C-188/89

The House of Lords points out that during Mrs Foster and the other appellants in the the material period the United Kingdom main proceedings are women who were had not yet brought its national law into employed by the British Gas Corporation conformity with the equal treatment ('the BGC'); on reaching the age of 60 on directive. Section 6(4) of the Sex Discrimi- various dates between 27 December 1985 and 22 July 1986 they were required to 2 — Judgment in Case 149/77 Defrenne v Sabena [1978] retire, in accordance with the general policy ECR 1365. 3 — Judgment in Case 19/81 Burton v British Railways Board of the BGC. During the same period male [1982] ECR 555. employees of the BGC were required to 4 — Judgment in Case 151/84 Roberts v Tate and Lyk [1986] retire only at the age of 65. ECR 703. 5 —• Judgment in Case 152/84 Marshall v Southampton and South-West Hampshire Area Health Authority [1986] * Original language: Dutch. ECR 723. 1 — Council Directive 76/207/EEC of 9 February 1976 on the 6 — Judgment in Case 262/84 Beets-Proper v Van Lanschol implementation of the principle of equal treatment for men [1986] ECR 773. and women as regards access to employment, vocational 7 — See also my Opinion in Case C-262/88 Barber v Guardian training and promotion, and working conditions (OJ 1976 Royal Exchange Assurance [1990] ECR I-1889, at point 26 L 39, p. 40). in fine and also points 32 and 33.

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nation Act 1975, which was then in force, impose obligations on an individual. In provided that the prohibition laid down in academic terminology, that means that Section 6(1 )(b) and (2) of the Act of where the period for their implementation discrimination against women in respect of has expired, provisions of directives which conditions of recruitment or dismissal from the point of view of their content are applied by employers or any other unfa- unconditional and sufficiently precise 12 have vourable treatment did not apply to 'vertical direct effect' but no 'horizontal provisions regarding death or retirement. 89 direct effect'.

3. At the material time the BGC was a nationalized gas undertaking; since then it has been privatized by the Gas Act 1986, In paragraph 49 of the judgment in under which British Gas pic (the respondent Marshall 10 the Court stated that persons in the main proceedings) was established may only rely on provisions such as Article and on 24 August 1986 succeeded to the 5(1) of Directive 76/207 in their relations rights and liabilities of the BGC. , 3 with 'the State', in its capacity as 'employer or public authority', since 'it is necessary to prevent the State from taking advantage of its own failure to comply with Community law'. 11 In paragraph 48, on the other hand, the possibility of relying upon such a provision against an individual is excluded, The status of the BGC, the employer of the inasmuch as a directive may not of itself appellants in the main proceedings at the relevant time, must be viewed in the context 8 — Amended by Section 2(1) of the Sex Discrimination Act 1986 with effect from 7 November 1987. of the nationalization of gas production and 9 — I shall not here discuss the duty of national courts to supply by the Gas Act 1948, which was later interpret provisions of national law in accordance with replaced by the Gas Act 1972. Under the Community law (see the judgments in Case 14/88 Von Colion v Land Nordrhein-Westfalen [1984] ECR 1891 and Gas Act 1948 property, rights and liabilities in Case 80/86 Kolpinghuis Nijmegen [1987] ECR 3969) since the House of Lords has not submitted any question in that respect. Sec also my Opinion in Barber (supra, footnote 12 — Paragraphs 55 and 52. 7), at point 50. 13 — Following the abolition of the monopoly on the supply of 10 — [1986] ECR 737. gas through pipes, British Gas plc is one of the 'public gas 11 — Paragraph 49 suppliers' (Sections 3 and 7 of the Gas Act 1986).

