Sune Klinge, PhD Fellow, Centre for Comparative and European Consitutional Studies, Faculty of Law, University of Copenhagen
Following the Court of Justice’s judgment in Case C-441/14 in the Ajos-case earlier this year, the Supreme Court of Denmark has handed down its judgment in the main proceedings. Despite the fact that the preliminary ruling left the Supreme Court with only two options; (1) apply national law in a manner that is consistent with the directive or (2) disapply any provision of national law that is contrary to EU law the Danish Supreme Court did neither. The Danish Supreme Court found that an interpretation consistent with EU law was not possible nor could the Supreme Court set aside national law since the Danish EU Accession Act did not confer sovereignty to the extent required for the unwritten EU principle prohibiting discrimination on the grounds of age to take precedence over national law. If the courts were to set aside national law they would be acting outside their constitutional limits to their competences as judicial power. Thereby the Supreme Court chose a third option and set aside the judgement from the CJEU.
This case from the Danish Supreme Court no. 15/2014 deals with the scope of Directive 2000/78 (the EU employment equality Directive) and the general principle of non-discrimination on grounds of age, adding another case to the ECJ’s Mangold and Kücükdeveci case law (on the requirement for national courts to suspend national law which breaches the principle of age discrimination) under Danish law.
The CJEU’s ruling in the Ajos-case has previously been discussed here. Consequently, only the main conclusions needed to fully understand the judgment in the main proceedings under Danish law will be revisited.
The Danish Supreme Court referred the following questions to the CJEU: The first question was related to the compliance of the national rules implementing the Directive and the application of the principle of non-discrimination on grounds of age. The second question formulated by the Danish Supreme Court referred to the balancing of rights and principles, and will be cited in full, since it contributes to the understanding of the judgment from the Danish Supreme Court last week:
“Is it consistent with EU law for a Danish court hearing an action in which an employee seeks from a private-sector employer payment of a severance allowance which, under the Danish law described in question 1, the employer is not bound to pay, even though that is contrary to the general EU principle prohibiting discrimination on grounds of age, to weigh that principle and the issue of its direct effect against the principle of legal certainty and the related principle of the protection of legitimate expectations and to conclude on that basis that the principle of legal certainty must take precedence over the principle prohibiting discrimination on grounds of age, such that the employer is, in accordance with national law, relieved of its obligation to pay the severance allowance and, in order to determine whether such a balancing exercise may be carried out, is it necessary to take into consideration the fact that the employee may, in appropriate cases, claim compensation from the Danish State on account of the incompatibility of Danish law with EU law?” (my underlining)
The CJEU openly rejected the solution offered by the Supreme Court, leaving it for the national courts to balance the EU principles against each other, and gave clear guidance on how the Supreme Court were to settle the case:
“EU law is to be interpreted as meaning that a national court adjudicating in a dispute between private persons falling within the scope of Directive 2000/78 is required, when applying provisions of national law, to interpret those provisions in such a way that they may be applied in a manner that is consistent with the directive or, if such an interpretation is not possible, to disapply, where necessary, any provision of national law that is contrary to the general principle prohibiting discrimination on grounds of age. Neither the principles of legal certainty and the protection of legitimate expectations nor the fact that it is possible for the private person who considers that he has been wronged by the application of a provision of national law that is at odds with EU law to bring proceedings to establish the liability of the Member State concerned for breach of EU law can alter that obligation” (my underlining)
On this basis the hearing before the Supreme Court took place 11 and 14 November 2016, and bearing the CJEU’s guidance in mind, the Supreme Court had to decide whether the private employer could rely on the Danish rules and not pay severance allowance to the employee.
As emphasized above in the quotation, the preliminary ruling left the Supreme Court with only two options; (1) applying national law in a manner that was consistent with the Directive or (2) disapplying any provision of national law that was contrary to EU law. The Danish Supreme Court did neither. The Supreme Court came to the conclusion that the national constitutional reservation had to take precedence over EU law according to the EU Accession Act.
Before entering into the extensive argumentation leading to this controversial conclusion, it is worth considering the circumstances and the dilemma of the Supreme Court leading to the decision to make a preliminary reference to the CJEU.
