ÉTAT DE DROIT ET CONSTITUTIONNALISME FRANÇAIS

LE CADRE CONSTITUTIONNEL DE L’ÉTAT DE DROIT

L’absence de consécration et de définition explicites de l’État de droit

En France, l’expression « État de droit » n’est pas une notion de droit positif. En effet, à la différence de la Loi fondamentale de la République fédérale d’Allemagne de 1949 (article 28), de la Constitution espagnole de 1978 (préambule) ou de la Constitution du Portugal de 1976 (préambule), on ne retrouve pas cette expression dans le texte même de la Constitution, ni dans ceux auxquels elle renvoie et qui ont valeur constitutionnelle, à savoir la Déclaration des droits de l’homme et du citoyen de 1789, le préambule de la Constitution de 1946, les principes fondamentaux reconnus par les lois de la République et la Charte de l’environnement de 2004. De plus, la notion d’« État de droit » n’apparaît pas non plus en tant que telle dans les décisions du Conseil constitutionnel rendues dans le cadre du contrôle de constitutionnalité des lois. Eu égard à l’absence de référence explicite à ce principe et, a fortiori, de définition normative expresse de l’État de droit au plus haut niveau de la hiérarchie des normes, il est difficile de considérer, à première vue, que celui-ci constitue une caractéristique fondamentale de l’ordre constitutionnel français, comme cela l’est, par exemple, en Allemagne ou en Espagne.

Ce premier constat est corroboré par l’analyse du niveau infraconstitutionnel. Dans la loi, tout d’abord, l’expression « État de droit » s’avère peu utilisée.

FORMAL FRAMEWORK OF THE RULE OF LAW IN THE CONSTITUTIONAL ORDER

1. Is the principle of the rule of law one of the fundamental features of the constitutional order?

2. Is there a normative definition of the rule of law:

• a) at the level of constitutional provisions?

• b) in the absence of a normative definition, by means of a direct reference to this principle in the text of the Constitution?

• c) in other legal provisions?

3. If there is no normative definition, is this principle decoded by case law and/or constitutional doctrine on the basis of a set of constitutional arrangements, such as, in particular, the principle of separation of powers and check and balance mechanism, the hierarchy of legal norms, the independence of the judiciary, constitutional review of laws, etc.?

SUBSTANTIVE CONCEPT OF RULE OF LAW

1. What is the dominant concept as regards the essential elements necessary to consider the legal order as compatible with the rule of law?

a) subordination of individuals, private entities and public authorities to the law (e.g. prerogatives of public authorities cannot be presumed; all their actions should be based on the law)?

b) equal treatment of everyone before the law and clear definition of the sphere of freedom of every person (according to the principle – everything not prohibited by law is allowed)?

c) separation of powers between the executive, legislative and judicial branches and mechanism of checks and balances?

d) hierarchical review of the law by an independent body such as a Constitutional Court/Supreme Court in order to ensure the primacy of fundamental rules in the legal system?

INTRODUCTION

The framing of a topic as one of a ‘revival’ can be interpreted in different ways. With respect to the rule of law, it could point to an increasing awareness of its importance as well as to mounting challenges to the rule of law. This report interprets the common theme in the latter sense. Arguably, the current time is one in which the rule of law is no longer necessarily seen to be an ‘unqualified, universal good’. Attacks against the rule of law come from different corners. To some critical academics, the rule of law – and related notions like the Rechtsstaat and l’État de droit – are only a form of bourgeois camouflage, a veneer for protecting the interests of those who control the means of production in liberal-capitalist societies. Others seem to speak out against the rule of law – or act against its spirit – out of a sense of populist entitlement. A sentiment of ‘we the people’ may challenge various forms of elite rule – and the rule of law seems to be perceived by some as just another form of rule which has allegedly become detached from democratic decisions.