The Secretary of State was empowered to require the BGC to report on its activities Under the Gas Act 1972, the BGC was not and, after laying that report before both an agent of the Secretary of State. The Houses of Parliament, to give the BGC such employees of the BGC were not in Crown directions as he considered appropriate on employment for the purpose of United the basis of that report for the most efficient Kingdom employment law. The BGC had management of the undertaking no legislative functions. (Section 4). The BGC was obliged to give effect to any such directions (Section 4(3)). The Secretary of State could also, after consultation with the BGC, give the BGC general directions for the exercise and performance of its functions, including the The basis of the judgment in Marshall: nemo auditur exercise of its rights as a shareholder, where in his view the national interest so required, and the BGC was obliged to give effect to any such directions (Section 7). The BGC was obliged, as soon as possible after the end of each financial year, to submit a 4. For the sake of convenience let me begin report to the Minister on the exercise and by quoting the central passage of the performance of its functions during that Marshall judgment. It is to be found in para- year and on its policy and programmes graphs 47 to 49 of the judgment and the (Section 8). second paragraph of its operative part.

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14 — See also the judgment in Case 148/78 Rain [1979] ECR 1629, paragraph 11 (and the Opinion of Advocate General Rcischl at p. 1653), and the judgment in Case 8/81 Becker 'In that respect it must be pointed out that v Finanzamt Munster-lnneenstadt [1982] ECR 53, paragraph 24. where a person involved in legal 15 — Relied on by the Health Authority at the hearing in proceedings is able to rely on a directive as Marshall.

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'(even if contrary to the trend of decisions in cases involving sovereign immunity where the exercise of imperium is distinguished 7. A few months after the Marshall from commercial and similar activities) as a judgment the Court gave judgment in the matter of Community law, . . . the "State" Johnston case, 21 concerning the possibility must be taken broadly, as including all the for an employee of relying on Article 3(1) organs of the State. In matters of 19 — Ibid. employment... this means all the employees 20 — In paragraphs 12, 49, 50, 51 and 56 of the judgment and in of such organs and not just the central civil the second paragraph of the operative part four synonyms service'. 18 are used in English, French, German, Danish and Italian, and five in Dutch. The manner in which those four or five terms are distributed among the six passages cited, in which expressions are repeated differently in different 16 — Supra, footnote 7, at point 52. languages, confirms the broad meaning that must be given 17 — In its judgment in Case 190/87 Moormann [1988] ECR to the concept of 'the State' and also demonstrates that it is 4689, paragraphs 22 and 24, the Court indicated the not correct to conclude from the use of words in any one provisions of the Treaty which provide a basis for that language that a basis for the definition of the 'State' can be conclusion (namely Article 189, third paragraph, and sought in the legal terminology of any one Member State. Article 5 of the EEC Treaty). 21 — Judgment in Case 222/84 Johnston v Chief Constable of the 18 — [1986] ECR 735. Royal Ulster Constabulary [1986] ECR 1651.

In that quotation it is striking to see the 8. The point of view expressed by the Court manner in which the relations between the in Marshall was applied again in its head of a local police force and 'other judgment in Case 103/88 Costanzo v organs of the State' are considered Comune di Milano. 24 That case concerned a irrelevant, which again shows that directive on public works contracts. The autonomous authorities which are inde- Court was asked whether a municipal pendent of other organs of the State, authority was obliged, in examining indi- regardless of the level at which they vidual tenders, to refrain from applying operate, be it central or local, do indeed fall national rules incompatible with the under the broad expression 'the State'. It is directive concerned, the period for whose implementation had expired. 22 — Paragraph 49 23 — Paragraph 56. 24 — [1989] ECR 1839.

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The Court held that: A twofold or a threefold classification?