In the Danish case Ole Andersen from 12 October 2012 the CJEU found, that the Directive precluded national rules (same national rules as in the Ajos-case) regarding payment of severance allowance. Paragraph 2a(3) of the Danish Law on salaried employees held that:
No severance allowance shall be payable, if the employee will – on termination of the employment relationship – receive an old age pension from the employer and the employee has joined the pension scheme in question before attaining the age of 50 years.
The CJEU found that the Directive must be interpreted as precluding national legislation pursuant to which workers who are eligible for an old-age pension from their employer under a pension scheme which they have joined before attaining the age of 50 years cannot, on that ground alone, claim a severance allowance aimed at assisting workers with more than 12 years of service in the undertaking in finding new employment, and thereby overruling the national rule.
In the national proceedings the Western High Court (the case was not tried at the Supreme Court) ruled in favor of the employee against a public authority as the employer – a vertical EU law relationship.
The question before the Supreme Court in the Ajos-case was if the same approach could be applied in a horizontal EU law relationship between two private individuals.
By referring the case to the CJEU, the Supreme Court highlighted a discussion carried out by the Advocates-General of the CJEU about the doctrinal basis of horizontal application of general EU principles.
Advocate General Kokott had in her opinion to the Ole Andersen-case questioned that the CJEU had relied directly on the general legal principle of the prohibition of age discrimination, stating that it was for the national court to set aside any provision of national law, which may conflict with that prohibition. She found in paragraph 22 that it appeared:
“to be a makeshift arrangement for the purposes of resolving issues of discrimination in legal relationships between individuals, in which Directive 2000/78 is not as such directly applicable and cannot therefore replace national civil or employment law.”
The Advocate General also emphasized that the idea of an in-depth reappraisal and examination of the doctrinal basis of the controversial horizontal direct effect of general legal principles or fundamental rights between individuals were certainly appealing, but not necessary to resolve the case at hand.
Also Advocate General Trstenjak had in her opinion in the Dominguez-case reservations regarding legal certainty for private individuals and the risk of mixing sources of law as regard to directives as secondary law and general principles as primary EU law.
About the absence of legal certainty for private individuals she emphasized in paragraph 164, that
“the principle of legal certainty requires that rules involving negative consequences for individuals should be clear and precise and their application predictable for those subject to them. However, as it will never be possible for a private individual to be certain when an unwritten general principle given specific expression by a directive will gain acceptance over written national law there would, from his point of view, be uncertainty as to the application of national law similar to that experienced where a directive is directly applied in a relationship between private individuals”
The Danish Supreme Court raised the same concerns and by referring the Ajos-case to the CJEU aimed to find a solution by balancing the conflicting principles. By rejecting the solution by the Danish Supreme Court the CJEU offered no way out for the Danish Supreme Court, but to turn on a plate and apply EU law as told by the CJEU if compliance were to be secured.
The Danish Supreme Court did not act as expected; instead, they found their own way of solving the problem and securing legal certainty under Danish law.
The reasoning of The Supreme Court
Interpretation consistent with EU law
The Supreme Court held – in line with the formulation of its question to the CJEU in 2014 – that the legal position under Danish law was clear, and that it would not be possible to arrive at an interpretation of the national law that was consistent with the Directive as interpreted by the judgment of the CJEU in the Ole Andersen-case by using the methods of interpretation recognized under Danish law.
Reflecting on the application of the contra legem assessment made by the Supreme Court it is worth relating it to the harshly formulated paragraph 34 of the CJEU’s Ajos-judgment, where the CJEU stipulated, that:
“the national court [the Danish Supreme Court] cannot validly claim that it is impossible for it to interpret the national provision at issue in a manner that is consistent with EU law by mere reason of the fact that it has consistently interpreted that provision in a manner that is incompatible with EU law.”
This seems to reflect a different understanding by the CJEU of the concept of “contra legem”, and therefore the reasoning on that matter is given a strong voice in the Danish Supreme Court’s judgement. The Supreme Court explains in details that the legal position under Danish law was clear and was not only relying on the interpretation made by the Supreme Court itself. The position had been reaffirmed over the years since the Danish Parliament introduced the rule in 1971 and the Parliament kept the same wording of the provision in the later amendment in 1996. Consequently, the Supreme Court found that it could not change the legal position as the CJEU suggested by using the methods of interpretation recognized under Danish law.
