sometimes have to work through individual complainants, relations with communities and grassroots organisations seem of importance as well. There is no actio popularis possible before the EU courts, which makes clients all the more relevant. Nevertheless, as Section 8.4 has shown, other ways of involvement can circumvent possible difficulties in finding the ‘perfect’ case, by working around the EU courts in other parts of the EU remedies system.

Additionally, some applicants seem to have gone forum shopping, finding the national legal system most suitable and procedurally more favourable for bringing a complaint about EU fundamental rights violations. This shows the unequal playing field among EU Member States when it comes to strategic litigation. Some systems are more ‘open’ in terms of legal opportunities than others. For example, in some countries judges might be more willing to pose a preliminary question to the CJEU than in others.⁹⁷ Or third-party intervention at the national level is easier. This makes EU legal opportunities dependent on the national level and opens access but not to everybody. Litigators seem to have made use of the available avenues in some Member States, where others are closed.

The second question that results from the current chapter is: How can access to the EU remedies system for strategic litigants be improved? Although a non-normative answer to this question is impossible to provide, the closedness of the EU system in terms of the first dimension of legal opportunity structures indicates that more access to the CJEU and other formal procedural options are desirable. In this regard, there are two different ways forward. The first is the creation of a new procedure, such as a form of collective action or actio popularis before the CJEU. Political support for something like this might be lacking.

There is also a (perhaps more feasible) second option: a more relaxed approach towards certain procedural requirements. The Plaumann criteria are the most telling example of this, but relaxing the requirements for third-party interventions before the CJEU is also possible (such as the approach of the ECtHR). This opens up EU legal opportunity structures and creates possibilities for strategic litigation. Moreover, what has been highlighted already are the differences between the EU Member States when it comes to procedural rules on access to courts, which in turn influences access to the CJEU. A more equal playing field in this regard is one of the ways in which the current availability of procedures can be streamlined as well. For example, the three EU non-discrimination Directives contain a provision that ensures standing for organisations wanting to tackle discrimination in an administrative or judicial procedure.⁹⁸ Such harmonisation on collective action or litigation for a public interest can be a way of securing a more ‘open’ EU remedies system.

9 Finding a New (Old?) Way Forward International Arbitration as a Supplementary Tool for Fundamental Rights Violations

Veronika Yefremova

9.1 Introduction

This chapter examines what legal space exists within the EU judicial system for arbitration to be used as a supplementary tool to remedy fundamental rights violations. This exercise is more creative and theoretical in nature since arbitration is not currently used to remedy violations by the EU. Moreover, arbitration exists outside the scope of the EU judicial system. However, since arbitration is a valuable dispute resolution mechanism, this chapter will assess whether it is possible to have more space to use such a tool in situations where an individual has had their rights violated and has no access to a court. The premise for this chapter primarily lies in the fact that the EU judicial system has been established and used for many years. In the eyes of the Court of Justice of the European Union (CJEU), there exists a full system of remedies.¹ The EU judicial system has been essential to the process of integration ever since the creation of the EU. The judicial system has been later enhanced through extensive treaty revision and case law of the CJEU. The use of arbitration in certain sectors has shown that parties prefer to opt for private dispute resolution mechanisms or private enforcement.² With the expanding competence of the EU and the far-reaching policies that can be found in the EU Treaties, a significant gap has emerged between EU policy objectives and provision of an effective remedy in practice. Against this background, this chapter will explore the legal room for using international arbitration where no access to court is available in practice in fundamental rights violations by the EU. This analysis will provide a view of whether and to what extent international arbitration can be used to close the enforcement gap that has become apparent when dealing with fundamental rights violations by the EU.

This chapter is divided into three sections. Firstly, the chapter begins by outlining what international arbitration is, the strengths and weaknesses of the system, and how it is being used within the EU. Moreover, the relationship between the EU judicial system and private international law is highlighted. Secondly, the chapter assesses the constitutional limits imposed through the CJEU approach and Treaty provisions where arbitration is concerned. Finally, the chapter will analyse the constitutional potential and practical implications of introducing arbitration as a dispute resolution avenue. In doing so, this chapter uses inter-state arbitration and investment-treaty arbitration cases as examples; however, the framework for these is excluded from the discussion.

9.2 The Model of International Arbitration

9.2.1 Defining International Arbitration

International arbitration can be defined as an extra-judicial mechanism of dispute resolution, which is considered one of the alternative dispute resolution mechanisms.³ The term international commercial arbitration refers to a procedure where disputes between private individuals or corporations are resolved.⁴ Moreover, it can also be between a state acting in its private capacity and a private party. The mechanism is considered to be part of the adjudication system of any legal order.⁵ There is a group of scholars who are of the opinion that all arbitration is private, even when it concerns a dispute between an investor and a state. This idea mainly stems from the fact that the arbitrators who adjudicate on the dispute are appointed by the parties, rather than belonging to a judicial institution. However, this is not always the case. The fact that it may be a private dispute resolution system does not take away from the fact that it is a mechanism that guarantees access to justice and has final and binding arbitral awards. The author is of the opinion that private arbitration concerns disputes that are brought by private parties or between a private party and a state acting in its private capacity.

Private arbitration allows the parties to create their own arbitration process.⁶ This is done through the principle of private autonomy, as it is an integral principle of arbitration. Hence, this also means that the elements of the arbitration process result from choices the parties make. For example, the seat of arbitration, which procedural rules apply, and the arbitrators are all choices that the parties make themselves. This means that there also has to be consent given by the parties to arbitration or it needs to be provided in an agreement. Therefore, arbitration is usually an agreed form of dispute settlement.

9.2.2 Benefits of International Arbitration

International arbitration has become the preferred mechanism for many cross-border commercial disputes due to three main benefits.⁷ The first is the flexibility in proceedings. The parties to the arbitration agreement may choose the type of tribunal that will hear the dispute, the applicable law (lex arbitri), the seat of arbitration, and which conflict of laws to use. Hence, the parties are able to choose the evidence rules and the time limits since most of these rules are outlined in the applicable and chosen law. Therefore, the parties are able to design their own proceedings.

A second benefit of arbitration is the ability to choose one’s arbitrators.⁸ Since disputes that arise come from different fields, they require different types of expertise to resolve the dispute at hand. The parties to a dispute are free to choose arbitrators according to their expertise.⁹ There are arbitrators who are either professors or practitioners in different fields of law and beyond. This is particularly advantageous when the resolution of a dispute hinges on specific technical expertise that judges may not always possess.

A third benefit of arbitration is that an arbitral award is final and binding.¹⁰ The arbitral award has res judicata effects.¹¹ Unlike other private dispute resolution mechanisms, an arbitral award can and should be enforced in any national jurisdiction.¹² Since arbitral awards are recognised and enforced in national jurisdictions, this means that the arbitrators will do their utmost best to resolve the case, as any arbitral tribunal would strive for the award to be enforceable (depending especially on whether the state signed the New York Convention).¹³ Therefore, although arbitration is considered a private dispute resolution mechanism, all the regulations that concern the protection of the weaker party or fundamental rights are still applied in arbitral proceedings. Hence, while doing their jobs, arbitral tribunalstend to apply, even if not obligated to, laws and norms that any national court would apply, in order to achieve enforceability of the arbitral award.¹⁴

9.2.3 Limitations of International Arbitration

As with any system, there are also a few limitations that can be attributed to using arbitration as a dispute resolution mechanism. The first limitation concerns the confidentiality of the dispute resolution process.¹⁵ It poses a limit to commercial arbitration since awards are not always publicly available. It poses risks that decision-making in arbitration proceedings does not adhere to any sort of check and transparency. For EU law purposes, this is a limitation since it is not possible to check how EU law was interpreted in a dispute. Moreover, this translates into issues with legal certainty since it then becomes difficult to establish a common line taken in awards is in a certain situation.¹⁶ Hence, it poses a limit to using arbitration.

A second limitation of arbitration, which ties into the previous one, concerns the issue of transparency and consistency.¹⁷ Due to some arbitral awards not being made public, this raises the question of how disputes are in fact resolved by the arbitrators. This also plays into decision-making of arbitral tribunals not being public, hence not transparent. A limitation exists here in the sense that when a dispute deals with private and public interests and is not transparent, that is a problem. Since public interest can be violated when a private interest is decided, it becomes crucial for national courts who enforce the award to check this. This poses a risk that national courts when enforcing the award will want to carry out a full review.

