The European Court of Justice rules that all EU countries must treat performers equally

By Emmanuel Legrand 

In what is described as a landmark decision with far reaching consequences, the European Court of Justice (ECJ) has issued on September 9 a ruling that would force European neighbouring rights societies to remunerate all performers, regarding their country of origin.

  The ECJ was asked to determine whether Irish law was consistent with EU law by excluding certain performers not based in Ireland or in European Economic Area (EEA) countries from the revenues generated by the use of their recordings by Irish radio and TV (equitable remuneration). 

  The legal action was started in Ireland by performers' group Artists Actors Performers (RAAP) against Phonographic Performance Ireland (PPI), the neighbouring rights society which represents producer of recordings, as well as against the Minister for Jobs, Enterprise and Innovation which oversees copyright law in Ireland.

Defining the scope of international treaties

  Neighbouring rights are codified by the EU Directive 2006/115/EC on rental right and lending right and on certain rights related to copyright in the field of intellectual property, and by two international treaties on copyright, the 1961 Rome Convention and the WIPO Performances and Phonograms Treaty of 1996 (WPPT). The USA has not ratified the Rome Convention but is part of the WPPT. However, many European societies do not pay US performers for equitable remuneration due to the lack of reciprocity in the US, which does not have performance rights for the use of sound recordings by radio stations. 

  RAAP was of the opinion that all the royalties should be shared between the phonogram producer and the performer, regardless of their origin. PPI maintained that under the 2006 Copyright Directive, non-EEA performers were not entitled to any share of royalties.

  The case reached the High Court in Ireland, which referred a number of questions to the ECJ, in particular if a national court could interpret the 2006 Directive in relation to the two international treaties, and if it had discretion to determine what constitutes a “relevant performer” under the Directive.

What is the role of Member States?

  The ECJ decided in its ruling to examine together the first and second questions, and determine "in essence, whether Article 8(2) of Directive 2006/115 must, in the light of the Rome Convention and/or the WPPT, be interpreted as precluding a Member State from excluding, when it transposes into its legislation the words ‘relevant performers’ which are contained in that provision and designate the performers entitled to a part of the single equitable remuneration referred to therein, performers who are nationals of States outside the EEA, with the sole exception of those who are domiciled or resident in the EEA and those whose contribution to the phonogram was made in the EEA."

  After consideration of the EU law and the international treaties, the court ruled that:

  1. The law should be interpreted "as precluding a Member State from excluding, when it transposes into its legislation the words ‘relevant performers’ which are contained in Article 8(2) of the directive and designate the performers entitled to a part of the single equitable remuneration referred to therein, performers who are nationals of States outside the European Economic Area (EEA), with the sole exception of those who are domiciled or resident in the EEA and those whose contribution to the phonogram was made in the EEA."

  2. The law should be interpreted as precluding "a Member State from limiting the right to a single equitable remuneration in respect of performers and phonogram producers who are nationals of those third States."

  3. The law "must be interpreted as precluding the right to a single equitable remuneration for which it provides from being limited in such a way that only the producer of the phonogram concerned receives remuneration, and does not share it with the performer who has contributed to that phonogram."

Protecting the economic welfare of performers

  In other words, the Court sided with RAAP in stating that performers cannot be excluded from receiving royalties based on their nationalities. The matter will now go back to the Irish High Court, since it now has the clarification it needed to make a judgment. But it will also force the Irish government to amend the current copyright legislation to comply with the ECJ ruling. Meanwhile, the ruling will be carefully analysed by governments across Europe and at EU level, as well as by neighbouring rights societies in Europe and elsewhere.

  “At a time when the income of so many talented and gifted music professionals has been decimated by the Covid pandemic it is some good news that the European Court of Justice recognises the need to protect the economic welfare of performers," rejoiced RAAP chairman Paddy Cole.

  Unsurprisingly, US neighbouring rights society SoundExchange praised the ECJ’s ruling ordering European Union countries to treat music creators equally regardless of their nationality. SoundExchange has launched a campaign in early 2020 asking to receive "national treatment", in particular in countries like the UK, France or Germany, denying equitable remuneration monies on the grounds that there is not performance right on sound recordings for terrestrial radio in the US.

