How is Part Two of the Withdrawal Agreement (citizens' rights) enforceable in the courts?

Professor Tamara Hervey, Natalia Miernik and James C Murphy (UG students), University of Sheffield

The support of the ESRC for Health Governance after Brexit and UK in a Changing Europe is gratefully acknowledged

1. Introduction

Some 3.6 million EU citizens, and their families, live in the UK. An estimated over 185,000 work in the health and social care sector, as highlighted in recent news reports. Part Two of the Withdrawal Agreement, on ‘Citizens’ Rights’ gives these people continuity of many of the rights they enjoyed in EU law. This blog post builds on earlier posts on the EU (Withdrawal Agreement) Act 2020; and the relevant parts of the Withdrawal Agreement itself. It considers what happens if those rights are not upheld. How can people affected enforce the Withdrawal Agreement? This is an important practical consideration: rights on paper without the means to enforce them are meaningless.

The ‘Citizens Rights’ provisions of the Withdrawal Agreement will continue to apply after the end of transition. They give residence rights and rights to access health care, pensions and other social security entitlements. Note, there are equivalent provisions in the EEA/EFTA Separation Agreement and the Swiss Citizens Rights Agreement (which the Withdrawal Agreement Act also gives domestic legal effect to in the UK).

Our focus here is the enforceability of the ‘Citizens Rights’ provisions of the Withdrawal Agreement in the UK. The question of their enforceability in EU Member States is a matter of EU law and of domestic constitutional law in each relevant Member State. However, because the Withdrawal Agreement is intended to impose reciprocal obligations (Article 4 (1) WA), where necessary, we also explain the enforceability of those provisions in the EU.

The starting point, which will be the relevant legal position for all instances where the UK brings into domestic law its relevant obligations under the Withdrawal Agreement, is the EU (Withdrawal Agreement) Act 2020. This gives power to adopt regulations to implement the Citizens Rights parts of the Withdrawal Agreement. If the UK executive adopts regulations that fully implement the citizens’ rights contained in the Withdrawal Agreement, then enforcing those rights in UK courts or tribunals will be a matter solely of domestic law: a claimant will be relying on rights found in UK regulations.

But what if the UK does not do so adequately? Can a claimant who believes this is the case bring a claim based on an infringement of their rights under the Withdrawal Agreement in UK courts or tribunals?

2. Enforceability of the Withdrawal Agreement in the UK

In EU law, two legal doctrines interact so as to have the effect that certain parts of EU law are enforceable by citizens using their national courts. These doctrines are known as ‘supremacy’ and ‘direct effect’. They are currently (pre the end of transition) recognised by UK courts, and applied accordingly, as required by the European Communities Act 1972.

In order for the Withdrawal Agreement to be enforceable in the UK, that effect must be created by an Act of Parliament. This is necessary because the UK is a ‘dualist’ country, where international treaties are not enforceable in the domestic legal system, unless there is domestic legislation which gives effect to them.

The EU (Withdrawal Agreement) Act 2020, section 5(1), which inserts a new section 7A into the European Union (Withdrawal) Act 2018, gives domestic legal effect to the Withdrawal Agreement, after the transition period:

‘all such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the withdrawal agreement… are without further enactment to be given legal effect or used in the UK.’

This provision uses very similar wording to the European Communities Act 1972, section 2 (1), which is the part of UK law which gave EU law supremacy and direct effect in the UK legal order.

The supremacy, or primacy, of EU law means that it must be applied in preference to contradictory national law, even if the contradictory national law has been enacted later than the relevant EU law.

2.1 Supremacy

The UK House of Lords case of Factortame confirmed that the 1972 Act gave EU law supremacy in the UK. The House of Lords found that it was required to ‘disapply’ or disregard any domestic legislation that was contrary to European Community law. Lord Bridge’s judgment expressed it thus:

“under the terms of the Act of 1972 it has always been clear that it was the duty of a UK court, when delivering final judgment, to override any rule of national law found to be in conflict with any directly enforceable rule of Community law”.

In the same sense, it is possible that section 7A of the European Union (Withdrawal) Act 2018 will have the same effect in that any domestic provision that contradicts the Withdrawal Agreement will be disregarded. In other words, Parliament may have given the Withdrawal Agreement supremacy in the same way the European Communities Act 1972 gave EU law supremacy.

This seems to be the intention of the Withdrawal Agreement. Its Article 4 (1) provides that the Withdrawal Agreement’s provisions “shall produce in respect of and in the United Kingdom the same legal effects” as they produce in the EU. Article 4 (2) of the Withdrawal Agreement imposes an explicit obligation on the United Kingdom to secure compliance with this agreement, ‘including as regards the required powers of its judicial and administrative authorities to disapply inconsistent or incompatible domestic provisions, through domestic primary legislation.’ (italics added).

But whether the supremacy of the Withdrawal Agreement, in the sense that contradictory domestic legislation must be ‘disapplied’ is secured by the EU (Withdrawal Agreement) Act 2020, and its amendments to the EU (Withdrawal) Act 2018 remains moot. It might be argued, for example, that the provisions of the EU (Withdrawal) Act 2018, as amended by the 2020 Act, represent a Parliamentary intention to free UK courts from the constraints implicit in the supremacy doctrine. The UK would then be in breach of the Withdrawal Agreement, because the Withdrawal Agreement would not have ‘the same legal effect’ in the UK as in the EU. But the remedy for that breach would lie elsewhere than in a claim brought by a citizen relying on a provision of the Withdrawal Agreement as disapplying contradictory national law.

2.2 Direct Effect

Whether the Withdrawal Agreement has the quality of ‘disapplying’ contradictory UK legislation or not, a further crucial question is whether the Withdrawal Agreement contains rights which can be enforced by individuals in UK courts and tribunals, such as the Social Security and Child Support Appeal Tribunals. This quality of EU law is known as ‘direct effect’.

There are two questions to be decided: first, whether the Withdrawal Agreement’s provisions on citizens’ rights have direct effect; and second whether that direct effect is effectively enacted as a matter of domestic law in the UK. The two are inter-related, because, as noted above, the Withdrawal Agreement itself provides that the agreement is to produce ‘the same legal effect’ in the UK as it does in the EU. If the Withdrawal Agreement did not provide for direct effect of the Citizens Rights provisions, then the UK need not effectively enact such direct effect into its domestic legal system.