A third limitation is that arbitration can form a limit to effective judicial protection within the EU. Given the fact that international arbitration exists outside the scope of the EU judicial mechanism, if a party to a dispute decides to take a dispute to arbitration, that party is in fact deciding to take the dispute out of the EU judicial system. From an EU perspective, practically this means that effective judicial protection as guaranteed under Article 47 Charter of Fundamental Rights of the European Union (‘the Charter’) is not achieved.¹⁸ On the EU level, more specifically, Article 47 Charter recognises access to justice as a ‘core fundamental right’.¹⁹ This means that arbitration undermines this fundamental principle of EU law. Secondly, if an arbitration clause in a contract or agreement exists, the dispute will go to arbitration, which means that a national court can only enforce or annul the arbitral award, hence a limited judicial review.²⁰ Although this does not mean that it is a breach of fundamental rights per se, it does mean that the EU threshold of effective judicial protection might not be met. Therefore, from an EU law perspective, the limited review stemming from the res judicata of arbitral awards may undermine effective judicial protection.

9.3 Setting the Scene: International Arbitration and EU Law

This section outlines where arbitration fits under the EU framework. Firstly, the development of private international law in the EU will be outlined. Secondly, an overview of the legal instruments on the EU level will allow an understanding of what room exists for arbitration.

9.3.1 The EU’s Competence and Arbitration

International arbitration is considered to belong to a branch of private international law, which predominantly relies on party autonomy and expression of will from parties to a dispute. There is no fully-fledged European Private International Law, although it is becoming more regulated within the EU sphere.²¹ Since arbitration mainly depends on private law and domestic procedural law, it is also dependent on private international law. Hence why this framework is relevant for using arbitration.

Even though the EU has expanded its regulation into numerous policy areas, private international law has been an area of law that was originally left untouched.²² This is also evident from the EU’s competences in matters of private international law. There is no specific field of ‘EU arbitration law’ that would be regulated in the Treaty on the Functioning of the European Union (TFEU).²³ Generally, there is no provision in the Treaties that explicitly refers to, or deals with, arbitration.²⁴ However, this was not always the case. A provision was inserted into the Treaty of European Economic Community (hereinafter, ‘EEC’), under Article 220 EEC.²⁵ Here, the following is established: ‘Member States shall, in so far as necessary, engage in negotiations with each other with the view to securing to the benefit of their nationals: … the simplification of the formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals and of arbitration awards.’²⁶

The Maastricht Treaty did not include private international law, even though there were important legal architecture changes being made. A ‘Three-Pillar Structure’ was created and placed judicial cooperation into the third pillar.²⁷ This created important substantive changes for the Treaty. For private international law, this meant that the integration was less than in fields that found themselves in the first pillar. Through the pillar structure, Member States gained more room for cooperation.²⁸ This was seen as a compromise whereby Member States achieved more ways for cooperation within the Pillar Structure but were not subject to the supranational integration approach and the sensitivity of the fields was still respected.²⁹ This approach also allowed the European Council to still retain its powers. Therefore, a middle ground was found to address these more sensitive topics.

Only within the framework of Communitarisation, in the Treaty of Amsterdam, did private international law become part of the first pillar.³⁰ Ever since then, international arbitration and EU law have come into closer contact.³¹ Though in practice, the interaction of arbitration and the EU legal order differs to varying degrees depending on the field of EU law and the competence that the EU and Member States have in the given fields.³²

The inclusion of private international law in the first pillar created a shift in the competence divide between the EU and Member States. What was originally a matter for Member States to decide, given that the area contains private relations, now gave the EU competence.³³ The EU has competence to ‘take measures in the field of judicial cooperation in civil matters having cross-border implications’, as long as this relates to the proper functioning of the internal market.³⁴ As stated under Article 3(2) Treaty on the European Union (TEU), a common area and the development of cooperation in civil matters having cross-border effects is possible with the legal basis under Articles 67 and 81 TFEU.³⁵

Later, with the Treaty of Lisbon, the Union only gained powers to initiate development of alternative dispute settlement methods, which most of the time excludes arbitration as discussed in this chapter.³⁶ These powers are not absolute, but this explains why there has been more reference to alternative dispute settlement as a potential remedy in secondary legislation.

Treaty amendments meant that the EU and Member States now have a shared competence in the field of private international law. For arbitration, Member States still retain most powers since most arbitration is governed domestically.³⁷ The principles of conferral, subsidiarity, and proportionality apply.³⁸ As also stated under Article 3(2) TEU, what can be seen within the EU is that a common area and the development of cooperation in civil matters having cross-border effects is possible with the legal basis under Article 81 TFEU.³⁹ On the other hand, given the shared competence, EU institutions can enact legislation.⁴⁰

9.3.2 Legal Instruments That Regulate Arbitration

On the international level, the New York Convention is an essential multilateral international treaty in the field of arbitration.⁴¹ The Convention deals with enforcement and recognition of arbitral awards and ensures that arbitral agreements are upheld. All Member States are also signatories to the New York Convention. The EU itself is not a signatory to the New York Convention and there is no equivalent that exists on the EU level. There is the Brussels I bis Regulation, the successor of the Brussels Convention, which deals with the free movement of judgments in cross-border situations.⁴² The Brussels I bis Regulation covers all civil and commercial matters. The term ‘civil and commercial matters’ is not defined under the regulation itself; the concept has gained an autonomous interpretation under EU law.⁴³ The main aim of the Brussels I bis Regulation is ensuring the proper functioning of the internal market, judicial fairness, and international comity.⁴⁴ Arbitration is, however, excluded from the scope of the regulation. This is provided in recital 12 and Article 2(d) of the regulation.

The reasoning behind the arbitration exclusion was mainly due to prior existence of international conventions, specifically the New York Convention, which dealt with arbitration when the Regulation was enforced. This is why most issues of arbitration are left to the New York Convention and national legislation to deal with. This way EU legislation avoided overlap with existing international conventions.

On the national level, each jurisdiction has their own rules that regulate arbitration. It is only on this level that one can find codes of civil procedure and rules on how arbitral tribunals and courts should interact (together with the rules that exist on the international level).

9.4 Constitutional Limits to Arbitration within the EU Judicial System

9.4.1 The CJEU Approach to International Arbitration

Constitutional limits are crucial in assessing the legal space that exists for arbitration within the EU judicial system. The main limit has developed through the CJEU’s approach to arbitration. Therefore, this section will outline the leading case law that deals with arbitration. The section is structured in a way that resembles the argumentation used by the CJEU when dealing with arbitration, namely in light of the autonomy of EU law and the uniform application of EU law.

9.4.1.1 The Principle of Autonomy and International Arbitration

The notion of the autonomy of EU law is central to the CJEU’s approach to arbitration. It forms the main constitutional limit to the use of international arbitration where a dispute concerns an element of EU law. In the CJEU’s case law, the type of relation between the CJEU and an international dispute settlement body and the type of dispute resolution body are the main aspects that determine whether a specific dispute resolution mechanism is contrary to the principle of autonomy. While relationships with commercial arbitration are not contrary to EU law, relationships of interaction, for example, in Opinion 2/13, have been declared contrary to EU law.⁴⁵

One prominent example of when the EU and a dispute resolution body coexist can be seen in Opinion 2/13. This judgment concerned the question of whether EU law is compatible with the draft agreement for the accession to the European Convention on Human Rights. The Court stated that it would undermine the autonomy of EU law if the EU acceded to the Charter of Human Rights under the ‘old’ agreement that was in front of the Court.⁴⁶ As stated in Opinion 2/13, an agreement or dispute settlement mechanism outside the scope of EU law cannot affect the powers fixed by the Treaties and the autonomy of the EU legal system.⁴⁷ The Opinion also stated that Member States should not submit a dispute that deals with the Treaties to any ‘other method of settlement other than those provided therein’.⁴⁸

In the same vein, judgments such as Achmea and Komstroy show that the arbitration procedure under the arbitral agreement in the given case is contrary to EU law and undermines the autonomy of EU law.⁴⁹ The case in Achmea concerned the question of whether Article 344 TFEU precluded the application of a bilateral investment protection agreement when the contracting state acceded to the EU.⁵⁰ The CJEU established that the intra-EU bilateral investment treaty would be against EU law since it would take the dispute outside the CJEU jurisdiction.⁵¹ The CJEU relied on the principle of autonomy of the EU to state that international agreements cannot affect the powers laid down in the Treaties.⁵² Relying on the ruling in Opinion 2/13, the Court reiterated that the legal system was designed to ensure the uniformity of the interpretation of EU law.⁵³ The Court went on to make a differentiation between investor-state arbitration and commercial arbitration. With commercial arbitration, since it is expressly based on the will of the parties, it does not have the same effect on the legal system as investor-state arbitration. Therefore, in these circumstances, there is more legal space provided to choose to go to commercial arbitration.

