Recalibrating the Debate on MiFID’s Private Enforceability: Why the EU Charter of Fundamental Rights is the Elephant in the Room

Abstract

The genesis of MiFID I initiated a fierce scholarly debate on the following question: does MiFID dictate private enforceability of the rules embedded in the directive? More specifically, under a general reference to the effet utile doctrine, certain authors have argued that MiFID requires member states to provide private law remedies for infringements of certain (investor protecting) MiFID provisions. However, another strand in legal scholarship has sternly denounced this idea. In their reading, member states might equally achieve an effet utile in light of the investor protection objective by solely providing administrative enforcement mechanisms. According to this vision, it is thus for the member states to decide whether, and if so under what conditions, private law remedies are made available. This debate has never resulted in a widely endorsed consensus and persists in the MiFID II era. My thesis, somewhat provocatively, is the following: legal scholarship has erroneously overlooked the EU Charter of Fundamental Rights when assessing the private enforceability of MiFID. As the Charter requires effective judicial remedies for violations of rights conferred upon individuals by EU law, I contend that its omission in the debate on MiFID’s private enforceability has led to serious misconceptions about the enforcement of MiFID. Furthermore, in light of my article’s central thesis, I extend existing scholarship on MiFID II’s controversial paragraph about remedial action in a new direction. I present two fresh textual arguments that might shed light on the meaning of this paragraph. The arguments, which—to the best of my knowledge—have not been advanced in legal scholarship before, draw upon an integrated and coherent reading of the text of MiFID II. More precisely, the novel arguments are based on the relation between the contested paragraph and the structure and wording of MiFID II as a whole.