2.2.1 Direct effect of the citizens’ rights provisions of the Withdrawal Agreement as a matter of EU law

The Withdrawal Agreement provides in Article 4 (1) that

‘... legal or natural persons shall in particular be able to rely directly on the provisions contained or referred to in this Agreement which meet the conditions for direct effect under Union law’. (italics added)

The term ‘the conditions for direct effect under Union law’ could be interpreted in two ways. Either it means the conditions for direct effect of EU law itself; or it means the conditions for direct effect in EU law of international agreements to which the EU is a party. The wording of Article 4, taken literally, might suggest the latter. Article 4 WA provides for ‘the conditions for direct effect under Union law’, not ‘the conditions for direct effect of Union law’.

EU law itself is directly effective where provisions meet a set of criteria developed by the European Court of Justice in the 1970s and 80s. They are relatively generous: the provision must set out entitlements for the benefit of individuals, and impose direct duties on a Member State authority to protect those entitlements. There is a (controversial, but accepted) presumption that the nature of the EU legal order is such that individuals enjoy enforceable rights within that novel legal order.

By contrast, provisions of international agreements to which the EU is a party are directly effective in a narrower range of circumstances. First, the agreement itself, taken as a whole, in terms of its overall nature and logic, must be capable of granting enforceable rights. Second, the specific provision at issue must contain a sufficiently precise legal obligation. Both conditions must be met. The CJEU’s approach makes a distinction between the novel legal order of EU law, and ‘ordinary’ international law. There is no presumption that provisions of international agreements to which the EU is a party, even if identically worded to provisions of EU law, have direct effect. The CJEU takes account of the political context as a whole: it is not simply a decision based on legal criteria alone.

Which interpretation of Article 4 WA is correct is a moot point, and could be the subject of litigation.

Adopting the former approach would lead to the conclusion that the Citizens’ Rights provisions of the Withdrawal Agreement have direct effect. The provisions set out entitlements for the benefit of individuals, and impose direct duties on a Member State authority to protect those entitlements. They are worded almost identically to directly effective provisions of EU law.

Adopting the latter approach would, in our view, lead to the same conclusion. But the steps of legal reasoning to reach that conclusion are more complex.

First, taking into account the nature and logic of the Withdrawal Agreement as a whole, is the Agreement such an agreement as capable of creating enforceable rights? It might be argued that the Withdrawal Agreement aims to provide for as smooth an exit from the EU as possible for the UK, but at the same time taking account of what is possible given the nature of the EU. The Withdrawal Agreement must be interpreted taking into account the UK’s position that it seeks to be outside of the control of EU law. The consequent effect of that position is that citizens in an EU-UK cross border situation will cease to enjoy the many benefits of EU membership. In other words, it is in the nature of the Withdrawal Agreement that citizens in a cross-border situation will find themselves worse off after Brexit. An aspect of that consequence could be the lack of enforceability of the Withdrawal Agreement.

But the better argument is that the whole point of the Withdrawal Agreement in this context is to secure the acquired rights of citizens who are in a cross-border position, who have relied in good faith on the ‘safety net’ of EU law, and on the benefits that EU membership had hitherto given those citizens. It is not possible to secure all such rights, as the UK is no longer an EU Member State. But the aim of the Withdrawal Agreement should be understood to be to secure as many such rights and benefits as possible. Therefore, the Withdrawal Agreement should be interpreted to be the type of agreement capable of direct effect. To this argument, we might add that where the EU has intended an agreement not to have direct effect, it has more recently been explicit on the matter, excluding direct effect in the text of the agreement itself, or in the Council Decision which concludes the agreement on behalf of the EU. The EU has emphatically not done so in the case of the Withdrawal Agreement, suggesting an intention that the Agreement taken as a whole is of a type which is capable of direct effect.

Second, what of the requirement that the specific provision at issue must contain a sufficiently precise legal obligation? This is an extraordinarily technical and complex area of EU law, where the CJEU’s approach has been criticized. It is difficult to draw general principles from the CJEU’s case law. Some authors have distinguished between association, cooperation and trade agreements, where the CJEU is more likely to find provisions directly effective, and other types of international agreements to which the EU is a party, where it is less likely to do so. This observation does not help with the Withdrawal Agreement: are we to consider it more similar to an association, cooperation or trade agreement, which all aim to bring closer integration between the parties (whereas the effect of the Withdrawal Agreement is to create divergence) or another type of international agreement?

Turning to the specific measures at issue, the relevant part of the Withdrawal Agreement contains many provisions which provide precise legal obligations, imposing specific duties on national authorities and granting rights to individuals: for instance, Articles 13-28, 31-35, 39 WA all have this quality, especially when combined with the definitional/scope provisions in Articles 9, 10 and 30 WA.

We conclude that, whichever approach is taken, many of the Citizens Rights provisions of the Withdrawal Agreement are directly effective as a matter of EU law.

2.2.2 Direct effect of the citizens’ rights provisions of the Withdrawal Agreement in UK law

What about the position in UK law?

The starting point here is the interpretative presumption that Parliament intends to implement the obligations on the UK found in the Withdrawal Agreement. The European Union (Withdrawal Agreement) Act 2020 inserts section 7C into the European Union (Withdrawal) Act 2018, which makes this presumption explicit.

7C Interpretation of relevant separation agreement law

(1) Any question as to the validity, meaning or effect of any relevant separation agreement law is to be decided, so far as they are applicable—

(a) in accordance with the withdrawal agreement, ... and ...

(2) See (among other things)—

(a) Article 4 of the withdrawal agreement (methods and principles relating to the effect, the implementation and the application of the agreement),

Any question as to, inter alia, the effect of any relevant law is to be decided in accordance with the Withdrawal Agreement. Section 7C refers explicitly to Article 4 WA in this regard.

The national implementation of the obligation to secure the direct effect of relevant provisions of the Withdrawal Agreement is found in section 7A of the European Union (Withdrawal) Act 2018, as amended. It reads:

7A General implementation of remainder of withdrawal agreement

(1) Subsection (2) applies to—

(a) all such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the withdrawal agreement, and

(b) all such remedies and procedures from time to time provided for by or under the withdrawal agreement, as in accordance with the withdrawal agreement are without further enactment to be given legal effect or used in the United Kingdom.