In Komstroy, the Court followed a similar logic.⁵⁴ The dispute arose because of a Moldovan investor and a Ukrainian investor having a dispute about the definition of ‘investment’.⁵⁵ The dispute was referred to the CJEU by a preliminary ruling reference from the Paris Court of Appeal. The judgment confirmed the same distinction with regards to commercial arbitration, where the Court reasoned that since arbitral awards are reviewed by national courts, the principles of EU law can be examined in the process of that review.

In conclusion, when investor-state arbitration is concerned, autonomy is used as a limit. In situations of commercial arbitration, where the parties to a dispute choose to turn to arbitration, following the reasoning of the Court this is not barred by autonomy. On the other hand, in situations where arbitration affects the powers as envisaged by the Treaties, then the principle of autonomy is used as a bar. This distinction requires some attention. Although this may be a way for the CJEU to give commercial arbitration more space and accept it, it is still questionable whether that review will be accepted by the CJEU. Since this would mean that arbitral tribunals would interpret EU law without a review from the CJEU, it is hard to believe it will be accepted.

9.4.1.2 Argument of Uniform Application of EU Law and Arbitration

Ensuring effective and uniform application of EU law is another central argument used by the CJEU when it deals with limiting arbitration. It serves as a limit to arbitration when arbitral tribunals apply EU law and that application then needs to be checked. In the case of arbitration, this check is done by national courts in the post-award stage, which results either in the annulment or enforcement of the arbitral award. According to the CJEU’s case law, when a case concerns the validity of an arbitration agreement or annulment of such an award that deals with EU law, national courts should have the possibility to review the application of EU law. However, this review is quite limited in practice.

Given the fact that arbitral awards enjoy res judicata effects, judicial review is limited to either enforcing the award or annulling it.⁵⁶ This means that if an error in law occurred, it is not possible to remedy the error in one part of the arbitral award.⁵⁷ The only remedy a national court would have would be to annul the arbitral award. This annulment is based on a violation of the uniform and effective application of EU law.

The limit on arbitration in the form of rendering it a violation of the uniform application of EU law is relevant when arbitration poses a risk to the effectiveness of any EU law norm. This is so when the balancing act between the benefits of arbitration and the potential violations it brings no longer favours the EU legal order. Hence, the uniform application of EU law argument becomes a bar to arbitration.

A good illustration of this is the Mostaza Claro judgment.⁵⁸ Although it is a case that stems from the field of consumer protection, which is quite specific and has a lot of secondary legislation for the protection of the weaker party, nevertheless it serves the purpose of showing how effective judicial protection is used by the Court. In general, the enforcement of consumer rights has been limited to the principles of effectiveness and equivalence by the case law of the CJEU.⁵⁹ However, the CJEU also made clear that domestic procedural rules should not make it extremely difficult for private parties, in this case consumers, to use their substantive rights under EU law. The Court went further in stating that in order to ensure the effectiveness of the EU legal order, it is necessary to allow national courts to examine the validity of arbitration agreements in the post-award phase.⁶⁰ The CJEU justified this more intrusive approach as being ‘necessary for ensuring that the consumer enjoys effective protection, in view of the real risk that he is unaware of his rights or encounters difficulties in enforcing them’.⁶¹ The Court relied on the principle of equivalence, as it had previously also done in Eco Swiss, to rule that domestic public policy and EU public policy are complementary.⁶²

Similar reasoning to Mostaza Claro can be found in the Asturcom judgment.⁶³ This case concerned a consumer who had not participated in the arbitration proceedings; however, the arbitral award was later issued and not annulled by the consumer. The arbitral award was enforced in Spain.⁶⁴ Firstly, it is clear from the case that the consumer was given the opportunity to annul the award in front of the Spanish courts.⁶⁵ Given this context, and once again relying on the principles of effectiveness and equivalence, the CJEU stated that if it were to put the obligation on the Spanish court to review and annul the award, this would go against the principle of res judicata and would impose ‘an unjustifiable high price on the Member States’.⁶⁶

9.4.2 Interim Conclusion

This section shows that the CJEU’s approach limits arbitration based on autonomy and ensuring effective application of EU law. Although these arguments are quite reasonable from the point of view of ensuring and protecting the EU legal order from external influence, this cautious view may not be working in the CJEU’s favour. Although this section has focused on the most integral cases while mapping out the legal room for arbitration, the discussion has also shown a broader ‘cost’ that would be incurred if international arbitration were used. This cost is twofold.

Firstly, for international arbitration to have room within the EU, a broader definition of autonomy needs to be applied. A softer definition of autonomy would allow the EU to interact with external bodies, such as arbitral tribunals, without it posing a risk to constitutional norms of the EU. The ‘cost’ would be that arbitrators apply EU law in each case. This of course poses the risk that EU law would be interpreted incorrectly and would dilute the uniform application of EU law. However, as the system currently stands, arbitrators already apply EU law when dealing with an arbitration proceeding. Hence, it may be better for the EU to reduce the risks by opening up to the possibility of using arbitration as a dispute settlement mechanism.

Secondly, from the EU perspective, having more arbitration means a balancing act needs to be struck between effective judicial protection as enshrined under Article 47 Charter and having arbitration achieve access to justice from the international perspective. From the EU perspective, utilising arbitration comes at a cost of taking the dispute outside the scope of the EU judicial system, meaning that individuals would not receive the same guarantees as envisaged under Article 47 Charter. Paradoxically, though, on the flip side, this then means that using arbitration could resolve the problem individuals have in enforcing their rights.

From the international law perspective, these safeguards exist in the international domain within the arbitration practice. This, however, is not a gamble that the CJEU is willing to take, since there is no guarantee that these safeguards would be used. Therefore, it is necessary to perform a balancing act between the principles at stake.

9.5 Constitutional Potential for Arbitration within the EU Judicial System

This section zooms in on how international arbitration could be utilised by the EU in order to guarantee individuals an opportunity to enforce their rights. This could take the form of a ‘rights-compatible’ process and a mechanism that would allow for access to court where a court is not available.⁶⁷ This section is divided into two sub-sections. Section 9.5.1 will discuss the ways forward in possibly using arbitration and Section 9.5.2 will analyse the practical implications of using arbitration alongside the EU judicial system. It will also draw together the whole discussion in order to see whether it is possible to use arbitration as a ‘rights guarantor’ mechanism and a supplementary tool to the EU judicial system and, if so, how this could be possible.

9.5.1 Way Forward for Potentially Using Arbitration in Fundamental Rights Violations

A distinction should be made between law enforcement and rights enforcement in the EU when arbitration could potentially be used as a supplementary tool. Since the crux of using arbitration is to induce rights enforcement, this is the main focus. The reason for this distinction is twofold. Firstly, the main argument of the CJEU where arbitration is concerned has been that it needs to be limited mainly for the purposes of ensuring effective and uniform application of EU law; this can be related to law enforcement grounds.⁶⁸ This means that arbitration, as a consensual (commercial) dispute resolution mechanism, can be used since the parties know (or at least should) that they take the dispute out of the scope of the EU judicial system. Therefore, it comes down to a balancing act between application of EU law and party autonomy in order to guarantee rights enforcement.

It is not disputed that the EU judicial system operates on the idea that individuals derive rights from EU law, which should entail a possible remedy if such rights are infringed.⁶⁹ This presumption also operates on the basis that a right to an effective remedy should not be harmed by national procedural requirements that place grave burdens on the individual and possibly harm a claim to be lodged.⁷⁰ The CJEU has stated in numerous instances that an individual should not have their substantive rights hindered due to overburdensome procedural requirements of a Member State court system.⁷¹ In precisely these situations, where strict national procedural rules hinder the possibility of access to court, for example, arbitration could be used to enforce rights. Since arbitration is predominantly made up of civil procedure, contract law, and private international law, it can be a fitting adjudication system to serve as a rights enforcement mechanism.⁷² This way, an individual seeking to enforce their substantive rights would be able to do so with arbitration, avoiding the strict procedural hurdles of national courts or the limited standing before the CJEU.

