Social skills

National rules regulating the gambling industry are a source of frequent challenges ending up at the ECJ. The question national courts often ask is whether this or that provision of national legislation falls foul of article 49 EC (now article 56 TFEU), which prohibits restrictions on the freedom to provide '“ and, it has been held, to receive '“ services within the EU. However, the prohibition is subject to exceptions, and in the field of gambling regulation the ECJ takes a generous view of those exceptions. This has been confirmed in the latest decision of the court in Joined Cases C-447/08 Sjöberg and C-448/08 Gerdin.

Mr Sjöberg and Mr Gerdin were editors of Swedish newspapers that published advertisements for foreign betting companies. In so doing, they acted contrary to Swedish criminal law and were ordered to pay fines. The first question was whether Swedish rules banning the promotion of foreign gambling complied with EU law.

The avowed purpose of the legislation in question was to protect consumers; to exclude private profit-making operators from the market; and to direct gambling proceeds to good causes. True, the effect was to restrict consumer choice and to inhibit cross-border trade but, said the ECJ, there was a need to tread carefully in a field where there are pronounced 'moral, religious and cultural differences' between member states. Accordingly, it was legitimate for the Swedish government to take the view that it was 'unacceptable to allow private profit to be drawn from the exploitation of a social evil or the weakness of players and their misfortune'.

But the prohibition must be applied equally to domestic and foreign situations. In the second part of its judgment, the ECJ held that if and insofar as those who promote gambling abroad are subject to harsher penalties than those promoting unlawful home-grown enterprises, the legislation in question would be discriminatory and, therefore, contrary to ex article 49 EC. This was, however, a matter of substance and not of form. The parties disagreed about whether the difference in treatment was merely formal (prosecution for different offences) or substantial (actual differences in the penal regime). The ECJ naturally left it to the Swedish courts to resolve that issue.

This case breaks no new ground. But it confirms the recent trend of the ECJ, for all its enthusiasm elsewhere, taking a deferential '“ and, on one view, socially conservative '“ line when it comes to reviewing national legislation combating 'social evils'.

'Known unknowns'

In April 2009, the EU legislature enacted a directive restricting the use of metallic additive MMT in petrol, diesel and other fuel (Directive 2009/30/EC). The UK government declared its intention to implement the directive, and became the target of judicial review proceedings brought by Afton Chemical, a manufacturer of MMT. Eventually, the matter was referred to the ECJ in Case C-343/09 Afton Chemical Ltd v Secretary of State for Transport. Boiled down, the issue was simple: were the restrictions on MMT lawfully adopted?

Having rejected some rather far-fetched complaints that the reference was inadmissible, the ECJ rejected all Afton's arguments against the validity of the directive.

The outcome was justified by the precautionary principle that, even though scientific evidence might be inconclusive and, frankly, debatable, the risk of real harm to public health can justify steps being taken to regulate the use of a potentially harmful chemical. The treaty authorises the community legislature to take pre-emptive action (article 174(2) EC, now article 191(2) TFEU). The judgment helps to explain the precautionary principle. In particular, it makes it clear that a central function of that principle is to address what Donald Rumsfeld would have called 'known unknowns'. The very purpose of the precautionary principle is to deal with situations where a potential risk exists, but the nature and extent of that risk is not fully understood. It is not an objection that, in such a case, the community legislature should take action on the basis of pessimistic assumptions about the possible risk.

The more interesting aspect of the case is the court's analysis of how, and why, the directive was adopted. Afton had two arguments on this. First, that the council and Parliament made an error in departing from the commission's assessment, which did not advise a ceiling being put on the MMT content of fuel. But the commission was not the only, nor, it seems, the critical, decision maker. The council and Parliament were not bound by the commission's view, and legitimately reached their own. Short of an improper exercise of discretion '“ which is a demanding test '“ that conclusion could not be faulted.

Afton's second argument was precisely that: quite apart from its merits, the process by which the decision was reached was irregular. Afton had requested '“ but had not been provided with '“ any scientific evidence in support of the limit. But it did not follow, the court reasoned, that there was none. Both the council and Parliament explained how their decision-making procedures take account of scientific studies which, for one reason or another, might not have been retained. The court noted that the material was publicly available, and that Afton was one of the parties heard by a parliamentary committee. The ECJ, in short, refused to convert a legislative process into a judicial one.

The need to have reasons and to explain them does not demand, of a legislature, the sort of point-by-point analysis of the evidence that a judge would engage in.