(2) The rights, powers, liabilities, obligations, restrictions, remedies and procedures concerned are to be—

(a) recognised and available in domestic law, and

(b) enforced, allowed and followed accordingly.

(3) Every enactment (including an enactment contained in this Act) is to be read and has effect subject to subsection (2).

This provision, as already noted, is similar to section 2, on ‘General implementation of Treaties’ of the European Communities Act 1972:

(1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression “enforceable EU right” and similar expressions shall be read as referring to one to which this subsection applies.

...

(4) The provision that may be made under subsection (2) above includes … any such provision (of any such extent) as might be made by Act of Parliament, and any enactment passed or to be passed, other than one contained in this part of this Act, shall be construed and have effect subject to the foregoing provisions of this section; ...

Just as section 2 of the European Communities Act 1972 secures direct effect of EU law in the UK’s legal system until the end of transition, so sections 7C and 7A of the European Union (Withdrawal) Act 2018 secure direct effect of the Withdrawal Agreement after transition.

During the negotiations of the Withdrawal Agreement, the UK government published an (undated) Technical Note which stated that direct effect is a principle specific to EU law and that it will cease to apply in the UK once the UK is no longer a Member State. Moreover, the note contends (para 3) that direct effect is not necessary for individuals to be able to enforce their rights under the Withdrawal Agreement:

‘The same substantive result can be achieved if the Withdrawal Agreement requires the UK to give citizens specified rights, and the UK enacts domestic legislation whose effect is to bestow those rights … EU citizens [will] be able to enforce those rights through the UK’s domestic legal system...’.

We do not agree with the analysis here. A ‘Technical Note’ as part of negotiations can only have a persuasive effect in terms of interpreting the legislative text. As explained above, the better interpretation of the legislation is that it expresses Parliamentary intention to comply with the obligations in the Withdrawal Agreement by granting relevant provisions of that agreement the legal quality of direct effect in UK law.

We note that several influential commentators, for instance, Richard Eccles, of the international law firm Bird & Bird; Emily McKenzie of Brick Court Chambers; and Steve Peers on this blog share our view that relevant provisions of the Withdrawal Agreement have direct effect in the UK post-transition.

2.3 Independent Monitoring Authority

Section 15 of the European Union (Withdrawal Agreement) Act 2020 establishes an Independent Monitoring Authority. Its general duties, laid down by statute, are to ‘promote the adequate and effective implementation and application in the United Kingdom of Part 2 of the withdrawal agreement …’ (schedule 2, section 23 (1)). Further details about the IMA are in schedule 2 of the Act. They include the independence of the authority from government; provisions on membership, including expertise on relevant matters in Northern Ireland, Scotland and Wales; provisions for payment of non-executive members; provisions for staffing; powers to delegate functions.

The IMA is to have powers to carry out inquiries, bring judicial review claims or intervene in judicial proceedings. But it is not obliged to do any of these things. The IMA is to be obliged only to carry out a preliminary review of a complaint brought by a person claiming to have a relevant right, to the effect that the UK has failed to comply with its duties in Part 2 of the Withdrawal Agreement, or a UK public authority has acted in a way which prevents that person from exercising the relevant right.  The preliminary review is so that the IMA may decide whether to carry out an inquiry. In reaching that decision, the IMA is obliged to ‘consider whether it would be more appropriate for the person who made the complaint to deal with its subject matter by other means (for example, court proceedings) than for the IMA to carry out an inquiry’.

The provisions in the 2020 Act conform with the UK’s obligations under Article 159(1) WA. This provision gives such an independent authority the power to: conduct inquiries concerning breaches of Part Two by administrative authorities; receive complaints from Union citizens and their family members for the purposes of conducting inquiries; and bring legal action before UK courts or tribunals following such complaints.

The IMA is to be appointed before the end of the transition period.

According to the government’s information, the Independent Monitoring Authority will report annually to Parliament, and will be sponsored by the Ministry of Justice.

The European Union (Withdrawal Agreement) Act 2020 provides that the IMA’s role may be transferred to another authority, by executive act, if this meets the requirements of ‘efficiency, effectiveness and economy’, taking into account the need for continued operational independence, impartiality and appropriate resourcing to carry out its functions. The government also has the power to abolish the IMA altogether (schedule 2, section 40),

‘if it appears to the Secretary of State that, in accordance with Article 159(3) of the withdrawal agreement ..., it is no longer necessary for the IMA to continue to exist’.

While the IMA, or a successor authority, is operating, those who feel that their rights under the Withdrawal Agreement have not been adequately implemented or upheld by the UK authorities may make a complaint to the independent monitoring authority (IMA). The IMA will then be able to launch an inquiry into how the UK authority has implemented the citizen’s rights under the agreement. If the IMA believes that the UK authority has failed to implement or apply the relevant rights, it has the power to bring legal proceedings against the authority. The IMA will act as the equivalent to the European Commission, which will monitor the implementation and application of citizens’ rights under the Withdrawal Agreement in the EU. This implementation process falls far short of ‘direct effect’.

The independent legal charity, the Public Law Project, has pointed out:

‘The IMA will have a key role in monitoring and protecting EU citizens’ rights after Brexit. As such, the Secretary of State should not be able to make fundamental changes, or even abolish it, by secondary legislation. Any amendments to the IMA must be by primary legislation and in accordance with the WA.’

Reliance by the UK only on this method of enforcement, especially given the executive powers to remove it without external scrutiny, would comply with the UK’s obligations under Article 4 WA, if, and only if, the relevant provisions of the Withdrawal Agreement did not have the quality of direct effect, under the terms of the Withdrawal Agreement. Given that they do have that quality (see above), we conclude, therefore, that the European Union (Withdrawal Agreement) Act 2020 expresses parliamentary intention that the relevant provisions of the Withdrawal Agreement are directly effective.