If one were to extrapolate the reasoning of the CJEU in consumer protection cases where the Court deals with situations involving a restriction of rights of consumers to an effective remedy and an exercise of rights conferred by the Unfair Terms in Consumer Contracts Directive, much could be used as an inspiration for using arbitration.⁷³ Given the fact that EU competences are expanding, and with it more secondary legislation is being drafted, there are more rights that are derived and need a viable remedy available. The expanding competences also result in the EU having more room to potentially violate fundamental rights, since it has more involvement within various fields. This means that a judicial system is necessary to mirror this – this is where arbitration could come in.

The caveat here is that it comes at the price of taking a dispute outside the scope of the EU judicial system and EU law would be interpreted by arbitrators. Therefore, this becomes a balancing exercise where the balance needs to be struck between effectively interpreting EU law and ensuring that individuals have a venue to seek redress for fundamental rights violations. The argument put forward in this chapter is that international arbitration should in no way replace the EU judicial system. The thesis is that arbitration could be used as a supplementary mechanism for when there is an enforcement gap in the EU. In addition to being an alternative way to remedy fundamental rights violations by the EU, arbitration can serve as a tool for rights compliance, hence stepping in when no access to an effective remedy is possible.

9.5.2 Practical Implications for Using Arbitration within the EU Judicial System

It is quite a bold statement to say that international arbitration should be used in situations where the EU violates fundamental rights of individuals, since in practice this would mean that arbitrators would apply and interpret EU law in situations where the EU has violated fundamental rights and the EU would allow for this (one would need consent for this from both sides). However, if one follows the reasoning that an individual who derives rights from EU law should also have a remedy available when those rights are violated, it would be beneficial for the EU to use arbitration as a supplementary mechanism, instead of not having any possibility to enforce their rights. Simply put, the balancing act rests with the question of whether it is better to use international arbitration and risk potentially diluting EU law than not having access to court available in situations of fundamental rights violation. This is because in practice arbitral tribunals apply EU law as developed by the CJEU because these tribunals want their arbitral awards enforced. Therefore, one could understand why the CJEU makes the argument of autonomy and uses a guarded approach in relation to arbitration, however, this approach harms the EU, especially as a global actor.

Institutionally speaking, the competence to act in this field is already established by the Treaties as discussed before, therefore no Treaty amendments would need to be made (neither are they desired). What is required, however, is a shift in approach. This is dependent on whether Member States could reach a common approach in how to treat arbitration, since most rules are still governed by domestic law. Moreover, it depends on the approach that the CJEU continues to develop towards arbitration. The question still stands whether commercial arbitration will keep being treated differently from investor-state arbitration or whether the lines will soon blur, depending on the cases that the Court receives.

The CJEU’s approach also develops constitutional principles such as proportionality, subsidiarity, and conferral, which remain the principles at the EU’s disposal to resolve questions that deal with arbitration.⁷⁴ Therefore, it is a matter of approach and using the principles in the EU’s ‘toolbox’ in the relationship with arbitration. Practically speaking, at the time of writing, this may be hard to achieve since arbitration and the EU are not in a state of full cooperation as the two systems function independently. Taking this coexistence of systems together with the constitutionalisation of EU law, the above-mentioned discussion shows the costs that come with using arbitration. With this said, the analysis has also shown openness and some space for arbitration within the EU legal order. This is something that both Member States and the EU should keep in mind.

9.6 Conclusion

In conclusion, the discussion on the relationship between EU law and international arbitration is left divided in practice. Although there are numerous benefits that can be derived from using arbitration as a dispute settlement mechanism, the fact that it exists outside the scope of the EU judicial system is an issue from the EU perspective. Given the growing EU competences and the rise in disputes that concern international trade matters, arbitration has become a favoured dispute resolution approach. Against this backdrop, the chapter has analysed how much legal space there actually is for international arbitration. This chapter has analysed what limits have emerged when arbitration enters the EU system. Reflecting on this, the concluding section has shown how international arbitration can be utilised within the EU judicial system in a way that would avoid diluting the EU’s legal system but where the mechanism could be used in situations of rights enforcement for individuals.

Since one of the main objectives of the EU is to ensure proper access to justice, it is time to make more use of arbitration for EU law disputes. A way forward would be to allow more space for arbitration to provide a rights enforcement mechanism where no remedy is available on the EU level. What is required in order for this to be achieved at this stage mainly concerns a softer approach from the CJEU. This in no way means that international arbitration should replace the EU judicial system or undermine the autonomy and effectiveness of EU law. However, in situations where arbitration can and does serve as a dispute resolution mechanism in fundamental rights violations – here, the CJEU should be more understanding. Most importantly, this would guarantee individuals a chance to bring claims in situations of fundamental rights violations and therefore indeed fulfil the promise of a full system of remedies.

Given the benefits of using arbitration, it may be time to reconcile some of the tensions that arise in the relationship between arbitration and the EU. In no way does this chapter argue that arbitration should replace the existing judicial framework, but it may be time to ponder the question of how to move towards a more peaceful coexistence in order to allow a more welcoming use of arbitration. Given the costs that come with using this form of dispute settlement from the EU perspective, it may be time to perform a balancing act in trying to see how to utilise the adjudication method without hindering too many EU principles. In any case, this chapter has engaged in a more theoretical exercise on how the legal space could allow for arbitration to be used in fundamental rights violations.

10 Online Dispute Resolution A Viable Avenue for Redressing Fundamental Rights Violations?

Maria José Schmidt-Kessen

10.1 Introduction

This chapter looks beyond established mechanisms that could be used (creatively) to seek redress and explores if and how a new mechanism in the form of an EU online dispute resolution system could potentially improve access to redress for victims of fundamental rights violations by the EU. Online dispute resolution (ODR) systems are defined as ‘mechanism[s] for resolving disputes through the use of electronic communications and other information and communication technology’.¹ In very basic terms, ODR is a form of alternative dispute resolution (ADR) that relies on a technology-based intermediary, or an ODR platform, to organise communication between the parties and, ultimately, to settle the parties’ dispute. ODR systems have emerged together with the rise of the Internet and e-commerce to facilitate the settlement of cross-border disputes. Well-known examples of ODR platforms are eBay’s Resolution Center² and the domain name dispute resolution system of the Internet Corporation for Assigned Names and Numbers (ICANN).³

The EU legal system is no stranger to ADR and ODR. ADR and ODR systems were first introduced as a form of redress mechanism in the field of consumer law. Now, ADR and ODR mechanisms can be found in a variety of fields of EU law, including telecommunications law⁴ and the recently passed Digital Services Act (DSA).⁵ They have become a go-to tool for the EU legislator whenever there is a problem with the underenforcement of legal provisions protecting consumers and when access to justice and redress cannot be adequately provided through traditional court proceedings via the judicial system.

This raises the question of whether ODR mechanisms can be transferred outside the realm of private law. Could an ODR mechanism also be used in disputes where one of the parties is a public entity, like the EU, and the other is a victim of a (serious) fundamental rights violation? This chapter sheds light on this question by laying out the basic elements of ODR systems in Section 10.2 and by looking for inspiration among some examples of existing ODR mechanisms in Section 10.3. Finally, Section 10.4 of the chapter discusses design options for an EU ODR system that could function as a redress mechanism for fundamental rights violations by the EU and engages with possible benefits and shortcomings of such a system.

10.2 A Brief History and Basic Elements of ODR

10.2.1 A Brief History of ODR: From Private Actors to Public Sector

To better understand the nature and capabilities of ODR, it is worth starting with a short history of ODR. ODR emerged in the mid-1990s as a response to the Internet becoming more widely available and accessible for commercial and private use. During this early period of the Web, the first online marketplaces like Amazon and eBay launched, and projects of collective content creation by internet users like Wikipedia emerged. With more and more online interactions and commercial transactions taking place around the globe, the number of conflicts originating from these interactions rose. It quickly became apparent that traditional court systems were not best suited to deal with conflicts originating from interactions on the Web. First, online transactions often had a cross-border dimension, which created a host of jurisdictional questions for national courts.⁶ Second, the disputes were often of low value, making recourse to the traditional court system disproportionately costly.

