Case C‑451/08, Helmut Müller

This reference for a preliminary ruling concerned the interpretation of the concept of “public works contracts” within the meaning of Directive 2004/18.

The Bundesanstalt - the German federal agency responsible for managing public property - was owner of a property known as the “Wittekind barracks’, occupying an area of just under 24 hectares in Wildeshausen (pictured). In October 2005, Wildeshausen town council decided, with a view to returning the land concerned – which covered approximately 3% of developed and non-developed areas of the town – to civilian use, to undertake feasibility studies for an urban planning project.

In October 2006, the Bundesanstalt indicated in statements made on the internet and in the press that it intended to sell Wittekind barracks. On 2 November 2006, Helmut Müller, a property development company, offered to bought the land for EUR 4 million, subject, however, to the condition that an urban development plan be drew up on the basis of its project for used of the land.

Wittekind barracks were closed at the beginning of 2007. In January 2007 the Bundesanstalt launched a call for tenders with a view to selling the property, in its condition at the time, as quickly as possible. Helmut Müller submitted a tender offer of EUR 400 000, which it increased to EUR 1 million on 15 January 2007.

Another property development company, Gut Spascher Sand Immobilien GmbH (‘GSSI’), which was at that time in the process of being set up, submitted a tender offer of EUR 2.5 million. Bundesanstalt assessed the plans submitted by Helmut Müller and GSSI and expressed a preference for GSSI’s project on urban-development grounds, taking the view that it would make Wildeshausen more attractive as a town. It informed the municipal authorities accordingly.

It was then agreed that the property should not be sold until after Wildeshausen town council had approved the project. The Bundesanstalt confirmed that it would respected the town council’s decision.

Wildeshausen town council decided in favour of GSSI’s project, against which Helmut Müller brought an action. In appeal, the referring Court asked a number of questions, which referred not to the seller-purchaser relationship, but were directed rather at the relationship between the municipality of Wildeshausen and GSSI, hence, to the relationship between the public authority with town-planning powers and the purchaser of Wittekind barracks.

The referring court inter alia wished to know whether that relationship might constitute a public works contract within the meaning of that provision.

The Court of Justice held that the concept of “public works contracts” within the meaning of Art. 1(2)(b) of Directive 2004/18 required that the works which were the subject of the contract be carried out for the contracting authority’s immediate economic benefit. The Court held that it was not, however, necessary that the service should take the form of the acquisition of a material or physical object. (see: Case C-399/98 Ordine degli Architetti and Others [2001] and Case C-220/05 Auroux and Others [2007]).

The Court held that with regard to the question whether those conditions were satisfied where the purpose of the intended works was to fulfil an objective in the public interest, the achievement of which was incumbent on the contracting authority, such as the development or coherent planning of part of an urban district. In the Member States of the European Union, the execution of building projects, at least those of a certain size, was normally subject to prior authorisation by the public authority having urban-planning powers. That authority must assess, in the exercise of its regulatory powers, whether the execution of the works was in the public interest. However, it was not the purpose of the mere exercise of urban-planning powers, intended to give effect to the public interest, to obtain a contractual service or immediate economic benefit for the contracting authority, as was required under Art. 1(2)(a) of Directive 2004/18.

 The referring court had also asked whether a public works concession, within the meaning of Art. 1(3) of Directive 2004/18, was excluded in the case where the sole economic operator to which the concession could be granted already owned the land on which the work was to be carried out, or where the concession was granted for an indeterminate period.

The Court pointed out that, under Art. 1(3) of Directive 2004/18, a public works concession “is a contract of the same type as a public works contract except for the fact that the consideration for the works to be carried out consisted either solely in the right to exploit the work or in this right together with payment’.

The Court held that in order for a contracting authority to be able to transfer to the other contracting party the right to exploit a work within the terms of that provision, that contracting authority must be in a position to exploit that work. That would normally not be the case where the only basis for the right of exploitation was the right of ownership of the economic operator concerned.