I would subscribe to that point of view, which indeed has not been disputed by any of the parties that have submitted obser- It is also clear that the 'State' does not cover vations. If the Court itself did not lay down only authorities whose powers are a basis in Community law, the result would 'delegated' from the central authority. The be a complete lack of uniformity among the criterion of delegation of powers is not Member States with regard to the direct always compatible with the legal situation of effect of provisions of directives. municipal authorities in different Member States and is in any event completely inap- propriate to the situation in Member States which have a federal structure. 10. In outlying a Community framework 25 — Paragraph 31. for defining the 'State' a fundamental 26 — A similar broad interpretation may be seen in a judgment question arises. Are the concepts 'State' and prior to the Marshall case, the judgment in Case 271/82 'individual' together exhaustive or is there, Auer [1983] ECR 2727, and in particular the Opinion of Advocate General Mancini, in which he stated that a in between them, a third category of directive may be pleaded against institutions which, although they are not organs of the State in the true sense persons or bodies? Such an intermediate of the term, in one way or another implement the policy of category might include bodies such as public the State (at p. 2751). The case concerned professional organizations of veterinary surgeons which were undertakings (for instance, the BGC in this responsible for the exercise of public authority, namely the case), State universities or even private recognition of professional qualifications obtained in other Member States. universities that are financed wholly or

As the appellants in the main proceedings have stated, no support can be found in the judgments of the Court referred to above for the existence of an intermediate category. Paragraph 48 of the judgment in Marshall assumes a twofold and not a threefold classification when it states in its Although it is my view that there is no basis last sentence: 'It must therefore be in the Court's case-law in this regard for a examined whether, in this case, the threefold classification, I shall not use such respondent must be regarded as having complementary and mutually supporting acted as an individual'. Similarly, in the definitions of 'individuals' and 'State'. The passage of his Opinion in that case quoted point is not who is the State or an individual above, Sir Gordon Slynn appears to bring in the abstract but against whom the failure both 'the exercise of imperium' and of a Member State to implement a directive 'commercial and similar activities' under the correctly and in good time in its own legal concept of 'the State' in Community law. system can be pleaded, having regard to the That point of view is also supported in later underlying reasons. According to Marshall judgments of the Court, in the Kolpingbuis and Johnston the basic thinking is that a Nijmegen judgment of 8 October 1987 27 Member State, and any public body charged and the Busseni judgment of 22 February with functions by the State, regardless of 1990. 28 the capacity in which it acts or its relations with other public bodies, may in no event derive advantage from the failure of the Member State to comply with Community law.

Analogies from other areas of Community approved by a government minister. 30 That law was sufficient to show that in determining its tariffs the undertaking in no way enjoyed full autonomy, but acted under the control and on the instructions of the public auth- orities. 31 It could therefore be concluded that the fixing of the contested tariff was 11. Before discussing the positions of the the result of action by the Member State parties and giving my own views, I should and thus fell within the concept 'aid granted like by way of comparison to discuss briefly by a Member State' for the purposes of a few areas of Community law in which Article 92. 3 2 some notion of public authority plays a role. The most important general conclusion to be drawn from this comparison is that an interpretation is sought of each measure which is most in keeping with its place in the Treaty and thus with the purpose of the That definition of the State as the author of concept of public authority which is used. aid measures reflects a broad interpretation That conclusion suggests that in the present which corresponds to the purpose of Article context too an approach should be chosen 92(1) of the Treaty, that of encompassing which will give the concept of 'the State' the all aid measures: 'any aid granted by a meaning that corresponds most closely to Member State or through State resources in the underlying reasoning, discussed above, any form whatsoever .33 of the Marshall judgment. The comparison also elicits a number of criteria which may be useful in the present context.

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pation therein, or the rules which govern with the directive. This concept of the State, it). 35 too, is interpreted by the Court in a flexible manner in accordance with the aim of the measure. 37