Online intermediaries soon understood that they would have to find solutions for solving disputes between users if their business model were to succeed. In the case of online marketplaces, for example, promises of cheaper prices and greater convenience were insufficient to attract buyers and gain their loyalty. Buyers had to trust the platform. To build trust and prevent sham offers and fraudulent practices by buyers or sellers, platforms introduced rating and feedback mechanisms. These mechanisms, however, did not eliminate disputes between buyers and sellers. This is how eBay, for example, entered into a collaboration with researchers from the Massachusetts Amherst Center for Information Technology and Dispute Resolution to design an online dispute resolution system to settle disputes between buyers and sellers in 1999.⁷ By 2010, eBay’s dispute resolution system handled sixty million claims per year.⁸ The eBay example is useful to highlight two features of ODR. First, ODR initially developed and grew in the private sector, for business reasons. Second, the early history of ODR and its handling of extremely large numbers of complaints have given ODR a reputation of being a fast, cheap, and effective mechanism for settling disputes.

Another example of an early ODR mechanism is ICANN’s Uniform Domain Name Dispute Resolution Policy. In contrast to e-commerce platforms, ICANN performs a global internet governance function: it is a private, not-for-profit organisation that administers, among others, the Internet’s global domain name system.⁹ ICANN’s ODR system is administered by various accredited arbitrators and deals in most part with claims from trademark owners that oppose the registration of domain names that use their trademarks without authorisation. As with e-commerce and other internet platforms, ICANN’s ODR system allows the settling of disputes in the place where they originate: on the Internet.

While ODR was initially conceived as a dispute resolution mechanism for disputes that arose online, its benefits like speed, accessibility, convenience, and expertise, as well as its trust-building function soon inspired various actors to pilot ODR mechanisms for offline disputes. The New York City Government, for example, started using the private ODR provider Cybersettle to allow individuals to settle their claims against the city relating to sidewalks, personal injury, or traffic vehicles.¹⁰ Cybersettle was used in cases where the city’s liability was not disputed and only the amount of monetary compensation had to be determined. The Cybersettle ODR tool is an automated negotiation process, which offers a blind-bidding process where software determines a negotiated outcome based on secret offers made by the parties. It should be noted, though, that automated negotiation processes are only useful if the only outstanding issue between the parties to a dispute is the amount of monetary compensation.¹¹

The potential of ODR for offline disputes, however, goes further. Courts and administrative agencies have found various opportunities for using ODR in the public sector for disputes that go beyond the mere settlement of the amount of compensation. States and provinces in the United States and Canada, for example, have introduced ODR systems to decide appeals against property tax claims.¹² The ODR system for property tax appeals introduced in 2012 in British Columbia, for example, yielded an amicable solution in 75% of appeals submitted.¹³ Overall, users of the system reported high satisfaction rates regarding the accessibility and convenience of the system.¹⁴

ODR has also been implemented in various jurisdictions at a pre-trial stage for a variety of civil law disputes. In the Netherlands, for example, the platform Rechtwijzer started operating in 2014 as an ODR tool for family separation and divorce disputes, which allowed the parties to engage in a structured dialogue to reach a divorce settlement agreement.¹⁵ Agreements reached through the platform can be subsequently presented before court to make the settlement binding.

One of the most ambitious implementations of ODR systems connected to the judiciary is the English Civil Online Court (Online Civil Money Claims). The original plan for the English Civil Online Court was to handle most civil claims for sums below £25,000 through a three-stage process: at the first stage, software would assist parties in filling out claims and responses. At the second stage, online or telephone facilitation by court-provided case officers would be offered to the parties to reach a settlement. Lastly, if no settlement was reached at the second stage, the claim could be taken at a third stage to a judge who would decide the case based on the documents submitted during the prior stages. If required by the circumstances of specific cases, the judge could conduct hearings online, by telephone, or face-to-face. The Online Civil Money Claims project launched a pilot in 2017 for claims brought before County Courts for money claims of up to £10,000 brought by individuals or up to £25,000 brought by represented individuals.¹⁶ More than 100,000 claims were issued in the first eighteen months of operation of the pilot.¹⁷ Furthermore, the pilot was expanded during the Covid-19 pandemic due to increased demand.¹⁸

10.2.2 The Technological Component of ODR

To understand the potential of ODR, it is useful to start from its basic elements and various possible design choices. At the most basic level, ODR adds a ‘fourth party’¹⁹ to dispute resolution. Traditional dispute resolution involves three parties: applicant, defendant, and a neutral third party (a judge, a mediator, an arbiter). ODR adds to these three parties a fourth party: technology. In ODR, technology comes in the form of software, user interfaces, databases, electronic communication, etc. In contrast to offline ADR, which, in principle, only requires a neutral individual acting as third party and can be set up ad hoc, ODR requires a more permanent infrastructure. It requires at least an electronic system or platform for ‘generating, sending, receiving, storing, exchanging or otherwise processing communications in a manner that ensures data security’.²⁰ Technology can have an important role at the initiation, resolution, and enforcement stages of ODR procedures.

When initiating an ODR procedure, technology can enable a variety of functions. It can allow for asynchronous communication between parties and alert parties whenever a party has submitted a new communication. Technology can also streamline the completion of forms and documents, so that all relevant arguments and evidence are presented and structured in a way that allows the settlement to be conducted more smoothly. This is one of the important functions of the technological solutions in the examples of Rechtwijzer and the first stage of the UK Online Civil Money Claims. In a more sophisticated version, for example, with the help of Artificial Intelligence (AI) tools, technology can help to identify and name a legal issue for parties in the first place. In a pilot programme funded by PEW Charitable Trust, researchers from Stanford and Suffolk University, for example, are developing and testing natural language processing (NLP) algorithms to help ODR users identify and frame their legal issues.²¹

Software tools can also help in providing options for solving conflicts at the settlement stage of the procedure. At a very basic level, ODR can simply offer video conferencing and other communication tools that enable parties to negotiate or a third party to hear parties and to propose solutions. But technology itself can also help in guiding parties to find a solution. As the example of Cybersettle above shows, automated blind bidding can help parties to find common ground to agree on monetary compensation. In the context of e-commerce, some platforms have experimented with software solutions that enable crowd-judging. On Alibaba’s Taobao platform, for example, disputes between buyers and sellers are solved by authorised users voting on the most appropriate solution for the dispute.²² With the lightning speed at which AI solutions are developing, we can probably expect more and more automation of the solution of disputes with ever more complex questions involved, which will be available not only to ODR mechanisms but to traditional ADR and court systems, too.

Lastly, technology solutions embedded in an ODR system can ensure the enforcement of settlements. In the case of online platforms that also control payments (e.g., through collaboration with a payment service provider), the outcomes of dispute resolution between buyers and sellers, or service providers and recipients, can be enforced through charge-back functions.²³ If the outcome of a dispute settlement between buyer and seller is that the buyer should have their money back, the chargeback mechanism will take care of implementing the remedy by reversing the payment transaction. In the case of transactions occurring via distributed ledger technologies (DLTs), like the Bitcoin blockchain, the software protocols used to record transactions could also implement automatic enforcement mechanisms for dispute settlement procedures.²⁴ This would be possible, for example, through the operation of smart contracts that have a pre-authorisation or escrow function, which only transfer the amount of a transaction after a human or algorithmic arbiter has verified that there is no dispute or once a dispute has been resolved in favour of the recipient.

10.2.3 Designing ODR Mechanisms

The design of ODR mechanisms, including technological choices, ultimately depends on several different factors. The UNCITRAL Technical Notes on Online Dispute Resolution suggest that ODR mechanisms can comprise one or more of the following three stages: a first stage of technology-enabled negotiation between the parties, a second stage of facilitated settlement by appointing a neutral third party that mediates between the parties, and a third stage that could be, for example, binding arbitration. The difference between the stages is the level of involvement of a third party in mediating the dispute and the bindingness of the outcome. This three-stage model is followed by the English Online Civil Money Claims platform. Other ODR mechanisms comprise only the first stage, as, for example, the Brazilian consumer ODR platform Consumidor.gov.br,²⁵ which enables consumers to file complaints against companies and companies to respond.²⁶

Blomgren Amsler, Martinez, and Smith provide a more elaborate framework with six criteria to guide the design of dispute settlement systems,²⁷ which also apply to ODR mechanisms.²⁸ The six criteria are (i) goals, (ii) stakeholders, (iii) context and culture, (iv) structures and processes, (v) resources, and (vi) accountability. Before developing an ODR system, its goal(s) should be determined. At the most abstract level, the goal of an ODR system is to deliver justice in some of its normative forms, including justice in terms of outcome (substantive, distributive, utilitarian, social), process (access, voice, participation, accuracy, transparency, due process), and/or community (restorative, corrective, transitional, retributive, deterrent). In narrower terms, the goals of a specific ODR system will be tailored to a specific type of conflict that the system seeks to address. In e-commerce ODR systems, for example, such goals can be to enhance consumer trust or to encourage traders’ participation by providing speedy settlements. In pre-trial ODR systems, the goal can be to unburden the court’s docket while ensuring a fair and fast settlement of smaller claims between parties.

