ADVANCE PHARMA SP. Z O.O v. POLAND

Communicated on 8 December 2020

Published on 21 December 2020

FIRST SECTION

Application no. 1469/20
ADVANCE PHARMA SP. Z O.O
against Poland
lodged on 2 December 2019

STATEMENT OF FACTS

1.  The applicant company, Advance Pharma Sp. z o.o, is a limited liability company registered in Warsaw. The applicant company is represented before the Court by Ms M. Gąsiorowska and Ms J. Metelska, lawyers practising in Warsaw.The circumstances of the case

2.  The facts of the case, as submitted by the applicant, may be summarised as follows.

3.  The applicant company was a distributor for Poland of a dietary supplement C. addressed to men wishing to improve their sexual performance. The sale of C. generated the totality of the company’s income, which in 2010 amounted to 20,000,000 Polish zlotys (PLN), approximately 4,800,000 euros (EUR) at the material time.

4.  Between 2 and 10 September 2010 the National Pharmaceutical Institute (Narodowy Instytut Leków) controlled the product. It concluded that it had been given the appearance of a medicinal product (produkt leczniczy) while not being such, and that it contained a molecule S. which had not been listed in the notice as it had been an active drug not authorised in dietary supplements.

5.  On 10 September 2010 the Main Pharmaceutical Inspector (Główny Inspektor Farmaceutyczny, “the Inspector”) withdrew C. from the market (wycofanie z obrotu). This decision was given an immediate enforceability clause and the applicant company was forced to remove all items from the market. Afterwards the applicant company destroyed all series of C. and suspended its activities.

6.  In total, the National Pharmaceutical Institute carried out fourteen controls of C. In eight samples it found the presence of molecule S. or its derivate (all being active drugs subject to medical prescription). In five other samples other unauthorised molecules were found. One sample contained no undeclared molecules.

7.  The applicant company appealed against the Inspector’s decision. In the course of the appellate proceedings, on 23 February 2011, the Regional Administrative Court quashed the Main Pharmaceutical Inspector’s decision of 10 September 2010 and ordered that it would not be enforceable (uchylona decyzja nie podlega wykonaniu). The Inspector’s cassation appeal was dismissed on 30 August 2012 by the Supreme Administrative Court. The administrative courts considered that the Inspector should have had established whether C. had been a dietary supplement or a medicinal product. Moreover, the administrative authorities, when detecting the presence of an active molecule, should have had the pharmacological properties of the product examined, and assessed the actual risks it had posed. The finding of whether C. had been a medicinal product or a dietary supplement was of crucial importance as it would determine the competency of the Inspector to deal with the case; the Inspector was competent to deal with medicinal products and not with purely dietary supplements. Since the Inspector had failed to assess the matter, the impugned decision was given in breach of the law and had to be quashed.

8.  On 6 November 2013 the Inspector discontinued the proceedings finding that they had lacked any purpose as all items of C. had been destroyed.

9.  Between 10 September 2010 and January 2014 the Inspector published on its Internet site information that supplement C had been withdrawn from the market.

10.  On 20 January 2014 the applicant company lodged a civil claim for payment against the State Treasury under Article 417 1 § 2 of the Civil Code (the value of the claim was set at PLN 32,000,000). The applicant company sought compensation for the actions of the Inspector who withdrew the dietary supplement C. from the market which led to the destruction of its stock. Since the Inspector’s decision was quashed by the courts as illegal their action in tort against the State Treasury had a legal basis. Moreover, in spite of the administrative courts quashing the Inspector’s decisions, the latter kept the supplement C. on its list of unauthorised products. The applicant company was therefore prevented from reintroducing it into the pharmaceutical market.

11.  On 8 February 2016 the Warsaw Regional Court dismissed the action. In particular, the court established that the applicant company was not ordered to destroy all of the stock of C by the decision of 10 September 2010. It carried out the destruction on its own initiative. Following the destruction of all series of the supplement C, the Inspector had been correct to discontinue the proceedings on 6 November 2013. The court reiterated the conditions for a liability of the State Treasury in tort and concluded that there had been no causal link between an administrative decision contrary to the law and the damage alleged by the applicant company.

12.  In particular, the decision of 10 September 2010 withdrew the existing series of the supplement C from the market, but it had been open for the applicant company to reintroduce it again afterwards. Moreover, the claimant failed to prove that it had been impossible to reintroduce the product on the market because the Inspector had kept the information of its withdrawal from the market on its internet site. Furthermore, the court relied on an opinion from the National Pharmaceutical Institute showing that the supplement C had been, in fact, a medicinal product and therefore the Inspector had been competent to withdraw it from the market. Consequently, the decision of the Inspector would have been the same had it proceeded in accordance with the law.