2.4 Joint Committee

The IMA is not the only body that implements the Withdrawal Agreement into UK law. Article 164(1) WA establishes a UK-EU Joint Committee which ‘shall be responsible for the implementation and application of this Agreement’. Moreover, Article 166(1) WA gives the Joint Committee the power to adopt decisions with regards to any matter within this agreement. The effect of such decisions shall be binding on the UK and the Union; they must implement such decisions under international law. While the Joint Committee does not receive complaints about breach of the provisions in the Withdrawal Agreement, it is obliged to assess, no earlier than 8 years after the end of the transition period (31st December 2028) the functioning of the IMA. The Joint Committee even has the power to decide that the UK may abolish the IMA.

The first meeting of the EU-UK Joint Committee under the Withdrawal Agreement took place on Monday 30 March 2020 by means of teleconference. The agenda for this meeting included UK / EU updates on implementation of the Withdrawal Agreement on Citizens’ Rights. During this meeting, the vice-president of the European Commission, both ‘welcomed the UK’s commitment to continue to ensure that EU citizens can register as lawful residents in the UK, so that they can enjoy their rights granted by the Withdrawal Agreement’ as well as confirming ‘that the Commission will support Member States in making sure that UK nationals in the EU will be in a position to exercise their rights under the Withdrawal Agreement, and will continue to monitor that this is done correctly.’ Both the UK and the EU agreed to ‘launch the work of the six Specialised Committees on the key areas for the implementation of the Withdrawal Agreement.’ The establishment of such Specialised Committees, most importantly the Committee on Citizen’s Rights, can be found in Article 165(1)(a) WA.

2.5 Preliminary Reference Procedure

Another element of the enforcement the Citizens Rights provisions of the Withdrawal Agreement in the UK post-transition is through a preliminary reference procedure. Article 158(1) WA provides that UK courts may refer questions of interpretation of Part 2 to the CJEU where a case commenced within 8 years from the end of the transition period before a UK court or tribunal. The legal effect of this on the UK is to be the same as the legal effect of the preliminary reference procedure governed by Article 267 TFEU (binding on the national court that submitted the question).

This aspect of the Withdrawal Agreement is brought into UK law by section 7C of the European Union (Withdrawal) Act 2018. This provides that questions about the interpretation, validity or effect of relevant law concerning the Withdrawal Agreement are to be decided in accordance with the Withdrawal Agreement. Section 7C (2)(b) refers explicitly to Article 158 WA and the jurisdiction of the CJEU under Part 2 of the Withdrawal Agreement.

3. Conclusion and summary

Until December 2020, (unless the EU and the UK agree, before July 2020, to extend the period for up to two years) EU law remains applicable. When the transition period ends, the UK’s obligations under the Withdrawal Agreement will take effect in UK law via the EU (Withdrawal) Act 2018, as amended by the EU (Withdrawal Agreement) Act 2020. These measures include the Citizens Rights provisions in the Withdrawal Agreement.

Post-transition, at least five bodies will have a role to play in the enforceability of those rights:

-       The UK executive will implement the UK’s obligations in UK law using statutory instruments, relying on powers given in the European Union (Withdrawal) Act 2018, as amended by the European Union (Withdrawal Agreement) Act 2020.

-       Also reliant upon these powers, an Independent Monitoring Authority will be set up in the UK to ensure the application and implementation of Part 2 of the Withdrawal Agreement. It will receive complaints from individuals and will have the power to conduct reviews.

-       This part of the Agreement is directly effective, and can be relied upon by individuals before domestic courts and tribunals in the UK.

-       Questions relating to interpretation of these parts of the Withdrawal Agreement may also be determined by the CJEU through a preliminary reference procedure, whereby domestic courts and tribunals refer such questions to the CJEU. 

-       General enforcement of the Withdrawal Agreement will be ensured by the Joint Committee, who will discuss and oversee implementation methods.

Barnard & Peers: chapter 26

Photo credit: Michael Reeve, via Wikimedia Commons

You can teach a new court Mangold tricks – the horizontal effect of the Charter right to paid annual leave

Filippo Fontanelli, Senior Lecturer in International Economic Law, University of Edinburgh

On 6 November 2018, the Court of Justice of the European Union (the Court) delivered three judgments relating to paid annual leave. Some of its remarks transcend the specific topic, and touch on constitutional matters: the impact of the EU Charter of Fundamental Rights on private parties, the allocation of competences between the EU and the Member States, and the application of EU secondary law.

These cases teach a couple of lessons, and raise a wider point. The lessons are useful: first, alongside the right to non-discrimination and effective judicial protection, the right to annual paid leave in the Charter has direct effect not only in vertical disputes (ie disputes between the individual and the State), but also in horizontal disputes (ie disputes between individuals), even though EU Directives dealing with the same issue still do not in themselves have such horizontal direct effect.  Second, the Charter sometimes binds State acts in a decisive manner. This occurs rarely and, curiously, so far exclusively in disputes between individuals, when the domestic law transposing a directive is not in good order.

The wider point concerns the Charter’s application to domestic measures. In these cases, EU secondary law could not displace domestic measures, because Germany had not transposed a directive correctly. The directive’s mere existence, however, warranted the Charter’s application, and in turn enabled domestic courts to disregard German law and enforce the right to annual paid leave.

The now familiar combo “unimplemented directive plus Charter right” seems a Munchhausen trick. To justify the practice, one should go back to the Mangold case (in which the CJEU ruled that, prior to the Charter having binding force, the general principles of EU law meant that the right to non-discrimination could apply between private parties even if a Member State had not implemented a Directive), and perhaps look deeper into the difference between direct applicability and direct effect, or between a norm’s application and its scope of application. After looking back and looking in-depth, it is still difficult to see precisely how the Charter applied.

The judgments

In cases C-619/16 and C-684/16 Kreuziger and Max Planck, the facts were comparable. Messrs Kreuziger and Shimizu, respectively employed by the Land of Berlin and the Max Planck Institute, had failed to take the entire period of paid annual leave to which they were entitled. After their employment ended, the former employers denied their request to receive payment in lieu of leave. German law appeared to authorise the employers’ position that a failure to request paid annual leave automatically entailed its lapse upon termination.