The second factor in designing an ODR system considers the stakeholders that create, use, and are affected by the ODR system, their background, power constellations, and respective resources. In the case of the EU ODR platform, for example, the stakeholders are consumers, companies, and national ODR bodies. Stakeholders should be consulted and actively involved in the process of designing an ODR system.

The third factor is context and culture. An ODR system has to be responsive to the context and culture in which it operates. An online marketplace’s ODR system, for example, needs to consider that it might be used regularly for handling cross-border disputes, among anonymous parties, at a high volume, and for a low value. Family ODR systems will need to consider that they are dealing with conflicts usually taking place in geographic proximity, between parties that know each other well, with a strong emotional component, and with a life-altering impact of the outcome on the parties and their affected children.

The fourth factor, process and structure, refers to the ODR’s procedural design to prevent, manage, and resolve disputes. They can involve one or more of the UNCITRAL ODR stages (negotiation, mediation, arbitration) mentioned above. The procedures should identify the ODR participants’ interests (including their fundamental rights, economic, social, and political interests) and be designed so as to ensure that these interests are recognised and furthered in the procedure.²⁹

The fifth factor is resources. For an ODR system, these resources refer to the expenditures for running the system and individual procedures, personnel costs and training, and, importantly, maintenance of the IT infrastructure of the ODR platform. In this context, it is also of central importance who pays for these costs. Depending on who finances the system, it might be perceived as biased.³⁰

Lastly, the sixth factor of accountability refers to periodic evaluations as to the ODR system’s functioning. Since an ODR system runs on an IT infrastructure, it will automatically generate a large volume of digital data that can be used for subsequent evaluation purposes if there are sufficient resources, cybersecurity, and privacy safeguards in place. The evaluation also entails asking whether stakeholders are actually making use of the system, whether neutral third parties (human or AI-based) involved are delivering unbiased and accurate services, and whether users of the system are satisfied with it. If the ODR system is sufficiently transparent, external parties will also be able to monitor and report on the effectiveness of the ODR system.

The six design criteria of Blomgren Amsler, Martinez, and Smith remain silent on how the remedies of dispute settlement systems or ODR should be designed, especially if procedures are not binding. Section 10.3 will present some examples of existing ODR systems to exemplify the choices made in relation to the six criteria as well as the types of remedies and redress that these various systems award.

10.3 Examples of ODR Mechanisms

To date, there is no ODR mechanism to enable redress for victims of fundamental rights violations by EU institutions. Yet a panoply of ODR mechanisms exist that could each provide elements and ideas for such a mechanism. This section gives examples of three types of ODR mechanisms that offer insights and learnings for the design of an EU ODR mechanism to redress fundamental rights violations. First, the chapter looks at examples of ODR mechanisms set up by the judiciary, which perform court-like tasks within the judicial or administrative system of their respective jurisdictions when it comes to civil claims. Second, the chapter looks at a precedent of an ODR mechanism set up by the EU itself: the EU consumer ODR platform. Third, the chapter looks at ODR mechanisms that have been created to address fundamental rights violations occurring on the Internet. These are the out-of-court dispute settlement bodies to be set up in the framework of the Digital Services Act (DSA)³¹ and the Oversight Board set up by the large US-based technology company Meta (formerly Facebook).³² None of these ODR mechanisms offers a ready-to-copy precedent for an ODR mechanism to be used by the EU to redress fundamental rights violations, but each of the types of example can offer lessons for the design of an EU fundamental rights ODR mechanism.

10.3.1 ODR Mechanisms Set up by the Judiciary

As mentioned in the brief history of ODR above, one of the main examples of ODR mechanisms within the public sector is pre-trial ODR implemented by national judicial systems and administrative agencies. One of the most salient examples is the previously mentioned UK Online Civil Money Claims (OCMC) pilot, which is scheduled to run until November 2023.³³ The pilot was launched after Lord Justice Briggs set out his vision for an online court in his 2016 Report,³⁴ which followed the conclusion of the Civil Courts Structure Review. Given that accessing the justice system in the United Kingdom is unaffordable for many, the online court project aims at making litigation for small claims more accessible by reducing costs. Cost reductions are achieved through eliminating mandatory representation and the use of ADR before a claim is heard by a judge. The goals of the OCMC pilot are, on the one hand, to enhance access to justice³⁵ and, on the other hand, to help in the modernisation of the English civil court system.³⁶

One of the notable features of the OCMC pilot is its extensive stakeholder consultation and piloting phase. Lord Justice Briggs had already conducted several consultations with the general public, judges, and other stakeholders in the process of writing his final report.³⁷ The first phase of the OCMC pilot (August 2017 until March 2018)³⁸ was conducted with only 1,400 selected participants before opening it to the general public. Furthermore, OCMC users are polled after submitting their claims to understand their level of satisfaction³⁹ and to generate feedback for further improving the system.

As explained above, the OCMC platform offers in a first step an online interface to fill in the details of the claim, which can then be submitted via the platform. The fees for submitting a claim depend on the amount of the claim (between 4 to 8% of the amount claimed),⁴⁰ and there is the possibility for applying for legal aid to cover the fees for low-income claimants. It also allows the respondent to file a response via the platform. So far, 378,000 claims have been submitted.⁴¹ In a second stage, the platform offers mediation, which has been used in 9,560 cases to date and has led to a settlement at this stage in 50.4% of cases within 24 days on average. Settlements reached through mediation result in an agreement between the parties that is legally binding. At any point in the procedure, the claim can be referred to a judge. Overall, the OCMC has yielded positive results in the form of faster settlements, higher rates of mediation, and a faster procedure for judges to issue orders based on the digital file.⁴²

The growth of pre-trial ODR has not only affected the United Kingdom but also other European states. In reaction to these developments, the Council of Europe issued a set of guidelines on online dispute resolution mechanisms in civil and administrative court proceedings in 2021.⁴³ The guidelines are not binding but give guidance to states on how to design national pre-trial ODR proceedings that are in line with Article 6 (right to a fair trial) and Article 13 (right to a remedy) of the European Convention on Human Rights.⁴⁴ The guidelines address a variety of issues around ODR procedures, including accessibility, due process, transparency, and cybersecurity. The guidelines would be a good reference for any potential ODR mechanism to offer redress to victims of fundamental rights violations by the EU.

10.3.2 The EU Consumer ODR Platform

When it comes to consumer law, the EU legislator has put a lot of emphasis on ADR and ODR as a solution to the widespread underenforcement of consumer law. The EU ODR Regulation,⁴⁵ which came into effect in 2016, sets out the rules for setting up a European online platform that offers easy and low-cost dispute resolution through electronic means to achieve a higher level of consumer protection in the EU.

The procedure via the ODR platform is set by EU law, and the ODR platform itself is financed by the EU. The ODR platform is only a first step that allows consumers to submit a complaint and a trader to react. Subsequently, the procedure foresees that consumer and trader will agree on an accredited ADR body that will ultimately settle the dispute. Under the EU ADR Directive, accredited ADR bodies must be able to provide comparable remedies to consumers as those provided by courts.⁴⁶ The goals of the EU ODR platform are to achieve a high level of consumer protection and to boost growth and integration of the EU’s digital single market.⁴⁷ The ODR procedure is available to any consumer regarding complaints in respect of online purchases from a trader established in the EU.⁴⁸ It thus follows the logic of early ODR that disputes arising online would be best resolved online.