13.  Finally, the court considered that the applicant company could not claim damages also because it had acted contrary to the principles of co-existence with others provided by Article 5 of the Civil Code (zasady współżycia społecznego). It underlined that the applicant company had included in its dietary supplement an active molecule which had serious side effects and contraindications, and should only be subject to prescription by a doctor. The notice of the dietary supplement C did not contain information about the active molecule S in its composition, increasing a risk of overdose. The experts clearly established that there had been a direct risk to human health and life from taking the molecule S. without medical supervision. The Inspector had therefore acted with the objective of the protection of human health and life.

14.  The applicant company appealed.

15.  On 30 October 2017 the Warsaw Court of Appeal dismissed the appeal. The court agreed with the assessment and reasoning of the court of first-instance.

16.  On 5 February 2018 the applicant company lodged a cassation appeal with the Supreme Court.

17.  On 25 March 2019 the Supreme Court, sitting in private, dismissed the cassation appeal. The Supreme Court was composed of judges A, B and C (see paragraph 24 below). The Supreme Court reiterated that the pre-condition for a claim for compensation, namely a final administrative decision given in breach of the law, had existed in the case. However, the causal link between that illegal decision and the damage claimed needed to be examined by the civil court. In the present case the existence of that causal link had not been proven.

18.  A copy of the judgment was delivered to the applicant company on 10 June 2019.Relevant legal framework and practiceConstitution of the Republic of Poland

Article 10

“1.  The system of government of the Republic of Poland shall be based on the separation of and balance between the legislative, executive and judicial powers.

2.  Legislative power shall be vested in the Sejm and the Senate, executive power shall be vested in the President of the Republic of Poland and the Council of Ministers, and the judicial power shall be vested in courts and tribunals.”

Article 186 § 1

“1.  The National Council of the Judiciary shall safeguard the independence of courts and judges.”

Article 187

1.  The National Council of the Judiciary shall be composed as follows:

1) the First President of the Supreme Court, the Minister of Justice, the President of the Supreme Administrative Court and an individual appointed by the President of the Republic;

2) fifteen judges chosen from amongst the judges of the Supreme Court, common courts, administrative courts and military courts;

3) four members chosen by the Sejm from amongst its Deputies and two members chosen by the Senate from amongst its Senators.

2. The National Council of the Judiciary shall choose, from amongst its members, a chairperson and two deputy chairpersons.

3. The term of office of those chosen as members of the National Council of the Judiciary shall be four years.

4. The organizational structure, the scope of activity and procedures for work of the National Council of the Judiciary, as well as the manner of choosing its members, shall be specified by statute.”Civil code

Article 5

“No one shall exercise any right held by him or her in a manner contrary to its socio-economic purpose or to the principles of co-existence with others [zasady współżycia społecznego]. No act or omission [matching this description] on the part of the holder of the right shall be deemed to be the exercise of the right and be protected [by law].”The Act of 8 December 2017 Amending the Act on the National Council of the Judiciary (ustawa z dnia 8 grudnia 2017 o zmianie ustawy o Krajowej Radzie Sądownictwa oraz niektórych innych ustaw; “the 2017 Amending Act”).

19.  Before the entry into force of the 2017 Amending Act, on 17 January 2018, the Act on the National Council of the Judiciary (“the NCJ”) provided that judicial members of this body were to be elected by the relevant assemblies of judges at different levels of the judiciary.

20.  The 2017 Amending Act granted to the Sejm the competence to elect judicial members of the NCJ for a joint four-year term of office (section 9a § 1). It stipulated that the joint term of new members of the NCJ begins on the day following the day of their election (section 9a § 3).

21.  Pursuant to section 6 of the 2017 Amending Act, the mandates of judicial members of the NCJ elected on the basis of the previous Act shall continue until the day preceding the beginning of the term of office of the new members of the NCJ.The Act of 8 December 2017 on the Supreme Court (ustawa z dnia 8 grudnia 2017 o Sądzie Najwyższym; “the 2017 Act on the Supreme Court”).

22.  The 2017 Act on Supreme Court entered into force on 3 April 2018. It modified organisation of that court by in particular creating two new Chambers: Disciplinary and of Extraordinary Control and Public Affairs (section 3).