The Court disposed of the Kreuziger case quickly, due to the dispute’s vertical nature (the employer was a German Land). Article 7 of Directive 2003/88 (the working time Directive) clearly confers the right to paid annual leave and, accordingly, payment in lieu for the leave not taken; the Court recently ruled on this issue in Bollacke. The Court dusted off the direct effect spiel. Since “provisions of a directive that are unconditional and sufficiently precise may be relied upon by individuals, in particular against a Member State and all the organs of its administration” [21], individuals can invoke the Directive and the judges must set aside domestic law if need be. The automatic lapse of this right upon termination of employment, without any safeguard to make sure that the employee could exercise it beforehand, violated EU law.

The reasoning of the Max Planck ruling extended further, since the main proceedings concerned a dispute between private parties. The reasoning of Kreuziger was copy-pasted: Article 7 of the Directive precludes an automatic lapse of the right to paid leave triggered by a mere failure to exercise it [40]. National courts must arrive, to the extent possible, at an interpretation of domestic law consistent with the Directive.

Failing all attempts at consistent interpretation, Mr Shimizu could not rely on the Directive alone, since “Max Planck had to be considered an individual” [65], and directives normally lack horizontal direct effect [68]. The Court thus turned to Article 31(2) of the Charter on the right to annual paid leave, noting that it entailed a clear, enforceable right, withstanding only derogations in compliance with Article 52(1) of the Charter [73]. Article 31(2) of the Charter needing no implementing act to operate, it could warrant disapplication of contrary domestic law:

74           The right to a period of paid annual leave, affirmed for every worker by Article 31(2) of the Charter, is thus, as regards its very existence, both mandatory and unconditional in nature, the unconditional nature not needing to be given concrete expression by the provisions of EU or national law, which are only required to specify the exact duration of annual leave and, where appropriate, certain conditions for the exercise of that right. It follows that that provision is sufficient in itself to confer on workers a right that they may actually rely on in disputes between them and their employer in a field covered by EU law and therefore falling within the scope of the Charter.

75           Article 31(2) of the Charter therefore entails, in particular, as regards the situations falling within the scope thereof, that the national court must disapply national legislation negating the principle [that the right to paid leave and/or payment in lieu cannot lapse automatically].

The last hurdle for the direct invocability of Article 31(2) of the Charter in German courts was the dispute’s horizontal nature. The Court recycled from its own case-law the bold suggestion that Article 51(1) of the Charter, which sets out who is bound by the Charter, is ambiguous in this respect and does not preclude individuals from relying on the Charter against each other:

76           … although Article 51(1) of the Charter states that the provisions thereof are addressed to the institutions, bodies, offices and agencies of the European Union … and to the Member States only when they are implementing EU law, Article 51(1) does not, however, address the question whether those individuals may, where appropriate, be directly required to comply with certain provisions of the Charter and cannot, accordingly, be interpreted as meaning that it would systematically preclude such a possibility.

Notably, the Court distinguishes Article 27 of the Charter on workers’ consultation (at issue in AMS) from Article 31(2) on annual leave, because the former Charter Article refers to national and EU law limits and the latter Charter Article does not. If this is the test for whether Charter provisions can have horizontal direct effect, it should be noted that most of the Charter provisions on social rights refer to national and EU limits – but most of the other provisions of the Charter do not.

73      By providing, in mandatory terms, that ‘every worker’ has ‘the right’ ‘to an annual period of paid leave’ — like, for example, Article 27 of the Charter which led to the judgment of 15 January 2014, Association de médiation sociale (C‑176/12, EU:C:2014:2) — without referring in particular in that regard to the ‘cases’ and ‘conditions provided for by Union law and national laws and practices’, Article 31(2) of the Charter, reflects the essential principle of EU social law from which there may be derogations only in compliance with the strict conditions laid down in Article 52(1) of the Charter and, in particular, the fundamental right to paid annual leave.

The Joined Cases C-596/16 and C-570/16 (Wuppertal v Bauer; Willmeroth v Broßonn) largely replicated the reasoning of the Max Planck and Kreuziger cases. Only, in the underlying disputes, it was rather the employees’ heirs seeking payment in lieu, on behalf of the deceased workers. According to the referring judge, German law provided that the right to unpaid annual leave, necessarily turned into payment in lieu upon the workers’ death, would not become part of their estates.

Building on prior case law (discussed here), the Court, besides noting the importance of the right under Article 7 of the Directive, stated that it should accrue, after the death, to the worker’s estate:

48      … from a financial perspective, the right to paid annual leave acquired by a worker is purely pecuniary in nature and, as such, is therefore intended to become part of the relevant person’s assets, as a result of which the latter’s death cannot retrospectively deprive his estate and, accordingly, those to whom it is to be transferred by way of inheritance, from the effective enjoyment of the financial aspect of the right to paid annual leave.

With respect to horizontal disputes (like the Willmeroth v Broßonn controversy, whereas Bauer was a public employee), the reasoning of the Court was identical to that used in the Max Planck case [87-91]. Article 31(2) of the Charter can be invoked in disputes between individuals, possibly leading to the setting aside of domestic norms like those at issue in the main proceedings.

The Charter’s effect on domestic measures

The Charter has many functions. It guides the interpretation of EU law and serves as standard of legality of EU acts. It does not enlarge the competences of the EU at the expense of the member states, but binds their action when they act as agents of the EU. In this residual scenario, delimited by the sibylline “implement[ation of] EU law” notion of Article 51(1) of the Charter, the Charter should serve as standard of EU-legality of national measures. In other words, the Charter can preclude some national measures.

The Charter applying to state measures falling “within the scope of EU law,” (a formula sanctified in Fransson [21], and unsurpassably frustrating), the following circumstances can arise:

a)      EU law does not apply to the matter, so neither does the Charter;

b)      EU law applies to the matter, and precludes the domestic measure. The Charter applies too: it might also preclude the domestic measure (“double preclusion”) or not;

c)       EU law applies to the domestic measure, but does not preclude it. The Charter applies too, and likewise does not preclude it;

d)      EU law applies to the domestic measure, without precluding it. The Charter, which also applies, precludes the domestic measure.

In the scenarios a), b) and c), the Charter is irrelevant to the ultimate determination of EU-legality.