Moreover, the essential characteristic of the concession was that it was the concessionaire himself who bore the main, or at least the substantial, operating risk (see with regard to concessions relating to public services, Case C‑206/08 Eurawasser [2009]  

The Court concluded that , in circumstances such as those of the case in the main proceedings, there was no public works concession within the meaning of Art. 1(3) of Directive 2004/18, nor did the provisions of Directive 2004/18 apply to a situation in which one public authority sold land to an undertaking, even though another public authority intended to award a works contract in respect of that land but had not yet formally decided to award that contract.

Text of Judgment

Case C‑440/08, Gielen v Staatssecretaris van Financiën

This reference for a preliminary ruling concerned the interpretation of Art. 43 EC. The reference had been made in the context of a dispute between Mr Gielen and the State Secretary for Finance in relation to income tax for 2001.


Art. 2.1(b) of the Law on income tax of 2001 provided that natural persons who were not resident in the Netherlands but who received income from that country were liable to income tax. In accordance with Art. 3.2 of the Law of 2001, taxable profit was the profit which the taxable person derived as a business operator from one or more undertakings, minus the self‑employed person’s deduction. Under Art. 3.76(2) of the Law of 2001, the amount of that deduction depended on the amount of the profit, determined in accordance with the table laid down in that provision, which operated degressively. The deduction amounted to EUR 6 084 for profit of less than EUR 11 745 and fell in stages to a minimum amount of EUR 2 984 for profits in excess of EUR 50 065. In accordance with Art. 3.76(1) of the Law of 2001, the right to the self-employed person’s deduction was subject, inter alia, to an “hours test’.

According to Art. 3.6 of that law, the hours test corresponded to the provision during the calendar year of at least 1 225 hours of work for one or more undertakings from which the taxable person derived profit as a business operator. In order to determine whether a non‑resident taxable person satisfied that test, account was taken only of hours worked for the part of an undertaking operated in a permanent establishment in the Netherlands. However, a non‑resident taxable person who was subject to the tax regime of another Member State in which he was resident might opt, in accordance with Art. 2.5(1) of the Law of 2001, to be made subject to the regime applicable to resident taxable persons.

The Hoge Raad (Supreme Court) of the Netherlands asked, in essence, whether Art. 49 TFEU precluded national legislation which, in relation to the granting of a tax advantage, such as the self‑employed person’s deduction, was potentially discriminatory towards non‑resident taxable persons, even though the latter might take advantage of the option to be treated as resident taxable persons provided for in that legislation in order to benefit from that tax advantage.

The Court reiterated that although direct taxation fell within their competence, the Member States must none the less exercise that competence consistently with European Union law (see, inter alia, C-347/04, Rewe Zentralfinanz [2006], on which I wrote this post). The Court also reiterated that the rules regarding equal treatment forbid not only overt discrimination by reason of nationality but also all covert formed of discrimination which, by the application of other criteria of differentiation, led in fact to the same result. Furthermore, discrimination could arise only through the application of different rules to comparable situations or the application of the same rule to different situations (see, inter alia, Case C‑279/93 Schumacker [1995])

The Court held that, with regard to satisfaction of the “hours test” for the purposes of the self‑employed person’s deduction, the national legislation at issue in the main proceedings treats taxable persons differently depending on whether or not they were resident in the Netherlands. Such a difference in treatment risked operating primarily to the detriment of nationals of other Member States, since non‑residents were most often non‑nationals.

However, the Hoge Raad pointed out that the self‑employed person’s deduction was not related to the personal capacity of taxable persons but rather to the nature of their activity. That deduction was granted to business operators whose main activity was running their business, which was demonstrated, inter alia, by satisfying the “hours test’. The Court held that in so far as that deduction was granted to all taxable business operators who had satisfied that test, inter alia, it must be held that it was not relevant in that regard to make a distinction according to whether those business operators performed their work in the Netherlands or in another Member State.

Consequently, for the purposes of the self‑employed person’s deduction, the situation of non-resident taxable persons was comparable to that of resident taxable persons (see, to that effect, Case C‑234/01 Gerritse [2003] and Case C‑346/04 Conijn [2006]).

