When Austria will be amending its national legislation to comply with the ECJ ruling in Maksimovic (C-64/18), with the ECJ order in C-645/18, and with the orders in joined cases C-140/19, C-141/19, C-492/19, C-493/19 and C-494/19?

Austrian courts are looking for (another) solutions:” the national legislature has neither enacted nor, at the very least, planned legislation to replace the provisions” concerned by the ECJ ruling in Maksimovic (see to that effect C-205/20, Summary of the request for a preliminary ruling pursuant to Article 98(1) of the Rules of Procedure of the Court of Justice-Brief summary of the facts and procedure).

In C-205/20, the Landesverwaltungsgericht Steiermark (Austria) referred to the ECJ the following questions for preliminary ruling:

  • whether the requirement for proportionality laid down in Article 20 Directive 2014/67/EU, interpreted by the ECJ in the orders above mentioned, can be enforced by individuals in national courts, against the Austrian State (direct effect)
  • provided that the first question is answered in the negative, and considering the erga omnes effect of the ECJ rulings, whether national courts may and must supplement the domestic penal provisions applicable at the case at hand, with the criteria laid down in the above mentioned ECJ orders

The case at issue (C-205/20) follows on from the proceedings in C-645/18 (NE,19 December 2019, ECLI:EU:C:2019:1108).

In C-645/18, the ECJ ordered that Article 20 Directive 2014/67/EU must be interpreted as precluding national legislation which lays down, in the event of non-compliance with labour law obligations relating to the reporting of workers and the retention of records of wages, the imposition of high fines:

  • which may not be lower than a predefined amount
  • which are imposed cumulatively in respect of each worker concerned and without an upper limit, and
  • to which is added a contribution to court costs of 20% of the amount of the fines if the appeal against the decision imposing those fines is dismissed

Pursuant to Article 20 Directive 2014/67/EU,

“Member States shall lay down rules on penalties applicable in the event of infringements of national provisions adopted pursuant to this Directive and shall take all the necessary measures to ensure that they are implemented and complied with. The penalties provided for shall be effective, proportionate and dissuasive” (emphasis added).

As regards the first question, the proportionality criterion from Article 20 Directive 2014/67/EU does not represent per se a sufficiently clear, precise, and an unconditional provision (i.e., capable of having direct effect).

As regards Article 20 Directive 2014/67/EU interpreted by the ECJ, it can be alleged that Austria had not implemented correctly the said article. However, is the order in C-645/18 sufficiently clear and precise to confer direct effect on the said article? The answer is probably in the negative.

Considering the request for a preliminary ruling, different Austrian courts are giving different interpretations to the ECJ order in C-645/18.

The ECJ orders cited have only pointed out that certain provisions are in breach of the principle of proportionality, and were not intended to supplement or replace the law provisions currently into force.

As regards the second question (that should have been raised first), the ECJ is called upon to rule in a situation in which a national court is expected to determine, taking the whole body of domestic law into consideration, and applying the interpretative methods recognised by domestic law, whether it can find an interpretation of that law, that allows an interpretation of the provisions in breach of the ECJ order, in accordance with the objective pursued by the said order (see to that effect, ruling of 8 May 2019, Praxair MRC, C‑486/18, EU:C:2019:379, paragraph 37; and ruling of 19 September 2019, Rayonna prokuratura Lom, C-467/18, EU:C:2019:765, paragraph 60).

However, the referring court observes that the provisions concerned are “clear, unambiguous formulations of the law which cannot be read otherwise by way of interpretation” (C-205/20, Summary of the request for a preliminary ruling pursuant to Article 98(1) of the Rules of Procedure of the Court of Justice-point 13).

Or “the principle of interpretation of national law in conformity with EU law has certain limits. Thus, the obligation on a national court to refer to EU law when interpreting and applying the relevant rules of domestic law is limited by general principles of law and cannot serve as the basis for an interpretation of national law that is contra legem” (see to that effect ruling of 19 September 2019, Rayonna prokuratura Lom, C‑467/18, EU:C:2019:765, paragraph 61; and ruling of 14 October 2020, JH, C-681/18, EU:C:2020:823 paragraph 66).

Our note:

The state liability can be invoked regardless of whether the provision breached has direct effect or not (i.e., apparently certain courts “continue to impose cumulative fines based on a free interpretation of the judgment of the Court in Maksimovic”).

To invoke the state liability:

  • the rule infringed must be intended to confer rights on individuals
  • the breach must be sufficiently serious and
  • there must be a direct causal link between the breach and the loss suffered by the individual

The Austrian Government might allege that the breach is not sufficiently serious, notably because the wording of the ECJ order is not “very precise” (see to that effect HM Treasury, ex parte British Telecommunications, C-392/93, 26 March 1996, ECLI:EU:C:1996:131). Even national courts are interpreting it differently.

Where a clear interpretation of the ECJ order is not given, it is also hard to determine the loss suffered by an individual.

The ECJ ruling is awaited with interest.