Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of Parallelewelten.
PART A 1. ALBATROSS SWIMMING POOL
Assume that the hypothetical EU and national legislation in this problem question exist. Following concern about the public health effects of using chlorination as a technique for cleaning swimming pools, the European Union legislature decide on 1 January 2003 to pass Directive 2003/01/EC on swimming pool safety (hereinafter referred to as ‘the Directive’). Article 1 (1) of the Directive stipulates: ‘Member States shall ensure that the use of chlorine cleaning agents in swimming pools is prohibited by the deadline set out in Article 20’. Article 20 of the Directive stipulates that Member States are to bring into force the laws, regulations and administrative provisions necessary to comply with the Directive by 1 January 2005. The United Kingdom does not pass any legislation intended to implement the Directive.
There is some existing UK legislation applicable to swimming pool safety, specifically the Health and Safety of Leisure FacilitiesAct 1974 (hereinafter referred to as ‘the 1974 Act’). Section 1 of the 1974 stipulates the following general obligation on proprietors of leisure facilities, which are defined elsewhere in the 1974 Act to include swimming pools: ‘s2. It shall be the duty of every leisure facility proprietor to conduct his undertaking in such a way as to ensure, so far as is reasonably practicable, that persons who may be affected thereby are not thereby exposed to risks to their health or safety.’ Section 3 of the 1974 Act provides that the Minister for Health may, with help of a special committee (Health and Safety Committee), publish non-binding recommendations and guidance on health and safety matters covered by the Act.
Department of Health guidelines on swimming pool safety were published in 1989 and recommend that, if chlorine agents are to be used to clean swimming pools, no more than 200g of chlorine tablet per 1,000 cubic metre’s of water should be used in any one cleaning session. In Bluetown, England, there are two swimming pools available to the general public known as the Albatross and Dove swimming pools.
Albatross swimming pool is an indoor public swimming pool owned by the local council of Bluetown. Dove swimming pool is an indoor swimming pool privately owned by Dove Ltd. The staff of both swimming pools use chlorine to clean the pools in accordance with the 1989 Department of Health guidelines. Mark is employed as a pool attendant at Albatross swimming pool. Sunita is a member of the Dove pool swimmers club. In July 2005, both Mark and Sunita contract bad cases of asthma. As a consequence, Mark and Sunita have been absent from work due to illness since July 2005. The medical consultant for lung diseases at the local hospital in Bluetown has assessed their conditions and concluded that it is most likely that the cause of their asthma is attributable to chlorine fumes emitted from a swimming pool. Advise Mark and Sunita as to their rights (if any) under EC law. (1500 words max)
This scenario exposes a discrepancy in the legal system of the European Community in relation to the enforcement of directives. As a consequence, after a general commentary applicable to both it will be necessary to offer separate and individual advice to Mark and Sunita.
Generally speaking, sources of European Community law take precedence over all forms of national law. However, it is not appropriate to apply the same treatment to EC legal instruments en masse. Certain forms of EC legislation differ in terms of their characteristics and the way in which they deliver enforceable law.
The Treaty of Rome specifies, in Article 249, that regulations:-
“shall have general application and be binding in their entirety and directly applicable in all Member States.”
That is all well and good and creates little difficulty. However, the said Article also provides that directives are:-
“binding, as to the result to be achieved, upon each Member State to which they are addressed, but shall leave to the national authorities the choice of form and methods.”
Unfortunately for Mark and Sunita, it is a Directive that is at issue in regards to their claim, specifically Directive 2003/01/EC on Swimming Pool Safety. It is highly significant that the directive has not been properly transposed into UK law.
Mark and Sunita must be advised that directives, unlike regulations, do not typically establish legal rights and duties automatically on entering into force. In most cases it is the transposing national legislation that actually creates generally enforceable law, the directive merely dictates the content of that implementing law.
Difficulties arise in situations such as the one faced by Mark and Sunita, where directives are improperly transposed or ignored by the implementing national authority. A directive which has not been properly transposed creates legal anomalies in the domestic legal system in question.
