Important legal notice
Opinion of Mr Advocate General Van Gerven delivered on 8 May 1990. - A. Foster and others v British Gas plc. - Reference for a preliminary ruling: House of Lords - United Kingdom. - Social policy - Equal treatment for men and women workers - Direct effect of a directive with regard to a nationalized company. - Case C-188/89.
European Court reports 1990 Page I-03313
Swedish special edition Page 00479
Finnish special edition Page 00499
Opinion of the Advocate-General
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Mr President,
Members of the Court ,
1 . The House of Lords has submitted the following question to the Court for a preliminary ruling under Article 177 of the Treaty :
"Was the British Gas Corporation ( at the material time ) a body of such a type that the appellants are entitled in English courts and tribunals to rely directly upon the equal treatment directive ( Council Directive 76/207/EEC of 9 February 1976 ) so as to be entitled to a claim for damages on the ground that the retirement policy of the British Gas Corporation was contrary to the directive ?". ( 1 )
Mrs Foster and the other appellants in the main proceedings are women who were employed by the British Gas Corporation (" the BGC "); on reaching the age of 60 on various dates between 27 December 1985 and 22 July 1986 they were required to retire, in accordance with the general policy of the BGC . During the same period male employees of the BGC were required to retire only at the age of 65 .
In its judgments in Defrenne III, ( 2 ) Burton, ( 3 ) Roberts, ( 4 ) Marshall ( 5 ) and Beets-Proper ( 6 ) the Court ruled that an age-limit applied for the purpose of terminating an employment relationship constitutes a working condition and more particularly a condition governing dismissal whose validity must be examined in the light of Directive 76/207/EEC on equal treatment . ( 7 )
Article 5(1 ) of that directive provides that :
"Application of the principle of equal treatment with regard to working conditions, including the conditions governing dismissal, means that men and women shall be guaranteed the same conditions without discrimination on grounds of sex ."
The House of Lords points out that during the material period the United Kingdom had not yet brought its national law into conformity with the equal treatment directive . Section 6(4 ) of the Sex Discrimination Act 1975, which was then in force, provided that the prohibition laid down in Section 6(1)(b ) and ( 2 ) of the Act of discrimination against women in respect of conditions of recruitment or dismissal applied by employers or any other unfavourable treatment did not apply to provisions regarding death or retirement . ( 8 ) ( 9 )
2 . The parties in the main proceedings are agreed that the distinction between men and women in the BGC' s pension policy is unlawful notwithstanding Section 6(4 ) of the Sex Discrimination Act 1975 if Article 5(1 ) of Directive 76/207 is directly applicable to the conditions of dismissal of the appellants in the main proceedings, but that otherwise the BGC' s policy is valid .
In paragraph 49 of the judgment in Marshall ( 10 ) the Court stated that persons may only rely on provisions such as Article 5(1 ) of Directive 76/207 in their relations 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, inasmuch as a directive may not of itself impose obligations on an individual . In academic terminology, that means that where the period for their implementation has expired, provisions of directives which from the point of view of their content are unconditional and sufficiently precise ( 12 ) have "vertical direct effect" but no "horizontal direct effect ".
The reference for a preliminary ruling thus concerns the issue whether at the material time the BGC was "the State" or "an individual ". In the first hypothesis the appellants in the main proceedings can rely on Article 5(1 ) of Directive 76/207 but in the second they cannot .
3 . At the material time the BGC was a nationalized gas undertaking; since then it has been privatized by the Gas Act 1986, under which British Gas plc ( the respondent in the main proceedings ) was established and on 24 August 1986 succeeded to the rights and liabilities of the BGC . ( 13 )
The status of the BGC, the employer of the appellants in the main proceedings at the relevant time, must be viewed in the context of the nationalization of gas production and supply by the Gas Act 1948, which was later replaced by the Gas Act 1972 . Under the Gas Act 1948 property, rights and liabilities were allocated to "area boards" or to the "Gas Council ". Under the Gas Act 1972 the Gas Council became the BGC and the property, rights and liabilites were vested in it . The BGC was a body with legal personality operating under the supervision of the authorities and having a monopoly on the supply of gas to homes and businesses in Great Britain . The members of the BGC were appointed by the Secretary of State, and he also determined their remuneration ( Section 1(2)(3 ) ). The task of the BGC was to develop and maintain an efficient, coordinated and economical system of gas supply for Great Britain and to satisfy, so far as it was economical to do so, all reasonable demands for gas in Great Britain ( Section 2(1 ) ). It was its duty to settle from time to time, in consultation with the Secretary of State, a general programme of research into matters affecting gas supply ( Section 3(3 ) ).