Therefore, the Supreme Court found that it would be “contra legem” to interpret the national law in conformity with the Directive since the national legal position was clear. In this reasoning the Supreme Court and the nine judges acted unanimously.
The general principle of non-discrimination on grounds of age
In the second part of the judgement’s reasoning the majority of eight out of the nine judges came to the conclusion that the Supreme Court could not set aside national law since the Danish EU Accession Act did not confer sovereignty to the extent required for the unwritten EU principle prohibiting discrimination on the grounds of age to take precedence over national law.
The reasoning focuses on the lack of legal basis in the Danish EU Accession Act which is the Act that sets the limits of the conferred sovereignty to the EU in line with paragraph 20 of the Danish Constitution.
The Supreme Court went on to perform an in-depth analysis of the preparatory works of the Accession Act (travaux préparatoire) leading to Denmark joining the EU in 1972 and the subsequent amendments to the Accession Act.
The Supreme Court found that the Danish Parliament did not explicitly refer to the Mangold and Kücükdeveci case law in the preparatory works to the Lisbon Accession Act amendment. On this basis the Supreme Court arrived at the conclusion, that the CJEU did not have the competence or legal basis to give precedence to the unwritten principle prohibiting discrimination on grounds of age in a case where this was contrary to national law.
Reflecting further on the Mangold case of 2005, the Supreme Court also noted that the CJEU in the Mangold case law did not balance the legal certainty and the protection of legitimate expectations against the prohibition of discrimination on grounds of age. It is not clear if the Supreme Court finds that the result in the Mangold case would have been different if the CJEU had reflected on this balancing. By revisiting the finding in the CJEU’s Ajos case one could make the argument, that it would not have changed the result.
The facts of the case – the dismissal of the employee - were before the Lisbon treaty entered into force the 1 December 2009. Consequently, the Supreme Court stressed that the application of any Charter provision since it was not legally binding and thereby disregarded the argument that the employee could rely on the Charter provisions.
After concluding that the Danish Accession Act does not provide legal basis in a horizontal relationship to give precedence to an unwritten EU law principle the Supreme Court adds:
“If the Supreme Court in a situation like this were to set aside national law the Court would be acting outside their limits to their competences as judicial power.” (Translation made by the author)
And thereby, not only referring to the Accession Act and sovereignty but also to the separation of power in the Danish Constitution section 3 as it would require an act of parliament to amend the national rules and reassure compliance with EU law.
In the end it should be noted that one judge found that the EU law should take precedence over national law, and that there was no conflict with the Danish EU Accession Act following the Supreme Courts judgments in the Maastricht and Lisbon cases on sovereignty. The minority judge voted to follow the directions made by the CJEU.
Reflection and follow-up litigation
Last week’s judgement from The Danish Supreme Court can definitely be seen as disobedience as the CJEU’s guidance in the Ajos-case was very precise and gave the Supreme Court only two options, but the Supreme Court choose a third. Or it can be seen as contributing to the debate about the dialogue between the courts; it depends on the eyes of the beholder.
It surely adds a chapter to discussion on where the contra legem test is best performed; in the national law regimes or by the CJEU and it sets out the limits of the Danish Supreme Courts constitutional mandate in order to reassure compliance with EU law.
The likely aftermath of the case is also fascinating since the employee has brought an action against the Danish state claiming that the state is liable for the loss of severance pay. The liability case has been suspended on the decision from the Supreme Court.
Another possible outcome could be follow-up litigation from the EU Commission by launching infringement proceedings against Denmark as a Member State on the lack of effective legal protection under article 19 TEU or the duty of sincere cooperation under article 4 (3) TEU. In any case the Ajos-case will be revisited and have a major impact on the relationship between the EU and Denmark.
Please feel free to contact me if you want more information about the case or the related issues from a national Danish perspective. I am doing a PhD project about the horizontal effect of EU law and member state liability from a national Danish perspective. Before I joined Academia I was practicing lawyer at one of the leading law firms in Denmark working extensively with EU law.
Photo credit: wikipedia
Barnard & Peers: chapter 6; chapter 8; chapter 9; chapter 20