The initial years of operation suggest that the vision for the ODR platform did not materialise as expected. Traders rarely responded to consumer complaints via the platform (80% of complaints were closed thirty days after submission due to no response from the trader)⁴⁹ and only around 2% of claims submitted eventually reached an ADR body.⁵⁰ This suggests that consumers and especially traders were insufficiently involved in the process of designing the platform to achieve the desired goals.⁵¹

The Commission has published annual reports on the functioning of the ODR platforms and has run surveys among users of the platform. It eventually responded with a change to the platform’s design in July 2019, which now first offers consumers a self-test.⁵² The self-test allows consumers various options to proceed with their complaints: either bilaterally contacting a trader (and negotiating), contacting a European Consumer Center, or contacting an ADR body through the platform. As a result, actual complaints submitted to the platform decreased significantly – the procedure offered by the platform was simply not the preferred option for consumers. In 2020, again, only 1% of complaints submitted via the platform reached an ADR body, while 20% managed to resolve their complaint in bilateral talks with traders.⁵³ The EU Commission did react to the lack of engagement with the formal procedure offered by the ODR platform. It completely revised the design of the ODR platform and turned it more into an information portal that explains to consumers various options to proceed with their complaints. The ODR offer is now only a secondary feature of the website. This is an important example of an ODR mechanism that did not deliver on its promises. A more extensive stakeholder consultation, like that carried out for the OCMC, as well as a piloting phase could probably have helped design the EU consumer ODR platform in a more effective manner.

10.3.3 ODR Mechanisms to Redress Fundamental Rights Violations

The previous examples have shown that ODR has been used beyond a purely commercial setting: ODR has gained prominence in the judicial system and administrative agencies in various jurisdictions within and beyond the EU. Furthermore, the example of the EU ODR consumer platform is a precedent for an ODR platform that was set up by EU law. In both contexts, ODR has been used to settle small claims. In this section, I discuss two examples of ODR mechanisms that have been set up to address potential fundamental rights violations. One of these is mandated by EU law: the out-of-court dispute settlement systems to be set up in the framework of the DSA. The other has been set up as a self-regulatory measure: the Meta Oversight Board. Both deal with disputes that arise from fundamental rights violations occurring on the Internet, in particular in relation to freedom of speech.

The DSA is a regulatory framework that aims at reducing a variety of risks from illegal online content, including fundamental rights violations. It also regulates the procedures by which online platforms⁵⁴ themselves remove illegal online content, referred to as online content moderation.⁵⁵ The DSA foresees that online platforms should implement internal complaint mechanisms and allows for appeals to external dispute settlement bodies. The idea behind these mechanisms is that users will be better protected, and online platforms will have to take due regard of the rights and legitimate interests of users in their content moderation practices, including users’ fundamental rights. In particular, online platforms must explain how they will take due regard of the rights and legitimate interests of all parties in their content moderation activity, including users’ fundamental rights ‘such as the freedom of expression, freedom and pluralism of the media, and other fundamental rights and freedoms as enshrined in the Charter’.⁵⁶

When a platform takes a decision to remove the content of a user, or refuses to remove content reported by a user, users must have access to an internal complaints mechanism to complain about the platform’s decision.⁵⁷ In addition, users must have the possibility to appeal decisions made by a platform’s internal complaint handling system to a certified out-of-court dispute settlement body or online mediation instance.⁵⁸ This can enhance access to justice, given that national court systems would be overburdened if they had to hear an appeal against every single content moderation decision and given that it might be too costly for most users to access a court in these cases.⁵⁹ The Digital Services Coordinators of each Member State will have the power to certify dispute settlement bodies.⁶⁰ In principle, these bodies will not have the power to impose binding solutions on the parties.⁶¹

The certified dispute settlement bodies need to be independent from platform providers, and members should be remunerated in ways that are not linked to the outcome of the procedure.⁶² The members should have the necessary expertise in relation to one or more areas of illegal online content or in relation to the application or enforcement of the terms of service of one or more platforms.⁶³ This will likely also include expertise on fundamental rights, given that freedom of expression is often one interest at stake in content moderation decisions, and careful balancing against other interests is necessary. In terms of costs, the service of the out-of-court dispute settlement bodies should be free of charge for users.⁶⁴

While the DSA out-of-court dispute settlement bodies are still in the process of being set up at the time of writing, there are some national precedents that show that such independent dispute settlement bodies can function without being perceived as biased towards platforms. In Germany, a similar ODR process was set up under the national law on illegal online content (Netzwerkdurchsetzungsgesetz – NetzDG) and is administered by an NGO, Freiwillige Selbstkontrolle Multimedia-Diensteanbieter (FSM). It is financed by a range of media and IT industry players, yet it has not been perceived as biased towards media players or online platforms.⁶⁵

There is another example of an already functioning appeals body to review online content moderation by social media platforms: the Meta Oversight Board. In 2018 and 2019, Meta conducted a global consultation for setting up an independent appeals body, which would decide the most difficult issues and questions regarding its content moderation practices.⁶⁶ In 2019, the charter of the Oversight Board was published,⁶⁷ which lays down the relationship between Meta, the Oversight Board, and an independent trust that deals with the financing and staffing of the Oversight Board. Members are to be elected for a three-time renewable term of three years, and the trust decides on the compensation of the board members without the outcome of the decisions having an influence on the compensation. Furthermore, the charter of the Oversight Board lays down two procedures for appeals. On the one hand, the Board selects cases from appeals launched by users and. on the other, Meta can refer cases to the Board.⁶⁸ When taking decisions, the Board should review the content in light of Facebook’s values and policies, as well as fundamental rights norms.⁶⁹ Lastly, the Board’s decisions in relation to a specific piece of content are binding, while any policy recommendations are not binding on Facebook.⁷⁰

According to the Charter of the Oversight Board, the size of the Board should be at least eleven members (likely to reach forty once fully staffed).⁷¹ Article 1(2) of the Charter also specifies that members must have ‘a broad range of knowledge, competencies, diversity, and expertise’. They should have no conflicts of interest and must have demonstrated ‘experience at deliberating thoughtfully and as an open-minded contributor to a team’.⁷² They should also have the skills to deliver reasoned opinions on the application of rules or policies, and they need to have familiarity with matters relating to digital content and governance, including ‘free expression, civic discourse, safety, privacy and technology’.⁷³ When looking at professional background, two-thirds of the members are lawyers.⁷⁴ Furthermore, two-thirds of the members have expertise in fundamental rights in general or in relation to specific fundamental rights fields (e.g., women’s rights or freedom of speech). In its decision practice, the Meta Oversight Board regularly goes beyond analysing Meta’s content moderation terms and uses international fundamental rights instruments in its interpretation.⁷⁵

In June 2022, the Board published its first Annual Report, which gives insights into the kinds of fundamental rights violations that users seek remedy for or that pose particular challenges to content moderators.⁷⁶ According to the report, the Board received more than 1.1 million appeals submitted by users. Most of these related to the Community Standards on Bullying and Harassment (32.4%), Violence and Incitement (28.9%), and Hate Speech (24.8%).

10.4 ODR as a Redress Mechanism for Fundamental Rights Violations by the EU

This section explores possible avenues to establish an ODR mechanism to redress fundamental rights violations by EU institutions. It starts by exploring which legal basis in the EU Treaties could potentially be used to establish such a mechanism. It then discusses possible design options for this ODR mechanism based on the examples discussed in Section 10.3.

10.4.1 Legal Basis

To discuss the possibility of establishing an ODR mechanism to provide some form of redress requires first establishing whether there would be any legal basis in the EU Treaties for having such an ODR mechanism. The legal basis for the two legal instruments that most prominently support the establishment of ODR mechanisms, the ODR Regulation and the DSA, both have Article 114 of the Treaty on the Functioning of the European Union (TFEU) as their legal basis.⁷⁷ Article 114 in conjunction with Article 26 TFEU gives the EU legislature the powers to enact legislation to further the function of the EU internal market. An ODR mechanism to redress the fundamental rights violations by EU bodies and agencies, however, would not have an internal market rationale. This means that Article 114 would not be an appropriate legal basis for establishing such a mechanism.

