Abuse of Right in EU Law: Some Reflections with Particular Reference to Financial Law

Abstract

The purpose of this paper is to explore abus de droit as a general principle of European Union law with particular reference to its application in the field of financial law. Whilst the principle of abuse of right is invoked in diverse areas of law and in many legal systems to serve a variety of purposes, in EU law it has been a latecomer and developed mainly in the fields of tax law and free movement. In the case law of the Court of Justice, the concept of abuse is used in two situations. First, in cases where a person seeks to circumvent the requirements of national law by relying on a Community freedom, engaging in effect in forum shopping, and, secondly, cases where a person seeks to derive an improper advantage from Community legislation. In general, the impact of the doctrine in Community law has remained limited. In the context of free movement, the ECJ has understood the doctrine narrowly in keeping with the expansive interpretation of the Treaty freedoms. In many fields, the doctrine has been largely concretised through the articulation of detailed rules in various Community directives. A prime example of such concretization is offered in the field of financial law. Since the adoption of Directive 2003/6, the term “market abuse” has become a term of art referring specifically to insider trading and market manipulation. The definition of manipulation comes closer to the general principle of abuse since most of its forms involve artificial transactions which formally remain within the bounds of the law. As for the free movement of investment firms, the detailed provisions of MiFID make less necessary reliance on the doctrine of abuse as a general principle of Community law, although it continues to have a residual role both where statutory arrangements do not provide a solution and as an aid to their interpretation.