Case C‑301/06, Ireland v Parliament and Council

In 2004, France, Ireland, Sweden, and the United Kingdom submitted to the Council a draft of a framework decision based on arts 31(1)(c) and 34(2)(b) EU. The draft concerned the retention of data processed and stored in connection with the provision of publicly available electronic communications services or data in public communication networks for the purposes of the prevention, investigation, detection and prosecution of criminal offences, including terrorism.

Taking the view that this draft framework decision consisted of two parts, namely, obligations on operators to retain traffic data relating to users of their services for a certain period and obligations concerning access to and exchange of those data by the competent authorities in criminal matters, the Commission stated that it favoured art. 95 EC as the legal basis for the continuous measures in the first part of the draft framework decision.

In 2005, the Commission adopted a proposal for a directive of the European Parliament and of the Council, based on art. 95 EC, on the retention of data processed in connection with the provision of public electronic communication services and amending Directive 2002/58. The Council opted for a directive on the legal basis of the EC Treaty, rather than for the adoption of a framework decision. After the European Parliament issued its opinion in accordance with the co-decision procedure under art. 251 EC, the Council adopted Directive 2006/24 by qualified majority. Ireland and the Slovak Republic voted against it. Ireland subsequently brought the present proceedings, claiming that the Court should annul Directive 2006/24 on the ground that Directive 2006/24 could not be based on art. 95 EC since its “centre of gravity” did not concern the functioning of the internal market. The sole objective of the directive, or at least its principal objective, was, it was contended, the investigation, detection and prosecution of crime.

The Court first of held that the question of the areas of competence of the European Union presented itself differently depending on whether the competence in issue had already been accorded to the European Union in the broad sense or had not yet been accorded to it. In the first hypothesis, it was a question of ruling on the division of areas of competence within the Union and, more particularly, on whether it was appropriate to proceed by way of a directive based on the EC Treaty or by way of a framework decision based on the EU Treaty. By contrast, in the second hypothesis, it was a question of ruling on the division of areas of competence between the Union and the Member States and, more particularly, on whether the Union had encroached on the latters’ areas of competence. The present case came under the first of those two hypotheses.

Conditions use of Article 95 EC
The Court reiterated that the Community legislature might have recourse to art. 95 EC in particular where disparities existed between national rules which were such as to obstruct the fundamental freedoms or to create distortions of competition and thus had a direct effect on the functioning of the internal market. Although recourse to art. 95 EC as a legal basis was possible if the aim was to prevent the emergence of future obstacles to trade resulting from the divergent development of national laws, the emergence of such obstacles must be likely and the measure in question must be designed to prevent them (see for instance the case law cited (and discussed) in
this post)

The Court essentially held that these conditions were fulfilled in the present case. It found that it was apparent that the differences between the various national rules adopted on the retention of data relating to electronic communications were liable to have a direct impact on the functioning of the internal market and that it was foreseeable that that impact would become more serious with the passage of time. Such a situation justified the Community legislature in pursuing the objective of safeguarding the proper functioning of the internal market through the adoption of harmonised rules.

Article 47 EU
The Court furthermore held that it was the task of the Court to ensure that acts which, according to one party, fell within the scope of Title VI of the Treaty on European Union and which, by their nature, were capable of having legal effects, did not encroach upon the powers conferred by the EC Treaty on the Community. In so far as the amendment of Directive 2002/58 effected by Directive 2006/24 came within the scope of Community powers, Directive 2006/24 could not be based on a provision of the EU Treaty without infringing art. 47 thereof (see
Case C-91/05 Commission v Council [2008], which I discussed here).

Substantive content of Directive 2006/24
The Court held that in order to determine whether the legislature had chosen a suitable legal basis for the adoption of Directive 2006/24, it was also appropriate to examine the substantive content of its provisions. Directive 2006/24 regulated operations which were independent of the implementation of any police and judicial cooperation in criminal matters. It harmonised neither the issue of access to data by the competent national law-enforcement authorities nor that relating to the use and exchange of those data between those authorities. Those matters, which fell, in principle, within the area covered by Title VI of the EU Treaty, had been excluded from the provisions of that directive.

The Court thus concluded that the substantive content of Directive 2006/24 was directed essentially at the activities of service providers in the relevant sector of the internal market, to the exclusion of State activities coming under Title VI of the EU Treaty. In light of that substantive content, Directive 2006/24 related predominantly to the functioning of the internal market. It followed that Directive 2006/24 had to be adopted on the basis of art. 95 EC. The present action must accordingly be dismissed.


Text of Judgment