The Secretary of State was empowered to require the BGC to report on its activities and, after laying that report before both Houses of Parliament, to give the BGC such directions as he considered appropriate on the basis of that report for the most efficient management of the undertaking ( 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 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 report to the Minister on the exercise and performance of its functions during that year and on its policy and programmes ( Section 8 ).
The BGC was obliged so to perform its functions and so to exercise its control over its subsidiaries as to ensure that, taking one year with another, the combined revenues of the BGC and its subsidiaries were at least sufficient to meet total operating costs and constitute the necessary reserves in order to be able to comply with any directions given by the Secretary of State ( Section 14 ). The Secretary of State could from time to time, after consultation with the BGC and with the approval of the Treasury, require the BGC to allocate certain amounts to reserves, whether or not for a specific purpose, and the BGC was obliged to comply with any such directions ( Section 15 ). If in any financial year there was a significant excess of income over total costs, the Minister, with the approval of the Treasury, could require the BGC to pay over to him the portion of that income which was surplus to the BGC' s requirements, and the BGC was required to comply .
Under the Gas Act 1972, the BGC was not an agent of the Secretary of State . The employees of the BGC were not in Crown employment for the purpose of United Kingdom employment law . The BGC had no legislative functions .
The basis of the judgment in Marshall : nemo auditur
4 . For the sake of convenience let me begin by quoting the central passage of the Marshall judgment . It is to be found in paragraphs 47 to 49 of the judgment and the second paragraph of its operative part .
Paragraph 47 :
"That view is based on the consideration that it would be incompatible with the binding nature which Article 189 confers on the directive to hold as a matter of principle that the obligation imposed thereby cannot be relied on by those concerned . From that the Court deduced that a Member State which has not adopted the implementing measures required by the directive within the prescribed period may not plead, as against individuals, its own failure to perform the obligations which the directive entails ."
Paragraph 48 :
"With regard to the argument that a directive may not be relied upon against an individual, it must be emphasized that according to Article 189 of the EEC Treaty the binding nature of a directive, which constitutes the basis for the possibility of relying on the directive before a national court, exists only in relation to 'each Member State to which it is addressed' . It follows that a directive may not of itself impose obligations on an individual and that a provision of a directive may not be relied upon as such against such a person . It must therefore be examined whether, in this case, the respondent must be regarded as having acted as an individual ."
Paragraph 49 :
"In that respect it must be pointed out that where a person involved in legal proceedings is able to rely on a directive as against the State he may do so regardless of the capacity in which the latter is acting, whether employer or public authority . In either case it is necessary to prevent the State from taking advantage of its own failure to comply with Community law ."
The Court therefore held that :
"Article 5(1 ) of Council Directive No 76/207 of 9 February 1976, which prohibits any discrimination on grounds of sex with regard to working conditions, including the conditions governing dismissal, may be relied upon as against a State authority acting in its capacity as employer, in order to avoid the application of any national provision which does not conform to Article 5(1 )."
5 . In Marshall the possibility of relying on an unconditional and sufficiently precise provision of a directive against a Member State was thus clearly linked to the failure of the Member State to implement the directive in national law correctly and at the proper time . ( 14 ) Accordingly, the principle "the State cannot plead its own wrong" ( 15 ) or the principle nemo auditur propriam turpitudinem allegans were held to constitute the basis for vertical direct effect . At the same time, however, the principle was interpreted broadly : the failure to act can be relied on by individuals against the Member State regardless of the capacity in which the State acts - as "employer or public authority"; moreover, as also appears from later judgments which will be discussed below, the failure to act can be relied on by individuals against independent and/or local authorities which are not themselves responsible for the failure to implement the directive in national law .
As I have already had the opportunity to explain in my Opinion in Barber, ( 16 ) the relevant provision of the directive was thus given some restricted effect with regard to third parties, that is to say against authorities other than the defaulting authority . The rationale is ( and remains ( 17 )) the desire to prevent the Member State in question from deriving any advantage whatsoever from its failure to comply with Community law .
6 . By giving the term "State" so wide a meaning the Court followed the Opinion of Advocate General Sir Gordon Slynn, in which he stated that
"( even if contrary to the trend of decisions in cases involving sovereign immunity where the exercise of imperium is distinguished from commercial and similar activities ) as a matter of Community law, ... the 'State' must be taken broadly, as including all the organs of the State . In matters of employment ... this means all the employees of such organs and not just the central civil service ". ( 18 )
That the Court did in fact wish to give the term "State" a sense going beyond the "personal default" of the authority concerned is clear from the actual circumstances . That is to say, the issue was the possibility of relying on Article 5(1 ) of Directive 76/207 against a local health authority which was certainly an "agent for the Ministry of Health" ( while its employees, including hospital doctors and nurses and administrative staff, were "Crown servants" ( 19 )) but was in no way concerned in or could be responsible for the failure of the legislature in the relevant Member State to implement the directive in national law .