In general, there is no specific legal basis that would allow the EU to enact legislation to establish an ODR mechanism for addressing fundamental rights violations by its institutions. There are, however, some legal bases in the TFEU that could be used creatively to establish an ODR mechanism for violations of specific fundamental rights. One legal basis, for example, would be Article 19 TFEU, which allows the EU to enact legislation combatting discrimination. Another would be Article 16 TFEU on the right to data protection, which allows the EU to enact legislation regarding the processing of personal data by EU institutions. Such legislation could, in theory, also include a redress mechanism for victims of data protection violations. If we think about the type of fundamental rights violations by EU institutions that seem to be of most relevance at present, Article 78 TFEU might also be a starting point to initiate a legislative proposal. Article 78 TFEU is the legal basis for the EU’s common asylum policy and protection of third country nationals in need of protection. Under Article 78 (2) (d) TFEU, the European Parliament and Council acting by ordinary legislative procedure can adopt measures on ‘common procedures for the granting and withdrawing of uniform asylum or subsidiary protection status’. Potentially, an ODR mechanism could be implemented as a form of mechanism to address complaints by persons whose fundamental rights have been violated by the EU Agency for Asylum. As Schramm discusses in this volume,⁷⁸ there is already a complaints mechanism in place under the European Asylum Policy Regulation implemented by the Agency’s Fundamental Rights Office.⁷⁹ A similar mechanism exists under the Frontex Regulation.⁸⁰ Neither of these mechanisms has been particularly visible or effective so far⁸¹ but could potentially be enhanced through turning them into ODR mechanisms.

As an alternative, it could be possible to subsume a potential ODR mechanism under the umbrella of the European Ombudsman. Article 228 TFEU is the legal basis for the office of the Ombudsman and allows the Ombudsman to conduct inquiries into fundamental rights violations by EU institutions, bodies, and agencies upon her own motion or a complaint submitted to her. This would allow for one central ODR mechanism to complain about fundamental rights violations by any EU body, institution, or agency. The problem with Article 228 TFEU, however, is that only natural or legal persons residing in Europe can submit complaints. One would thus have to think of a network of NGOs that could submit complaints on behalf of third country citizens that have been victims of fundamental rights violations by EU bodies and agencies to the Ombudsman.

10.4.2 Design Options for an EU ODR Fundamental Rights Redress Mechanism

If the obstacles relating to the legal basis could be overcome, the process of designing an ODR mechanism subsumed under the Ombudsman’s office or other specialised EU agencies could fruitfully draw on the six design criteria for dispute settlement systems and existing ODR mechanisms.

The first step would be to establish the goals of the ODR mechanism. These seem relatively clear: to enable some form of access to redress for victims of fundamental rights violations by EU agencies and bodies, as well as fostering and demonstrating the EU’s commitment to international fundamental rights regimes.

The second step to establish such a mechanism would be to extensively engage with stakeholders. This could take the form of a stakeholder consultation, which involves victims of fundamental rights violations by the EU, as well as the organisations that give these individuals a voice, like civil society organisations. As seen in the examples above of the English OCMC and the Meta Oversight Board, several rounds of consultations with a variety of stakeholders helped to establish ODR mechanisms that are being used by stakeholders and that enjoy a necessary level of trust to function.

Third, it is essential to consider the context and culture of an EU ODR mechanism to redress fundamental rights violations. One important part of context and culture would be to set up the ODR mechanism in a truly accessible way for victims. Especially when thinking about victims outside the EU borders, access becomes a challenge due to physical, economic, and language barriers. As a starting point, the ODR platform would need to be available in more languages than the current EU languages.⁸² Furthermore, it should have a user interface that can be easily accessed through all types of electronic devices, including mobile devices. Especially when testing prototypes of the ODR mechanism, it should be ensured that the users that are involved in tests are in a comparable situation in terms of IT literacy,⁸³ literacy in general, language, and socio-economic background. This would avoid similar pitfalls as with the EU consumer ODR platform, which was not designed in a sufficiently user-centric manner to successfully take off.

Fourth, decisions regarding the structure and procedure of the ODR mechanism will need to be made. The procedural rules could be guided by the principles that can be found in the 2021 guidelines by the Council of Europe. In principle, the procedure would commence with the submission of a complaint – the simple registration of these complaints could already create a very important database on alleged fundamental rights violations by the EU bodies and agencies. In a second stage, a committee of members appointed by the Ombudsman or Fundamental Rights Officers could decide on the complaint and whether there has indeed been a fundamental rights violation attributable to EU agencies or bodies. This committee should be staffed by individuals that have a professional or academic background in fundamental rights law. The example of selection criteria for members sitting on the Article 21 DSA dispute settlement bodies and the Meta Oversight Board show that such criteria can be tailored to the specific context in which the ODR platform operates. Once a decision has been taken by the committee, the Ombudsman or Fundamental Rights Officers could resort to the forms of redress they can award, which are, admittedly, limited.

The complaints mechanisms administered by the Fundamental Rights Officers at the EU Asylum Agency and Frontex do not have any effective remedies available other than forwarding the message that there has been a fundamental rights violation to the executive director or national authorities.⁸⁴ The Ombudsman seems at least to have political influence to persuade other EU institutions.⁸⁵ She could address the agency or body that has committed the fundamental rights violation and ask for one of the internationally recognised forms of redress (cessation of the violation, damages, reparation, acceptance of responsibility, and preventing future violations) or try to influence the political process.⁸⁶

As neither the Ombudsman nor the Fundamental Rights Officers have any enforcement powers, the entire ODR procedure would not be binding. The fact that the procedure is not binding, however, does not completely eliminate its effectiveness. In the case of the Meta Oversight Board, for example, decisions do not bind Meta regarding its overall policies but only in respect of the specific case. Nonetheless, the Oversight Board can make recommendations and has used its Annual Report to show whether Meta has made any progress on its recommendations. In this sense, even a non-binding mechanism can establish some form of accountability through transparency and reporting.

Fifth, there is the question of the resources for funding the ODR procedure. In the examples given in this chapter, all ODR platforms are funded by the fees paid by one or both parties. In the case of an EU ODR mechanism to address fundamental rights violations by EU Institutions, the mechanism would likely have to be funded by the EU. After all, it would be an accountability mechanism for its own institutions and agencies. Placing fees on the victims would not be equitable. As in several other ODR systems discussed above, the weaker party usually gets access for free to the ODR system. If the mechanism were to be administered by the Ombudsman’s Office or the Fundamental Rights Officers, they should receive an additional budget for it.⁸⁷

Lastly, to create a sustainable and well-functioning ODR system, periodic evaluations would be necessary. Periodic evaluations could be facilitated by the publication of an annual report by the Ombudsman or Fundamental Rights Officers, similar to the reports published by the EU Commission in relation to the consumer ODR platform, the Meta Oversight Board, or the future DSA out-of-court dispute settlement bodies. This would allow for public scrutiny and for drawing lessons from the operation of the mechanism and improving it in the future.

10.5 Conclusion

If the EU is to have any integrity regarding its commitment to fundamental rights, it will sooner or later have to find a way to hold its institutions, bodies, and agencies that violate fundamental rights accountable and to award redress to victims of these fundamental rights violations. As the current institutional set up does not yet allow for effective redress for victims of fundamental rights violations by the EU, this chapter explores the possibility of establishing an EU ODR mechanism to this effect.

While ODR was born in a private and commercial context, it has spread into the public realm and is used in the framework of judicial and administrative procedures at national level. Furthermore, ODR is being increasingly seen as a solution to help in preventing and solving disputes around fundamental rights violations by private actors, such as online platforms, for example, in the case of the DSA dispute settlement bodies and the Meta Oversight Board.

One of the most significant obstacles to establishing an EU ODR mechanism addressing complaints about fundamental rights violations by EU agencies and bodies is that we lack a clear legal basis that would allow for instituting such a mechanism. Nonetheless, as a starting point, this chapter explores the option to implement such a system under the EU Ombudsman’s office or under the Fundamental Rights Officers of the EU Asylum Agency or Frontex. When it comes to the possibility of filing complaints, however, victims of fundamental rights violations would likely have to act with the help of EU-based NGOs or individuals to submit claims to an ODR mechanism administered by the Ombudsman, which is far from ideal but a pragmatic solution to the limitations imposed by Article 228 TFEU.

Furthermore, the design of an EU fundamental rights ODR mechanism could fruitfully draw from experiences of existing ODR mechanisms, as well as Guidelines by the Council of Europe on ODR. While the remedies or redress that such an ODR system could award at this point in time would not be extensive, the mechanism would at least allow for establishing an EU-wide database recording complaints and decisions on whether there was a fundamental rights violation in specific cases. Furthermore, the Ombudsman could use the advocacy powers she has to influence EU agencies and bodies to change their processes and working modes that lead to fundamental rights violations.