Kolpinghuis Nijmegen BV

European Law

Kolpinghuis Nijmegen BV
Image: ’21st Century Still Life’ by Jose A Hinojos

The definition of a Directive relies upon its effect upon a Member State as opposed to individuals unless so designed, and yet on this occasion, the criminal acts of a café were punished under the powers of an as yet transposed Directive, thus prompting the District Court to seek a preliminary ruling.

In July 1980, the European Council passed Directive 80/777/EEC in relation to the sourcing and sale of mineral water, which explained that:

“[O]nly waters extracted from the ground of a Member State and recognized by the responsible authority of that Member State as natural mineral waters satisfying the provisions of Annex I, Section I, of the Directive may be marketed as natural mineral waters.”

While the transposition period was four years from the date of the Directive implementation, the Member State in question failed to adopt it into their national laws.

On 7 August of 1984, the defendant Kolpinghuis Nijmegen BV was found stocking and selling mineral water that in fact consisted of nothing more than tap water and carbon dioxide. Indicted by the Keuringsdienst van Waren (Goods Inspectorate) the defendant was charged under art.2 of the Keuringsverodening (Inspection Regulation) for the sale of goods of unsound composition, and levied a fine of HFL 501.

With consideration of the fact that the Directive was not implemented into national law until 8 August 1985, the Officer van Justitie was of the opinion that the Directive was already legally enforceable, however the District Court sought a preliminary ruling under art.177 of the EC Treaty in order to establish whether:

(i) A Member State could rely upon the powers of a Directive as yet unadopted into national law.

(ii) Where a Directive has not yet been transposed, a national court could give direct effect to its provisions despite the individual standing to gain no benefit from such an act.

(iii) Where a national court has the option to follow national law, it should follow instead, the powers of an applicable Directive.

(iv) Any weight needed to be given to the first three points when the adoption threshold for the Directive was still open.

Referring to a number of similar cases such as Marshall v Southampton and South West Hampshire Area Health Authority and Von Colson and Kamann v Land Nordrhein-Westfalen, the Court relied upon Pretore di Salo v X to illustrate how:

“[A] Directive cannot, of itself and independently of a national law adopted by a Member State for its implementation, have the effect of determining or aggra­vating the liability in criminal law of persons who act in contravention of the provisions of that Directive.”

This translated that while the powers contained within a Directive can indirectly assist in the enforcement of both national and local laws, it could not serve as direct source of adjudication when determining individual liability, while the Court also noted that the date upon which hearing had occurred bore no relevance to the issues in questions 1-3, as the transposition window had yet to close.

R v HM Treasury ex p British Telecommunications plc (1996)

European Law

R v HM Treasury ex parte British Telecommunications
‘Red Telephone Box’ by Debbie Fisher

The successful transposition of EU Directives requires delicate application when ensuring the overriding objective of the Directive remains intact. On this occasion, the rules of Directive (90/531/EEC) while specific in their construction, caused immediate conflict between the domestic government and a dominant telecommunications provider.

Basing their argument on principles examined in Francovich and others v Italy, British Telecom (BT) took issue with Parliament’s decision to edit the transposed Directive in a way that precluded them from perceived equal rights in a highly competitive industry. In fact by all accounts, the telecommunications giant was already bound to cap its tariff rates, provide connection services irrespective of national geography, and publish its commercial intentions for all to see. However, when put in its proper context, the domestic market was disparagingly divided in such a way that afforded BT a ninety-percent share, while those new to the field were limited to only a collective three-percent stake.

This extended enormous advantage to the applicants, and yet they still felt that under the prescribed terms of the Directive, the EU Commission had intended that any exclusions to the benefit of Community law were decidable between those contracting, and not to the discretion of the Member State. It was understood that in circumstances providing a balanced economic market, the Directive required no degree of intervention, as the playing field would, in many events, present itself fairly, yet the UK government, having enjoyed the monopoly of BT as a state funded enterprise, were only too aware that without marshalling of the transposition, the essence of equality would be lost in translation, and the integrity of domestic contract law held to account.

By exercising its discretion, the applicants were (rightly or wrongly) denied access to the terms of the Directive, and therefore unable to determine for themselves which services they felt were excludable and why, a process that would have inevitably relied upon the wisdom of the EU Commission to decide, and so was not in any way affected by those preventative measures.

When transposing Directives, it is the duty of Member States to incorporate the relevant terms ‘as far as possible’, whereby on this occasion it was deemed that the steps taken reflected that ethos. This resulted in the Court of Justice reserving the rights of the legislature to act where appropriate, and that despite any sufferance on the part of the applicants, there were no grounds for either ‘direct effect’ damages nor compensatory award for economic loss, as the ends ultimately justified the means, while holding that for future reference:

“[I]t is not open to a Member State, when transposing the Directive into national law, to determine which telecommunications services are to be excluded from its scope in implementation of article 8(1), since that power is vested in the contracting entities themselves.”

R v Secretary of State for Transport ex parte Factortame Ltd (No.2) (1990)

English Constitutional Law

R v Secretary of State for Transport Ex parte Factortame Ltd
‘NERIED, Cannery Tender’ by Steve Mayo

Direct effect compatibility, and the obligation owed by Member States to transpose Directives and Treaties as binding upon national laws, was a ruling that would soon unearth conflicts of interest. On this occasion, the contention was brought about by aggressive amendment to statute in favour of the UK fishing industry.

Until 1988, those parties involved in domestic commercial fishing were required to register under the Merchant Shipping Act 1894; an Act that allowed overseas companies to operate outside British waters, but still have their fleets registered under UK incorporation. As a means of preventing ‘quota hopping’ (over-fishing), it was enacted by Parliament to include Part II of the Merchant Shipping Act 1988 and Merchant Shipping (Registration of Fishing Vessels) Regulations 1988, to the effect that all those trading were to re-register under new conditions.

These terms required that in order to qualify for registration, the company must have a minimum of seventy-five percent British ownership, and where ownership fell outside the United Kingdom, there needed to be a seventy-five percent share hold by British citizens. This translated that the appellants, who had been previously registered for over almost twenty years, were now unable to re-register, as the owners were Spanish and therefore exempt from the new legislation.

Having appreciated the United Kingdom’s position as a Member State, and subsequent membership to EU Community law, the firm sought proceedings under the principle that the choice taken to exclude other EU members from registration had displayed an overt refusal to comply with art.177 of the EEC Treaty. Furthermore, it was claimed that where Community rights were held to have ‘direct effect’, it was the onus of the national courts to suspend challenged legislation, with the granting of interim relief where proven necessary.

When heard in the Divisional Courts, the claim was supported and provisions made to allow the unfettered trading of the claimants, until such time that clarification was found in the challenge against the amended Act. However, when appealed by the Secretary of State, Court of Appeal Court set aside the previous finding, while granting leave of appeal to the House of Lords.

In this instance, the House agreed that should the claimants’ fail in their argument, the financial damage would be sufficient enough to cause irretrievable damage to the firm, but that without a preliminary ruling by the European Court of Justice (COJ), it was impossible to determine (i) if the courts were empowered to suspend legislative effect, and (ii) how best to determine what form the interim relief should take.

Upon deliberate consideration by the COJ, it was unanimously agreed that when the objectives of direct effect were designed, they were done so in a way that intended literal application with immediate purpose, and that unless under exceptional circumstances, it was the duty of the national courts to hold the powers of Community law above those of domestic interest, whereupon the House held that:

“[N]ational courts are required to afford complete and effective judicial protection to individuals on whom enforceable rights are conferred under a directly effective Community provision, on condition that the Community provision governs the matter in question from the moment of its entry into force…”