Indeed, such a broad interpretation is also suggested by the choice of words in the judgment : in the language of the case - and also in the other languages ( 20 ) - expressions such as "emanation of the State", "organ of the State", "public authority" and "State authority" are used as overlapping and synonymous terms .
Later cases
7 . A few months after the Marshall judgment the Court gave judgment in the Johnston case, ( 21 ) concerning the possibility for an employee of relying on Article 3(1 ) and 4 of Directive 207/76 against the Chief Constable of the Royal Ulster Constabulary . The British Government, arguing that those provisions could not be relied on, referred to the fact that the Chief Constable is constitutionally independent of the State . ( 22 ) That did not prevent the Court, referring to the Marshall judgment, from stating that :
"The Court also held in the aforesaid judgment that individuals may rely on the directive as against an organ of the State whether it acts qua employer or qua public authority . As regards an authority like the Chief Constable, it must be observed that, according to the Industrial Tribunal' s decision, the Chief Constable is an official responsible for the direction of the police service . Whatever its relations may be with other organs of the State, such a public authority, charged by the State with the maintenance of public order and safety, does not act as a private individual . It may not take advantage of the failure of the State, of which it is an emanation, to comply with Community law ". ( 23 )
In that quotation it is striking to see the manner in which the relations between the head of a local police force and "other organs of the State" are considered irrelevant, which again shows that autonomous authorities which are independent of other organs of the State, regardless of the level at which they operate, be it central or local, do indeed fall under the broad expression "the State ". It is also striking that the judgment states that the Chief Constable is "charged by the State with the maintenance of public order" and infers from that that he "does not act as private individual ". I assume that in that judgment, unlike in Marshall, the Court referred to the specific public duties of the Chief Constable because the maintenance of public order is regarded as a public function in all the Member States, which is not so clear in respect of health care . That may suggest that although the nature of the duty is not conclusive in determining the public nature of an authority, that is to say in distinguishing it from a private individual, it may nevertheless be a useful pointer .
Finally, the last sentence of the quoted paragraph is also worthy of attention, since it takes up the theme of the "advantage" that the State must not derive from its default and expressly relates it to a constitutionally independent local authority, the Chief Constable of Northern Ireland .
8 . The point of view expressed by the Court in Marshall was applied again in its judgment in Case 103/88 Costanzo v Comune di Milano . ( 24 ) That case concerned a directive on public works contracts . The Court was asked whether a municipal authority was obliged, in examining individual tenders, to refrain from applying national rules incompatible with the directive concerned, the period for whose implementation had expired .
The Court held that :
"when the conditions under which the Court has held that individuals may rely on the provisions of a directive before the national courts are met, all organs of the administration, including decentralized authorities such as municipalities, are obliged to apply those provisions ". ( 25 )
Even outside the area of fundamental rights ( equal treatment for men and women ), then, the Court has a very broad conception of the "State ": ( 26 ) all administrative authorities, at every level of the territorial division of a Member State, form part of "the State" for the purposes of the Marshall judgment .
It is also clear that the "State" does not cover only authorities whose powers are "delegated" from the central authority . The criterion of delegation of powers is not always compatible with the legal situation of municipal authorities in different Member States and is in any event completely inappropriate to the situation in Member States which have a federal structure .
A twofold or a threefold classification?
9 . In what I have said up to now I have tacitly assumed that what the Court must do is draw a dividing line in Community law which will assist national courts in distinguishing the concept of "the State" from the concept of "individual ". That point of departure is implicit in the cases discussed above, although in Marshall and Johnston the Court could rely to some extent on findings in that respect made by the national court itself . In the present case that is clearly not so : the House of Lords has made no assessment of the nature of the BGC, that is to say whether or not it formed part of "the State"; on the contrary, in the questions which it has submitted to the Court it assumes that it is for the Court to set out a Community framework within which the national courts may determine whether the direct effect of provisions of a directive may be relied upon against this or that body .
I would subscribe to that point of view, which indeed has not been disputed by any of the parties that have submitted observations . If the Court itself did not lay down a basis in Community law, the result would be a complete lack of uniformity among the Member States with regard to the direct effect of provisions of directives .
10 . In outlying a Community framework for defining the "State" a fundamental question arises . Are the concepts "State" and "individual" together exhaustive or is there, in between them, a third category of persons or bodies? Such an intermediate category might include bodies such as public undertakings ( for instance, the BGC in this case ), State universities or even private universities that are financed wholly or virtually wholly by the State, and the like . If the existence of such a category is accepted, the question arises whether with regard to the possible direct effect of provisions of directives it must be put on the same footing as the category "State" or the category "individuals ".
