C-151/81

JUDGMENT OF THE COURT 12 OCTOBER 1982 1

Commission of the European Communities v Ireland

(Failure to implement Directive 77/91/EEC)

Case 151/81

Member States — Obligations — Implementation of directives — Failure to comply with time-limits for their implementation —Justification for failure — Not possible (EEC Treaty, Art. 169)

A Member State may not plead Since the governments of the Member provisions, practices or circumstances States participate in the preparatory existing in its internal legal system in work for directives they must be in a order to justify a failure to comply with position to prepare, within the period obligations resulting from Community prescribed, the draft legislative provisions directives. necessary for their implementation.

JUDGMENT OF 12. 10. 1982 — CASE 151/81

APPLICATION for a declaration that by not adopting, within the prescribed period, the provisions needed to comply with Directive 77/91, the second Council Directive of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, Ireland has failed to fulfil one of its obligations under the EEC Treaty,

THE COURT ,

composed of: J. Mertens de Wilmars, President, A. O'Keeffe, U. Everling and A. Chloros (Presidents of Chambers), P. Pescatore, Lord Mackenzie Stuart and T. Koopmans, Judges,

Advocate General : Sir Gordon Slynn Registrar: P. Heim

gives the following

law, save for those which are non-profit- Since it appeared that Ireland had not, making) with a view to making such within the prescribed period, adopted the safeguards equivalent throughout the necessary measures for implementation Community. of the directive and that in any case the Commission had been given no infor mation with regard thereto, the On 18 December 1961 the Council drew Commission, by letter of 8 January 1980, up a General Programme for the commenced the procedure provided for abolition of restrictions on freedom of in Article 169 of the EEC Treaty against establishment (Official Journal, English Ireland. Special Edition, Second Series, IX, p. 7). In Title VI of that programme it is stated that the safeguards required by Member In its letter the Commission stated that States of companies and firms for the by failing to adopt the measures protection of the interests of members necessary to incorporate the directive and others should, to the extent into its national law, Ireland had failed necessary and with a view to making to fulfil its obligations and invited the such safeguards equivalent, be coordi Irish Government to submit its obser nated before the end of the second year vations within a period of two months. of the second stage of the transitional

members and others, are required by Member States of companies within the The Commission, pursuant to the first meaning of the second paragraph of paragraph of Article 169 of the EEC Article 58 of the Treaty, in respect of the Treaty, issued a reasoned opinion on formation of public limited liability 29 September 1980, which was notified companies and the maintenance and on 8 October 1980, recording Ireland's alteration of their capital, with a view to failure to fulfil its obligations and making such safeguards equivalent inviting it to adopt within a period of

JUDGMENT OF 12. 10. 1982 — CASE 151/81

primary legislation would have to be (b) Order Ireland to pay the costs. adopted rather than secondary legislation; it would be necessary to make a considerable number of complex The Irish Government claims that the technical amendments to Irish law. Court should:

(a) Dismiss the application;

II — Written procedure (b) In the alternative, stay the proceedings pending the adoption of By application lodged on 12 June 1981, the Irish legislation necessary for the Commission, pursuant to the second implementation of the directive. paragraph of Article 169 of the EEC Treaty, brought before the Court the matter of Ireland's alleged failure to fulfil one of its obligations by not giving IV — Submissions and arguments effect to Directive 77/91. of the parties during the written procedure

COMMISSION v IRELAND

The Irish Government states that the legislation enacted but have found legislative process necessary for incor­ difficulty in complying with the directive poration of Directive 77/91 into its within a given period. The time-limit domestic law has been commenced. prescribed for implementation of the Substantial and detailed amendments will directive has been found to be inad­ have to be made to Irish company equate by most Member States. legislation, as contained in the Companies Acts 1963 to 1977; the minister responsible has prepared and secured approval by the government of The Court has jurisdiction to give due the heads of a parliamentary bill entitled weight to those realities and in this case the Companies (Amendment) Bill 1981 it should exercise its discretion. Whilst and drafting of the bill is in the hands of those facts do not, it is true, amount to a a parliamentary draftsman who is giving justification from a strictly legalistic the matter his exclusive attention; when point of view for delay in implementing the draft has been prepared in this way it the directive, account should nevertheless will be submitted to the Irish Parliament. be taken of the fact that Ireland is taking steps to adopt the necessary legislation and the full legislative process has already been put into operation to that Exercise of the jurisdiction conferred on end. the Court by Article 169 of the EEC Treaty requires knowledge of all the facts of the case and some understanding of the difficulties which Member States may encounter. This form of action The Commission's application should should be used reluctantly, especially therefore not be considered but should where Member States have clearly be dismissed; at the very least, indicated that they are doing all in their proceedings should be stayed pending power to introduce the necessary the early enactment of the legislation in legislative changes. question.

2 Pursuant to Article 43 of the directive, Member States were required to bring into force the laws, regulations and administrative provisions needed in order to comply with the directive within two years of its notification. It was notified to Ireland on 16 December 1976 and the above-mentioned period accordingly expired on 16 December 1978.

3 The Irish Government does not contest that it has not fulfilled that obligation. It emphasizes however that the delay in implementing the directive is due not to any lack of awareness on the part of Ireland or the competent Irish authorities of the need to implement the required legislation but rather to the complexity of the subject-matter, the directive, moreover, being only one of numerous complex measures adopted, at the Community level, within the field of company law. The difficulties encountered in implementing the directive in Ireland and in several other Member States show that the period prescribed for implementation of the directive was insufficient.

4 Those circumstances cannot expunge the failure to fulfil one of its obligations with which Ireland is charged. According to well-established case-law of the Court, a Member State may not plead provisions, practices or circumstances existing in its internal legal system in order to justify a failure to comply with obligations and time-limits resulting from Community directives.

COMMISSION v IRELAND

5 Attention should also be drawn to the fact that the governments of the Member States participate in the preparatory work for directives and must therefore be in a position to prepare within the period prescribed, the draft legislative provisions necessary for their implementation. It appears, however, from information produced in the course of the proceedings that no draft law had yet been placed before the Irish Parliament within the period pre­ scribed for implementation of the directive or even when the Commission brought its action.

1. Declares that, by not adopting within the prescribed period the provisions needed in order to comply with Council Directive 77/91/ EEC, the second Council Directive of 13 December 1976 on coordi- nation of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the

OPINION OF SIR GORDON SLYNN — CASE 151/81

Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, Ireland has failed to fulfil one of its obligations under the EEC Treaty;

2. Orders Ireland to pay the costs.

Mertens de Wilmars O'Keeffe Everling

Chloros Pescatore Mackenzie Stuart Koopmans