On 27 February 2018, in Case No. C-64/16, Associação Sindical dos Juízes Portugueses v. Tribunal de Contas1, the Court of Justice of the European Union (CJEU) handed down a judgment of very significant consequences and implications which transcend the circumstances of the actual case.

As some commentators have already stated, this judgment is not as much about the temporary salary reduction for Portuguese judges as part of the financial assistance programme designed to remedy the excessive deficit of the Portuguese state, but about the judicial system reform measures adopted in recent years in countries such as Hungary and Poland and their appraisal in the light of the fundamental principle of the rule of law.

It should be recalled in any event that this case at the Portuguese Supreme Administrative Court (SAC) involved the Trade Union of Portuguese Judges (ASJP), representing the judges of the Court of Auditors (Tribunal de Contas), bringing a special administrative action seeking the annulment of administrative measures affecting these judges’ salaries for the month of October 2014 and the months thereafter that had been adopted under Law No. 75/2014, of 12 September, which established mechanisms for the temporary reduction of public sector salaries in Portugal within the context of the financial assistance programme agreed in 2011 between Portugal, the European Union, the European Central Bank and the International Monetary Fund. Apart from the annulment of the measures in question, it also claimed repayment of the sums withheld, plus default interest at the statutory rate, and the acknowledgement of the right of the interested parties to receive their remuneration in full.

As a ground for its claim, the ASJP contended that the salary-reduction measures infringed the principle of judicial independence enshrined not only in the Portuguese Constitution but also in European Union law, particularly in the second subparagraph of Article 19(1) of the Treaty on European Union (TEU) and Article 47 of the Charter of Fundamental Rights of the European Union (Charter).

In its request for a preliminary ruling, the SAC indicated that the measures in question are based on the Portuguese Republic’s obligation to reduce its excessive deficit, in accordance with EU law, and where adopted in the framework of the financial assistance programme for Portugal approved by the European Union. It stressed however that the margin of appreciation for defining budgetary policy, within that context, that must be recognised to public authorities does not relieve them of their obligation to respect the general principles of EU law, including that of judicial independence, which applies to EU courts and to the courts of the Member States, since effective judicial protection of the rights deriving from the EU legal order is ensured primarily by the national courts in conformity with the second subparagraph of Article 19(1) TEU.

However, according to the SAC, to the extent that the effectiveness of judicial protection is conditional on respect for the guarantees of impartiality and independence of the courts, which in turn stems from the status of their judges, including their salary, the objective of the question submitted to the CJEU was whether the principle of judicial independence, stemming from the provisions of the TEU and the Charter referred to above, must be interpreted as being opposed to salary-reduction measures such as those to which the judiciary were subjected in Portugal unilaterally imposed on an ongoing basis by the other sovereign powers/bodies (the legislative and executive branches).

The CJEU reply to the question submitted to it – confirming the compatibility of the measures adopted in Portugal with EU law – can hardly be considered surprising since it ruled in this vein after finding that the salary-reduction measures which affected the judiciary were adopted with a view to correcting the excessive deficit of the Portuguese State and within the context of an EU financial assistance programme, that these measures were limited in range, temporary in nature (indeed by the time the judgment was delivered, they had already been terminated) and general in character, applying not only to the judiciary but to all holders of public office and of legislative, executive and judicial powers in general, as well as to civil servants and all public sector workers. Thus, the CJEU was able to conclude that the measures in question did not target the judiciary in particular but were instead part of the general budgetary measures for correcting financial imbalances in Portugal, in particular, with regard to the state budget deficit, and could not therefore be considered to undercut the independence of the judiciary.

This reply is not surprising but what is especially relevant and innovative in the CJEU judgment is the reasoning underlying the determination of its own jurisdiction and the reach attributed by the Court to the principle of judicial independence, as stemming from Article 19 TEU.

Although the approval of the concrete measures for temporary reduction of public sector salaries in Portugal did not stem from a specific compromise approved by the EU or undertaken by the Portuguese government within the framework of the financial assistance programme, the CJEU considered it sufficient, in order to establish a relevant connection with the European Union legal order and thus to establish its own jurisdiction, that the legislation in question had been approved by the Portuguese authorities with a view to correcting the excessive deficit detected and declared by the EU institutions in accordance with the Treaty on the Functioning of the European Union (TFEU).

This enabled it to rule out any classification of the facts as a “purely internal situation” (in which case the SAC would have to decide on the legality of the contested measures exclusively in the light of national constitutional principles and rules) and which also led the CJEU to dismiss the plea raised by the Commission as to the inadmissibility of the referral, taking the view that – though summarised – the SAC’s explanations as to the importance, for the decision on the merits, of the EU law provisions for which interpretation was requested, were sufficient for the CJEU to understand the reasons that led the national court to request their interpretation. This was the procedural context that enabled the CJEU to focus its attention on the second subparagraph of Article 19(1) TEU and extract wide-ranging consequences from that subparagraph.