That is also apparent orities'. from the case-law of the Court. 39 The important distinction here is thus the capacity in which the public authority acts: as an authority or as a normal taxable person. A 'body governed by public law' means any body: (a) established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character, (b) having legal 15. A final point of comparison 40 can be personality, and (c) financed, for the most found in the case-law of the Court on part, by the State, or regional or local auth- Article 30 of the EEC Treaty, in which it is orities, or other bodies governed by public determined whether a particular restrictive law; or subject to management supervision practice can be ascribed to the authorities. by those bodies; or having an adminis- In the Buy Irish judgment it was demon- trative, managerial or supervisory board strated that the restrictive practice in more than half of whose members are question (a promotional campaign for the appointed by the State, regional or local purchase and sale of Irish products) could authorities or by other bodies governed by public law (see Article 1 of the directive). 37 — Judgment in Case 31/87 Beentjes v Nethertands [1988] ECR Article la of the directive goes on to 4635, paragraphs 11 and 40; see also the Opinion of Advocate General Darmon, paragraphs 10 to 20. provide that contracting authorities which 38 — Sixth Council Directive (77/388/EEC) of 17 May 1977 on subsidize directly by more than 50% a the harmonization of the laws of the Member States relating to turnover taxes — Common system of value works contract awarded by an entity other added tax: uniform basis of assessment (OJ 1977 L 145, than themselves must ensure compliance P- D- 39 — In its judgment in Joined Cases 231/87 and 129/88 Carpando Piacentino and Rtvergaro [1989] ECR 3233, the 35 — As Advocate General Mischo slated in his Opinion in Case Court emphasized in paragraph 15 that the provision in 118/85, in applying that definition of 'public under- question seeks to draw a distinction between the activities

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transparency of relations between Member States and public undertakings, by distin- guishing between the State qua authority and qua owner: supra, paragraph 12, and in connection with the levying of VAT, by distinguishing between its activities as an Again in connection with the free movement authority and its activities as a taxable indi- of goods, reference may be made to the vidual: supra, paragraph 14). meaning given by the Court to the concept of State monopolies of a commercial character within the meaning of Article 37: that article applies to all 'situations in which the national authorities are in a position to supervise, determine or even appreciably influence trade between Member States through a body established for that purpose A further point should be emphasized: or a monopoly delegated to others'. That whenever, in the light of the underlying includes 'a situation in which the monopoly purpose of the measure, the concept of 'the in question is operated by an undertaking or State' is given a broad interpretation, a group of undertakings, or by the terri- reference is made to the criterion of actual torial units of a State such as communes'. 42 control, dominating influence and the possi- Every means at the disposal of national bility on the part of the authorities to give authorities for influencing trade in goods, binding directions, regardless of the manner regardless of whether the body 'used' is in which such control is exercised (by means governed by private or public law, thus falls of ownership, financial participation, under Article 37. dependence for purposes of management or finance, or through legislative provisions:

paragraph 13. law.

The appellants in the main proceedings support a broad interpretation of the I do not think that the criterion of dele- concept of 'the State'. They rely on the gation (with which, if I have understood opinion of Advocate General Sir Gordon correctly, the status of 'Crown servant' is Slynn in Marshall, cited above, and on the connected) is an appropriate one for the judgment in Costanzo. They reject a problem with which we are concerned here. criterion of public authority based strictly First of all, that criterion depends closely on on 'the classic duties of the State' since an the State structure: it is difficult to use in evaluation of what constitute 'duties of the countries with a federal structure, in which State' would give rise to differences between various authorities have autonomous Member States and uncertainty in powers, so that it is not a suitable basis for a application. They also reject the suggestion Community framework of assessment. that State authorities should be limited to Similarly, the distinction made in that Crown bodies or bodies of a connection between classical and non-commercial character. non-classical duties of the State is in my view of no service (infra, point 19). Finally and above all, a criterion based on dele- gation seems to me to be incompatible with Although the appellants in the main the broad view taken by the Court in, for proceedings do not in their observations put example, the Johnston and Constanzo it in such extreme terms, they do in fact judgments (supra, points 7 and 8), which proceed on the basis that every undertaking give the principle nemo auditur a broad which is actually controlled by the political scope so that the failure to act of the public authorities, such as the BGC at the material authorities actually in default can be relied time, must be brought under the concept of on also against the entirely independent 'the State'. Stated in such extreme terms public authorities referred to above. It is that view seems to me to go too far, in so significant that the respondent in the main far as it encompasses every type of public proceedings does not mention the Costanzo control, even where it has nothing to do judgment. with the matter to which the Member State's failure to implement a particular provision of a directive in national law relates. 19. The remarks of the United Kingdom take the same approach as those of the respondent. At the hearing its representative explained that there are two groups of 18. The respondent in the main proceedings bodies which may come under the concept takes a restrictive view. Basing itself on the of 'the State' as defined in Marshall: bodies

