Provisional text
OPINION OF ADVOCATE GENERAL
EMILIOU
delivered on 18 January 2024(1)
Case C‑766/21 P
European Parliament
v
Axa Assurances Luxembourg SA,
Bâloise Assurances Luxembourg SA,
La Luxembourgeoise SA,
Nationale-Nederlanden Schadeverzekering Maatschappij NV
(Appeal – Article 272 TFEU – Arbitration clause contained in a contract concluded by the European Union – Article 123 of the Rules of Procedure of the General Court – Defendant in default – Judgment by default – Application to set aside a judgment by default – Article 56 of the Statute of the Court of Justice of the European Union – Articles 172 and 176 of the Rules of Procedure of the Court of Justice – Response to an appeal – Cross-appeal – Error of interpretation – Inadequate and contradictory statement of reasons)
I. Introduction
1. The texts governing procedure before the Courts of the European Union are akin to a railway system. Each track represents a procedural route, while the trains operating on those tracks symbolise the cases that are brought before this judicial institution. As the progression of a case unfolds, the rules of procedure serve as the railway signalling, ensuring that the case stays on the appropriate track towards its final destination.
2. Nevertheless, like a train journey, the legal journey of a case may encounter junctions. Appeals, cross-appeals and other mechanisms may prompt a shift in direction of a case, offering an alternate route to its destination, all the while adhering to the established procedural rules. In that regard, just as a train relies on a smooth-functioning railway network, legal cases depend on precisely defined procedural rules to ensure their fair and proper resolution.
3. The present case encompasses those considerations.
4. By its appeal, the European Parliament requests the Court of Justice to set aside, in part, the judgment of the General Court in Parliament v Axa Assurances Luxembourg and Others, (2) by which that court dismissed, for the most part, its action seeking the reimbursement of costs incurred as a consequence of water damage to the Konrad Adenauer building (‘the KAD’) in Luxembourg City (Luxembourg) in May 2016.
5. At the same time, the present case involves a cross-appeal, lodged by Nationale-Nederlanden Schadeverzekering Maatschappij NV (‘NN’), one of the defendants at first instance, seeking the annulment of (other parts of) the judgment under appeal, to the extent that the General Court ordered it, by default, to reimburse the Parliament a portion of the costs claimed, together with statutory interest for late payment.
6. At the request of the Court of Justice, this Opinion will focus on the cross-appeal brought by NN. However, the particulars of this case provide the Court of Justice with a chance to impart greater clarity on certain features of default procedures, which is all the more important in the present case because the General Court has, in my view, erred in law in applying the relevant rules in that regard. Accordingly, this Opinion will also delve into those issues.
II. Legal framework
A. The Statute of the Court of Justice of the European Union
7. Article 41 of the Statute of the Court of Justice of the European Union (‘the Statute’) reads as follows:
‘Where the defending party, after having been duly summoned, fails to file written submissions in defence, judgment shall be given against that party by default. An objection may be lodged against the judgment within one month of it being notified. …’
8. In accordance with Article 56 of the Statute:
‘An appeal may be brought before the Court of Justice, within two months of the notification of the decision appealed against …
Such an appeal may be brought by any party, which has been unsuccessful, in whole or in part, in its submissions. …’
B. The Rules of Procedure of the Court of Justice
9. Article 172 of the Rules of Procedure of the Court of Justice (‘the RPCJ’), entitled ‘Parties authorised to lodge a response’, provides that ‘any party to the relevant case before the General Court having an interest in the appeal being allowed or dismissed may submit a response within two months after service on him of the appeal. …’
10. Article 176 of the RPCJ concerns cross-appeals. Pursuant to its first paragraph, ‘the parties referred to in Article 172 of [the RPCJ] may submit a cross-appeal within the same time limit as that prescribed for the submission of a response’. In that regard, in accordance with Article 178(1) of the RPCJ, a cross-appeal shall seek to have set aside, in whole or in part, the decision of the General Court.
C. The Rules of Procedure of the General Court
11. In accordance with Article 123 of the of the Rules of Procedure of the General Court (‘the RPGC’), entitled ‘Judgments by default’:
‘1. Where the General Court finds that a defendant on whom an application initiating proceedings has been duly served has failed to respond to the application in the proper form or within the time limit prescribed … the applicant may, within a time limit prescribed by the President, apply to the General Court for judgment by default.
2. A defendant in default shall not intervene in the default procedure and, with the exception of the decision, which closes the proceedings, no procedural document shall be served on him.
3. The General Court shall give judgment in favour of the applicant in the judgment by default, unless it is clear that the General Court has no jurisdiction to hear and determine the action or that the action is manifestly inadmissible or manifestly lacking any foundation in law.
…’
12. Under Article 166 of the RPGC, a defendant in default may, pursuant to Article 41 of the Statute, submit an application to set aside a judgment by default.
III. Background to the dispute, the procedure before the General Court and the judgment under appeal
A. Background to the dispute
13. The background to the dispute is set out in detail in the judgment under appeal. (3) The factual circumstances that are relevant to this Opinion may be summarised as follows.
14. In 2011, the Parliament initiated a tender procedure to secure a tous risques chantier (an ‘all construction site risks’) insurance policy for the major renovations and construction work forming part of the KAD extension project in Luxembourg City. The proposal presented by AXA Assurances Luxembourg SA (‘AXA’), Bâloise Assurances Luxembourg SA, La Luxembourgeoise SA, and Delta Lloyd Schadeverzekering NV was selected. On 12 December 2018, that latter company was absorbed by NN (collectively, ‘the defendants at first instance’).