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 last sentence : "It must therefore be examined whether, in this case, the respondent must be regarded as having acted as an individual ". Similarly, in the passage of his Opinion in that case quoted above, Sir Gordon Slynn appears to bring both "the exercise of imperium" and "commercial and similar activities" under the concept of "the State" in Community law . That point of view is also supported in later judgments of the Court, in the Kolpinghuis Nijmegen judgment of 8 October 1987 ( 27 ) and the Busseni judgment of 22 February 1990 . ( 28 )
The advantage of a twofold classification is that the problem of definition can be approached from two sides . We may ask on the one hand who is the State and on the other who must be regarded as an individual . It seems easier to decide who is an individual and who is not, on the basis of the prevailing conceptions : thus public undertakings are not private parties in the sense in which that is understood in everyday language, which leads to the conclusion, in the hypothesis of a twofold classification, that they are part of the "State ".
Although it is my view that there is no basis in the Court' s case-law in this regard for a threefold classification, I shall not use such complementary and mutually supporting definitions of "individuals" and "State ". The point is not who is the State or an individual in the abstract but against whom the failure of a Member State to implement a directive correctly and in good time in its own legal system can be pleaded, having regard to the underlying reasons . According to Marshall and Johnston the basic thinking is that a Member State, and any public body charged with functions by the State, regardless of 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 .
It must now be considered whether, having regard to that reasoning, a public undertaking such as the BGC must not benefit from the default of its Member State and in that sense must be brought under the concept of "the State ".
Analogies from other areas of Community law
11 . Before discussing the positions of the parties and giving my own views, I should like by way of comparison to discuss briefly a few areas of Community law in which 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 concept of public authority which is used . That conclusion suggests that in the present context too an approach should be chosen which will give the concept of "the State" the meaning that corresponds most closely to the underlying reasoning, discussed above, of the Marshall judgment . The comparison also elicits a number of criteria which may be useful in the present context .
12 . Reference may be made first of all to the concept of an aid measure under Article 92 of the EEC Treaty . As the Court has consistently held, no distinction may be drawn "between cases where aid is granted directly by the State and cases where it is granted by public or private bodies established or appointed by the State to administer the aid ". ( 29 ) As concrete indications of the public nature of the aid measure reference has been made for example to the fact that a Member State held directly or indirectly 50% of the shares in the undertaking granting the aid and appointed half the members of the supervisory board, and that the tariffs applied by the undertaking granting the aid had to be approved by a government minister . ( 30 ) That 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 authorities . ( 31 ) It could therefore be concluded that the fixing of the contested tariff was the result of action by the Member State and thus fell within the concept "aid granted by a Member State" for the purposes of Article 92 . ( 32 )
That definition of the State as the author of aid measures reflects a broad interpretation which corresponds to the purpose of Article 92(1 ) of the Treaty, that of encompassing all aid measures : "any aid granted by a Member State or through State resources in any form whatsoever ". ( 33 )
A somewhat different intention lies behind Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member States and public undertakings . ( 34 ) It appears from the sixth recital in the preamble to the directive that its purpose is to "enable a clear distinction to be made between the role of the State as public authority and its role as proprietor ". Accordingly, Article 2 defines first "public authorities" ( the State and regional or local authorities ) and then "public undertakings" ( any undertaking over which the public authorities may exercise directly or indirectly a dominant influence by virtue of their ownership of it, their financial participation therein, or the rules which govern it ). ( 35 )
13 . A second area of Community law that may offer an analogy is that of public works contracts . In Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts ( 36 ) "the State, regional or local authorities, bodies governed by public law, associations formed by one or several such authorities or bodies governed by public law" are described as "contracting authorities ".
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 personality, and ( c ) financed, for the most part, by the State, or regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board more than half of whose members are appointed by the State, regional or local authorities or by other bodies governed by public law ( see Article 1 of the directive ). Article 1a of the directive goes on to provide that contracting authorities which subsidize directly by more than 50% a works contract awarded by an entity other than themselves must ensure compliance with the directive . This concept of the State, too, is interpreted by the Court in a flexible manner in accordance with the aim of the measure . ( 37 )
14 . A third possible point of departure is the exceptional provision in the first subparagraph of Article 4(5 ) of the Sixth Council Directive on VAT . ( 38 ) As its wording indicates, that provision is restricted to the activities or transactions in which States, regional and local authorities and other bodies governed by public law engage "as public authorities ". That is also apparent 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 .
15 . A final point of comparison ( 40 ) can be found in the case-law of the Court on Article 30 of the EEC Treaty, in which it is determined whether a particular restrictive practice can be ascribed to the authorities . In the Buy Irish judgment it was demonstrated that the restrictive practice in question ( a promotional campaign for the purchase and sale of Irish products ) could be ascribed to the government and that Ireland had therefore failed to comply with its obligations under Article 30 . ( 41 ) Proof that the campaign in question was a "measure" for the purposes of Article 30 was inferred from the carefully thought out and coherent set of initiatives emanating from the government, although the actual implementation of those initiatives was left to an association governed by private law .