The Court concluded that Article 49 TFEU precluded national legislation which, in relation to the granting of a tax advantage, such as the self‑employed person’s deduction at issue in the main proceedings, was discriminatory towards non‑resident taxable persons, even though those taxable persons might opt for the regime applicable to resident taxable persons in order to benefit from that tax advantage.

Case C‑378/08, Raffinerie Mediterranee

Another important case on the polluter pays principle (see my previous post on this principle). The dispute concerned the Priolo Gargallo Region in Sicily (pictured left), which had been declared a “Site of National Interest for decontamination purposes’, and in particular the Augusta roadstead. The roadstead had been affected by recurring incidents of environmental pollution, dating back as far as the 1960s, when the Augusta-Priolo-Melilli site was established as a hub for the petroleum industry. Since that time, numerous undertakings operating in the hydrocarbon and the petrochemical sectors had been set up and/or succeeded one another in the region.

The area was the subject of a “characterisation” designed to assess the condition of the land, the water-table, the coastal sea and the seabed. In accordance with Art. 9 of Ministerial Decree No 471 of 25 October 1999, the undertakings established on the petrochemical site, as owners of land-based industrial areas located on the site of national interest, submitted proposals for emergency safety measures and measures for decontaminating the water-table, which were approved by interministerial decree.

By various successive measures and in view of the delay in Implementing the proposed measures, for which it criticised the undertakings concerned, the competent public authority required the undertakings to decontaminate and reinstate the seabed of the Augusta roadstead, and in particular to remove contaminated sediment existing there up to a depth of two metres. It indicated that, if those undertakings failed to comply, the works would be carried out by the authorities of their own initiative at the expense of those undertakings.

Claiming that such a task was impracticable and would expose them to disproportionate costs, the undertakings concerned brought actions against those administrative decisions. The lower national court upheld the actions. That judgment was challenged by the administrative authorities Council of Administrative Justice for the Region of Sicily, which ordered the judgment be stayed.

Faced with the refusal to comply on the part of the applicant companies, the administrative authorities decided that the companies should be required to take further measures, including the building of a dam. The applicants in the main proceedings brought a new action against that decree and other related administrative measures before the Tribunale amministrativo regionale della Sicilia, which referred several questions to the Court of Justice.

The referring court stated that the practice of the competent public authority as it currently stood consisted in making the undertakings operating in the Augusta roadstead shoulder responsibility for existing environmental pollution, without any distinction being made between past and present pollution or any assessment carried out as to the direct responsibility of each of the undertakings concerned for the damage. It pointed out in particular that there had been a whole succession of petrochemical undertakings in the area, so that it would be not only impossible but also pointless to determine each individual’s share of responsibility, especially since the very fact of pursuing activities which were in themselves hazardous on a contaminated site should be regarded as sufficient to hold those undertakings liable.

The Tribunale amministrativo regionale della Sicilia asked, in essence, whether the “polluter pays” principle, as laid down in  Art. 174(2) EC, and the provisions of Directive 2004/35, which sought to give that principle concrete expression in the field of environmental liability, precluded national legislation which allowed the competent authority to impose measures for remedying environmental damage on commercial operators on account of the fact that their installations were located close to a contaminated area, without carrying out any preliminary investigation into the occurrence of the contamination or establishing a causal link between the environmental damage and those operators or indeed intent or negligence on the part of those operators.

  

The environmental liability mechanism laid down in Directive 2004/35

Art. 4(5) of Directive 2004/35 provided that the directive was to apply to that kind of pollution only where it was possible to establish a causal link between the damage and the activities of individual operators. The Court reiterated that Directive 2004/35 did not specify how such a causal link was to be established. Under the shared competence enjoyed by the European Union and the Member States in environmental matters, where a criterion necessary for the implementation of a directive adopted on the basis of Art. 175 EC had not been defined in the directive, such a definition fell within the competence of the Member States and they had a broad discretion, in compliance with the Treaty rules, when laying down national rules developing or giving concrete expression to the “polluter pays” principle (see Case C‑254/08 Futura Immobiliare and Others [2009], on which I wrote this post).