15. On 3 April 2012, the European Union, represented by the Parliament, concluded the all construction site risks contract (‘the CAR contract’), referred to in the tender, with the defendants at first instance. The contract designated AXA as the lead insurer. (4)
16. Following substantial rainfall on 27 and 30 May 2016, rainwater from the KAD construction site seeped into the basement of the building. That accumulation of water could not be drained, creating a humid environment in areas in which technical equipment had already been installed. As a result, that equipment was damaged.
17. On 30 May 2016, the company overseeing the major works on that construction site filed an insurance claim in view of the circumstances. By letter of 15 July 2016, AXA, acting as the lead insurer, informed the Parliament that, on the basis of the information examined by its experts, the abovementioned circumstances were not covered by the CAR contract, and, thus, denied any liability.
18. Despite an exchange of written correspondence and a meeting, the disagreement between AXA and the Parliament persisted. The latter sent a letter of formal notice to the defendants at first instance, based on a provisional damage estimation.
19. Following that first letter, the Parliament renewed that notice on 28 November 2018, stating that the damage suffered amounted to EUR 800 624.33, excluding value added tax.
B. The procedure before the General Court and the judgment under appeal
20. On 20 June 2019, the Parliament brought an action pursuant to Article 272 TFEU before the General Court, requesting that the defendants at first instance be ordered to reimburse the costs related to the water damage caused to the KAD equipment in May 2016. In support of its action, the Parliament relied on six pleas in law.
21. On 10 September 2019, AXA, Bâloise Assurances Luxembourg and La Luxembourgeoise submitted their defence to the General Court.
22. Having been informed that Delta Lloyd Schadeverzekering had been absorbed by NN, by letter of 13 January 2020, the Registry of the General Court notified the latter that an application had been lodged, and set the time limit for it to submit its defence.
23. NN did not submit a statement of defence within the prescribed period.
24. By letter of 29 June 2020, the Registry of the General Court informed NN that, in accordance with Article 123 of the RPGC, which concerns judgments by default, and at the request of the Parliament, it would no longer participate in the default proceedings and would only be served with the decision bringing those proceedings to a close.
25. On 29 September 2021, by points 2 and 4 of the operative part of the judgment under appeal, the General Court dismissed the action in so far as it concerned the defendants at first instance, with the exception of NN. In points 1 and 3 of the operative part of that judgment, that court ordered NN to reimburse the sum of EUR 79 653.89 to the Parliament (which corresponds to the amount the Parliament claimed against NN in its forms of order), together with statutory interest for late payment, as well as to bear the costs of the default proceedings to the extent that those proceedings concerned it.
26. On 18 November 2021, in accordance with Article 41 of the Statute and Article 166 of the RPGC, NN lodged an application to set aside points 1 and 3 of the operative part of the judgment under appeal. By decision of 10 January 2022, the General Court suspended that procedure pending the decision of the Court of Justice in the present appeal.
IV. Procedure before the Court of Justice and forms of order sought by the parties
27. By document dated 8 December 2021, the Parliament brought the present appeal against the judgment under appeal.
28. By its appeal, the Parliament claims that the Court should:
– set aside points 2 and 4 of the operative part of the judgment under appeal;
– refer the case back to the General Court;
– reserve the costs, with the exception of those related to point 3 of the operative part of the judgment under appeal; and
– in the alternative, set aside points 2 and 4 of the operative part of the judgment under appeal, and grant the Parliament’s claim against the defendants at first instance.
29. In their response to that appeal, the defendants at first instance, including NN, contend that the Court should:
– dismiss the Parliament’s appeal;
– dismiss the Parliament’s request to reserve the costs;
– in the alternative, in the event that the Court upholds the Parliament’s appeal, refer the case back to the General Court; and
– on a subsidiary basis, reject the Parliament’s claims against AXA, Bâloise Assurances Luxembourg and La Luxembourgeoise on the basis of the arguments presented by them at first instance and to rule, accordingly, in line with their submissions.
30. By its cross-appeal, lodged on 6 April 2022, NN claims that the Court should:
– declare the cross-appeal to be admissible; and
– set aside points 1 and 3 of the operative part of the judgment under appeal.
31. In its response to the cross-appeal, the Parliament requests that the Court:
– declare the cross-appeal to be inadmissible;
– in the alternative, declare the cross-appeal to be unfounded; and
– order NN to pay the costs of the cross-appeal.
V. Analysis
32. In the present case, two appeals have been brought before the Court of Justice, one by the Parliament and the other by NN.
33. In support of the main appeal, the Parliament relies on three grounds of appeal to challenge the General Court’s interpretation of the term ‘flooding’ appearing in Article I.15.1.1 of the CAR contract. In that respect, the Parliament alleges (i) an infringement of the principles of interpretation of EU law; (ii) a failure to state reasons; and (iii) a distortion of the facts and evidence.
34. In support of its cross-appeal, NN puts forward two grounds of appeal. In the first place, it claims that the General Court infringed Article 45(1)(a) of the RPGC, which concerns the manner in which the language of a case is determined, by failing to find that the Parliament’s action, drawn up in the French language, was manifestly inadmissible in so far as it concerned NN.