Approaching this topic from a German perspective might, at first sight, invite some complacency. The idea of the Rechtsstaat seems to be almost unchallenged, an unqualified success story of German constitutional law. For a long time, German constitutional traditions were leaning more towards a rule of law orientation than towards one of democracy

INTRODUCTION

Writing extrajudicially in 2019, Judge Safjan identified a new, unprecedented and worrying trend in the EU: the ‘undermining, eliminating and distorting the rule of law’, which he presented as ‘one of the key challenges, if not the key challenge, facing’ the EU today. This report shares this diagnosis and will outline the lack of a prompt, forceful and systemic answer by the EU institutions in the face of a top-down, sustained and systemic process of rule of law backsliding which is continuing to spread and accelerate to this day. One may note in this respect a recent and unprecedented step: the lodging of four annulment applications by four organisations representing European judges against the Council's decision to endorse Poland's Recovery and Resilience Plan on the ground that the Council, and indirectly the Commission, disregards the Court of Justice's rulings.

Rule of law backsliding represents a critical challenge for the EU because it represents an existential threat to the EU: it structurally undermines the fundamental premise on which the EU's interconnected legal order is based. In light of the continuing deterioration of the situation on this front – which was entirely predictable and was indeed anticipated by the European Parliament in 2015 in light of the Commission and Council's persistent mix of denials and lack of meaningful actions – the President of the European Court of Justice was forced to publicly warn in November 2021 about the ‘extremely serious situation’ the EU finds itself in which ‘leaves the Union at a constitutional crossroads’ with the EU's ‘foundations as a Union based on the rule of law’ now ‘under threat’.

Résumé

L’idée principale de ce volume dédié à la thématique de la « renaissance de l’État de droit » consiste, d’une part, à faire état de la diversité des approches retenues en matière d’État de droit dans les systèmes juridiques contemporains et, d’autre part, à identifier les éléments sous-tendant l’essence même de la notion de « l’État de droit », c’est-à-dire les éléments indispensables qui permettent de considérer que le système juridique d’un pays respecte le principe de l’État de droit. Cette analyse comparative vise aussi à identifier les principaux déficits et menaces qui mettent en péril le fonctionnement correct et efficace d’un système basé sur ce principe, de même qu’à fournir des pistes de réflexion sur ce que pourrait être l’évolution future de celui-ci. De manière générale, la thématique abordée dans le présent volume tente de répondre à la question de savoir s’il est possible, dans le monde contemporain, de soutenir la thèse d’une renaissance dudit principe et, dans l’affirmative, dans quel sens cette renaissance s’effectue.

Cet ouvrage présente des rapports relatifs non seulement aux systèmes nationaux européens et extra-européens, mais aussi à des analyses élaborées par des organisations internationales, telles que l’Union européenne, l’OSCE et le Conseil de l’Europe (Commission de Venise). La première et principale conclusion que l’on peut tirer d’une telle analyse est que le principe de l’État de droit ne peut être, conformément à l’approche dominante répandue dans le monde contemporain, réduit au respect purement formel des dispositions du droit positif ; d’autres exigences tout aussi importantes doivent également être satisfaites, comme le respect des droits fondamentaux, le mécanisme de séparation des pouvoirs (checks and balances) et les mécanismes démocratiques d’exercice du pouvoir.

INTRODUCTION

In recent years, Turkey has faced a ‘constitutional crisis’ which has been asserted to be amounting to a process of ‘de-constitutionalization’. However, given the various authoritarian tendencies across the globe, Turkey may not be the only country going through this crisis. Then, the questions arise: are there any specific issues concerning the democratic constitutional system peculiar to Turkey which can explain its own constitutional crisis, such as political factors or lack of democratic structures adhering to the rule of law? If so, what are they?

To answer these questions and adequately examine Turkey's struggle with the rule of law, this report will begin with the constitutional texts and rulings. In doing so, the report will argue in line with the prominent doctrine that the legal texts need to be interpreted within wider contexts such as the democratic and political climate. By shedding light on specific political/legal problems which appear to be both interesting and illuminating for those interested in the rule of law, the report will try to demonstrate that, while the Turkish Constitution has its own deficiencies concerning the rule of law, Turkey's so-called constitutional crisis arises from structural political/legal problems much wider than the Constitution itself.

CONSTITUTIONAL DEFINITION OF THE RULE OF LAW

The Turkish Constitution declares in Article 2 that the Republic of Turkey is, in exact Turkish wording, ‘hukuk devleti’, which could be translated as a Rechtsstaat. However, in the official English translation of the Constitution, it is written that the Republic of Turkey is a state ‘governed by rule of law’.