Since, in accordance with the “polluter pays” principle, the obligation to take remedial measures was imposed on operators only because dof their contribution to the creation of pollution or the risk of pollution (see Case C‑188/07 Commune de Mesquer [2008] on which I wrote this post), in order for such a causal link to thus be presumed, the competent authority must have plausible evidence capable of justifying its presumption, such as the fact that the operator’s installation was located close to the pollution found and that there was a correlation between the pollutants identified and the substances used by the operator in connection with his activities.

If the Tribunale amministrativo regionale della Sicilia considered that the pollution in question in the main proceedings was diffused and no causal link could be established, such a situation did not fall within the scope ratione materiæ of Directive 2004/35 but within that of national law.

The Court stressed, however, that, if the referring court reaches the conclusion that Directive 2004/35 was applicable to the case before it, the following considerations were to be borne in mind.

 Arts 3(1), 4(5) and 11(2) of Directive 2004/35 must therefore be interpreted as meaning that, when deciding to impose remedial measures on operators whose activities fell within Annex III to the directive, the competent authority was not required to establish fault, negligence or intent on the part of operators whose activities were held to be responsible for the environmental damage. On the other hand, that authority must, first, carry out a prior investigation into the origin of the pollution found, and had a discretion as to the procedures, means to be employed and length of such an investigation. Second, the competent authority was required to establish, in accordance with national rules on evidence, a causal link between the activities of the operators at whom the remedial measures were directed and the pollution.

Furthermore, in accordance with Art. 11(4) of Directive 2004/35, operators had available to them legal remedies to challenge remedial measures adopted on the basis of the directive and the existence of any causal link between their activities and the pollution found. Second, in accordance with Art. 8(3) of the directive, such operators were not required to bear the costs of remedial actions where they could prove that the environmental damage was caused by a third party and occurred despite the fact that appropriate safety measures were in place, since it was not a consequence of the “polluter pays” principle that operators must take on the burden of remedying pollution to which they had not contributed (see, by analogy, Case C‑293/97 Standley and Others [1999]).

It followed that a Member State might decide, inter alia, that operators engaged in activities other than those set out in Annex III to Directive 2004/35 could be held strictly liable for environmental damage, that was to say, as defined in Art. 2(1)(a) to (c) of the directive, not only damage to protect species and habitats but also water damage and land damage.

Directive 2004/18

By its fourth question, the Tribunale amministrativo regionale della Sicilia asked the Court, in essence, whether the directives governing public contracts, in particular Directive 2004/18, precluded national legislation which allowed the competent authority to award directly to a private-sector company the planning and implementation of public works and decontamination works to reinstate a polluted site.

The Court, however, reiterated that it was for the national court before which the dispute had been brought, which alone had direct knowledge of the facts giving rise to the dispute and must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submitted to the Court. Consequently, where questions submitted concerned the interpretation of EU law, the Court of Justice was bound, in principle, to give a ruling (see also C-467/05, Dell'Orto [2007], on which I wrote this post).

Where the Court did not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it, it must refused to rule on a question referred by a national court. (see Case C‑188/07 Commune de Mesquer [2008], on which I wrote this post). The Court considered that it did not have sufficient information on the factual context of the fourth question referred by the Tribunale amministrativo regionale della Sicilia and must therefore declare that question inadmissible.

 Text of Judgment

Case C‑241/08, Commission v France

By its application, the Commission of the European Communities requested the Court to declare that, by failing to adopt all the laws and regulations necessary to transpose correctly Art. 6(2) and (3) of the Habitats Directive (Directive 92/43), France had failed to fulfil its obligations under that directive.

Art. L. 414-1(V) of the French Code de l’environnement (Environmental Code) provided:

‘Natura 2000 sites should be the subject of measures intended to conserved or restore, in a state favourable to their long‑term maintenance, the natural habitats and populations of species of wild fauna and flora which had justified the designation of those sites. Natura 2000 sites should also be subject to appropriate preventive measures to avoid deterioration of those natural habitats and disturbances likely significantly to affect those species.