35. In the second place, and in the alternative, it alleges an infringement of Article 123(3) of the RPGC (which concerns the steps that the General Court must take to hand down a judgment by default), as well as a failure to state reasons, in so far as the judgment under appeal upheld the action in respect of NN, while dismissing it in respect of the other defendants at first instance, despite the Parliament’s claims being based on the same arguments in law and in fact.
36. As specified earlier, at the request of the Court, this Opinion will focus mainly on the analysis of the admissibility of the second appeal, that is, NN’s cross-appeal. However, it is necessary to emphasise that NN’s cross-appeal cannot be considered in isolation, without due regard being had to the broader contextual circumstances – most notably the fact that NN is a defendant in default and has made use of two distinct procedural mechanisms. I consider it necessary also to examine those aspects, even though they extend somewhat beyond the cross-appeal.
37. In that light, I will begin my Opinion with some preliminary remarks, which concern NN’s status as a defendant in default and – as mentioned in point 26 above – its request, as submitted to the General Court, that the judgment under appeal (or ‘default judgment’) be set aside (A). I will then turn to the admissibility of NN’s response to the main appeal (B). Subsequently, I will assess whether NN may bring a cross-appeal (C). Lastly, I will conclude by focusing on certain interpretative issues that arise from the text of Article 123(3) of the RPGC, as well as the manner in which it was applied by the General Court in the judgment under appeal (D).
A. The judgment by default and NN’s application to set it aside
38. Under Article 41 of the Statute, read in conjunction with Article 123 of the RPGC, where a defendant on whom an application initiating proceedings has been duly served fails to file written submissions in its defence in the proper form or within the time limit prescribed, and where the applicant to the proceedings so requests, the General Court may deliver a judgment against that party by default.
39. Under those circumstances, such a party will have the status of ‘defendant in default’. (5)
40. That being said, in accordance with Article 41 of the Statute and Article 166 of the RPGC, a defendant in default may raise an objection in the form of an application, before the General Court, to set aside the judgment by default within one month from the date on which it was served that judgment. (6) Therefore, the texts governing procedure before the Courts of the European Union have expressly laid down a remedial procedural track for any party that finds itself a defendant in default. The exercise of that procedural track allows such a defendant to obtain the reopening of the case and a review of the matter that was (provisionally) adjudicated inaudita altera parte.
41. On 18 November 2021, NN made use of that procedural track by filing an application to have the General Court’s judgment by default set aside. On 10 January 2022, however, that court decided to suspend that procedure, in view of the fact that the Parliament had brought the main appeal against the judgment under appeal.
42. Subsequently, on 6 April 2022, NN submitted a response and a cross-appeal in the appeal proceedings brought by the Parliament.
43. Against that background, the Parliament takes the view that both the response and the cross-appeal lodged by NN are inadmissible. In the next two sections, I will address the Parliament’s arguments in that respect.
B. Admissibility of NN’s response to the main appeal
44. In the first place, the Parliament contends that the response submitted collectively by the defendants at first instance is inadmissible in so far as it concerns NN because that company has no interest in the appeal being allowed or dismissed.
45. The Parliament submits that its appeal concerns only points 2 and 4 of the operative part of the judgment under appeal, by which the General Court dismissed its action to the extent that it was directed against the other defendants at first instance. Consequently, it submits that the main appeal does not affect NN’s legal situation.
46. I do not agree with that assessment.
47. To recall, in accordance with Article 172 of the RPCJ, ‘any party to the relevant case’ before the General Court ‘having an interest in the appeal being allowed or dismissed’ may submit a response within two months after service of the appeal.
48. Accordingly, it follows from the plain text of Article 172 of the RPCJ that any person who had the formal status of ‘party’ in the first-instance proceedings may, in principle, participate in the appeal proceedings by submitting a response to the appeal lodged by another party, provided that it has an interest in the appeal’s success or failure. Consequently, aside from the applicable time limit, participation hinges on whether two cumulative conditions have been met.
49. First, the response must be submitted by a ‘party to the relevant case’.
50. In line with the definition of the terms ‘party’ and ‘main party’, provided for in Article 1(2)(c) and (d) of the RPGC, I understand that phrase to comprise of the applicant(s) and the defendant(s), as well as the intervener(s), to the particular case. (7) As NN was a defendant in the judgment under appeal, it satisfies that condition.
51. The classification of NN as a ‘defendant in default’ does not affect its status as a ‘party’. In fact, NN retained its status as a defendant throughout the proceedings before the General Court. Indeed, it is for that reason that the judgment under appeal was served upon it. (8)
52. Similarly, Article 172 of the RPCJ clearly states that the parties to the relevant case are to be served with an appeal if one is lodged. The service on NN of the appeal by the Parliament is also clear confirmation that NN is a party to the proceedings. (9)
53. Second, a party wishing to lodge a response must have an ‘interest in the appeal being allowed or dismissed’.
54. It is common ground that a party wishing to bring proceedings must be able to show that those proceedings, if successful, are likely to procure an advantage to that party. (10) In that respect, the same ought to be true of a party seeking to lodge a response to an appeal, because it too must have an ‘interest’ in its outcome in order to do so. Although I agree that that term may encompass a broad range of advantages extending beyond factors that are strictly legal, (11) the outcome of the given proceedings must be capable of having legal consequences for the party bringing those proceedings and, in my view, also for those wishing to participate in them. (12)
55. As discussed above, NN lodged an application to have the judgment under appeal set aside, pursuant to Article 41 of the Statute and Article 166 of the RPGC. However, the General Court has suspended that application, awaiting the ruling of the Court of Justice in the main appeal.