INTRODUCTION

What is the ‘other’ side of the rule of law coin in Europe, as opposed to the story of the fight for the values of Article 2 of the Treaty on European Union (TEU) at the national level, explored by Pech in this volume? It is the deployment of the principle of the rule of law by the European Court of Justice (ECJ) to pre-empt necessary dialogue and to disqualify substantive arguments of principle originating in other legal orders. The rule of law, on this count and as used by the Court, emerges as a trump card making the vital dialogue on which the rule of law directly depends impossible. Such deployment of the rule of law ruins the basic coherence of the EU legal system, as the Court does not measure itself by the same standards that it applies to the national courts, while embracing a multitude of conflicting approaches to the rule of law and judicial independence, steeply departing from EU law's own established principles, as well as European Convention on Human Rights (ECHR) standards in rule of law cases. Such use of the principle is both dangerous and directly opposed to the very essence of European constitutionalism. It is an attack on the procedural side of EU law, as it undermines coherence, as well as on the substance of the rule of law, as this approach opposes vital checks on the arbitrary power of the sovereign – in this case the Herren der Verträge. This is all particularly dangerous given the huge question marks concerning the ECJ's own structural independence.

FORMAL FRAMEWORK OF THE RULE OF LAW IN THE CONSTITUTIONAL ORDER

The United Kingdom is almost unique in not possessing a codified constitution. Nevertheless, there is clear evidence that the rule of law is one of the fundamental features of the constitutional order, with a long constitutional history. It is found in principles of the common law and in legislation. However, despite being a fundamental feature of the UK constitution, its importance is balanced with other fundamental features – most notably parliamentary sovereignty. Whilst the rule of law may place limits on the law-making powers of the devolved legislatures, and on the Westminster and devolved executives, it places no legal limit on the law-making powers of the Westminster Parliament.

The rule of law – understood in its broadest sense of government according to the law – can trace its roots back to Magna Carta, in particular the principle that no individual should be punished save through the mechanisms of the law. The protection of the rule of law was also developed through the common law. This can be seen, in particular, in the judgments of Coke, alongside his accounts of English law. In its earliest incarnation, the rule of law in the UK can best be understood in a procedural sense, based on an understanding of the principles of natural justice – that nobody should be a judge in their own cause and the right to a fair hearing.

The economic and financial difficulties encountered by European States since the global 2007–2009 financial crisis have led to a loss of trust in the banking and financial system, and have made the previous theoretical assumption of the bankruptcy of credit institutions perceptible. The financial crisis showed the importance of maintaining depositor confidence in the financial system, and using such tools as increases in deposit insurance coverage and strengthening of funding arrangements, to support financial stability. In a changing world, challenges with respect to deposit schemes are numerous. In June 2017 (i) an agreement was reached at the EU and Italian levels to recapitalise the Italian Banca Monte dei Paschi di Siena, and (ii) the Spanish Banco Popular Espanol S.A. was put into resolution and its equity instruments were transferred to Banco Santander S.A. The failure of those two credit institutions illustrates the fact that bankruptcies of banks are not hypothetical, 10 years after the Lehmann Brothers collapse. March 2023 proved that risks on deposits still exist. Indeed, US regulators rushed to seize the assets of Silicon Valley Bank (SVB) after a run on that bank, the largest failure of a financial institution since the height of the financial crisis more than a decade ago. Pursuant to a 12 March 2023 Joint Statement by the US Department of the Treasury, US Federal Reserve, and US FDIC, the resolution of Silicon Valley Bank was announced to be executed in a manner that fully protects all depositors.

INTRODUCTION

Relying on a ‘tragedy of the commons/anti-commons’ analysis, this contribution seeks to develop a conceptual framework that explains and justifies both the procedural and substantive transformation of property rights in corporate insolvency and bank resolution. On that basis, the chapter further seeks to predict one of the unintended consequences of the new bank resolution framework: a likely increase of the costs of capital for medium-sized and less complex institutions, that may result in a further consolidation of the banking sector over the long term. This goes against the underlying rationale of the bank resolution framework to effectively tackle ‘too-big-to-fail’.