Those measures should be defined in consultation with, inter alia, the local authorities and groupings concerned, and with the representatives of the owners, operators and users of the lands and spaces within the site.

They should take account of economic, social, cultural and defence requirements and of regional and local characteristics. They should be adapted to the specific dangers which threaten those natural habitats and those species. They should not result in human activities being prohibited, where those activities did not have a significant effect on the maintenance or restoration of those natural habitats and those species at a favourable conservation status. Fishing, aquaculture, hunting and other hunting‑related activities practised under the conditions and in the areas authorised by the laws and regulations in force should not constitute activities causing disturbance or having such an effect.

The Commission claimed that, by providing that human activities were prohibited in Natura 2000 sites only if they significantly affected the maintenance or restoration of natural habitats and species at a favourable conservation status,  Art. L. 414‑1(V) of the Code de l’environnement applied the “significant effect” criterion indifferently both to the deterioration of habitats and the disturbance of species, and was therefore imprecise and less strict than Art. 6(2) of the Habitats Directive. Article 6(2) required the Member States to take appropriate steps to avoid, in the special areas of conservation, first, the deterioration of natural habitats and the habitats of species and, second, the disturbance of species in so far as such disturbance could be significant in relation to the objectives of that directive. In other words, according to the Commission, disturbances of species, which occured most often over a short period of time, might be tolerated up to a certain level, in contrast to the deterioration of habitats, which could be defined as a physical degradation affecting those habitats and which was systematically prohibited because placing a habitat in danger was more serious than disturbing a species.

The Court held that, for the purposes of determining whether the complaint raised by the Commission was well founded, it was incumbent upon the Commission to prove the allegation that an obligation had not been fulfilled. The Court stressed that it was the Commission’s responsibility to place before the Court all the information needed to enable the Court to establish that the obligation had not been fulfilled, and in so doing the Commission might not rely on any presumption (Case C‑293/07 Commission v Greece [2008]).  

In the present case, however, the Commission merely alleged, in essence, that, in order to ensure a correct transposition of Art. 6(2) of the Habitats Directive, Art. L. 414‑1(V) of the Code de l’environnement must prohibited all deteriorations, even if they did not have a significant effect. By isolating that provision in that way, and not taking sufficient account of its immediate legislative context, the Commission had, according to the Court, failed to show that the appropriate measures adopted pursuant to Art. L. 414‑1(V) of that code did not, in fact, allow the deterioration of habitats within the meaning of Art. 6(2) of the Habitats Directive to be avoided.

The Court held that, in those circumstances, it had not been established that Article L. 414‑1(V) of the Code de l’environnement, considered in its entirety, did not constitute a correct transposition of Art. 6(2) of the Habitats Directive, as alleged in the first complaint.

Activities causing disturbance

The Commission furthermore claims that the fourth sentence of the third subparagraph of Art. L. 414‑1(V) of the Code de l’environnement, which provided that fishing, aquaculture, hunting and other hunting‑related activities practised under the conditions and in the areas authorised by the laws and regulations in force should not constitut activities causing disturbance or activities having such an effect, did not ensure a clear, precise and complete transposition of Art. 6(2) of the Habitats Directive. Compliance with rules without any assurance that those rules take account of the requirements specific to a particular site could not, a priori, led to the general assertion that those activities caused no disturbance.

 The Court reiterated that Article 6(2) and (3) of the Habitats Directive sought to ensure the same level of protection (see, to that effect, Case C‑127/02 Waddenvereniging and Vogelbeschermingsvereniging [2004], para. 36, and Case C‑418/04 Commission v Ireland [2007]). Furthermore, the option of exempting generally certain activities, in accordance with the rules in force, from the need for an assessment of the implications for the site concerned did not comply with that provision. Such an exemption was not such as to guarantee that those activities did not adversely affect the integrity of the protected site (see Case C‑98/03 Commission v Germany [2006]).

Accordingly, taking into account the similar levels of protection required by Art. 6(2) and 6(3) of the Habitats Directive, Art. L. 414‑1(V) of the Code de l’environnement by providing generally that certain activities such as fishing or hunting did not cause disturbance, could be regarded as consistent with Art. 6(2) of that directive only if it was ensured that those activities caused no disturbance likely significantly to affect the objectives of the directive.