56. In its forthcoming judgment concerning the main appeal, based on the grounds raised by the Parliament, the Court of Justice will need to examine whether the General Court erred in its reasoning when it dismissed the action against the other defendants at first instance.
57. In that regard, it is worth emphasising that the Parliament relied on the same facts and the same legal arguments against all defendants (thus, including NN). It is therefore quite clear that the assessment of the Court of Justice of the Parliament’s arguments on appeal will most likely determine the outcome of NN’s action currently pending (although suspended) before the General Court. Should the Court of Justice reverse the General Court’s ruling and uphold the Parliament’s claims, the fate of NN’s application before the General Court is probably sealed. The opposite is also true: were the Court of Justice to dismiss the Parliament’s appeal, NN’s chances of success in having the judgment delivered by default overturned will be greatly increased.
58. As a consequence, it appears quite clear to me that, contrary to the arguments relied on by the Parliament, NN has a significant and direct legal interest in the outcome of the present appeal proceedings. As such, NN satisfies both relevant conditions referred to in points 49 and 53 above, and is able to lodge a response to the present appeal.
59. That being said, to my mind, there are also reasons of principle why NN, although a defendant in default, ought to be able, in a situation such as that at issue in the present proceedings, to submit a response to the main appeal.
60. The lodging of the main appeal led to the suspension by the General Court of NN’s application to have the default judgment set aside. In that regard, the remedy initially available to NN by virtue of Article 41 of the Statute and Article 166 of the RPGC was temporarily suspended, while the remedy used by the Parliament, specifically that of an appeal, has been accorded precedence.
61. In my view, it would be contradictory both to the right to an effective remedy and the right to be heard, if a party, albeit a defendant in default at first instance, were to find itself ensnared in this state of legal limbo, wherein it could not effectively utilise the legal remedy available to its situation, that being the application to set aside the judgment by default, or participate in the appeal proceedings that concern the very case to which it was – and still is – a party.
62. The right to be heard is a general principle of EU law. It pertains to the rights of the defence, as embodied in provisions of the Charter of Fundamental Rights of the European Union (‘the Charter’), in particular in Article 47 thereof. Broadly speaking, that right ensures that all parties are entitled to make representations, in writing or orally, in advance of any decision liable adversely to affect the interests of that party. (13)
63. It is therefore incumbent upon the Court to ensure that each party has a reasonable opportunity to present its case, under conditions that do not place it in a clearly less advantageous position by comparison with other parties. (14)
64. If a party such as NN is not able to respond to an appeal that has been brought, it will not be in a position to state its legal position, and to be heard, on the basis of its own legal arguments raised in its defence, which the Court will have to duly consider. In such circumstances, it is rather difficult to see how the Court could ensure the exercise of NN’s right to be heard and to an effective remedy.
65. In the light of the foregoing, I take the view that the response submitted collectively by the defendants at first instance is admissible in its entirety, including in so far as it concerns NN.
C. Admissibility of NN’s cross-appeal
66. In the second place, the Parliament contends that the Court should declare NN’s cross-appeal to be inadmissible on the ground that, as a defendant in default, it does not meet the conditions necessary to make use of that procedural remedy.
67. In examining the admissibility of NN’s cross-appeal, I will first consider the relevant provisions that underpin the use of that legal mechanism. To that end, I will examine Article 176 of the RPCJ on cross-appeals and explain why I also consider Article 56 of the Statute, which concerns appeals, to be relevant in this specific context (1). Subsequently, I will direct my attention to the requirements under that provision of the Statute, and explain why I consider that NN is not entitled to lodge a cross-appeal in the context of the present case (2). Finally, I shall offer some brief reflections on the system of remedies available to a defendant in default, in particular, whether such a defendant may use several mechanisms at the same time (3).
1. The relevant provisions for lodging a cross-appeal
68. Article 176 of the RPCJ establishes the procedural framework for cross-appeals. In accordance with that provision, the parties referred to in Article 172 of the RPCJ may submit a cross-appeal. In that respect, a cross-appellant may be any party to the relevant case before the General Court which has an interest in the appeal being allowed or dismissed.
69. In its case-law, the Court has recognised that a party falling within the scope of those provisions may submit a response to an appeal and, at the same time, submit a cross-appeal. (15) However, a response to an appeal may not seek the annulment of the decision of the General Court on the basis of distinct and independent grounds from those raised in the appeal, since such grounds may be raised only as part of a cross-appeal. (16) In that regard, the cross-appeal must be introduced in a document separate from the response, and must only contain grounds and arguments that are separate from and independent of those raised in that same party’s response to the appeal. (17)
70. In the context of the present case, as clarified earlier, NN qualifies as a party that is eligible to submit a response to the main appeal within the meaning of Article 172 of the RPCJ. Consequently, based on a literal interpretation of the wording of Article 176 of the RPCJ, NN would also appear to be entitled to lodge a cross-appeal in accordance with the conditions outlined above.
71. Those conditions appear, in the case at hand, to be satisfied. Indeed, it follows from the case file that the defendants at first instance, including NN, filed a response to the main appeal on the same day that NN lodged its cross-appeal, in a separate document and within the deadline. That cross-appeal seeks to have points 1 and 3 of the operative part of the judgment under appeal set aside. Therefore, the contents of that cross-appeal is founded on separate grounds to those raised in the main appeal (which concern points 2 and 4 of the operative part of the judgment under appeal), and is separate from and independent of those arguments raised in the response to the main appeal.