20. According to the Commission, finally, there are various criteria which may bring a public body within the concept of 'the State' for the purposes of Marshall. First of all there is the criterion of 'carrying out a public function on behalf of the State'. That criterion covers public corporations estab- Here again we encounter the same diffi- lished to run nationalized industries, such as culties as before: what, precisely, constitute the BGC, public bodies which exercise regu- the classical functions of the State, in latory powers and universities which award particular of the executive. According to the degrees recognized by the Member States. If United Kingdom, public security is included this criterion alone is used, a problem arises (although even that function can be with regard to undertakings in which the 'privatized' to a certain extent by State holds 100% or a majority of the contracting out to approved security shares. According to the Commission, there services), but not the supply of water, gas is no good reason to treat an undertaking in and electricity, although in a modern which the State holds a controlling share- welfare State such supplies are of essential holding any differently from a nationalized importance for the population and for undertaking. It therefore asks whether a industry. What, then, of public health, criterion of 'State control over the body in which was assumed in Marshall to fall question in relation to the matter at issue' within the tasks of the State although, as the may be used, and seeks to determine what is Commission mentions in its written obser- to be understood by control. Substantial vations, in some Member States health care funding by the State is not sufficient, and is 'privatized' to a large extent? The United neither is the possibility of compulsion by Kingdom nevertheless brings the health any means (since the State can equally authority at issue in Marshall within the compel any individual to do something by concept of 'the State' by referring inter alia means of general legislation). Similarly, to the fact that its employees are 'Crown control on the basis of a legal right is not a servants'. We thus come back to the notion conclusive answer; all the circumstances of delegation, the unsuitability of which as a from which control appears possible (in basis for a Community framework has other words the 'economic reality') must be already been emphasized (supra, point 18). taken into account.

After those helpful remarks, which I think whether someone forms part of the take us a considerable way in the right government, whether a particular duty is a direction, the Commission nevertheless public duty and whether someone derives concludes that even such a criterion of his authority from the State (whether or not control would exclude the Royal Ulster in the sense that he exercises authority Constabulary from the concept of 'the State' delegated by the State) are difficult matters since it carries out its functions indepen- to define, and their meaning differs signifi-

of Marshall. In the present case the BGC is in any event a public body and the answer In the cases I have referred to, the Court to be given to the House of Lords can did not attempt to define those concepts in accordingly be restricted to that category of entities. the abstract, and I think it was right not to do so. Nevertheless it appears from those cases that the concept of a public body must be understood very broadly and that all bodies which pursuant to the constitutional Proposed solution structure of a Member State can exercise any authority over individuals fall within the concept of 'the State'. In that respect it is immaterial how that authority (which I shall

That much is certain. lying behind the Marshall and Johnston cases: a Member State, but also any other public body charged with a particular duty by the Member State from which it derives The question in the case now before us is its authority, should not be allowed to how much further the application of those benefit from the failure of the Member State judgments can extend, in particular with to implement the relevant provision of a regard to undertakings, in this case public directive in national law. That, however, undertakings, which as such exercise no raises the question how far the expressions authority in the strict sense over individuals. 'public body', 'charged with a particular I think the answer is this: it may extend as duty' and 'from which it derives its far as 'the State' (in the broad sense authority' precisely extend. Moreover, it is not entirely possible to give those 43 — Judgment in Case 271/82 Auer [1983] ECR 2727, paragraph 19. and the Opinion of Advocate General expressions a precise Community meaning: Mancini, at p. 2751.