The Court held that the statement of objectives could not systematically guarantee in all cases that the activities in question would not cause disturbances likely significantly to affect those conservation objectives.

It followed that by providing generally that fishing, aquaculture, hunting and other hunting-related activities practised under the conditions and in the areas authorised by the laws and regulations in force did not constitute activities causing disturbance or having such an affected, France had failed to fulfil its obligations under Art. 6(2) of the Habitats Directive.

Whether failure to examine alternative solutions

The Commission furthermore criticises point 1 of Art. R. 414‑21(III) of the Code de l’environnement for not requiring the person making the application, in the context of an appropriate assessment of the implications for the site laid down in Art. 6(3) of the Habitats Directive, to provide a description of the various alternative solutions which could be envisaged for carrying out the plan or project. That assessment required, first, that a description be made of the various alternative solutions examined and an analysis of their implications for the site be carried out and, second, that the public authorities, even in the absence of an adverse affected on the integrity of the site, study those alternative solutions before making a decision on the basis of Art. 6(3) of the Habitats Directive.

 Text of Judgment

Case C‑172/08, Pontina Ambiente Srl v Regione Lazio

Pontina Ambiente, whose registered office was in Rome, collected and disposed of waste. In particular, it received, in a landfill intended for that purpose, solid waste from various municipal authorities in Regione Lazio, it stocks that waste and processes it in order to produce derivatives and compost and also to reduce its volume.

Pursuant to Law No 549/95 and the regional Implementing law, Pontina Ambiente was liable to pay quarterly, to Regione Lazio, a special levy on the disposal of solid waste in landfills, which must be paid not later than the month following the end of the quarter of the calendar year during which the waste was deposited. Pontina Ambiente was obliged to seek reimbursement from the municipal authorities sending waste to landfill.

That company paid, late, the levy for the third and fourth quarters of 2004, which caused the competent authorities of Regione Lazio to issue two tax assessments to it in October 2006 and, at the same time, impose on it the financial penalties laid down in Art. 3(31) of Law No 549/95.

On 4 January 2007, Pontina Ambiente brought an action before the Commissione tributaria provinciale di Roma for annulment of the measures adopted by Regione Lazio.

The company raised, in particular, the incompatibility with European Union law of certain rules for application of the levy at issue in regard to the determination of the person liable for the levy and the system of penalties for late payment, more precisely, with Arts 12 EC, 14 EC, 43 EC, 46 EC, Art. 10 of Directive 1999/31 and the relevant provisions of Directive 2000/35.

The Court of Justice first of all held that Article 10 of Directive 1999/31 required the Member States to take measures to ensure that the price charged for waste disposal in a landfill covered all the costs involved in the setting up and operation of the facility.

That requirement was an expression of the “polluter pays” principle, which implied, as the Court had already held in regard to Directive 75/442 and Directive 2006/12 of the European Parliament and of the Council of 5 April 2006 on waste (OJ 2006 L 114, p. 9), that the cost of disposing of the waste must be borne by the waste holders (Case C‑1/03 Van de Walle and Others [2004]; and Case C‑188/07 Commune de Mesquer [2008] (on which I wrote this post) and Case C‑254/08, Futura Immobiliare srl Hotel Futura (on which I wrote this post)).

It formed part of the objective of Directive 1999/31 which, according to Art. 1(1) thereof, was to meet the requirements of Directive 75/442, and in particular Art. 3 thereof, which inter alia required the Member States to take appropriate measures to encourage the prevention or reduction of waste production.

The consequence, in particular, was that whatever the national rules might be governing landfill sites, they must ensured that that all the operating costs of such a site was actually borne by the holders of the waste deposited in the landfill for disposal.

