Friday 22 December 2023

What is a “European work”? A hole in the AVMS Directive and a footnote on arbitration

On 29 November 2023 the European Audiovisual Observatory organised a conference in Brussels, “The promotion of European works according to the AVMSD: where do we stand?” The conference was intended to launch a new Observatory publication, “The Promotion of European Works”.  Video of the proceedings is accessible here.  As a result of the discussion, I noticed something odd about the definition of “European works” in the Audiovisual Media Services Directive (AVMS) (Directive 2010/13/EU). 

The AVMS Directive requires EU Member States to impose a cultural quota on their television broadcasters.  They must include “European works” in a majority of their transmission time.  The European Convention on Transfrontier Television (ECTT), a Council of Europe (CoE) treaty entered into slightly before the passing of the AVMS Directive, makes similar provision.  Many EU Member States are party to the ECTT.  Articles 25 and 26 ECTT provide for conciliation, then arbitration in case of dispute between states party.

Once the departure of the United Kingdom from the European Union became imminent, the question whether UK works should continue to be regarded as European for the purposes of the EU’s television quota under the AVMS Directive became a persistent, if sotto voce, theme in European audiovisual policy discussions.  As Observatory senior legal analyst, Francisco Cabrera observed while moderating the panel discussion (at 42.57), the “elephant in the room” was the question whether UK works should continue to be “European works”.

In the negotiation of the terms of the British exit from the EU, the EU’s position was always that “Audiovisual services should be excluded from the scope of the economic partnership”.  This position was conceded by the UK, so that the field remained open post-Brexit for attempts to exclude British producers from the quota.  However, for various reasons of international law explored in an article that I published last year, this would be very difficult to achieve.  The main obstacle is that many EU Member States are bound by the ECTT to treat all European works as “European works” for the purposes of the cultural quota (except as between EU Member States, for which EU law takes priority over the ECTT).

What is a “European work”?

There is a discontinuity between the AVMS definition of “European works” and the ECTT conception.  Simplifying slightly, under the Directive European works are (i) works originating in EU Member States; (ii) works originating in European states which are not EU Member States but are party to the ECTT; and (iii) works produced under co-production agreements between the EU and non-EU Member States (Article 1(1)(n), AVMS).  It will be noted that under this definition (leaving aside co-productions), programming from non-EU countries will not count towards the quota unless those states are both (i) European and (ii) party to the ECTT.  In other words, works from European countries which are not party to the ECTT or the EU are excluded from the benefit of the quota under the Directive.

The ECTT formulates the cultural quota more broadly as “creative works, the production or co-production of which is controlled by European natural or legal persons” (Article 2(e), ECTT).  The ECTT means by “European” simply European.  The designation must at least extend to all the Members of the CoE and also covers parties to CoE treaties, such as the European Cultural Convention (ECC), even if, like Belarus or Kazakhstan, they have never been members of the CoE.  This is clear from the fact that proposed amendments to the ECTT must be circulated to, among others, non-CoE members who are party to the ECC (Article 23(2), ECTT).  In short, “European” here simply refers to countries contained by or extending to the European continent.  It follows that programming from the Netherlands is (obviously) European for the purposes of the ECTT, even though the Netherlands is not party to the ECTT.  So to is programming from Norway or Turkey.

The ECTT is mainly concerned with the freedom to broadcast television across borders. According to its recitals, it is intended “to increase the production and circulation of high-quality programmes” with a view to “enhancing Europe's heritage”.  It represents a broad notion of European culture, like the European Cultural Convention, to which it refers, and clearly has the object of ensuring that European works in a broad sense can travel across borders.

Under the AVMS, however, works which come from non-EU, non-ECTT European countries such as Armenia, Monaco or Russia are not “European works”.  Of course, these non-parties cannot enforce the ECTT, but it is a different question whether their works are European.  The states party to the ECTT owe their duty in international law to one another, but that is not to say that a failure by one ECTT party to implement the cultural quota in respect of European works with a non-ECTT origin could not give rise to a breach of the treaty with respect to another ECTT party. 

What does this mean for EU Member States party to the ECTT? 

The many EU Member States party to the ECTT are in an awkward position.  Although as between themselves the AVMS Directive governs, in their relations with non-EU ECTT states they must implement the cultural quota as laid down in the ECTT.  To be precise, their obligation is to “ensure, where practicable and by appropriate means, that a broadcaster within its jurisdiction reserves for European works a majority proportion of its transmission time” (Article 10(1), ECTT). 

Interpreted against that background, are EU Member States party to the ECTT free to implement the cultural quota by limiting themselves to EU works, to the exclusion of some or all ECTT members?  Are they free, in other words, to determine what is or is not a European country for this purpose, notwithstanding their obligations under the ECTT?

A fundamental rule of international law is that “[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose” and that every treaty “must be performed… in good faith” (Articles 31 and 26, Vienna Convention on the Law of Treaties 1969 (VCLT)).  Just as between signing and ratification a state "is obliged to refrain from acts which would defeat the object and purpose of a treaty" (Article 18, VCLT), the object and purpose of the treaty must shape the obligation to implement the treaty, once ratified, in good faith.  In the case of the ECTT, the treaty's object and purpose is to foster the circulation of European works, broadly defined, across borders.

When an ECTT state undertakes to apply the cultural quota, that obligation is undertaken with regard to all the other parties to the treaty.  It would seem that it would not be compliant with the ECTT for a European state to impose a requirement on its broadcasters of transmitting solely national programming, even though in a simplistic sense a majority - indeed, all - of the works broadcast would have their origin in a European state.  By the same token, the limitation of the quota by EU Member States to works originating in EU (or even ECTT) states would not implement the ECTT’s quota for European works (in the broadest sense).  The ECTT requires application of a European quota as such, not a cherry-picking of favoured European states of origin.

It follows that the exclusion of UK works from the television quota under a revised AVMS Directive would compel EU states party to the ECTT to violate the cultural quota of the ECTT.  Any non-EU ECTT state affected would be entitled to pursue a claim in arbitration against the EU Member State concerned.  It is worth noting that arbitration under Article 26 of the ECTT is mandatory once six months have expired from a first request for conciliation.

A final point on arbitration

Under bilateral investment treaties (BITs), various EU Member States have entered into obligations in international law to protect the investments of UK (and often US) companies.  These “investments” invariably are defined to include intellectual property, so any production made in an EU state, such as the recent Poor Things, shot in Hungary in 2021, could qualify.  Such treaties may contain terms which would be violated by differential treatment of EU and non-EU European works in breach of the ECTT. For example, in the UK-Hungary BIT each state party covenanted to “observe any obligation it may have entered into with regard to investors of the other Contracting Party” (Article 2(2), UK-Hungary BIT). It could be argued that the ECTT cultural quota is such an obligation.  The distinctive element in these BITs is that the parties irrevocably consent to arbitration at the request of the investor, who can then bring a claim for damages. 

Even though many of the UK-EU BITs have been terminated in the wake of the CJEU’s debated 2018 decision in Slovak Republic v Achmea (the UK-Hungary BIT was terminated in August 2022), BITs usually have long sunset clauses, typically of 20 years, protecting investments made during the term of the BIT.  No doubt it is an unlikely scenario, but if a distributor found itself losing television sales as a consequence of the exclusion of UK pictures from the quota, a claim in arbitration against the ECTT state concerned would be conceivable. 

All that having been said (and at such regrettable length), UK quality television is so strong in European markets, it may be that the best efforts of policy-makers will not make a lot of difference…


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