On the 8 July 2019, the Court of Justice of the European Union (the “CJEU” or the “Court”), in the case of Commission vs Belgium (C-543/17), applied and interpreted Article 260(3) of the Treaty on the Functioning of the European Union (“TFEU”) for the first time since its introduction by the Lisbon Treaty in 2007.
This case revolved around the failure by Belgium to fully transpose Directive 2014/61/EU on high-speed electronic communications network (the “Directive”) and for failure to notify the Commission with the measures adopted in order to transpose said Directive. In terms of Article 13 of the Directive, Member States should have adopted the relevant laws and regulations for the purposes of transposition by the 1 January 2016 and that such laws and regulations were to be communicated to the Commission thereafter.
After failing to receive any information from Belgium relating to the measures taken for the purposes of effectively transposing the Directive, the Commission sent a letter of intimation to Belgium for failing to communicate such measures. In its reply on the 11 July 2016, Belgium noted that these were still being drafted. In accordance with Article 258 TFEU (para 1), the Commission delivered a reasoned opinion to Belgium on the 30 September 2016 requesting it to conform to the provisions of the Directive within a period of two months from the date of such opinion.
After having this period extended till the 28 February 2017, Belgium notified the Commission that the transposition of the Directive was still pending. Thereafter, the Commission instituted proceedings against Belgium in terms of Article 258 TFEU (para 2) for (i) failing to transpose the Directive and (ii) for the failure to notify the Commission with the relevant implementing measures. By virtue of Article 260(3) TFEU, the Commission requested that the CJEU orders Belgium to pay a daily penalty of €54,639.36 from the date of judgement till when Belgium ceases to be in breach of its obligations. Belgium notified the Commission that it had adopted various legislative measures aimed at transposing the Directive. In its reply the Commission noted that even though progress was made, additional measures were still required to ensure proper transposition. Nonetheless the Commission agreed to decrease the requested daily penalty to €12,142.08 and subsequently to €6,071.04 in light of the additional progress made.
The Commission’s principal argument was that Belgium’s failure to effectively transpose the provisions of the Directive and the subsequent failure to notify the Commission constituted a breach of Article 13 of the Directive and thus a breach of the Acquis Communautaire, which is actionable under Article 258 TFEU. The Commission reiterated that it is the obligation of all Member States to ensure that the provisions of a directive are implemented with vigour, precision and clarity so as to promote legal certainty across the community. In the case at hand, Member States were expected to transpose the Directive by the 1 January 2016 and to notify the Commission accordingly. However, a year and half later, Belgium was still in breach. Upon the expiry of the term afforded in the reasoned opinion (as extended), Belgium had only transposed articles 5 and 6 of the Directive solely with respect to the Bruxelle-Capitale region. Even though the situation ameliorated following the institution of proceedings, the Commission still noted that Articles 2 to 4, Article 7(1), Article 8 and Article 10 were not transposed and that up to the date of the hearing there were still certain other provisions which lacked transposition.
With respect to the breach per se, the CJEU noted that according to constant jurisprudence the existence of a breach of an obligation or otherwise is to be examined in accordance with the situation of the Member State as at the expiry date of the time period provided for in the Commission’s reasoned opinion which in this case was the 28 February 2017. Thus the Court had to take into account the state of Belgium’s domestic law as at the 28 February 2017 to determine whether it was in breach. For this reason the Court established that Belgium had not adopted the necessary laws and regulation so as to conform to the Directive and, a fortiori, also failed to notify such measures to the Commission and thus was in breach of its obligations arising from Article 13 of the Directive.
The Court had to consider the applicability of Article 260(3) TFEU which provides that where the Commission institutes proceedings before the Court on the basis that a Member State has failed to notify the measures taken to transpose a directive, it may, were appropriate, specify the lump sum or penalty payment to be paid by the Member State. The Commission argued that this new article was introduced by the Treaty of Lisbon so as to strengthen the Court’s sanctioning powers and to encourage Member States to transpose directives within the stipulated time thus guaranteeing uniform application across the Union.
The Commission considered that a Member State may be in breach of this obligation in the following three cases: i) where a Member State completely fails to communicate the measures adopted to the Commission, ii) where the Member State partially communicates such measures, or iii) even where the Member State fails to transpose the directive in the first place. In view of the latter, the Commission reiterated that even though the provision refers to the failure of a Member State “to fulfil its obligation to notify measures transposing a directive” it would be a mistake to interpret this provision in a purely formalistic manner as this would heavily dilute the obligation on Member States to transpose directives into national law thus putting the harmonisation of laws in jeopardy. The State of Belgium contended that Article 260(3) TFEU was not applicable to the case at hand as this only refers to the failure of a Member State to notify the implementing measures and not the lack of transposition itself. The defendant argued that the wide interpretation put forward by the Commission could undermine legal certainty within the Union. Moreover Belgium was of the view that this interpretation was also in violation of the proportionality principle enshrined in Article 5(4) of the Treaty of the European Union which provides that “under the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties.” On this basis Belgium argued that if every instance of non-transposition led to a sanction one would be assimilating the failure of transposing a directive to the failure of adhering to and executing a judgment delivered by the Court (provided for in Article 263(2) TFEU) which are two distinct violations and thus punishable in different ways. The Commission rebutted these arguments on the ground that contrary to Article 260(2) TFEU, Article 260(3) TFEU does not derogate from any general principle of the ‘Acquis Communautaire’ and thus should not be interpreted restrictively.
In its findings, the Court referred to the report of the discussion circle on the Court of Justice which provides that the introduction of Article 260(3) TFEU was not solely to encourage Member States to transpose directives efficiently and within the applicable time-frames, but also to facilitate the imposition of penalties on Member States for failing to notify the Commission with the relevant measures. Such an objective would be compromised if the Commission could seek the imposition of a penalty on a Member State on the basis of Article 260(3) TFEU only where such a Member State fails to communicate the measures taken to transpose the provisions of a directive as is being suggested by Belgium. The Court noted that the interpretation put forward by Belgium could lead to a situation whereby Member States would only notify those measures which transpose insignificant provisions of the directive or measures which would not actually be transposing the directive thus allowing Member States to circumvent Article 260(3) TFEU.
For this reason, the CJEU held that the obligation to notify is to be interpreted in the sense that Member States should provide the Commission with clear and specific information including all measures taken to ensure the transposition of a directive. In order to satisfy this obligation, Member States should provide a list of those provisions under domestic law which transpose the equivalent provisions under the directive. This would allow the Commission to assess if there are any manifest lacunas in these measures when determining whether to impose the penalty under Article 260(3) TFEU or not.
From the examination of the facts at hand it was clear that Belgium had persisted in its partial infringement of Article 13 of the Directive as it failed to transpose the Directive within the proposed time frames and a fortiori, failed to notify such measures to the Commission and thus Article 260(3) was applicable. When determining the daily penalty, the Court noted that this was a serious breach and even though during the course of the proceedings, Belgium had sought to rectify the situation other provisions still lacked transposition. For this reason the Court imposed a daily penalty of €5,000 from the date of delivery of the judgment until the infringement is rectified.
This article was first published in The Malta Independent, 17 July 2019.