Mangold vs. Helm – ECJ case C-144/04 – DID the Court gets it wrong ?
9th ECLN-Conference, European University Institute Florence, November 18-19, 2013
by
Ingolf Pernice, Berlin[*]
I. Introduction
II. Facts and background
III. Scrutinizing the Mangold-judgment and its critique
1. “advance effect” of directives during the period of transposition
2. Horizontal effects of the directive
3. A general principle of law excluding age discrimination
4. Binding effect of EU principles of law on Member States
5. Horizontal effects of general principles of EU-law
IV. Conclusion: Lessons to be learned from Mangold
I. Introduction
Criticizing others is often easier than giving satisfying reasons for what we are doing or deciding ourselves. Sometimes we are particularly unhappy with the result of what the European Court of Justice has decided. There can be a number of grounds for being dissatisfied politically or with regard to the economic consequences we assume to follow from the judgment. For legal scholarship, compliance with general principles, doctrinal issues and methodology are more important. The present analysis, thus, is limited to legal issues, and there are diverse aspects under which it is possible to criticize a judgment in legal terms:Sometimes we do not share the reasons given or even do not find convincing reasons at all. We may detect a violation of generally accepted higher principles of law or of methodology; there might be a lack of coherence with earlier case law, or we may be convinced that new approaches or concepts have adverse consequences in the future.[1]Some judicial activism[2] may also exceed what we consider to be the constitutional limits of the Court’s competences with regard to other European institutions and, in particular, the legislative bodies, or even with regard to the powers conferred to the European Union at large.
A methodology for a meaningful review of the ECJ case-law has yet to be developed. The present paper aims toidentify the critical issues of a case considered, at least in Germany, as a leading example for „when the Court got it wrong“: thiscase was C-144/04 – Mangold v. Helm.[3]It is upon the basis of a brief presentation of the facts and the debate on this case in Germany (infra II.) that not only the judgment, but also some of the critique will be analyzed(infra III.) with a view to draw lessons to be learned from this ex post evaluation of this judgment (infra IV.)
II. Facts and background
Theproceedings in the matter of C-144/04 – Mangold v. Helmdealt with a case of age discrimination as it emerged in the realm of provisions of German labor law concerning contract termination requirements. As an integral element of the storied German “Hartz”-laws of 2002[4], these provisions permitted the unrestrictedconclusion of fixed-term contracts with unemployed workers of the age 52 years and older. In thus far, the provisions deviated from the general rule according to which fixed term contracts could only be concluded upon the contention of an objective justification. The German legislator had adopted this partial abrogation of worker protection lawin order to facilitate and encourage the employment of older workers who, under general labor law,allegedlyhad little chance to find work at all.
However, an idiosyncratic and, perhaps for the German legislator, unfortunate twist of European law loomed: The German provisions had been enacted after the entry into force of Directive 2000/78, which established a general framework for equal treatment in employment and occupation, but beforeexpiration of its extended period of transposition.
Mr. Mangold, at the age of 56 years, was employed at the law firm of Mr. Helmon the basis of a fixed-term contract in which specific reference was made to the “Hartz”-laws.In fact, its provisions clearly stated that the use of its fixed-term clause could not be based on any other justification. In a case brought before the Munich Labor Court (MLC), Mr. Mangold argued that the clause fixing the term of the contract was invalid on the grounds that the provision of German law referred to in order to justify the fixed term was contrary to Directive 2000/78. Mr. Helm, in contrast, argued that it was justified as the “Hartz”-laws facilitated employment of people who otherwise would not find a job because of their age.
The Labor Court referred the case to the ECJ with the following questions relevant to the present paper:
1.Is Article 6 of … Directive 2000/78 … to be interpreted as precluding a provision of national law which, like the provision at issue in this case, authorises the conclusion of fixed-term employment contracts, without any objective reason, with workers aged 52 and over, contrary to the principle requiring justification on objective grounds?
2.Must the national court refuse to apply the provision of domestic law which is contrary to Community law and apply the general principle of internal law, under which fixed terms of employment are permissible only if they are justified on objective grounds?