Only in scenario d) does the Charter show its teeth, doing its standard of review job fully. Exclusively in this scenario, an otherwise EU law-compliant measure can breach the Charter and, accordingly, might be set aside by domestic judges. To this day, scenario d) has never occurred in its garden variety. Never has been the case that, for instance, a national measure that justifiably restricts one fundamental freedom (and falls therefore under the scope of Treaty law, without being precluded thereby) was found to breach the Charter. This unlikely coincidence warrants a deeper analysis (but not here), because it suggests that the Court is discreetly keeping the Charter in a locked drawer, lest member states react like the German Constitutional Court reacted after Fransson. A low-profile use of the Charter – one that essentially emptied it of its post-Lisbon potential – is what the Court’s record shows in the last 9 full years.

However, there is a hybrid category of cases, halfway between scenarios b) (double preclusion) and d) above. The paid annual leave rulings of 6 November 2018 belong in this atypical group, insofar as they relate to horizontal disputes. As far as their bearing on vertical disputes, they are squarely b)-type rulings: the measures are precluded by the Directive, and the breach of the Charter is just redundant.

The discussion below, instead, focuses only on the horizontal dimension of these rulings.

Did the Directive apply?

That the Directive applied must be assumed – otherwise the Charter would not have applied at all. Yet, the Directive could not apply to determine the outcome of the underlying dispute, for lack of horizontal direct effect. Can it be said that the Directive applied, and precluded the national measures, but was ineffective? The (ineffective) application of the Directive to the underlying scenario would then warrant the (very effective) application of the Charter. The Charter alone would warrant the disapplication of the German norms that breached both the ineffective Directive and the effective Charter.

The easier construction – that the Directive, lacking horizontal direct effect, could not apply – is untenable. Admitting that the Directive did not apply contradicts the notion that the German law fell within the “scope” of EU law, and would rule out the relevance of the Charter tout court. Some finer reasoning must support the Court’s decision. I suggest a couple of unnoticed distinctions that might help.

Direct application is not the same as direct effect: This is an all-time favourite for mid-term exams, so why not give this distinction a day in Court? Perhaps, the Directive did apply somehow (direct applicability), but could not be relied upon in domestic proceedings (lack of horizontal direct effect). This would explain the triggering of Article 51(1) of the Charter, but also the impossibility to use the Directive to solve the disputes between Mr Shimizu and Mrs Broßonn and their employers. Certainly the Directive applied, somehow. As soon as the transposition period expired, it deployed its legal obligatory effects and, even regarding horizontal disputes, triggered immediately Germany’s responsibility for failure to transpose correctly, which individuals can invoke to seek compensation without recourse to any implementing measure.

On the lack of direct effect, there is no real mystery: Article 7 of the Directive creates a precise and unconditional right, capable of invocation in domestic proceedings, so the direct effect checklist is in order. However, it can only work in vertical disputes. This distinction between direct applicability and direct effect could justify the Court’s truncated use of the Directive (sort-of applying to bring the Charter in under Article 51(1) of the Charter; not-really applying in its own right).

Scope of application is not the same as application: This is a contrived distinction, but it might operate in the background of these rulings. The Directive effectively cannot apply in domestic proceedings. However, the German law falls under the “scope” of the Directive, in a somewhat more abstract sense, as if applicable and applied were distinguishable. To accept that EU law reaches further than the circumstances to which it can actually apply is a head-scratcher. Yet, that is what the Court prescribed: domestic law must be set aside for intruding in an area that the Directive could not operate (the direct regulation of duties between private parties) but it nevertheless occupied – somehow. In the wake of Kücükdeveci (an earlier judgment on discrimination in employment), I noted the risk:

… it is necessary to evaluate the implications of Kücükdeveci: if the general principle of non-discrimination has a wider scope than the measures codifying it (the Directive), it follows that it can be invoked in a series of disputes that, despite concerning EU-regulated matters, fall outside the scope of the Directive.

Putting lipstick on Mangold

The distinctions above are nowhere mentioned in the rulings. So, if the Directive could not operate in domestic proceedings, how did the Court justify German law falling under the scope of EU law? This week’s rulings proffer only minimal reasons, but summon precedents to convey the idea that this apparent misalignment is nothing to worry about. From Bauer:

53           Since the national legislation at issue in the main proceedings is an implementation of Directive 2003/88, it follows that Article 31(2) of the Charter is intended to apply to the cases in the main proceedings (see, by analogy, judgment of 15 January 2014, Association de médiation sociale, C‑176/12, EU:C:2014:2, paragraph 43).

If one goes down the rabbit hole of cross-citations, however, Mangold awaits on the bottom. In terms of legal reasoning, it does not get any more controversial than Mangold. The judgment exasperated the former president of the German Constitutional Court and drafter of the Charter, who penned an op-ed wishing the Court of Justice to “Stop.” Ultimately, Mangold was criticised for encroaching into the Member States’ competence.

There are, in fact, a series of cases in which the Court prescribed the horizontal direct effect of a fundamental right, using a directive as a trampoline. Mangold was the first case, and Kücükdeveci followed. Dansk Industri (discussed here), also on discrimination on grounds of age, pulled the same trick, this time using the Charter rather than a general principle of law. AMS (discussed here) replicated the reasoning with respect to the workers’ right to consultation and information in the Charter, accepted its applicability but concluded that the Charter’s norm was not self-executing and stopped short of confirming its horizontal direct effect.

Egenberger (discussed here), very recently, asserted the horizontal effect of the right to non-discrimination on grounds of religion and the right of effective access to justice. In IR (discussed here), the Court consolidated Egenberger, and wisely recalled that non-discrimination is essentially a general principle: if the AMS explanation why the Charter applies to individuals were not compelling, the unwritten source might apply more liberally and come to the rescue just like in the good Mangold days:

69           Before the entry into force of the Treaty of Lisbon, which conferred on the Charter the same legal status as the treaties, that principle derived from the common constitutional traditions of the Member States. The prohibition of all discrimination on grounds of religion or belief, now enshrined in Article 21 of the Charter, is therefore a mandatory general principle of EU law and is sufficient in itself to confer on individuals a right that they may actually rely on in disputes between them in a field covered by EU law.

Conclusion

In all the cases mentioned, individuals could not rely on the directives in domestic proceedings. Yet, each directive somewhat marked the “scope” or “cover[age]” of EU law and let the fundamental right finish the work (unless some ingrained deficiency made it non self-executing, as in AMS). The simple annotation that the German law “is an implementation of [the] Directive” sanded over the uncomfortable truth: if the Directive was insufficient to set aside the norms of German law, perhaps these norms of German law lay outside the scope of EU law, and the Charter should not have found its way in the proceedings.