72. In that respect, and contrary to the arguments put forward by the Parliament on that point, I fail to see any issue with the fact that NN’s cross-appeal presents different arguments to those raised, and seeks a distinct resolution to that pursued, by that party in the main appeal. (18)
73. Nonetheless, fulfilling the formal requirements under Articles 172 and 176 of the RPCJ represents but one obstacle that a party must overcome before it is able to lodge a cross-appeal successfully.
74. Article 56 of the Statute outlines the basic requirements that must be met for a party to bring an appeal. In that respect, the second paragraph thereof provides that an appeal may be brought by ‘any party which has been unsuccessful, in whole or in part, in its submissions’.
75. In that regard, one question immediately comes to mind: in the absence of an express reference, does Article 56 of the Statute encompass both a conventional ‘appeal’ and a ‘cross-appeal’?
76. In my view, the answer is rather clear.
77. That provision refers to the term ‘appeal’, which describes a legal remedy that a party may use to challenge a judicial decision, or a part thereof, by presenting legal arguments that aim to have set aside, either in whole or in part, that decision.
78. A ‘cross-appeal’ is a legal remedy that serves that very purpose. In fact, it is fundamentally similar, but for the crucial distinction that a party will initiate a cross-appeal after a main appeal has been brought and, naturally, rely on different legal arguments and grounds of appeal to those presented in the main appeal. In that respect, the difference between an appeal and a cross-appeal lies not in the substance of those mechanisms, but in their temporal dimension and in their independent or ancillary nature.
79. Indeed, an appeal must be lodged within two months of the notification of the decision appealed against,(19) whereas a cross-appeal may be lodged even after that deadline has expired. Pursuant to Articles 172 and 176 of the RPCJ, it may be submitted ‘within the same time limit as that prescribed for the submission of a response’, which means within two months after the appeal has been served on the party. (20)
80. In addition, if different parties lodge separate appeals against the same decision of the General Court, each of those appeals will have an ‘independent life’. Where appropriate, the Court of Justice may join (some or all of) those cases for the purposes of the written or oral parts of the procedure, or for the judgment.(21) However, were one of those cases to be withdrawn or rejected as inadmissible, the procedure in the other appeal(s) would not be affected.
81. By contrast, the cross-appeal is a case which is transplanted onto an existing case. This means that an examination of the cross-appeal by the Court may be contingent on the main appeal. In fact, pursuant to Article 183 of the RPCJ, a cross-appeal may become devoid of purpose when the appellant discontinues his or her appeal, or the appeal is declared manifestly inadmissible on certain specific grounds.(22)
82. In the light of the above, the cross-appeal mechanism appears to have been conceived, first and foremost, for reasons of judicial economy, and in particular to discourage unnecessary litigation and to permit interconnected cases to be examined within one and the same procedure.
83. Once a judgment (or another decision open to challenge) of the General Court has been handed down, the common course of action for any dissatisfied party would be promptly to lodge an appeal. There may be occasions, however, when a party may be dissatisfied with certain aspects of a decision whilst being satisfied with other aspects thereof. In those cases, it is possible that a party is ready to accept the outcome at first instance, provided the other parties accept it too, so that the dispute is finally settled.
84. However, absent a provision such as Article 176(1) of the RPCJ, a ‘sit and wait’ approach by any party would be risky, as another party could lodge an appeal towards the end of the two-month time period, making it difficult for the former to react in a timely manner. In such a scenario, there would be an increased likelihood that frivolous appeals are lodged, even in instances where the parties might have been inclined to refrain from initiating another round of legal proceedings.
85. On the basis of the reasons above, I come to the conclusion that cross-appeals and main appeals are simply two species of the same genus: appeals.
86. Accordingly, the minor discrepancy in the terminology employed in the relevant rules for each type of appeal serves simply to assist in distinguishing between them, when referring to those respective legal remedies in the context of the given proceedings. It does not mean, however, that, in a situation such as that at issue in the main proceedings, they should be treated any differently.
87. In fact, it would run counter to the importance of ensuring the proper administration of justice, and the concept that parties ought to be placed on an equal footing, if Article 56 of the Statute were applicable only to a party wishing to bring an appeal, and not to a party seeking to submit a cross-appeal after the main appeal has already been brought.
88. Consequently, I consider that Article 56 of the Statute applies to all forms of appeal available pursuant to the texts governing procedure before this judicial institution, which includes cross-appeals.
89. In the context of the present case, therefore, while I am satisfied that NN fulfils the conditions under Articles 172 and 176 of the RPCJ, it must be determined whether it also fulfils the formal requirements specified in Article 56 of the Statute. (23)
2. The requirements under Article 56 of the Statute
90. As I mentioned in point 74 above, the second paragraph of Article 56 of the Statute provides that an appeal may be brought by ‘any party which has been unsuccessful, in whole or in part, in its submissions’.
91. Although in the vast majority of cases it should be relatively easy to verify whether that condition is satisfied, there may be cases in which that exercise is not so straightforward. That may be the case, inter alia, because the terms ‘unsuccessful’ (24) and ‘submissions’ (25) are not devoid of ambiguity. Such ambiguity is partly due to some discrepancies in the different language versions of the Statute. (26)
92. However, irrespective of those interpretative doubts, it is, in my view, hardly disputable that a defendant in default does not fulfil those criteria. Such a defendant has not filed any submission, and thus has not sought any specific form of order. Moreover, by way of a consequence, it is untenable to assert that such a party has been ‘unsuccessful’, within the meaning of Article 56 of the Statute.