23.  Section 29 of the 2017 Act on the Supreme Court provides that the judges of the Supreme Court shall be appointed by the President of Poland acting on a proposal from the NCJ.

24.  On 10 October 2018 the President of the Republic of Poland appointed seven judges, including A, B, and C, to the Civil Chamber of the Supreme Court. The appointment was made upon recommendation of the NCJ.The rulings of the Court of Justice of the European Union (the CJEU)

(a)   Preliminary ruling of 19 November 2019

25.  In August and September 2018 the Supreme Court made three requests to the CJEU for preliminary rulings in three cases pending before that court.

26.  The requests concerned, inter alia, a question whether the Disciplinary Chamber of the Polish Supreme Court satisfied, “in the light of the circumstances in which it [had been] formed and its members appointed, the independence and impartiality required” by EU law.

27.  On 27 June 2019 the Advocate General Tanchev delivered his written opinion in those cases. He analysed the required qualifications of the NCJ with reference to the Court’s case-law (§ 123 of the opinion). The Advocate General Tanchev concluded that the Disciplinary Chamber of the Polish Supreme Court does not satisfy the requirements of judicial independence (§ 76 ibid).

28.  On 19 November 2019 the Court of Justice of the European Union gave a preliminary ruling on the cases referred by the Supreme Court (joined Cases C-585/18, C-624/18 and C-625/18). The CJEU concluded as follows:

“Article 47 of the Charter of Fundamental Rights of the European Union and Article 9(1) of Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation must be interpreted as precluding cases concerning the application of EU law from falling within the exclusive jurisdiction of a court which is not an independent and impartial tribunal, within the meaning of the former provisions. That is the case where the objective circumstances in which that court was formed, its characteristics and the means by which its members have been appointed are capable of giving rise to legitimate doubts, in the minds of subjects of the law, as to the imperviousness of that court to external factors, in particular, as to the direct or indirect influence of the legislature and the executive and its neutrality with respect to the interests before it and, thus, may lead to that court not being seen to be independent or impartial with the consequence of prejudicing the trust which justice in a democratic society must inspire in subjects of the law. It is for the referring court to determine, in the light of all the relevant factors established before it, whether that applies to a court such as the Disciplinary Chamber of the[Supreme Court].

If that is the case, the principle of the primacy of EU law must be interpreted as requiring the referring court to disapply the provision of national law which reserves jurisdiction to hear and rule on the cases in the main proceedings to the abovementioned chamber, so that those cases may be examined by a court which meets the abovementioned requirements of independence and impartiality and which, were it not for that provision, would have jurisdiction in the relevant field.”

29.  The CJEU formulated following concerns with respect to the NCJ (§ 143 of the judgment):

“...first, the [NCJ], as newly composed, was formed by reducing the ongoing four-year term in office of the members of that body at that time; second, whereas the 15 members of the [NCJ] elected among members of the judiciary were previously elected by their peers, those judges are now elected by a branch of the legislature among candidates capable of being proposed inter alia by groups of 2 000 citizens or 25 judges, such a reform leading to appointments bringing the number of members of the NCJ directly originating from or elected by the political authorities to 23 of the 25 members of that body; third, the potential for irregularities which could adversely affect the process for the appointment of certain members of the newly‑formed NCJ.”

30.  The CJEU noted that: “the decisions of the President of the Republic appointing judges to the Supreme Court are not amenable to judicial review” (§ 145 ibid).

31.  In addition, the CJEU considered that other features, taken jointly, pertaining to the Disciplinary Chamber should also be taken into account (§§ 147-151):

- “this court has been granted exclusive jurisdiction, under Article 27(1) of the New Law on the Supreme Court, to rule on cases of the employment, social security and retirement of judges of the [Supreme Court], which previously fell within the jurisdiction of the ordinary courts”.

- “under Article 131 of the New Law on the Supreme Court, the Disciplinary Chamber must be constituted solely of newly-appointed judges, thereby excluding judges already serving in the [Supreme Court]”.

- “although established as a chamber of the [Supreme Court], the Disciplinary Chamber appears, in contrast to the other chambers of that court, and as is clear, inter alia, from Article 20 of the New Law on the Supreme Court, to enjoy a particularly high degree of autonomy within the referring court.”