described in the preceding paragraph) has failure to implement a directive. The given itself powers which place it in a reasoning lying behind Marshall and the position to decisively influence the conduct related cases implies that the State may not of persons — whatever their nature, public benefit from its default in respect of or private, or their sphere of activity — with anything that lies within the sphere of regard to the subject-matter of the directive responsibility which by its own free choice it which has not been correctly implemented. has taken upon itself, irrespective of the It is immaterial in that regard in what person through whom that responsibility is manner 'the State' can influence the conduct exercised. of those persons: de jure or de facto, for example because the organ of authority has a general or specific power (or is simply able as a matter of fact) to give that person binding directions, whether or not by the exercise of rights as a shareholder, to approve its decisions in advance or suspend or annul them after the fact, to appoint or 22. On the basis of the foregoing I propose dismiss (the majority of) its directors, or to that the following answer should be given to interrupt its funding wholly or in part so as the House of Lords. Individuals may rely on to threaten its continued existence, with, an unconditional and sufficiently precise however, the provisos that: (1) the possi- provision such as Article 5(1) of Directive bility of exercising influence must stem from 76/207 against a person or body, in this something other than a general legislative case a public undertaking, in respect of power (since otherwise all individuals which the State (understood as any body subject to such general legislative power endowed with public authority, regardless would be brought within the scope of of its relationship with other public bodies Marshall and related judgments, which or the nature of the duties entrusted to it) would go beyond their purpose), and (2) as has assumed responsibilities which put it in a I have already said, the possibility of exer- position to decisively influence the conduct cising influence must exist inter alia (or in of that person or body in any manner what- particular) in connection with the matter to soever (other than by means of general which the provision of a directive which has legislation) with regard to the matter in not yet been implemented relates or can respect of which the relevant provision of a relate. directive imposes an obligation which the Member State has failed to implement in national law.

activities and to the exercise and In the absence of any specific rule in performance of its functions in general if Community law that is in principle a the national interest so required (supra, question which must be answered in point 3). It seems to me that compliance accordance with the national law of the with the law, including Community law Member State. Even so, there are binding on the Member State, is an restrictions in Community law on the liberty objective of national interest, so that left to the Member States to determine the binding instructions could have been given substantive and procedural aspects of the to the BGC to comply with the provisions sanctions associated with the obligations of Directive 76/207, which at the material which result for a Member State from a time had not yet been formally implemented directive. in national law. It was also the Secretary of State who appointed the members of the BGC and, I assume, could compel them to resign, and he could also exercise pressure on the management of the corporation by appropriate financial arrangements. More specifically, with regard to the sanctions on the obligation arising from Article 5(1) of Directive 76/207, which is in issue in this case, the Court held in paragraph 28 of the judgment of 10 April In that connection I should also point out 1984 in Von Colson44that that the answer suggested above is in accordance, mutatis mutandis, that is to say having regard to the difference in the objectives of the various measures, with the legislation and case-law in other areas of 'although Directive 76/207/EEC, for the Community law where the concept of 'the purpose of imposing a sanction for the State', as in the present situation, must be breach of the prohibition of discrimination, given a broad scope: in those areas too leaves the Member States free to choose bodies other than those endowed with between the different solutions suitable for public authority are brought under the achieving its objective, it nevertheless measure in question when their conduct can requires that if a Member State chooses to be influenced by the authorities (supra, penalize breaches of that prohibition by the point 16). award of compensation, then in order to ensure that it is effective and that it has a deterrent effect, that compensation must in any event be adequate in relation to the damage sustained and must therefore The question of damages amount to more than purely nominal compensation . . . '.

Although Directive 76/207/EEC, for the purpose of imposing a sanction for breach of the prohibition of discrimination, leaves the Member States free to choose between the different solutions suitable for achieving its objective, it never- theless requires that if a Member State chooses to penalize breaches of that prohibition by the award of compensation, then in order to ensure that it is effective and that it has a deterrent effect, that compensation must in any event be adequate in relation to the damage sustained. It is for the national court to find a means within its own legal system of meeting that requirement under Community law.'

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