Again in connection with the free movement of goods, reference may be made to the 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 or a monopoly delegated to others ". That includes "a situation in which the monopoly in question is operated by an undertaking or a group of undertakings, or by the territorial units of a State such as communes ". ( 42 ) Every means at the disposal of national authorities for influencing trade in goods, regardless of whether the body "used" is governed by private or public law, thus falls under Article 37 .
16 . As I have said, all these examples illustrate the desire to ensure that the concept of "the State" is given full and proper effect, that is to say a meaning which achieves the goals of the measure in question . Depending on the aim of the measure the term "State" may be interpreted broadly ( for example in connection with aid measures governed by Article 92, supra, point 12, in connection with public works contracts, supra, point 13, or in connection with State monopolies governed by Article 37, supra, point 15 ), or a distinction may be drawn according to the role played by the State ( for example, in connection with the transparency of relations between Member States and public undertakings, by distinguishing 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 authority and its activities as a taxable individual : supra, paragraph 14 ).
A further point should be emphasized : whenever, in the light of the underlying purpose of the measure, the concept of "the State" is given a broad interpretation, reference is made to the criterion of actual control, dominating influence and the possibility on the part of the authorities to give binding directions, regardless of the manner in which such control is exercised ( by means of ownership, financial participation, dependence for purposes of management or finance, or through legislative provisions : supra, points 12, 13 and 15 ). Somewhat different but nevertheless parallel reasoning lies behind the criterion used in the Buy Irish judgment ( supra, point 15 ) of whether a particular practice can be attributed to the government . In each case the assumption is thus that there is a "core" of authority ( broadly defined to include all central, regional and local authorities ) which, for the purpose of the measure concerned, imparts a public character by its control and influence to other bodies or transactions, even where these are governed by private law .
The positions of the parties
17 . In the light of the foregoing I should now like briefly to discuss and comment upon the observations submitted to the Court .
The appellants in the main proceedings support a broad interpretation of the concept of "the State ". They rely on the opinion of Advocate General Sir Gordon Slynn in Marshall, cited above, and on the judgment in Costanzo . They reject a criterion of public authority based strictly on "the classic duties of the State" since an evaluation of what constitute "duties of the State" would give rise to differences between Member States and uncertainty in application . They also reject the suggestion that State authorities should be limited to Crown bodies or bodies of a non-commercial character .
Although the appellants in the main proceedings do not in their observations put it in such extreme terms, they do in fact proceed on the basis that every undertaking which is actually controlled by the political authorities, such as the BGC at the material time, must be brought under the concept of "the State ". Stated in such extreme terms that view seems to me to go too far, in so far as it encompasses every type of public control, even where it has nothing to do with the matter to which the Member State' s failure to implement a particular provision of a directive in national law relates .
18 . The respondent in the main proceedings takes a restrictive view . Basing itself on the principle that the State cannot take advantage of its own wrong, it proposes that the concept of "the State" should be understood as comprising the three elements of the State as analysed by Montesquieu, including bodies which exercise the authority of those three elements of the State by way of delegation . In all the Member States the maintenance of public order falls within such authority .
I do not think that the criterion of delegation ( with which, if I have understood correctly, the status of "Crown servant" is connected ) is an appropriate one for the problem with which we are concerned here . First of all, that criterion depends closely on the State structure : it is difficult to use in countries with a federal structure, in which various authorities have autonomous powers, so that it is not a suitable basis for a Community framework of assessment . Similarly, the distinction made in that connection between classical and non-classical duties of the State is in my view of no service ( infra, point 19 ). Finally and above all, a criterion based on delegation seems to me to be incompatible with the broad view taken by the Court in, for example, the Johnston and Constanzo judgments ( supra, points 7 and 8 ), which give the principle nemo auditur a broad scope so that the failure to act of the public authorities actually in default can be relied on also against the entirely independent public authorities referred to above . It is significant that the respondent in the main proceedings does not mention the Costanzo judgment .
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 bodies which may come under the concept of "the State" as defined in Marshall : bodies which exercise directly or as agents the classical legislative, judicial and executive functions of the State and bodies which carry out other functions ( such as the supply of gas ) where the State has taken on the responsibility of carrying out those functions itself or delegating them to others . The fact that in the case of the BGC a degree of supervision is exercised by organs of the State is not, however, sufficient to bring the BGC within the concept of "the State"; in any event the existence of a power of control is not a determining criterion .