The commencement of proceedings with a view to resolving financial distress, and to a lesser extent the financial state of insolvency, can have a transformative effect on the property rights held by counterparties of the debtor. The term ‘property right’ is here used in a broad – economic – sense, encompassing personal (contractual) rights as well as proprietary interests (ius in re). Depending on the legal system, contractual obligations and security interests may no longer be enforceable; after-acquired property clauses in security agreements may be ineffective; rights acquired pre-commencement may be subject to a challenge under voidable transfer laws; mutual obligations may be reduced to a net balance; and debt may be deferred, written down or converted to equity. As a general principle, in a market economy parties are free to agree on any amendment of their rights and obligations. In the insolvency context, they may do so ex post through a contractual workout,

INTRODUCTION: A REGULATORY PARADOX

The regulatory response to the financial crisis has had a paradoxical effect: stricter public supervision of the financial sector has led to more private selfregulation. So-called codes of conduct and codes of ethics, i.e. self-made rules of banks, banking groups and associations, have proliferated in recent years They have grown in number, and they have often grown in length. But – have they also grown in importance? This will be the subject of this contribution, with a specific view to the doctrine and practice of European contract law.

The contribution will proceed in three steps. As a first step, it will try to explain why and how the proliferation of private codes in the banking sector is a consequence of stricter public regulation (below section 2). The second step will be a brief look at a practical example of a conduct code in the banking sector (below section 3). The main focus will be on the third step. Here, the contribution aims to analyse the different ways in which codes of conduct might have legal effects on the relationship between the bank and its customers (below section 4). The contribution will then draw some conclusions, which might be relevant not only for the field of banking law, but for contract law more generally.

THE SPREAD OF ADR BANKING AND FINANCIAL SYSTEMS IN EUROPE

Alternative Dispute Resolution mechanisms (ADR) have become increasingly widespread in Europe over the last two decades, being favoured by the laws of both the Member States and the Union, especially with regard to the trade of banking and investment services (and, to a lesser extent, insurance services as well).

Directive 2013/11/EU refined the general framework of ADR for consumer disputes in the Union's law, which was further specified by the Regulation (EU) No. 524/2013 on Online Dispute Resolution for Consumer disputes (CODR). The depiction of these mechanisms as ‘alternative’ means that they strive to settle disputes out of court, and it thus implies a neat opposition between them and the judicial systems of the Member States. However, it is less appropriate than in the past to draw a line between these two realms of civil justice, since on the one hand the boundary between them is becoming increasingly blurred, and on the other hand, ADR systems cannot be properly understood as (just) a means to address the shortcomings of the judicial process and to diminish the number of cases pending before the courts.

The nature of ADR systems is highly mutable, both in terms of their architecture and of the type of activity carried out in pursuing the settlement of disputes brought to them. In the banking and financial markets, particularly, the panoply of techniques used by ADR systems covers a broad array of services, ranging from a ‘soft’ facilitation of amicable solutions between the parties (mediation) to proper adjudication of cases by arbitrators, be they monocratic or sitting in a panel.

INTRODUCTION

The effectiveness of EU law largely depends on national enforcement mechanisms. This concerns both national authorities executing EU administrative law and private parties enforcing EU law content. In EU banking regulation, most attention has been devoted to the administrative enforcement of regulatory goals at the national and EU levels. Private law has not played an important role in this context so far. This starkly contrasts with other areas of EU regulation where private law remedies have increasingly gained importance, namely competition law and capital markets regulation. In competition law, the ECJ first ruled in Courage that EU law required individual compensation rights for anybody negatively affected by a cartel and later specified conditions for cartel damages claims. The EU legislator then introduced the Cartel Damages Directive. In capital markets regulation, private law duties are sometimes explicitly codified in EU legislative acts and are sometimes the subject of discussion. The Transparency Directive and Prospectus Regulation provide for individual liability mechanisms. In contrast, it is a matter of debate if and to what extent the MiFID II provisions on investment advice contain private law duties. In any case, private enforcement has moved to the core of discussions on competition law and capital markets regulation.