93. Drawing on the metaphor introduced in the introduction to this Opinion, reaching the train’s destination requires one first, to buy a ticket and request an itinerary, and then, to board that train.
94. That position would appear to align with the Court of Justice’s approach in its judgment in Bayer CropScience and Bayer v Commission. In that case, both Bayer CropScience and Bayer brought an appeal before the Court of Justice, though only the former had been a party to the proceedings before the General Court. Since Bayer had not taken part in those initial proceedings, and since it had not invoked any particular circumstances that may, conceivably, have entitled it to bring an appeal, the Court ruled that the appeal was inadmissible in so far as it had been brought on behalf of that company. (27)
95. Similarly, the Court of Justice has arrived at a comparable conclusion in certain trade mark cases, concerning potential interveners in the appeal proceedings. Indeed, in circumstances where the party lodging an appeal had failed to respond to the application initiating proceedings, the Court has found that such a party cannot be regarded as having participated in the proceedings before the General Court because it had neither proposed its own form of order, nor stated that it was supporting the form of order sought by the other parties. (28)
96. In that light, and in agreement with the arguments put forward by the Parliament, I consider NN’s cross-appeal to be inadmissible.
3. The broader procedural considerations
97. With that said, though I arrive at the above conclusion through the lens of the present case, the same rationale applies to the broader procedural framework governing legal remedies before the Courts of the European Union.
98. The arguments presented by the different parties to the present proceedings reveal a notable ambiguity surrounding the use of specific legal mechanisms before this judicial institution, and the appropriate point in time at which they may be utilised.
99. In that respect, putting the particular circumstances of this case to one side for a moment, it is appropriate to address two questions which are obviously interconnected: (i) whether a defendant in default is able to bring an appeal against a default judgment, or whether it is required to make use of the procedural avenue that allows it to lodge an application to set aside that judgment; and, if the latter (ii) whether such a defendant can pursue both avenues at the same time, or, as exemplified in the present case, lodge such an application together with a cross-appeal.
100. In my view, the answer to both questions is relatively clear.
101. Namely, a defendant in default cannot bring an appeal against a first-instance decision because it is required to make use of the specific remedy consisting in applying to have the judgment by default set aside. A fortiori, a defendant in default cannot pursue both avenues at the same time by bringing an appeal before the Court of Justice, together with an application to have the judgment by default set aside before the General Court.
102. Such an interpretation seems to have been most recently affirmed by the Court of Justice in its judgment in Eulex Kosovo v SC, delivered on the same day as this Opinion. (29)
103. The two procedural avenues are, therefore, not only alternatives and mutually exclusive, but also not interchangeable.
104. On the one hand, to lodge an appeal, a party must fulfil the formal requirements outlined in Article 56 of the Statute, in essence, mandating participation at first instance. Thus, for the reasons explained above, a defendant in default does not fulfil that criterion. Any attempt to bring a successful appeal would seem futile.
105. On the other hand, if a party has participated in the first-instance proceedings, it cannot, by definition, be categorised as a defendant in default. Consequently, there would be no judgment by default which that party could apply to have set aside.
106. To view it any differently would be inconsistent with the logic of the EU system of legal remedies.
107. Indeed, it would not only circumvent the rules providing for a procedural remedy specifically conceived to preclude a judgment by default, but also devalue such a remedy, given the different time frames governing those mechanisms and the decisive weight that a judgment of the Court carries in an appeal. Equally, it would erode the very essence of default judgments, which serve to encourage active participation in legal proceedings by restricting the involvement and recourses available to a party which has failed to engage in the initial proceedings, despite being requested to do so.
108. In addition, permitting the use of two legal remedies in parallel would be tantamount to allowing a defendant in default to have two bites at the cherry – or, to continue with the metaphor, to ride two trains at the same time. This would run counter to the principle that there should be equality of arms between all parties. When viewed in this manner, how could it be permissible for a party, which had failed to participate at first instance, to nonetheless have the possibility to pursue one remedy before the General Court, and another remedy before the Court of Justice, both ultimately seeking the same outcome?
109. Lastly, such a situation would even have the potential to disrupt the proper administration of justice, affecting the integrity of the procedural framework by causing confusion as to the suitable remedy in a particular case, as well as likely contributing to the escalation of costs for any party involved in parallel procedures, as well as those of this judicial institution. (30)
110. Those observations are just as relevant when it comes to the use of a cross-appeal.
111. In such circumstances, the arguments relied on by a defendant in default in its application to have a default judgment set aside may bear a resemblance to those put forward by that same defendant in a cross-appeal. However, it may also be, as is demonstrated by NN’s cross-appeal, that the arguments put forward in the cross-appeal are entirely different.
112. On this point, I do not share NN’s viewpoint that such a scenario would have the effect of streamlining the procedure by enabling the Court of Justice to deliver a final judgment, which also definitively resolves the issues raised in the application to have set aside the default judgment before the General Court.
113. Rather, such a situation inadvertently confers an advantage on the defendant in default in making use of an additional procedural avenue in order to introduce further legal arguments, without guaranteeing that the initial arguments raised in the application to have set aside the default judgment within the factual context of the case before the General Court will properly be addressed, even if the Court of Justice finds the cross-appeal to be well founded. That is because, in the context of a cross-appeal, the Court is bound to address points of law only.
