Dealing another blow to British Prime Minister David Cameron's anti-Brussels crusade, a top adviser to the European Union's highest court on Thursday, Nov. 20, recommended that judges dismiss a U.K. challenge to EU-wide banker bonus rules.
The case, before the Luxembourg-based Court of Justice of the European Union, stems from a measure passed by EU governments in 2013 banning bonuses of more than twice fixed salary. Over Britain's objections, EU governments passed the measure in 2013 as part of stricter bank and liquidity rules known as the Capital Requirements Directive IV, or CRD IV.
Six months after being outvoted by its EU peers, the U.K. took its fight to court, arguing that the measure oversteps the bloc's powers and contravenes rights enshrined in the EU treaties governing the freedom of establishment and the freedom to provide services.
The U.K. is also contesting a provision in CRD IV empowering the London-based European Banking Authority to draft regulatory technical standards spelling out the criteria used to identify executives covered by the bonus limit.
But those arguments don't fly with EU Court of Justice advocate general Niillo Jääskinen, who is urging judges to reject the U.K.'s entire case and dismiss its action. Although legal opinions are non-binding on the Court, it follows them in the majority of cases. A final decision is not expected until next year.
Earlier this year, the U.K. lost another court challenge to EU financial regulation when the same court tossed out its case against EU powers to ban shortselling. In that ruling, judges said that powers available to the European Securities and Markets Authority are "precisely delineated and amenable to judicial review," and that those powers are fully compatible with the EU's treaties.
In the bonus cap challenge, Jääskinen said the restriction is legally sound and didn't equate to an EU-wide fixing of pay limits, which he agreed would be up to member states to do individually.
"However, fixing the ratio of variable remuneration to basic salaries does not equate to a 'cap on bankers' bonuses', or fixing the level of pay, because there is no limit imposed on the basic salaries that the bonuses are pegged against," according to a press summary of the opinion.
He also noted that since there is no legal limit to the basic salary that can be paid, that means there is no limit to the total pay.
The adviser also questioned the U.K.'s claim that the contested measures overstep the EU's powers, noting that member states could not have achieved a uniform risk-management regulatory framework like the EU has done.