Here again we encounter the same difficulties as before : what, precisely, constitute the classical functions of the State, in particular of the executive . According to the United Kingdom, public security is included ( although even that function can be "privatized" to a certain extent by contracting out to approved security services ), but not the supply of water, gas and electricity, although in a modern welfare State such supplies are of essential importance for the population and for industry . What, then, of public health, which was assumed in Marshall to fall within the tasks of the State although, as the Commission mentions in its written observations, in some Member States health care is "privatized" to a large extent? The United Kingdom nevertheless brings the health authority at issue in Marshall within the concept of "the State" by referring inter alia to the fact that its employees are "Crown servants ". We thus come back to the notion of delegation, the unsuitability of which as a basis for a Community framework has already been emphasized ( supra, point 18 ).
However, the main objection to the proposed view is again the fact that it is not explained why the default of the Member State should not equally be relied on against other public bodies which do not fall within the ( classic ) concept of the State or exercise authority delegated by it, having regard to the cases already dealt with in Marshall and later judgments .
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 established to run nationalized industries, such as the BGC, public bodies which exercise regulatory powers and universities which award degrees recognized by the Member States . If this criterion alone is used, a problem arises with regard to undertakings in which the State holds 100% or a majority of the shares . According to the Commission, there is no good reason to treat an undertaking in which the State holds a controlling shareholding any differently from a nationalized undertaking . It therefore asks whether a criterion of "State control over the body in question in relation to the matter at issue" may be used, and seeks to determine what is to be understood by control . Substantial funding by the State is not sufficient, and neither is the possibility of compulsion by any means ( since the State can equally compel any individual to do something by means of general legislation ). Similarly, control on the basis of a legal right is not a conclusive answer; all the circumstances from which control appears possible ( in other words the "economic reality ") must be taken into account .
After those helpful remarks, which I think take us a considerable way in the right direction, the Commission nevertheless concludes that even such a criterion of control would exclude the Royal Ulster Constabulary from the concept of "the State" since it carries out its functions independently . It therefore comes to the conclusion that it does not appear possible to formulate one test to cover all possible situations but that both the criterion "exercise of a public function" and that of "real control" can bring a person, in this case an employer, within the concept of "the State" for the purposes of Marshall . In the present case the BGC is in any event a public body and the answer to be given to the House of Lords can accordingly be restricted to that category of entities .
Proposed solution
21 . The observations submitted to the Court contain a number of factors which may assist in giving an appropriate answer to the question referred by the House of Lords .
As I have already repeatedly emphasized, the point of departure must be the reasoning 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 its authority, should not be allowed to benefit from the failure of the Member State to implement the relevant provision of a directive in national law . That, however, raises the question how far the expressions "public body", "charged with a particular duty" and "from which it derives its authority" precisely extend . Moreover, it is not entirely possible to give those expressions a precise Community meaning : whether someone forms part of the government, whether a particular duty is a public duty and whether someone derives his authority from the State ( whether or not in the sense that he exercises authority delegated by the State ) are difficult matters to define, and their meaning differs significantly not just from one Member State to another and within each Member State from one period to another but also in Community law, in so far as they are used there, according to the matter in issue .
In the cases I have referred to, the Court did not attempt to define those concepts in 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 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 call public authority ) is organized and how the various bodies which exercise that authority are related . In the light of the Marshall, Johnston and Costanzo judgments ( and the judgment in Auer ( 43 ) which preceded them ) there can be no doubt that they all fall under the concept of "the State", and there is no need for any criterion of delegation or control by other public authorities . That much is certain .
The question in the case now before us is how much further the application of those judgments can extend, in particular with regard to undertakings, in this case public undertakings, which as such exercise no authority in the strict sense over individuals . I think the answer is this : it may extend as far as "the State" ( in the broad sense described in the preceding paragraph ) has given itself powers which place it in a position to decisively influence the conduct of persons - whatever their nature, public or private, or their sphere of activity - with regard to the subject-matter of the directive which has not been correctly implemented . It is immaterial in that regard in what manner "the State" can influence the conduct 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 dismiss ( the majority of ) its directors, or to interrupt its funding wholly or in part so as to threaten its continued existence, with, however, the provisos that : ( 1 ) the possibility of exercising influence must stem from something other than a general legislative power ( since otherwise all individuals subject to such general legislative power would be brought within the scope of Marshall and related judgments, which would go beyond their purpose ), and ( 2 ) as I have already said, the possibility of exercising influence must exist inter alia ( or in particular ) in connection with the matter to which the provision of a directive which has not yet been implemented relates or can relate .
Once the State ( in the broad sense ) has retained such a power to exercise influence over a person ( in this case the BGC ) with regard inter alia to the subject-matter of the relevant provision of a directive, from the point of view of individuals it has brought that person within its sphere of authority . For that reason individuals may then rely against that person on the Member State' s failure to implement a directive . The reasoning lying behind Marshall and the related cases implies that the State may not benefit from its default in respect of anything that lies within the sphere of responsibility which by its own free choice it has taken upon itself, irrespective of the person through whom that responsibility is exercised .