The Court said yes, broadly speaking, to both questions. It was strongly criticized[5] because
- the Directive referred to was not yet applicable as the period prescribed for the transposition of the Directive into national law had not yet expired
- the Directive, according to the established case-law of the ECJ, in any event could not produce horizontal effects among private persons[6]
- in light of the diversity of national constitutional law regarding age discrimination, there was insufficient grounds for extracting a general principle of law prohibiting age discrimination,[7]
- such a principle, even if it were generally recognized, would not apply to a case where national legislation is not within the scope of and, namely, notintended to implement EU law,
- in any event, a fundamental right prohibiting age discrimination could not be invoked amongst private persons in an exclusively private law contract,
- the preliminary ruling, for all these reasons constitutes a manifest transgression of competences on the part of the Court of Justice.[8]
In a subsequent case, the Federal Labor Court (FLC) handed down judgment, in which it expressly appliedthe Mangold-ruling. The plaintiff successfully argued the inapplicability of the fixed-term in his employment contract on the grounds that it violated theprohibition of age discrimination of EU primary law.[9]
Consequently, the affected employer filed a constitutional complaint against this judgment with the German Federal Constitutional Court (GFCC), putting forward the arguments listed above. This became the famous “Honeywell”-case. In anticipation of the judgment, many observers[10] expected that the GFCC would exercise its self-declaredultra vires jurisdiction[11] for the first time and declare Union law inapplicable in Germany. Yet, the Court did no such thing, althoughit apparently did not entirely concur with theECJ’s argument in Mangold. Nonetheless, with a view to comply with the “supranational integration principle“ and driven by the principles of cooperation, mutual respect and tolerance, as enshrined in Article 4 (3) TEU, the GFCC found the Mangold judgment to be within the limits of the competences conferred to the European Union and, in particular, to the ECJ. It stated, as a general rule, that
„... the task and status of the independent suprastate case-law must be safeguarded. This means, on the one hand, respect for the Union’s own methods of justice to which the Court of Justice considers itself to be bound and which do justice to the “uniqueness” of the Treaties and goals that are inherent to them (see ECJ Opinion 1/91 EEA Treaty [1991] ECRI-6079 para. 51). Secondly, the Court of Justice has a right to tolerance of error. It is hence not a matter for the Federal Constitutional Court in questions of the interpretation of Union law, which with a methodical interpretation of the statute can lead to different outcomes in the usual legal science discussion framework, to supplant the interpretation of the Court of Justice with an interpretation of its own. Interpretations of the bases of the Treaties are also to be tolerated which, without a considerable shift in the structure of competences, constitute a restriction to individual cases and either do not permit impacts on fundamental rights to arise which constitute a burden or do not oppose domestic compensation for such burdens“.[12]
Certainly, this is not the place for discussing the general approach the GFCC has chosen regarding its own relationship with the ECJ and European law at large.[13] With a view to the general topic of the discussion at the present workshop: “When the Court gets it wrong”, the Honeywell judgment of the GFCC, nevertheless, provides an important insight: Even judges may err; and it is not for the national courts, in principle, to play the role of watchdogsof the ECJ’s jurisprudence.
What the case shows is that the matter was taken very seriously in Germany and that the GFCC abstains from playing the supervisory board for the ECJ. The question to be discussed here is nevertheless: Did the Court err and, if so, what did it get wrong? What can we learn from the Mangold-case?
III. Scrutinizing the Mangold-judgment and its critique
The long list of critical issues mentioned above merits closer examination.They cover a number of fundamental questions regarding both, the duties of the Member States and their courts under Union law and the fundamental rights the individual Member States and their courts are required under EU law to safeguard in a field which is not within the scope of Union law. The judgment seems to conflict with general assumptions concerning the context of established EU law and jurisprudence.Quite possibly it is this circumstance which has createdconsiderable confusion in legal academia.
1. “advance effect” of directives during the period of transposition
A first assumption regarding directives in general is that they lack legally binding effectante expiration of the prescribed period of transposition.
Yet, the Court not only found that the German “Hartz”-law was contrary to Article 6 (1) of Directive 2000/78. It also emphasized, that „the fact that, when the contract was concluded, the period prescribed for the transposition into domestic law of Directive 2000/78 had not yet expired cannot call that finding into question“.[14]It based this claim on its earlier judgment in case C-129/96 InterEnvironnement Wallonie.There it stated that:
„during the period prescribed for transposition of a directive, the Member States must refrain from taking any measures liable seriously to compromise the attainment of the result prescribed by that directive“.[15]
In reaction to the decision, some critical voices argued inter alia that there was no evidence in the specific facts of the case that the disputed provision of German national law could not have been made to comply with the directive before expiration of its transposition period.[16] Moreover, given that the validity of the provisions of German law was to expire before the end of the period of transposition, there was no violation of EU secondary law. Thus, it was said, the ECJ had adopted an “advance effect” of directives contrary to its established case law.[17]
However, the Treaties can be read tostipulate a duty of the Member States to use the period of transposition positively to implement thosemeasures necessaryto achieve the objectivesof the directive,rather than measures which run the risk ofjeopardizing them. The concept of a directive’s entry into force is itself not dependent on any period of transposition. Article 288 (3) TFEU states that “the directive shall be binding…”, and Article 297 (2) TFEU defines the “entry into force”.A directive, therefore, produces legal obligations from the twentieth day after its publication onwards. Also in light of the general principle of “sincere cooperation” under Article 4 (3) TEU, Member States are held to undertake all action necessary in order toensure compliance until the date the period of transposition expires, rather than implementing countervailing measures.