In Marshall v. Southampton and South West Hampshire Area Health Authority it was demonstrated that citizens of a member state may be forced to rely on different rights subject to the status of their employer. This is directly relevant to Mark and Sunita. The doctrine of vertical direct effect permits public employees to enforce rights set out in a directive which has not been properly transposed against the state, on the grounds that the state as their employer, has failed in its duty to transpose the directive accurately. Mark, who is an employee of Albatross swimming pool which is owned by the local council of Bluetown and which for these purposes will be considered an emanation of the state, may therefore have a right of action under Directive 2003/01/EC , which clearly remains unimplemented in the United Kingdom. Mark can be advised that it is the Foster case which establishes that a public body is defined as any body made responsible for providing a public service under the auspices and control of the state “which has for that purpose special powers beyond which result from the normal rules applicable in relations between individuals”. His local authority employer qualifies under this definition.
That said however, Sunita is a member of a private undertaking and as such the doctrine of vertical direct effect is not applicable. She can only attempt to invoke direct effect horizontally against Expedite. In Marshall the European Court of Justice rejected the applicability of horizontal direct effect in this context, which effectively leaves claimants against private undertakings like Sunita with no right to rely on an improperly implemented directive at source.
ADVICE TO MARK
At this point we can advise Mark that he is entitled to sue his local authority before the European Court under the concept of vertical direct effect (which is justified by the United Kingdom’s failure to implement Directive 2003/01/EC) in order to obtain the benefits that the Directive was intended to bestow upon him. It is submitted that these benefits can be claimed from the point at which the Directive should have been implemented in the United Kingdom. That is to say, he can claim benefits running from the implementation deadline of the Directive. The provisions established by 2003/01/EC seem clear and categorical – in particular the straight ban on the use of chlorine – and there should be no difficulty in obtaining due compensation and the enforcement of his new rights.
SUNITA: FURTHER ANALYSIS
Sunita need not lose heart at this stage. The European Court is cognisant of the unfairness created by the disparity between horizontal and vertical effect and has established jurisprudence to address the issue and provide remedies for those who only have a right of action against a private entity.
Von Colson and Harz involved claims under the Equal Treatment Directive. In Von Colson a public employee brought the action and in Harz a private employee was the claimant, and as a result of the situation previously described a remedy was available in the Von Colson case but not in Harz. Aware of this legal discrimination the European Court invoked Articles 10 and 249 EC which require member states to conform to their Community obligations.
In Harz therefore, the principle of indirect direct effect was created by the European Court of Justice. This rule requires national courts to interpret and apply domestic legislation so as to give effect to any existing directives “in the light of the wording and purpose of the directive in order to achieve the objective of the directive”. In simple terms this is a form of backdoor direct effect. Marleasing reinforced the indirect effect doctrine by confirming that there is a duty to interpret national law to comply with a directive, regardless of whether the applicable national law entered into force before or after the directive. Therefore, if the terms of Directive 2003/01/EC are clear and precise enough to allow indirect application by a United Kingdom court – and this would appear to be the case in the context of the flat prohibition on the use of chlorine – it may be that Sunita is able to obtain redress using this principle.
Sunita should also be informed that damages may be awarded as a remedy in situations where a member state fails to transpose EU law. Where applicable the liability of the member state is determined by the non-implementation of a directive and a technical breach of its EU duties. In this case the United Kingdom could be compelled to rectify directly the damage done to Sunita by this failure. The doctrine of state liability was settled in the Francovich case. In that instance the directive concerned was incapable of sustaining direct effect, but the fundamental Community objective of the uniform and effective implementation of EC legislation was deemed to justify member state liability to pay compensation for its failure to transpose the directive.
The European Court thus established a tripartite test to determine whether member states should be compelled to compensate individuals for breach of improperly implemented EC law in Francovich. The test is set out below for Sunita’s perusal:
- A) the objective of the directive must include the conferring of individual rights;
- B) the content and scope of those rights must be clearly identifiable from the text of the Directive; and
- C) there must be a casual link between the breach and the damage caused.
If one invokes Francovich in Sunita’s situation it is submitted that she has a clear cut case for compensation, although it would be helpful to receive further information as to the circumstances of her claim to confirm this advice.
Sunita should be reassured by the fact that the Court has developed the Francovich doctrine of state liability in more recent cases. In Brasserie du Pêcheur and Factortame III, the ECJ built on its earlier jurisprudence, confirming that member states would be liable to pay damages in the context of claims for loss suffered as a result of legislation adopted in contravention of directly effective Treaty provisions. Moreover, it should be of interest to Sunita that in Dillenkofer v Germany this principle was applied to incorporate improperly implemented Directives.
These authorities also clarify that for state liability to be found the breach of Community obligations at issue must be sufficiently serious (alternatively this is defined as manifest and grave). Bayerische HNL GmbH confirms this observation.
ADVICE TO SUNITA
Sunita will be required to pursue a different route to Mark in her attempt to secure redress and compensation in this matter, but the foregoing analysis indicates that she should be successful by one means or another. Horizontal direct effect is unlikely to found a reliable cause of action so Dove Ltd should not be the target of her claim. Sunita is advised instead to sue the United Kingdom under the Harz and Francovich doctrines. Given the information provided, it seems likely she will be successful in obtaining redress under one or other of these legal causes of action.
PART B SUPERSTORE LTD
Assume the following events take place Superstore Ltd requests your legal advice on a number of problems it has been encountering recently with two UK Government measures. The first one is a recent decision by the UK Government to introduce a plastic bag tax on non-reusable plastic bags that are provided or sold in shops. The purpose of the measure is to encourage consumers to use reusable carrier bags for shopping. The revenue from the tax is to be channelled into supporting research and development initiatives of UK firms promoting more environmentally responsible alternatives to disposable plastic bags. The other one is a recent piece of UK legislation that prohibits the sale of any products made from hard wood materials unless the retailer is able to prove to the satisfaction of the Department of Environment that the finished product has been manufactured from trees that have not been felled from endangered tropical forests. Superstore Ltd objects to the plastic bag tax and the restriction imposed on hard wood products. Advise Superstore as to its rights (if any) under EU law with respect to the tax and hard wood sales prohibition. (1500 words max)
PLASTIC BAG TAX
Superstore Ltd is concerned that the UK Government is to introduce a plastic bag tax on non-reusable plastic bags that are used in its retail outlets. It is noted that the purpose of the measure is purportedly to encourage consumers to use reusable carrier bags for shopping and it is manifest that this is a laudable endeavour in itself given that it is of benefit to the environment to encourage the preservation of scarce resources, in particular those which require materials derived from the petro-chemical industry. That said, it is further noted that it is intended that the revenue from the tax will be channelled into supporting the research and development initiatives of UK firms promoting more environmentally responsible alternatives to disposable plastic bags.
This will inevitably subject the tax to the scrutiny of the European Commission given that it will confer a direct financial benefit on domestic producers in such a way as to exclude other producers of similar products based in other member states in the Single Market. The tax will thus operate to grant a competitive advantage to domestic production and it is submitted that this is directly and indisputably offensive to the fundamental aims and objectives of the Customs Union.
It is entirely possible for example that a tax may be imposed on non-reusable plastic bags which are produced by non-British manufacturers and then paid over to British manufacturers engaged in research to produce environmentally friendly bags. This is contrary to Community law.
Article 23 EC provides that a Customs Union will be achieved by, inter alia:
(b) the prohibition between member states of customs duties on imports and exports and of all charges having equivalent effect.
It is argued that the plastic bag tax proposed constitutes a charge having equivalent effect in this context. Genuine taxes are defined in the case Commission v France (Re Levy on Reprographic Machines) as measures “relating to a system of internal dues applied systematically to categories of products in accordance with objective criteria irrespective of the origin of the products”.
The case Fratelli Cucchi v Avez SpA confirms that a domestic tax may be treated as an incompatible charge if the proceeds of the tax are earmarked to confer a benefit on domestic producers which are subject to the tax. Furthermore, the case Ianelli & Volpi v Meroni settles the point that it is irrelevant that the tax is designed for a specific purpose (which may be ostensibly laudable) and that this will not serve to defend the measure against a ruling of incompatibility in the context of the member state’s obligations to the Single Market.
Article 90 EC provides that:
No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.
Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.
It is clear that that the proposed tax affords direct protection to domestic producers in such a way as to discriminate against non-domestic EU producers.
The fact that it is aimed to benefit a technically different product is irrelevant in the eyes of EC law. This may indeed be a peripheral point in the context of the scenario under review. In terms of the question of similarity, a broad view is taken by the European Court of Justice. The key issue according to the case Commission v Denmark is whether the products: ‘have similar characteristics and meet the same needs from the point of view of consumers… not according to whether they are strictly identical but whether their use is similar or comparable.‘ [emphasis added]
It is clear that from the point of view of the shopper, a reusable carrier bag performs the same use as a non-reusable carrier bag.
It is submitted that any aspect of a domestic taxation system which purported to distinguish between domestic and extra-EU products and as in this context favour domestic producers would be treated as blatant protectionism by the European Court. It is trite law that internal taxation is contrary to Article 90 EC if it affords protection to domestic products.