A sceptical reader might wonder what “a field covered by EU law” means, and wonder whether the Charter spilled over from the EU-law scope comfort zone. An optimist one can celebrate the expansive force of social rights. Horizontal application of fundamental rights translates into the creation of EU-based fundamental duties, and lets us catch a glimpse of solidarity in the making.

Barnard & Peers: chapter 9, chapter 20, chapter 6

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Salvation outside the church? The ECJ rules on religious discrimination in employment

Dr Ronan McCrea, Senior Lecturer in Law, University College London

Background

The Court of Justice has issued its first major ruling on the reconciliation of the autonomy rights of religious organisations with the right of employees (or potential employees) of such organisations to be free of discrimination.

In 2012 Vera Egenberger applied for a fixed term post advertised by the Evangelisches Werk für Diakonie und Entwicklung, which is a body associated with the Evangelische Kirche in Deutschland (a German Protestant church). The post advertised sought a person who could prepare a report on Germany’s compliance with the United Nations International Convention on the Elimination of All Forms of Racial Discrimination. Ms. Egenberger had significant experience in this area and applied for the post. However, there was a problem. Ms. Egenberger is a person who does not have a religious faith and the relevant advert included the following statement:

‘We require membership of a Protestant church, or of a church which is a member of the Arbeitsgemeinschaft Christlicher Kirchen in Deutschland (Cooperative of Christian Churches in Germany), and identification with the welfare mission. Please state your membership in your curriculum vitae.’

Ms. Egenberger was not called for interview. She took a case in the German courts alleging discrimination on grounds of religion.

As discrimination in employment on grounds of religion is regulated by EU law, in the form of Directive 2000/78 (which also bans discrimination on grounds of disability, age or sexual orientation in employment), when the case came before the Bundesarbeitsgericht (Federal Labour Court) it decided to make a reference to the Court of Justice to clarify the interpretation of EU law. The key issue in the reference was whether the scope of the exemption from the duty not to discriminate on grounds of religion or belief granted by German law to religious organisations was compatible with Directive 2000/78.

The issue of exemptions from the prohibition on discrimination on grounds of religion for religious employers is addressed by Article 4(2) of the Directive which states:

‘…. in the case of occupational activities within churches and other public or private organisations the ethos of which is based on religion or belief, a difference of treatment based on a person's religion or belief shall not constitute discrimination where, by reason of the nature of these activities or of the context in which they are carried out, a person's religion or belief constitute a genuine, legitimate and justified occupational requirement, having regard to the organisation's ethos. This difference of treatment shall be implemented taking account of Member States' constitutional provisions and principles, as well as the general principles of Community law, and should not justify discrimination on another ground.’ (emphasis added).

The relevant German law implementing the directive provided that:

‘….a difference in treatment based on religion or belief shall also be admitted in the case of employment by religious societies, by institutions affiliated therewith, regardless of legal form, or by associations whose purpose is to foster a religion or belief in the community, where a given religion or belief constitutes a justified occupational requirement, having regard to the employer’s own perception, in view of the employer’s right of autonomy or by reason of the nature of its activities.’ (paragraph 9(1) of the Allgemeine Gleichbehandlungsgesetz, emphasis added).

This legislation, has been interpreted in the light of the German constitutional guarantee that states:

‘Religious societies shall regulate and administer their affairs independently within the limits of the law that applies to all. They shall confer their offices without the involvement of central government or local authorities.’ (Grundgesetz Article 140).

This has meant that the consistent approach of the German courts has been that the decision as to whether a particular role within a religious organization needs to be limited to those of a particular faith was for the religious employer to take. The role of the courts has been limited to plausibility review, on the basis of a religion’s self-conception defined by belief.

The national court harboured doubts as to whether the approach of German law in allowing the religious employer to determine for itself, subject only to plausibility review by the courts, whether its beliefs required a particular role to be reserved to those of a particular faith, was compatible with the directive and therefore made a reference to the Court of Justice under Article 267.

The Ruling: A More Balanced Approach Needed

The Court of Justice’s ruling made it clear that German law had gone too far by allowing such a wide scope for religious employers to determine for themselves whether a particular job could be reserved to those of a particular faith.

It noted that Article 4(2) of the Directive allowed the discrimination on grounds of religion only if having regard to the nature of the activity concerned or the context in which it is carried out, ‘religion or belief constitute[s] a genuine, legitimate and justified occupational requirement, having regard to the organisation’s ethos’ and concluded that:

‘if review of compliance with those criteria were, in the event of doubt as to that compliance, the task not of an independent authority such as a national court but of the church or organisation intending to practise a difference of treatment on grounds of religion or belief, [this provision of the Directive] would be deprived of effect.’

Interestingly, although the employer had cited both the guarantee of freedom of religion or belief (Article 10 of the Charter of Fundamental Rights) and Article 17 of the Treaty on the Functioning of the European Union, which provides that the Union ‘The Union respects and does not prejudice the status under national law of churches and religious associations or communities in the Member States’, the Court also relied heavily on constitutional principles to bolster its conclusion that excessive leeway had been granted to religious employers by German law.

The Court noted that Directive 2000/78 was merely a ‘specific expression, in the field covered by it, of the general prohibition of discrimination laid down in Article 21 of the Charter’ (which sets out a general ban on discrimination). It also noted that that when an individual establishes before a national court facts from which it may be presumed that there has been direct or indirect discrimination then, under Article 10 of the Directive, it is for the respondent to prove that there has been no breach of that principle. Thus, the need under Article 47 of the Charter to provide effective judicial protection of EU law rights meant that restricting the ability of the national courts to review the decision of an employer to impose a discriminatory requirement would be contrary to EU law.

Next, the Court held that the objective of Article 4(2) of the Directive was to ensure “a fair balance” between the autonomy rights of religious organisations and the right of workers to be free from discrimination. The Directive “sets out the criteria to be taken into account in the balancing exercise” and in the event of a dispute it must be possible for the balancing exercise to be reviewed by a national court. For the Court, the commitment to respecting the status of religious organisations in Article 17 of the Treaty could not change this conclusion.