It has beennoted, that this construction goes beyond what the Court had decided in case C-129/96 InterEnvironnement Wallonie.[18] There it states that “measures liable seriously to compromise the attainment of the result prescribed by that directive” are prohibited.In Mangold the fact that the national measure was limited so to expire shortly after the end of the period of transposition can indeed be seen as sufficient to ensure compliance with this rule.[19] Hence, the reference to this judgmentdoes not justify the rule established in Mangold. However,the Court also took note of the special situation that Germany had made use of the additional period of three years allowed “if necessary” under the second subparagraph of Article 18 of the Directive, “in order to take account of particular conditions”. According to this provision, Germany was obliged to report annually on the measures taken “to tackle age discrimination” and “on the progress it is making towards implementation”. The Court argued that this provision would be “redundant” if the Member State werepermitted to act in the opposite direction during the period of transposition.[20] This conclusion, however, seems to miss the point. What is decisive, instead, seems to be the violation of the obligation to proceed towards the implementation of the directive and to report upon this.
Accordingly, the principal question is whether or not this violation of a seemingly negative duty not to act contrary to the objectives of the directive is equivalent to a violation of the positive duty to comply with the Directive when the period of transposition has indeed expired. Contrary to what is suggested by Karl Riesenhuber[21], the provisions of Article 18 of the Directive specifically underline the obligations of the Member States to positively proceed towards implementation. It follows that any action to the opposite may be validly declared contrary to the Treaties and, in particular, to violatethe duties under Article 10 (3) TEU and 288 (3) TFEU.
Granted,the reasons given by the Court are questionable. Yet, the mere fact that the period of transposition of the Directive had not expired at the relevant time and that the German measures expired at the end of the period of transpositionissufficient to consider them as contrary to the Treaties.What has been called “advance effect” (Vorwirkung) of directives in the literature as well as in the Honeywell judgment of the GFCC,[22] should not be understood as a new normative barrier to the freedom of national legislators anticipating what would normally apply after the period of transposition has expired.Rather, it is a simple expression of the existing duties of the Member States as of the date of entry into force of the directive, which they have agreed upon.
What follows from the violation of these duties in a given case?It is difficult to conclude from this, the direct effect of the substantive provisions of the Directive, as if the period of transition had already expired.[23]In particular, Advocate General Tizzano in his conclusions on the case stated that setting aside the German law in order to render it compliant with the substantive obligations arising from the Directive would amount to acknowledging its “horizontal effect” and thus be contrary to earlier case-law. This doctrine, he added, applied with even greater force in cases in which the period of transposition had not yet expired.[24] But what if the provisions violated in a given case are general obligations of a more procedural character? Is it possible to argue that, according to the principle of primacy, provisions of national law adopted in violation of general Treaty obligations,as they can be derived fromArticle 10 (3) TEU andArticle 288 (3) TFEU,read together with Article 18 of the Directive,cannot be applied by a national court?The question whether these obligationscan be read to prohibit any act of a Member State, which is contrary to what the directive requires to do, and to have direct effect in a case such asMangold, has never been asked. It should be answered to the affirmative. The Court, therefore, could have answered the preliminary question in stating that the German law in question was inapplicable in the given case for this reason. But the ECJ did not take this position[25]andreferred, “in a second place and above all” to the prohibition of age-discrimination as a general principle of law.[26]
2. Horizontal effects of the directive
There is an established jurisprudence that directives may havedirect effect after the period of transposition has expired only in so far as they contain provisions that are clear, unconditional and confer rights upon the individual.[27]However, in order to maintain the difference drawn between regulations and directives in Article 288 TFEU, there is a similarly established case law of the ECJ excluding such direct effect where private parties are involved on both sides, the so-called horizontal effect.[28]
Nonetheless, in Mangold, the Court does not distinguish between direct or horizontal effect of the Directive. Interestingly, it is the GFCC that refers to the cases CIA Security and Unileverin an apparent attempt toconstrue aduty of the courts to set aside a provision of national law in a dispute between private individuals even before expiration of the directive’s transposition period. It eventuallyrejects the claim that the Mangold ruling was ultra vires in this point, by placingsaid duty within the doctrine of “negative effect” of directives: