CJEU

The CJEU is the highest court of the European Union. The abbreviation stands for Court of Justice of the European Union, and it is based in Luxembourg. Its task is to interpret the common rules of the EU member states. It states, with binding effect, what a European law actually means. All courts and authorities in all member states must adhere to this interpretation. That is why a single ruling from Luxembourg can change the way large tech companies operate across all of Europe.

Why Luxembourg has a say over tech companies

In recent years, the EU has passed many laws for the digital world. These include the General Data Protection Regulation, rules for large online platforms, and the AI Act. Such texts are often worded in general terms. They state, for example, that data processing must be “necessary”. What that means in a specific case is not spelled out in the law.

This is precisely the gap the CJEU fills. It determines how narrowly or broadly a term is to be understood. For companies, this is the difference between a functioning business model and a prohibited one. A well-known example is the “Schrems II” ruling from 2020. At the time, the CJEU struck down the agreement that permitted the transfer of European data to the US. Thousands of companies had to renegotiate their cloud contracts.

For investors, such rulings are relevant because they come without warning. There is no transition period like with a new law. A ruling takes effect immediately and retroactively, because the court is formally only stating what was always the case. Share prices of affected companies often react sharply to this.

The path of a case to Luxembourg

Most cases do not begin in Luxembourg, but at home. Someone files a lawsuit before a German, Irish, or Spanish court. In the process, a question about EU law arises that is unclear. The national court then suspends the proceedings and refers the question to Luxembourg. This procedure is called a preliminary ruling procedure.

The CJEU only answers the legal question, not the specific dispute. It states, for example: this is how this article is to be understood. The case then goes back to the home court, which decides the matter itself using this answer. You can think of it like a binding ruling on interpretation: the tournament’s referee explains the rule, but the game itself continues to be officiated by the referee on the ground.

There are also other types of proceedings. The EU Commission can sue a state that fails to implement a law. Companies can challenge decisions by EU authorities, for instance against billion-euro fines in competition law. Before the judges decide, a so-called Advocate General often gives an independent recommendation. These opinions are not binding, but the court frequently follows them. The CJEU should not be confused with the European Court of Human Rights in Strasbourg – which is not part of the EU.

CJEU rulings in tech news

The CJEU appears regularly in news about technology. Common topics include data protection, personalized advertising, upload filters, and the question of when platforms are liable for their users' content. Market power is also a recurring theme: the CJEU has upheld billion-euro fines against major search engine and retail companies.

The court will become more important for AI in the coming years. The EU’s AI Act uses terms such as “high risk” or “general purpose”. At some point, it will become contentious whether a particular language model falls under these categories. The question of whether training data from the internet may be used without permission is also likely to end up there.

A common misconception is to consider the CJEU a kind of court of appeal that anyone can turn to. That is not true. Private individuals almost never go there directly, but only via the detour of their national court. So when you read that someone “is taking a case to the CJEU”, this usually refers to proceedings that have run for years through several instances.