(b)   Interim measures in case C 791/10

32.  In January 2020 the Commission requested the CJEU to order Poland to adopt a series of interim measures in another case pending before the CJEU (C 791/19 Commission v. Poland). On 9 March 2020 the CJEU held a hearing and on 8 April 2020 granted the interim measures requested by the Commission. The court ordered a provisional suspension of the relevant provisions of the 2017 Act on Supreme Court governing activity of the Disciplinary Chamber, in disciplinary proceedings of judges, until delivery of the final judgment by the CJEU. Secondly, the Polish authorities were ordered to refrain from referring cases pending before the Disciplinary Chamber for examination by a panel that has not fulfilled the requirements of independence as indicated in particular in the ruling of 19 November 2019). Thirdly, the Polish authorities should inform the Commission, within one month from the ruling ordering interim measures, of the measures taken in its execution.Follow up to the CJEU’s judgment of 19 November 2019

33.  On 5 December 2019 and 15 January 2020 the Supreme Court gave judgments in the three cases in which the requests to CJEU for preliminary ruling. The judgment of 5 December 2019 contained extensive grounds and applied interpretation indications given by the CJEU. The court concluded that the NCJ in “its current composition is not a body that is impartial and independent from legislative and executive branches of power” (§ 88 of the judgment). The Supreme Court also concluded that the Disciplinary Chamber of the Supreme Court was not a court within the meaning of domestic law and of Article 6 of the Convention (§ 79).

34.  On 8 January 2020 the Chamber of Extraordinary Control and Public Affairs of the Supreme Court gave a resolution of seven judges (uchwała) on interpretation of consequences of the CJEU judgment of 19 November 2019 for cases pending before the Supreme Court.

35.  On 23 January 2020 the joined Chambers of the Supreme Court (fifty-nine judges of Civil, Criminal, and Labour Law and Social Security Chambers) issued a common resolution. The court made the following conclusions, in so far as relevant:

“1. A court formation is unduly appointed within the meaning of Article 439(1)(2) of the Code of Criminal Procedure or a court formation is unlawful within the meaning of Article 379(4) of the Code of Civil Procedure also where the court formation includes a person appointed to the office of a judge of the Supreme Court on application of the National Council for the Judiciary formed in accordance with the [2017 Amending Act].

...

3.  The interpretation of Article 439(1)(2) of the Code of Criminal Procedure and Article 379(4) of the Code of Civil Procedure provided in points 1 and 2 hereof shall not apply to judgments given by courts before the date hereof and judgments to be given in proceedings pending at the date hereof under the Code of Criminal Procedure before a given court formation.

4.  Point 1 [above] shall apply to judgments issued with the participation of judges of the Disciplinary Chamber established at the Supreme Court under [the 2017 Act on the Supreme Court] irrespective of the date of such judgments.”

36.  The Speaker of the Sejm seized the Constitutional Court on a question of a “conflict of competence between the Sejm and the Supreme Court and between the President of Poland and the Supreme Court”. On 28 January 2020 the Constitutional Court issued an interim measure whereby it suspended the enforcement of the Supreme Court’s resolution of 23 January 2020 and suspended the prerogative of the Supreme Court to issue resolutions concerning issues of national or international law. On 21 April 2020 the Constitutional Court gave a final ruling on the matter of “conflict of competence”. The court held that the Supreme Court had not been competent to give a binding interpretation of the law even in connection with a ruling of an international court. Secondly, only the President of Poland was competent to appoint judges, upon recommendation of the NCJ, and without the participation of the Supreme Court, and such an appointment was definite.

COMPLAINTS

37.  The applicant company complains under Article 6 of the Convention that it had its case examined by the Civil Chamber of the Supreme Court, which did not constitute an “independent and impartial tribunal established by law” as it was composed of judges recommended by the NCJ. The applicant refers to the judgment of the Court of Justice of the European Union given on 19 November 2019.

QUESTIONS TO THE PARTIES

1.  Was the court which dealt with the applicant company’s case a “tribunal established by law” as required by Article 6 § 1 of the Convention?

2.  Was the court which dealt with the applicant company’s case independent and impartial, as required by Article 6 § 1 of the Convention?

Reference is made to the fact that the applicant company’s cassation appeal was examined by the Civil Chamber of the Supreme Court, which in particular:

- was constituted on the basis of the Law of 8 December 2017 on the Supreme Court;

- was composed of judges appointed in the procedure established by the Law of 8 December 2017 Amending the Act on the National Council of the Judiciary.

In their replies to the above questions the parties are asked to refer to the Court’s judgment in Guðmundur Andri Ástráðsson v. Iceland [GC], no. 26374/18, §§ 205-290, 1 December 2020.

 

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