22 . On the basis of the foregoing I propose that the following answer should be given to the House of Lords . Individuals may rely on an unconditional and sufficiently precise provision such as Article 5(1 ) of Directive 76/207 against a person or body, in this case a public undertaking, in respect of which the State ( understood as any body endowed with public authority, regardless of its relationship with other public bodies or the nature of the duties entrusted to it ) has assumed responsibilities which put it in a position to decisively influence the conduct of that person or body in any manner whatsoever ( other than by means of general legislation ) with regard to the matter in respect of which the relevant provision of a directive imposes an obligation which the Member State has failed to implement in national law .
It is for the national courts to apply that criterion in specific cases . I may, however, be permitted to point out that in the case of the BGC the competent Secretary of State had the power at the material time to give the BGC binding directions with regard both to the most efficient management of its activities and to the exercise and performance of its functions in general if the national interest so required ( supra, point 3 ). It seems to me that compliance with the law, including Community law binding on the Member State, is an objective of national interest, so that binding instructions could have been given to the BGC to comply with the provisions of Directive 76/207, which at the material time had not yet been formally implemented 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 .
In that connection I should also point out 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 Community law where the concept of "the State", as in the present situation, must be given a broad scope : in those areas too bodies other than those endowed with public authority are brought under the measure in question when their conduct can be influenced by the authorities ( supra, point 16 ).
The question of damages
23 . In the second part of its question the House of Lords seeks to determine whether the appellants, if they can rely on the equal treatment directive against the BGC, have "a claim for damages on the ground that the retirement policy of the BGC was contrary to the directive ".
In the absence of any specific rule in Community law that is in principle a question which must be answered in accordance with the national law of the Member State . Even so, there are restrictions in Community law on the liberty left to the Member States to determine the substantive and procedural aspects of the sanctions associated with the obligations which result for a Member State from a directive .
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 1984 in Von Colson ( 44 ) that
"although Directive 76/207/EEC, for the purpose of imposing a sanction for the breach of the prohibition of discrimination, leaves the Member States free to choose between the different solutions suitable for achieving its objective, it nevertheless 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 and must therefore amount to more than purely nominal compensation ...".
It is for the national court to find a means, within its own legal system, of meeting that requirement under Community law .
Decision
24 . I propose that the question referred by the House of Lords should be answered as follows :
"Individuals may rely on an unconditional and sufficiently precise provision such as Article 5(1 ) of Directive 76/207/EEC against an undertaking in respect of which the State ( understood as any body endowed with public authority, regardless of its relationship with other public bodies or the nature of the duties entrusted to it ) has assumed responsibilities which put it in a position to decisively influence the conduct of that undertaking in any manner whatsoever ( other than by means of general legislation ) with regard to the matter in respect of which the relevant provision of a directive imposes an obligation which the Member State has failed to implement in national law .
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 nevertheless 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 ."
(*) Original language : Dutch .
( 1 ) Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions ( OJ 1976 L 39, p . 40 ).
( 2 ) Judgment in Case 149/77 Defrenne v Sabena [1978] ECR 1365 .
( 3 ) Judgment in Case 19/81 Burton v British Railways Board [1982] ECR 555 .
( 4 ) Judgment in Case 151/84 Roberts v Tate and Lyle [1986] ECR 703 .
( 5 ) Judgment in Case 152/84 Marshall v Southampton and South-West Hampshire Area Health Authority [1986] ECR 723 .
( 6 ) Judgment in Case 262/84 Beets-Proper v Van Lanschot [1986] ECR 773 .
( 7 ) See also my Opinion in Case C-262/88 Barber v Guardian Royal Exchange Assurance [1990] ECR I-1889, at point 26 in fine and also points 32 and 33 .
( 8 ) Amended by Section 2(1 ) of the Sex Discrimination Act 1986 with effect from 7 November 1987 .
( 9 ) I shall not here discuss the duty of national courts to interpret provisions of national law in accordance with Community law ( see the judgments in Case 14/88 Von Colson v Land Nordrhein - Westfalen [1984] ECR 1891 and in Case 80/86 Kolpinghuis Nijmegen [1987] ECR 3969 ) since the House of Lords has not submitted any question in that respect . See also my Opinion in Barber ( supra, footnote 7 ), at point 50 .
( 10 ) [1986] ECR 737 .
( 11 ) Paragraph 49 .
( 12 ) Paragraphs 55 and 52 .
( 13 ) Following the abolition of the monopoly on the supply of gas through pipes, British Gas plc is one of the "public gas suppliers" ( Sections 3 and 7 of the Gas Act 1986 ).
