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German Federal Constitutional Court thwarts UPC Agreement

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The German Federal Constitutional Court has ruled that the German ratification law for the Agreement on a Unified Patent Court (UPC Agreement) is void. The Court’s long-awaited decision on the constitutional complaint filed by a Duesseldorf lawyer in March 2017 has been published on 20 March 2020 and can be found here (available in German).

The Constitutional Court’s press release summarises the reasons for the decision (click here for German and English).

A majority of the 8-person senate (5:3) concluded that the ratification law should have required approval by a 2/3 majority in the German Federal Parliament (Bundestag) to become legally effective. Although the ratification law was unanimously adopted, less than 10% of the members of the parliament attended the voting and gave their consent – the vote therefore fell short of the required 2/3 majority.

Background

The UPC Agreement seeks to establish a Unified Patent Court common to all participating EU member states and responsible for disputes over European patents and the proposed European patents with unitary effect (Unitary Patents). For the UPC Agreement to come into effect, at least France, Germany and the UK – the three EU states with the largest number of European patents – plus 10 other member states had to ratify the legislation.

While France and 14 other EU member states have ratified the UPC agreement, the UK –despite having ratified the UPC Agreement – confirmed in February 2020 that they will not seek to participate in the UPC System post-Brexit. In Germany, the ratification process had been stalled by the constitutional complaint discussed in this article.

The ratification process is different for each EU member state. In Germany, the UPC Agreement needs to be approved its legislative bodies, which include the German Federal Parliament (Bundestag). Generally, legislation can be passed by a simple majority of the Parliament members (i.e., majority of the votes cast) – unless it amends the constitution. In this case, a qualified (2/3) majority of the members of Parliament is required for approval.

The draft German ratification law was approved by the legislative bodies in 2017, however, with about 35-38 (of >600 in total) of the Parliament members attending the vote. This failure to comply with the formal requirements was challenged by the complainant, who saw his constitutional rights violated.

Reasoning

The decision agrees that the German Constitutional Court’s failure to observe the “2/3 majority” rule violated the complainant’s constitutional rights of democratic self-determination1) by exposing him to the influence of a supranational public authority (the Unified Patent Court) without observing the formal requirements for conferring sovereign powers. The decision explains that the observance of these formal requirements is important to safeguard the citizen’s rights to influence the process of European integration by democratic means – including the right to claim that sovereign powers are conferred only in the ways provided for in the constitution, as they cannot easily be reclaimed by the conferring authority.

The dissenting minority of the judges did not question the applicability of the “2/3 rule” for a qualified approval of the ratification law, but took the opinion that the constitutional “right to democracy” did not give rise to a right that formal requirements for the conferral of sovereign powers be adhered to.

What’s next?

Theoretically, the Parliament could repeat the vote and seek to approve the Agreement with the required 2/3 majority. In view of the present Coronavirus pandemic and suggestions to reduce the number of Parliament members at each session to a minimum, a 2/3 vote may be pushed months into the future.

The UPC’s Preparatory Committee has not lost its optimism and declares that “Despite the fact that the judgement will result in further delay the preparatory work will continue, while the judgement and the way forward is further analysed.”

However, irrespective of the Constitutional Court’s decision, the UK’s recent announcement to pull out of the UPC system left many unanswered questions about how the UPC project will develop. If it turns out that the UPC Agreement needs amendment to reflect the recent developments in the UK, the successful establishment of the UPC system will be on our minds for a long time to come.

If you have any questions about this topic please contact Adilka Weiss aweiss@forresters.co.uk or your usual Forresters contact.

1) Legal basis: Article 38(1) first sentence and Article 20(1) and (2) in conjunction with Article 79(3) of the Basic Law (Grundgesetz, GG). Click here for the English version.