The Court therefore concluded that Article 10 of Directive 1999/31 must be interpreted as meaning that it did not preclude a national provision, such as that at issue in the main proceedings, which made the operator of a landfill site subject to a levy to be reimbursed by the local authority depositing the waste and which provided for financial penalties to be imposed on that operator for late payment of the levy, on condition that those rules were accompanied by measures to ensured that the levy was actually reimbursed within a short time and that all the costs of recovery, and in particular, the costs resulting from late payment of amounted which that authority owes to the site operator on that account, including costs incurred in order to avoid any financial penalty which might be imposed on the site operator, were passed on in the price to be paid by the authority to that operator. It was for the national court to ascertain whether those conditions had been satisfied.

Text of Judgment

Case C‑518/07, Commission and EDPS v Germany

With regard to the protection of individuals with regard to the processing of personal data of individuals, German law made a distinction depending on whether or not that processing was carried out by public bodies. There was therefore a difference between the authorities responsible, on the one hand, for monitoring compliance with the provisions concerning data protection by public bodies and, on the other hand, for monitoring compliance with data protection by non-public bodies and undertakings governed by public law which compete on the market (öffentlich-rechtliche Wettbewerbsunternehmen).

The processing of data by public bodies was supervised, at Federal level, by the Federal representedative responsible for the protection of personal data and freedom of information (‘Bundesbeauftragter für den Datenschutz und die Informationsfreiheit’) and, at regional level, by the representatives responsible for the protection of regional data (‘Landesdatenschutzbeauftragte’). Those representatives were solely responsible to their respective parliament and were not normally subject to any scrutiny, instruction or other influence from the public bodies which were the subjected of their supervision.

On the other hand, the organisation of the authorities responsible for supervising the processing of data by non-public bodies varied among the Länder. However, all the laws at Länder level expressly subject those supervisory authorities to State scrutiny.

By its application, the Commission of the European Communities requests the Court to declare that, by making the authorities responsible for monitoring the processing of personal data outside the public sector in the different Länder subject to State oversight, and by thus incorrectly transposing the requirement of “complete independence” of the supervisory authorities responsible for ensuring the protection of that data, Germany had failed to fulfil its obligations under the second subparagraph of Art. 28(1) of Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.

The scope of the requirement of independence of the supervisory authorities

The Grand Chamber of the Court first of stressed that the assessment of the substance of the present action depended on the scope of the requirement of independence contained in of Art. 28(1) of Directive 95/46 and, therefore, on the interpretation of that provision. In that context, the wording itself of that provision and the aims and scheme of Directive 95/46 should, according to the Court, be taken into account.

With regard to Directive 95/46, it was apparent from the third, seventh and eighth recitals in the preamble thereto that, through the harmonisation of national provisions on the protection of individuals with regard to the processing of personal data, that directive sought principally to ensure the free movement of such data between the Member States, which was necessary for the establishment of and the functioning of the internal market, within the meaning of Art. 14(2) EC (see, Joined Cases C‑465/00, C‑138/01 and C‑139/01 Österreichischer Rundfunk and Others [2003], on this case, see also this Article I wrote for the Common Market Law Review).

The Court held that the supervisory authorities provided for in Art. 28 of Directive 95/46 were the guardians of those fundamental rights and freedoms, and their existence in the Member States was considered, as was stated in the 62nd recital in the preamble to Directive 95/46, as an essential component of the protection of individuals with regard to the processing of personal data.

In order to guarantee that protection, the supervisory authorities must ensured a fair balance between, on the one hand, observance of the fundamental right to private life and, on the other hand, the interests requiring free movement of personal data. Furthermore, under Art. 28(6) of Directive 95/46, the different national authorities were called upon to cooperate with one another and even, if necessary, to exercise their powers at the request of an authority of another Member State.

The guarantee of the independence of national supervisory authorities was intended to ensured the effectiveness and reliability of the supervision of compliance with the provisions on protection of individuals with regard to the processing of personal data and must be interpreted in the light of that aim. It was established not to grant a special status to those authorities themselves as well as their agents, but in order to strengthen the protection of individuals and bodies affected by their decisions.


 It followed that, when carrying out their duties, the supervisory authorities must act objectively and impartially. For that purpose, they must remain free from any external influence, including the direct or indirect influence of the State or the Länder, and not of the influence only of the supervised bodies.