( 14 ) See also the judgment in Case 148/78 Ratti [1979] ECR 1629, paragraph 22 ( and the Opinion of Advocate General Reischl at p . 1653 ), and the judgment in Case 8/81 Becker v Finanzamt Muenster-Innenstadt [1982] ECR 53, paragraph 24 .
( 15 ) Relied on by the Health Authority at the hearing in Marshall .
( 16 ) Supra, footnote 7, at point 52 .
( 17 ) In its judgment in Case 190/87 Moormann [1988] ECR 4689, paragraphs 22 and 24, the Court indicated the provisions of the Treaty which provide a basis for that conclusion ( namely Article 189, third paragraph, and Article 5 of the EEC Treaty ).
( 18 ) [1986] ECR 735 .
( 19 ) Ibid .
( 20 ) In paragraphs 12, 49, 50, 51 and 56 of the judgment and in the second paragraph of the operative part four synonyms 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 languages, confirms the broad meaning that must be given to the concept of "the State" and also demonstrates that it is not correct to conclude from the use of words in any one language that a basis for the definition of the "State" can be sought in the legal terminology of any one Member State .
( 21 ) Judgment in Case 222/84 Johnston v Chief Constable of the Royal Ulster Constabulary [1986] ECR 1651 .
( 22 ) Paragraph 49 .
( 23 ) Paragraph 56 .
( 24 ) [1989] ECR 1839 .
( 25 ) Paragraph 31 .
( 26 ) A similar broad interpretation may be seen in a judgment prior to the Marshall case, the judgment in Case 271/82 Auer [1983] ECR 2727, and in particular the Opinion of Advocate General Mancini, in which he stated that a directive may be pleaded against institutions which, although they are not organs of the State in the true sense of the term, in one way or another implement the policy of the State ( at p . 2751 ). The case concerned professional organizations of veterinary surgeons which were responsible for the exercise of public authority, namely the recognition of professional qualifications obtained in other Member States .
( 27 ) Supra, footnote 9 . The case concerned a Member State which sought to rely in proceedings against an individual on a directive which had not yet been implemented in national law; the Court naturally refused to permit it to do so, in the light of the judgment in Marshall . There is no indication in this judgment that the Court proceeded on the basis of anything but a twofold classification .
( 28 ) Judgment in Case C-221/88 ECSC v Busseni [1990] ECR I-495, paragraphs 22 to 24 . This concerned recommendations under the ECSC Treaty; in paragraph 21 the Court stated that these are measures of the same nature as directives under the EEC Treaty .
( 29 ) See for example the judgment in Joined Cases 67, 68 and 70/85 Van der Kooy v Commission [1988] ECR 219, paragraph 35 .
( 30 ) Paragraph 36 .
( 31 ) Paragraph 37 .
( 32 ) Paragraph 38 .
( 33 ) My emphasis .
( 34 ) Commission Directive 80/723/EEC ( OJ 1980 L 195, p . 35 ) was extended by Directive 85/413/EEC of 24 July 1985 ( OJ 1985 L 229, p . 20 ).
( 35 ) As Advocate General Mischo stated in his Opinion in Case 118/85, in applying that definition of "public undertakings", "greater importance must ... be attached to function than to form" - judgment of 16 June 1987 Commission v Italy [1987] ECR 2599, Opinion at p . 2617; see also paragraphs 7 to 15 of the judgment .
( 36 ) OJ, English Special Edition 1971 ( II ), p . 682, most recently amended by Directive 89/440/EEC ( OJ 1989 L 210, p . 1 ).
( 37 ) Judgment in Case 31/87 Beentjes v Netherlands [1988] ECR 4635, paragraphs 11 and 40; see also the Opinion of Advocate General Darmon, paragraphs 10 to 20 .
( 38 ) Sixth Council Directive ( 77/388/EEC ) of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes - Common system of value added tax : uniform basis of assessment ( OJ 1977 L 145, p . 1 ).
( 39 ) In its judgment in Joined Cases 231/87 and 129/88 Carpaneto Piacentino and Rivergaro [1989] ECR 3233, the Court emphasized in paragraph 15 that the provision in question seeks to draw a distinction between the activities of the bodies concerned which are governed by public law and those which are governed by private law .
( 40 ) I shall not discuss the expression "employment in the public service" in Article 48(4 ) of the Treaty; as an exception from a fundamental principle of the Treaty it must be interpreted narrowly and thus has little relevance to the concept of "the State : at issue here .
( 41 ) Judgment in Case 249/81 Commission v Ireland [1982] ECR 4005, paragraphs 29 and 30 .
( 42 ) Judgment in Case 30/87 Bodson [1988] ECR 2479, paragraph 13 .
( 43 ) Judgment in Case 271/82 Auer [1983] ECR 2727, paragraph 19, and the Opinion of Advocate General Mancini, at p . 2751 .
( 44 ) Supra, footnote 9; see also paragraphs 26 and 23 .
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