114. In my view, the consequences just described do not reflect the intended functioning of the system of remedies, established in the texts governing procedure before the Courts of the European Union – a single train cannot occupy two tracks at the same time.
115. Accordingly, in view of the foregoing considerations, it seems to me that the procedural avenue permitting a defendant in default to submit an application to have set aside a judgment by default before the General Court is the most appropriate (rectius, the only) course of action that such a party may use in such circumstances.
116. Where the General Court receives a request from a defendant that a default judgment be set aside, the initial judgment at first instance will not be considered final. In practical terms, if that application is successful, a new ruling will replace the default judgment.
117. Conversely, if that application is dismissed, the default judgment will remain in effect and become, with respect to the proceedings at first instance, final. At this stage, the defendant in default will be able to file an appeal within two months of receiving notification of that judgment if it wishes to do so. In my view, this process aligns with the intending functioning of the system of remedies available under the procedural framework. (31)
118. In the light of the above, I reiterate my conclusion that NN’s cross-appeal should be declared inadmissible. Consequently, the Court need not assess the two grounds of appeal put forward therein by NN.
119. However, should the Court disagree with my assessment above, and, thus, come to the conclusion that NN’s cross-appeal is admissible, I am of the view that – for the reasons that I will explain below – it ought to find that that cross-appeal is well founded and, consequently, set aside the judgment under appeal in so far as it concerns NN.
D. The General Court’s approach in handing down a judgment by default in respect of NN
120. As I mentioned in point 34 above, NN puts forward two grounds of appeal in its cross-appeal. For reasons of judicial economy, I suggest that the Court first examines NN’s second ground of appeal. Since I consider that ground to be manifestly well founded, it will not be necessary for the Court to examine NN’s first ground of appeal.
121. By its second ground of appeal, NN alleges an infringement of Article 123(3) of the RPGC, which concerns the conditions under which the General Court may deliver a default judgment, and a failure to state reasons, in so far as the judgment under appeal upheld the action against it while dismissing that action brought against the other defendants at first instance, despite the Parliament’s claims being based on the same arguments in law and in fact.
122. In paragraphs 45 to 61 of the judgment under appeal, the General Court examined whether the Parliament’s application for a judgment by default against NN should be granted, in the light of the conditions set out in Article 123(3) of the RPGC. According to that provision, before the General Court is able to deliver a default judgment in favour of the applicant, it must verify that (i) it has jurisdiction to hear and determine the action before it; (ii) the action is not manifestly inadmissible; and (iii) the action is not manifestly lacking any foundation in law.
123. In the judgment under appeal, the General Court deemed the conditions under Article 123(3) of the RPGC to be satisfied.
124. After having found that it had jurisdiction to hear and determine the Parliament’s action, and that that action was not manifestly inadmissible, the General Court turned to the examination of the third condition referred to above. In a single brief paragraph, it stated:
‘… a prima facie analysis of the Parliament’s arguments does not show that the action is manifestly devoid of any basis in law. Indeed, the question of whether or not the claim for which it seeks compensation is covered by the CAR contract, without being the subject of an exclusion clause arising from that contract, requires a closer examination of the terms of that contract, read in context and taking into account the intention of the parties’. (32)
125. On that basis, the General Court upheld the Parliament’s action against NN. Nevertheless, when assessing the merits of the action against the other defendants at first instance, the General Court – after carrying out a more detailed examination of the Parliament’s arguments – concluded that those arguments were unfounded, and thus dismissed that part of the action. (33)
126. I find two distinct errors of law in those passages of the judgment under appeal: an error of interpretation of Article 123 of the RPGC and a failure to state reasons.
127. First, the General Court’s approach betrays a misunderstanding of the purpose and the scope of the judicial review mandated by Article 123 of the RPGC, and of the term ‘manifest’ appearing therein.
128. Building on the explanations I provided in my recent Opinion in Commission v United Kingdom (Judgment of the Supreme Court), (34) I wish to point out that it follows clearly from the EU procedural rules on default proceedings, as well as this judicial institution’s case-law, that a defendant’s failure to participate in proceedings does not automatically entail an acceptance, by the adjudicating court, of the applicant’s claims. Indeed, in default proceedings, the very idea of allowing the applicant’s claims to benefit from a presumption of truth is simply out of the question.
129. At the same time, however, the standard of review to be applied by the Courts of the European Union is one of relative benignity towards the applicant’s claims. The Court is not required to carry out a fully fledged examination of the facts alleged and the legal arguments put forward by the applicant, nor could it be expected to elaborate the arguments of fact and of law that the defendant could have put forward, had it participated in the proceedings. By forfeiting its right to appear, a defendant chooses to forgo its ability to, inter alia, present evidence that may call into question the accuracy of the facts alleged by the applicant, or raise lines of defence that are in principle for the defendant to adduce and substantiate. (35)
130. In short, in a default procedure before the General Court, the applicant bears the burden of proving that its claims are ‘prima facie, not unfounded’. (36) That burden is met when the arguments put forward by the applicant in support of its claims appear, without an in-depth analysis, plausible: that is, sufficiently reasonable in law and in fact and, where appropriate, sustained by adequate evidence.
131. For reasons of judicial economy, the EU procedural rules permit the Courts of the European Union to avoid an in-depth examination of the applicant’s claims where the defendant, despite having been duly served the application, chose not to participate in the proceedings.
132. Those rules cannot, instead, be interpreted as implying that no examination whatsoever needs to take place where the arguments put forward by the applicant are complex. There is, obviously, a difference between a light-touch examination and no examination at all.
