Commission v United Kingdom – a post-Brexit show of enforcement power by the European Court of Justice
By Neil Baylis
Neil Baylis explains the wider implications of the recent ruling by the European Court of Justice
On 28 September 2023, the European Court of Justice (ECJ) handed down a judgment in Commission v United Kingdom (C-692/20, EU:C:2023:707), ordering the UK and Northern Ireland to pay the European Commission a lump sum of €32 million for failing to adopt all necessary measures to comply with a previous judgment of 17 October 2018 (‘the 2018 judgment’) in Commission v United Kingdom (C-503/17, EU:C:2018:831). The 2018 judgment established the UK’s failure to fulfil its obligations under Council Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene (Directive 95/60) by authorising the use of marked gas oil as fuel for the propulsion of private pleasure craft.
Pursuant to the 2018 judgment, the UK was required to implement measures to bring about compliance with Directive 95/60. In the 2023 ECJ proceedings, the UK cited practical and legal difficulties in achieving compliance, including the general election in 2019, extended public consultations and legislative procedures and the covid-19 pandemic. Ultimately, the ECJ found that these circumstances did not warrant significant delay, noting that almost three years had elapsed between the delivery of the 2018 judgment and the UK’s eventual compliance with that judgment.
The implications of the ECJ’s ruling
Outside of its immediate context, the ECJ’s judgment is formative, and its implications could be far-reaching. Importantly, the Commission’s action according to the Opinion of Advocate General Collins, 8 December 2022 (Case C-692/20, EU:C:2022:972), “is the only one of its kind taken against the United Kingdom during its membership of the European Union… [and] commenced during the transition period.” The judgment draws on post-Brexit legal realities and the continuing hold European courts seem to have on the UK. For example, the ECJ held that the time limit of four months prescribed by the Commission in its letter of formal notice on 15 May 2020 was both reasonable and sufficient, particularly considering the fact that 23 months had elapsed between the delivery of the 2018 judgment which established the UK’s infringement and the expiry of that time limit. The ECJ unequivocally rejected the UK’s submission that the Commission had brought a premature action and infringed the principle of equal treatment by granting other member states considerably longer time limits to exercise compliance. Instead, the ECJ outlined the discretion enjoyed by the Commission, “as guardian of the Treaties”, to determine the time at which to bring an action against a member state for its failure to fulfil its obligations and noted that “the considerations determining that choice cannot affect the admissibility of the action nor even be subject to judicial review by the Court.” As such, the ECJ quite plainly stated its own limits against an arguably wide discretion afforded to the Commission.
Another important aspect of the ECJ’s judgment is the treatment of Northern Ireland. Directive 95/60 ceased to apply to the UK at the end of the transition period on 31 December 2020 and the infringement since 1 January 2021 concerned only Northern Ireland. In the ECJ’s assessment of the UK’s ability to pay the penalty, it refused the UK’s submission that the gross domestic product (GDP) of Northern Ireland should be relied upon. Rather, the ECJ outlined the UK’s responsibility under Article 12(1) of the Protocol on Ireland and Northern Ireland for implementing and applying Union law applicable to Northern Ireland by the Protocol and rejected the relevance of the UK not being a member state since 1 February 2020. The ECJ, therefore, took the GDP of the UK for the entire infringement period when calculating the penalty, noting that an assessment based solely on the GDP of Northern Ireland “would not be sufficiently dissuasive” in achieving the ECJ’s aim of “effectively preventing the repetition of similar infringements of EU law in the future.”
While this is the first instance of the UK failing to comply with a judgment given by the Court under Article 258 of the Treaty on the Functioning of the European Union, the ECJ’s hardline approach serves as a stark reminder that Union law still bites post-Brexit and that the Court will not hesitate to issue significant penalties where it deems there is a disruption to the proper functioning of the internal markets.
Neil Baylis is a partner at Cameron McKenna Nabarro Olswang LLP