Advancing the cause of fairness

  "The ruling has broad implications for music creators around the world," said the Washington, DC-based society in a statement. "By adopting the principle of 'national treatment' – that a country should provide foreign entities the same benefits and protections as it would its own citizens – the ECJ is setting the stage for all artists to be paid royalties when their music is played on EU radio broadcasts and public performances."

  SoundExchange President and CEO Michael Huppe said the ruling was "advancing the cause of fairness within the global community of music creators." He added: "We urge EU member states to quickly follow suit so that ALL musicians and labels, from whatever territory, can be properly respected for the benefits they provide beyond their home country."

  The UK's society PPL, which represents over 110,000 performers and record companies, from the UK and from around the world, said it "supports fair payment and protection for sound recordings and performances wherever in the world they are used." PPL noted "with interest" that the CJEU’s decision rules "on when performers qualify for equitable remuneration." PPL said: "The CJEU has given a detailed judgment in a complex case, raising technical legal issues about the decision-making relationship between the EU and its member states. We now wait to see how the judgment will be followed in Ireland, and how other EU member states will react."

An alarming decision for ADAMI

  PPL admitted that in the UK the situation "is further complicated by Brexit" but PPL would "follow whatever UK law prescribes, whether now or in the future." It added: "On behalf of the performers and record companies we represent, we will also continue to support wider efforts to improve the local protection of sound recordings and performances, whether that is within Europe or in other key markets such as the US." 

  The ruling created a commotion in France, where budgets to support creative projects allocated by neighbouring rights societies are mainly financed through the non-distributed royalties from equitable remuneration. ADAMI, which represents performers, said said the ruling was "an alarming decision for the rights of performers" and said it would appeal to Minister of Culture Roselyne Bachelot. "The judges considered that the European collective management organisations must now pay all the artists distributed in the countries of the Union, including those whose phonograms come from countries not signatories of international treaties allowing reciprocity of rights – essentially American artists. A virtuous circle has just been broken, without compensation." 

  ADAMI said that in concrete terms, the decision would translates into a reduction of more than 35% of the budgets devoted to the aid for the creation and the employment of the performers. ADAMI estimated the losses between 12 and 15 million euros per year. 

A financial shock for SPPF

  Jérôme Roger, Director General of SPPF, the French neighbouring rights society representing independent labels, told News Tank that the ECJ's decision could cost the organisation up to 65% of its cultural budget, "If 65% of our support funds were to disappear it would truly be a financial shock for SPPF but mainly for all the independent producers that are members of SPPF," said Roger. 

  Roger also said that the ruling is not specific as to whether it will have a retroactive effect. If such were the case, all four French neighbouring rights societies (SCPP, SPPF, ADAMI and SPEDIDAM) would have to pay millions in back-payments to US performers. Roger said the solution should come from Europe with a necessary clarification of the various Directives. 

  Helen Smith, the executive chair of IMPALA, the Brussels-based organisation representing independent music companies in Europe, told Creative Industries Newsletter that the solution will probably come from the European Union. "There is a lot of white noise about what this case means, but it is not really about national treatment as a principle," she said. 

Mobilise to lobby the Commission

  She added: "It is more about how this particular EU legislation should be interpreted and it wasn't clearly enough drafted. As the court acknowledges, this can be fixed and that's what we would expect member states to ask the EU to do. And obviously this really puts the spotlight on the glaring hole that is the lack of a performance right in the US which is costing musicians and labels millions each year. That’s precisely why restrictions to the principle of national treatment are and always will be an integral part of international copyright rules." 

  A European label source said the issue of reciprocity still remains on the table: "I would expect the member states to mobilise as it’s crazy to imagine that they would allow this to put them in a worse position than third countries under international rules by asking societies in EU members to pay to a country that doesn’t have its own terrestrial right when other non-EU countries don’t have to."