From another perspective, according to the celebrated Dassonville formula:
‘All trade measures or trading rules enacted by the Member States which are capable of hindering, directly or indirectly, actually or potentially, intra- community trade are to be considered as measures having an effect equivalent to quantitative restrictions.’
Therefore it is not necessary to demonstrate that the proposed UK tax actually hinders trade between member states. It is possible to show that the measure is capable of such effects and that will be enough for an effective challenge by Superstore Ltd.
In addition to the above, it may be possible to argue that the redistribution of the tax among domestic producers constitutes an unwarranted state aid, which is contrary to the competition law provisions of the Treaty. Article 87(1) EC prohibits the granting of state aid which:
‘…distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods.’
This rule is applicable in so far as the measure affects trade between member states, which inevitably would be the case in regards to the measure under review in this context, given the benefit that will be received exclusively by domestic producers.
State aid is very broadly construed by the Commission and the European Court and has been defined as any advantage granted directly or indirectly through State resources: Syndicat Francais de l’Express International v La Poste. There is little doubt that the proposed measure would therefore also fall foul of the jealously guarded and assiduously maintained EU competition law regime.
In summary, Superstore Ltd is advised that the proposed tax can be challenged on various grounds under EU law and that success is likely given, in particular, the manifestly discriminatory and protectionist effect of redistributing the proceeds of the tax exclusively to domestic producers. The environmentally-friendly objective behind the tax will not protect it from Community action.
BAN ON PRODUCTS MADE FROM HARD WOOD MATERIALS
Superstore Ltd is also concerned about a recent piece of UK legislation that prohibits the sale of any products made from hard wood materials unless the retailer is able to prove to the satisfaction of the Department of Environment that the finished product has been manufactured from trees that have not been felled from endangered tropical forests.
Article 28 of the Treaty of Rome provides that:
“Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.”
It could be argued that the effect of the new legislation is to block, without justification, imports of hard wood products manufactured in other member states. This would be in direct contravention of fundamental Treaty provisions relating to the free movement of goods. However, it is noted that the measure effects both Community and domestic UK producers equally – although this conclusion could be refuted on evidence that for some reason domestic producers could accommodate the provision more easily than their EU competitors.
Of course, the EU enforcement authorities are well aware that rules which do not discriminate between goods on grounds of country of origin may nevertheless constitute real and effective barriers to the trade in those goods between member states in a variety of circumstances.
Directive 70/50 specifically prohibits measures governing, inter alia, the composition of products where those measures are equally applicable to domestic and imported products (such as the new United Kingdom rule in this context) where the restrictive effect on trade is disproportionate.
Again the Dassonville case, as cited above, is relevant in this context. It is not reproduced for the sake of word economy. The Cassis de Dijon line of authority, which indicates that such indistinctly applicable rules may fall subject to challenge where goods are lawfully manufactured in other member states is also applicable.
There are several derogations from the general Article 28 prohibition set out in Article 30. One of them, namely the provision which permits measures justified on grounds of the protection of health and life of humans, animals or plants is possibly applicable in this context, given the ostensible motive of environmental protection. However it should be noted that because Article 30 derogates from a central principle of the Single Market, the exceptions it contains are all narrowly construed and restrictively defined and applied. As a consequence the United Kingdom Government would need to establish a cogent argument in order to persuade the EU enforcement authorities that exemption was justified on the facts. An example of the restrictive attitude to the protection of health and life of humans, animals or plants derogation can be found in the case Commission v United Kingdom.
Further particulars regarding the profile of the market and other conditions are needed in order to arrive at cogent advice on this matter.
- The Treaty of Rome (1957 as amended)
- Textbook on EC Law, Steiner and Woods, (2003) Blackstone
- Text, Cases and Materials on European Union Law, Tillotson and Foster, (2003) Cavendish
- EU Law- Text Cases and Materials, Craig and de Burca, (2003), Oxford University Press
- Law of the European Union, Kent, P., (2001) Longman
- Basic Community Cases, Rudden and Phelan, (1997) Oxford University Press
- Cases and Materials on EU Law, Weatherill, (2005) Oxford University Press
- Europa: Gateway to the European Union: http://europa.eu.int/index_en.htm.
- EC Legislation 2005-2006, Foster (2005) Blackstones Statutes
- From Direct Effects to Francovich: Shifting Means of Enforcement of Community Law, Steiner, 18 E.L.Rev. 3 (1993)
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