To interpret this provision – whereby “Member States shall provide remedies sufficient to ensure effective legal protection in the fields covered by Union law” – the CJEU employed a systematic approach. Firstly, it combined its text with that of Articles 2 and 4 of the same Treaty and, secondly, underscored the difference in wording from Article 51(1) of the Charter.

Actually, as to this latter aspect, while Article 51(1) establishes that the Charter is addressed to the Member States “… only when they are implementing Union law” – which means that the fundamental rights enshrined in the Charter, specifically the right to judicial protection provided for in Article 47, can only be invoked against the Member States when concrete EU law provisions are being applied by the national authorities – the second subparagraph of Article 19(1) TEU imposes, very broadly, on the Member States, the duty to institute in their internal legal order avenues which ensure effective judicial protection “… in the fields covered by Union law”.

This distinction leads the CJEU to put aside the importance of Article 47 of the Charter for the solution of the case at hand – at least implicitly, since explanations about this matter are somewhat sparse in the judgment – and to focus exclusively on the second subparagraph of Article 19(1) TEU.

The reach of this provision is examined in the light of Article 2, which enshrines the values on which the EU is founded, specifically those of the rule of law, and of Article 4(3) on the principle of sincere cooperation.

This leads the CJEU to consider that the requirement to enshrine effective legal protection, as a general principle of EU law based on the common constitutional traditions of the Member States, is inherent to the values of the rule of law and imposed not only on the EU and its institutions, specifically with regard to the terms on which its judicial system is arranged and structured, but also on the Member States “… in the fields covered by Union law”.

It follows that, in combination with the Article 4(3) principle of sincere cooperation – which, among other duties, imposes on Member States the duty to take “… any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties …” – that in shaping the necessary remedies to ensure effective legal protection at national level in the fields covered by EU law, under the second subparagraph of Article 19(1) TEU, Member States have the obligation to guarantee respect for the requirements of the rule of law, beginning with the independence of the judiciary.

And this is all the more important since the national courts or tribunals are the “ordinary courts” of EU law, charged with guaranteeing the application of the same in the legal orders of each Member State, in cooperation with the CJEU through the preliminary ruling referral enshrined in Article 267 TFEU.

And for a court or other tribunal to be classified as a national court or tribunal, for the purposes of Article 267 TFEU, it must satisfy all the guarantees associated with effective legal protection, to wit: (i) basis in law; (ii) permanent character; (iii) binding force; (iv) adversarial nature of the proceedings; (v) application of rules of law; and (vi) independence.

In turn, the independence requirements, which apply on the same terms to the EU courts and to the courts of the Member States, imply, apart from guarantees as to their members not being removed, that the court or tribunal in question performs its functions wholly autonomously, without being subject to any hierarchical constraint or subordinate to anyone or anybody and without receiving orders or instructions from any source. The CJEU goes on to stress that the receipt by the members of courts or tribunals of a level of remuneration commensurate with the importance of the functions they perform also constitutes an essential guarantee for judicial independence.

The CJEU thus articulates very clearly and in a wide-ranging manner the obligations arising to the Member States from the duty to establish “… remedies sufficient to ensure effective legal protection in the fields covered by Union law”, as enshrined in the second subparagraph of Article 19(1) TEU, in combination with Articles 2 and 4 thereof.

Accordingly, without prejudice to the policy control mechanism provided for in Article 7 TEU regarding respect for the values stated in Article 2, specifically the rule of law, this ruling marks a turning point with wide-ranging effect at constitutional level, since it launches the bases for possible judicial control, under the terms of the infringement action provided for in Articles 258 and 259 TEU, over compliance with the duties of the Members States under the second subparagraph of Article 19(1) TEU to provide remedies in the national legal order which ensure effective legal protection in the fields covered by EU law.

As nowadays EU law, to a greater or lesser extent depending on the scope of the powers which the Treaties attribute to its institutions, touches on practically all fields of action of public authorities, it flows from this CJEU judgment that the European Commission and the Member States have indeed a very powerful judicial oversight instrument available to them regarding any conduct of a Member State which may breach the duties imposed by the above-mentioned second subparagraph of Article 19(1) TEU to provide remedies for effective legal protection in its internal legal order, including the essential guarantees for judicial independence.

The “face-off” between the Commission, Poland and Hungary over controversial reform measures in their judicial systems, which are queried by the Commission, may therefore see new dramatic developments in the light of the procedural perspectives that have now opened up.