State Scrutiny

The Court furthermore held that the mere risk that the scrutinising authorities could exercise a political influence over the decisions of the supervisory authorities was enough to hinder the latter authorities” independent performance of their tasks. First, as was stated by the Commission, there could be “prior compliance” on the part of those authorities in the light of the scrutinising authority’s decision-making practice. Secondly, for the purposes of the role adopted by those authorities as guardians of the right to private life, it was necessary that their decisions, and therefore the authorities themselves, remained above any suspicion of partiality.

Therefore, State scrutiny exercised over the German supervisory authorities responsible for supervising the processing of personal data outside the public sector was not consistent with the above mentioned requirement of independence.

Principle of Democracy

Germany contended that it would be contrary to various principles of European Community law to interpret the requirement of independence in Art. 28(1) of Directive 95/46 in a way which would oblige that Member State to renounce its tried and tested system of scrutiny of the supervisory authorities with regard to the processing of personal data outside the public sector.

First, in the opinion of that Member State, the principle of democracy, in particular, precluded a broad interpretation of that requirement of independence.

The Court held that that principle, which was enshrined not only in the German constitution, but also in Art. 6(1) EU, required that the administration be subject to the instructions of the government which was accountable to its parliament. Thus, the legality of interventions concerning the rights of citizens and undertakings should be subject to the scrutiny of the competent minister. Since the supervisory authorities responsible for the protection of individuals with regard to the processing of personal data had certain powers of intervention with regard to citizens and entities outside the public sector under Art. 28(3) of Directive 95/46, a heightened scrutiny of the legality of their activities by means of instruments for monitoring legality or substance was absolutely necessary.

The Court furthermore stressed that the principle of democracy formed part of European Community law and was expressly enshrined in Art. 6(1) EU as one of the foundations of the European Union. The Court held that, as one of the principles common to the Member States, it must be taken into consideration when interpreting acts of secondary law such as Art. 28 of Directive 95/46.

According to the Court, that principle did not preclude the existence of public authorities outside the classic hierarchical administration and more or less independent of the government. The existence and conditions of operation of such authorities were, in the Member States, regulated by the law or even, in certain States, by the Constitution and those authorities were required to comply with the law subject to the review of the competent courts. Such independent administrative authorities, as existed moreover in the German judicial system, often had regulatory functions or carry out tasked which must be free from political influence, whilst still being required to comply with the law subject to the review of the competent courts. That was precisely the case with regard to the tasks of the supervisory authorities relating to the protection of data.

Admittedly, the absence of any parliamentary influence over those authorities was inconceivable. However, the Court pointed out that Directive 95/46 in no way made such an absence of any parliamentary influence obligatory for the Member States.

Thus, first, the management of the supervisory authorities might be appointed by the parliament or the government. Secondly, the legislator might define the powers of those authorities. Furthermore, the legislator might impose an obligation on the supervisory authorities to report their activities to the parliament. In that regard, a comparison might be made with Art. 28(5) of Directive 95/46 which provided that each supervisory authority was to draw up a report on its activities at regular intervals which would then be made public.

The Court held that, therefore, conferring a status independent of the general administration on the supervisory authorities responsible for the protection of individuals with regard to the processing of personal data outside the public sector did not in itself deprive those authorities of their democratic legitimacy.

Principle of conferred powers

The Court furthermore held that the principle of conferred powers enshrined in the first paragraph of Art. 5 EC, also pleaded by Germany, obliges the Community to act within the limits of the powers conferred on it and of the objectives assigned to it by the EC Treaty.

The Court held that the independence of the supervisory authorities, in so far as they must be free from any external influence liable to have an effect on their decisions, was an essential element in light of the objectives of Directive 95/46. That independence was necessary in all the Member States in order to create an equal level of protection of personal data and thereby to contribute to the free movement of data, which was necessary for the establishment and functioning of the internal market.

Therefore, a broad interpretation of the requirement of independence of the supervisory authorities did not go beyond the limits of the powers granted to the European Community under Art. 100a of the EC Treaty, which was the legal basis of Directive 95/46.

Text of Judgment