133. I wish to insist on this point. The test laid down in Article 123(3) of the RPGC does not permit the General Court to consider that the applicant has made a prima facie case solely because the matter raised by the applicant is so complex (in law and/or in fact) that it warrants closer scrutiny. Complexity, in terms of the arguments put forward, is no licence for the absence of any form of judicial assessment of those arguments. (37)
134. Yet, that is precisely what happened in the present case in respect of the claims brought by the Parliament against NN. Paragraph 57 of the judgment under appeal makes it unmistakably clear that the General Court did not undertake any substantive assessment of those claims.
135. It follows from the above that the General Court erred in law in interpreting and applying Article 123 of the RPGC. The General Court should have, at the very least, examined whether, in view of the terms of the contract, read in their context, the interpretation of that contract put forward by the Parliament was plausible enough to make a prima facie case.
136. In any event, it is equally clear to me that a given argument is no longer plausible if, in the same decision, the General Court rules on the merits of that argument and arrives at the conclusion that it is, upon closer scrutiny, unfounded.
137. As I have previously explained, Article 123 of the RPGC permits the General Court to forego a detailed examination of the applicant’s claims in proceedings by default. However, that provision cannot be interpreted as requiring that court to limit itself to a light form of review when assessing the arguments raised against a defendant in default where, for one reason or another, those same arguments will have to be examined more thoroughly.
138. It is difficult to discern the logic behind such a judicial decision, in which a court deems the very same arguments (both in fact and in law) not to be manifestly erroneous in one part of that decision (in casu, in the assessment concerning NN) and then considers them to be erroneous in another part of that decision (in casu, when assessed in relation to the other defendants at first instance).
139. The General Court’s interpretation of Article 123 of the RPGC would seem to imply that, in some cases, it is in fact obliged to uphold an argument in full knowledge that such an argument is incorrect, and – to make matters worse – despite having expressly acknowledged this in the same decision.
140. In my view, this cannot be considered a proper and just exercise of that court’s judicial function. In essence, a court would find against a party in default for the sole reason that that party chose not to participate in the proceedings. However, as has been mentioned above, that is not what is provided for in the EU rules on procedures by default. Those rules still require the Courts of the European Union to conduct an assessment of the matter: one that, albeit carried out in a light form, must nonetheless adhere to the requirements stemming from Article 47 of the Charter.
141. In that respect, it should not be overlooked that the choice not to participate in proceedings, as regrettable as it may be, is entirely at the discretion of the individual party and is, thus, legitimate. (38) Naturally, that choice entails the risk of being treated as a defendant in default, a status that may result in being subject to a default judgment which, as has been explained, has a number of procedural consequences, some of those being unfavourable to the defendant.
142. However, it would be stretching the letter and purpose of the EU procedural rules too far, and would risk bringing about a consequence that is excessively punitive, if a court were to interpret them as imposing upon itself the duty to rubber-stamp the arguments of the applicant no matter the circumstances.
143. My standpoint seems to be corroborated by the judgment of the Grand Chamber of the Court of Justice in Tomkins, in which it upheld the General Court’s decision to reduce the duration of the anti-competitive conduct imputed to a company, based on the findings made in respect of another company, despite the former company not having raised any claim with regard to the duration of the infringement. (39) The Commission had criticised the General Court for ruling ultra petita. However, the Court of Justice dismissed the appeal, noting, in essence, that the two companies were related (the parent company and the subsidiary) and that it was not a case of two distinct forms of conduct infringing the competition rules, but rather a single infringement, for which both companies could be held liable.
144. The principles derived from that judgment appear to be relevant, mutatis mutandis, to the present case. The defendants at first instance are related in that they are all bound by one and the same contract and were sued collectively by the Parliament before the General Court for an alleged failure to honour that contract. In those proceedings, the four insurers were in an identical factual and legal position: the Parliament claimed, on the basis of the same legal grounds, that they were jointly liable to reimburse the costs related to the damage caused by one specific event (that is to say, the alleged flooding of the KAD building).
145. As in the judgment in Tomkins, where the Courts of the European Union could not attribute two different time periods to the same conduct, depending on the company concerned, for reasons relating to their conduct in the judicial proceedings, in the present case, this judicial institution cannot find the same terms of the same contract to have two different meanings, depending on the company concerned, for reasons relating to their conduct in the judicial proceedings.
146. Furthermore, it follows from the foregoing that the judgment under appeal is also vitiated by a failure to state reasons: paragraph 57 thereof lacks any prima facie evaluation of the arguments put forward by the applicant, and is contradicted by paragraphs 62 to 138 of that judgment. (40)
147. In the light of the foregoing, therefore, I consider the judgment under appeal to be vitiated (i) by an error of interpretation of Article 123 of the RPGC, and (ii) by an inadequate and contradictory statement of reasons in relation to why the third condition laid down in that provision, which allows the General Court to deliver a judgment by default in favour of the applicant, was satisfied.
148. Accordingly, should the Court deem NN’s cross-appeal to be admissible, it would, in my view, have to set aside points 1 and 3 of the operative part of the judgment under appeal.
VI. Conclusion
149. Having regard to the foregoing considerations, I propose that the Court:
– find that Nationale-Nederlanden Schadeverzekering Maatschappij NV’s response to the main appeal is admissible;
– dismiss Nationale-Nederlanden Schadeverzekering Maatschappij’s cross-appeal as inadmissible.