That article’s function was:

‘to express the neutrality of the European Union towards the organization by the Member States of their relations with churches and religious associations and communities […] [and] is not such as to exempt compliance with the criteria set out in Article 4(2) of Directive 2000/78 from effective judicial review.’

Guidance on the Test to Be Applied

Having found that the German legislation was not compatible with the Directive the Court then had to address two further interesting issues. First, it had to give guidance to the national court on the question of how the ‘fair balancing’ ought to be carried out and then it had to advise on how to implement the consequences of its finding in the case.

In relation to how to carry out the ‘fair balancing’ the Court had to walk a tightrope. It acknowledged that under ECHR case law, states are precluded from assessing the legitimacy of the beliefs of a religious organization. However, it also had to ensure that the imposition of an occupational requirement relating to religion or belief was, in the words of the Directive ‘genuine, legitimate and justified, having regard to [the] ethos [of the religious employer]’. Thus it had to decide how to recognize the necessarily subjective requirements of the ethos of the employer, with the seemingly objective requirements of the ‘genuine, legitimate and justified’ test.

The Court adopted an approach that is significantly more objective than the approach taken in German law. It set out a test under which religious organisations must show an ’objectively verifiable existence of a direct link between the occupational requirement imposed by the employer and the activity concerned.’ Thus, in order to meet Article 4(2)’s requirements that the difference in treatment on grounds of religion be ‘genuine, legitimate and justified’ the Court held that:

‘To be considered ‘genuine’: ‘professing the religion or belief on which the ethos of the church or organisation is founded must appear necessary because of the importance of the occupational activity in question for the manifestation of that ethos or the exercise by the church or organisation of its right of autonomy.’

To be considered ‘legitimate’ it found that the national court must ‘ensure that the requirement of professing the religion or belief on which the ethos of the church or organisation is founded is not used to pursue an aim that has no connection with that ethos or with the exercise by the church or organisation of its right of autonomy.’

And to be considered justified the CJEU set down that ‘the church or organisation imposing the requirement is obliged to show, in the light of the factual circumstances of the case, that the supposed risk of causing harm to its ethos or to its right of autonomy is probable and substantial, so that imposing such a requirement is indeed necessary.’

Finally, although a proportionality requirement is not included in the text of Article 4(2) (and is included in other Articles of the Directive), the Court held that as proportionality is a general principle of EU law, the exemption given by Article 4(2) is to be read as being subject to a proportionality requirement.

Applying the Ruling

Given the possibility of a clash between German law and the requirements of the Directive the German court asked for guidance on how it should proceed if it proved impossible to interpret domestic law so as to comply with the Directive (bearing in mind the contra legem exception in the Marleasing line of case-law on the indirect effect of Directives; ie a national court cannot be required to interpret national law consistently with a Directive to the extent of ignoring the express wording of national law).

The Court seemed to doubt that an interpretation consistent with EU law was impossible, noting that the duty to interpret national law consistently with EU law included a duty for national courts ‘to change their established case-law where necessary’ (referring to the DI judgment on age discrimination, discussed here). However, it went on to say that should consistent interpretation prove impossible then the Court should disapply national law and give effect to the relevant EU law rights itself.

It justified this position on the basis that Directive 2000/78 did not establish the right to equal treatment. Rather it sets out a framework for combatting discrimination on various grounds. The right to equal treatment is, the Court held, a general principle of law and is enshrined in Article 21 of the Charter. Given that Article 47 of the Charter requires that adequate judicial protection be given to such rights, national courts have to ensure ‘the judicial protection deriving for individuals from Articles 21 and 47 of the Charter and to guarantee the full effectiveness of those articles by disapplying if need be any contrary provision of national law.’ This develops earlier case law on the issue of when the Charter itself does (and does not) have direct effect, in particular the AMS case discussed here; and it confirms the UK case law on the direct effect of Article 47 (Vidal-Hall and Benkharbouche, discussed here and here).

Conclusion

The Court of Justice has given a notably constitutionalized interpretation of the Directive in this case. It has relied on the Charter and general principles of law to read a proportionality test into Article 4(2) that did not appear in the text. It has insisted on proportionality as the framework within which the ‘fair balancing’ of the autonomy rights of religious employers and equal treatment rights of employees must take place.

This approach is in tension with recent trends in the caselaw of the Strasbourg Court. In cases such as Fernandez Martinez v Spain, the Court of Human Rights had moved away somewhat from the balancing of rights seen in its earlier caselaw and had moved closer to the ‘ministerial exemption’ model used in the United States, under which religious organisations have an absolute exemption from non-discrimination laws in respect of roles that include religious functions. Given the strong emphasis placed on proportionality by the EU legal order, unsurprisingly, in Egenberger, the Court of Justice has clearly come down in favour of the balancing approach (see R. McCrea “Singing from the Same Hymn Sheet? What the Differences between the Strasbourg and Luxembourg Courts Tell Us about Religious Freedom, Non-Discrimination and the Secular State” Oxford Journal of Law and Religion (2016) 5(2) 183-210, 198-99).

The Court’s insistence that EU non-discrimination law merely codifies a self-executing (and horizontally directly effective) constitutional general principle of non-discrimination law represents a continuation of the controversial line of cases beginning in Mangold which has attracted significant criticism, including from national courts given the potential for legal uncertainty that such an approach involves. Here, the Court of Justice has made it clear that the EU’s constitutional commitment to proportionality means that religious bodies may only impose discriminatory conditions on employees when it is proportionate to do so and national courts must be empowered to ensure religious employers do not exercise their right to discriminate in a disproportionate way.

This is in tension with the approach adopted by the German legislature which, in the light of German constitutional guarantees of religious autonomy, gave very restricted powers to the courts to second guess the decisions of religious bodies in this way. Given that EU and German constitutional norms appear to be in tension with each other in this way it will be interesting to see how this ruling is applied by the national court. The German constitutional provisions on religious autonomy go all the way back to the Weimar constitution and are taken very seriously, though it may be an exaggeration to view them as constituting the kind of core ‘constitutional identity’ that might trigger a refusal by the German courts to give primacy to EU law.

Barnard & Peers: chapter 9, chapter 20

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