CELEX: 62011CJ0374
Language: en
Date: 2012-12-19 00:00:00
Title: Judgment of the Court (Fourth Chamber) of 19 December 2012. # European Commission v Ireland. # Failure of a Member State to fulfil obligations - Directive 75/442/EEC - Domestic waste waters discharged through septic tanks in the countryside - Judgment of the Court finding that a Member State has failed to fulfil obligations - Article 260(2) TFEU - Measures to ensure compliance with a judgment of the Court - Financial penalties - Penalty payment - Lump sum. # Case C-374/11.

JUDGMENT OF THE COURT (Fourth Chamber)
      19 December 2012 (*)
      
      (Failure of a Member State to fulfil obligations – Directive 75/442/EEC – Domestic waste waters discharged through septic tanks in the countryside – Judgment of the Court finding that a Member State has failed to fulfil obligations – Article 260(2) TFEU – Measures to ensure compliance with a judgment of the Court – Financial penalties – Penalty payment – Lump sum)
      In Case C‑374/11,
      ACTION under Article 260(2) TFEU for failure to fulfil obligations, brought on 13 July 2011,
      European Commission, represented by E. White, acting as Agent, with an address for service in Luxembourg,
      
      applicant,
      v
      Ireland, represented by D. O’Hagan and E. Creedon, acting as Agents, assisted by A. Collins, SC, and M. Gray, BL, with an address for service in Luxembourg,
      
      defendant,
      THE COURT (Fourth Chamber),
      composed of L. Bay Larsen, acting as President of the Fourth Chamber, J.‑C. Bonichot (Rapporteur), C. Toader, A. Prechal and
         E. Jarašiūnas, Judges,
      
      Advocate General: J. Kokott,
      Registrar: T. Millett, Deputy Registrar,
      having regard to the written procedure and further to the hearing on 4 October 2012,
      having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
      gives the following
      Judgment
      1        By its application, the European Commission requests the Court to: 
      
      –        declare that, by failing to take the necessary measures to comply with the judgment of the Court of 29 October 2009 in Case
         C‑188/08 Commission v Ireland concerning the failure of Ireland to fulfil its obligations under Council Directive 75/442/EEC of 15 July 1975 on waste (OJ
         1975 L 194, p. 39), as amended by Council Directive 91/156/EEC of 18 March 1991 (OJ 1991 L 78, p. 32) (‘Directive 75/442’),
         Ireland has failed to fulfil its obligations under Article 260 TFEU; 
      
      –        order Ireland to pay to the Commission a lump sum of EUR 4 771.20 multiplied by the number of days between the date of delivery
         of the judgment in Case C‑188/08 Commission v Ireland and the date of the judgment in the present case (or the date of full compliance with the judgment in Case C‑188/08 Commission v Ireland, if such compliance occurs while the present case is pending);
      
      –        order Ireland to pay to the Commission a daily penalty payment of EUR 26 173.44 from the date of judgment delivered in the
         present proceedings to the date of compliance by Ireland with the judgment in Case C‑188/08 Commission v Ireland; and 
      
      –        order Ireland to pay the costs. 
       Legal context
      2        Article 4 of Directive 75/442 is worded as follows: 
      
      ‘Member States shall take the necessary measures to ensure that waste is recovered or disposed of without endangering human
         health and without using processes or methods which could harm the environment, and in particular: 
      
      –        without risk to water, air, soil and plants or animals; 
      –        without causing a nuisance through noise or odours; 
      –        without adversely affecting the countryside or places of special interest. 
      Member States shall also take the necessary measures to prohibit the abandonment, dumping or uncontrolled disposal of waste.’
         
      
      3        Article 8 of that directive provides: 
      
      ‘Member States shall take the necessary measures to ensure that any holder of waste: 
      –        has it handled by a private or public waste collector or by an undertaking which carries out the operations listed in Annex II
         A or II B, or 
      
      –        recovers or disposes of it himself in accordance with the provisions of this Directive’.
      4        Article 13 of Directive 75/442 states: 
      
      ‘Establishments or undertakings which carry out the operations referred to in Articles 9 to 12 shall be subject to appropriate
         periodic inspections by the competent authorities’. 
      
       The judgment in Case C‑188/08 Commission v Ireland
      5        On 6 May 2008, the Commission, pursuant to Article 226 EC, brought an action against Ireland for failure to fulfil obligations
         by which it sought a declaration that that Member State had failed to fulfil its obligations under Directive 75/442 by failing
         to transpose, fully and correctly, into its domestic legislation the requirements of Articles 4 and 8 of that directive, relating
         to the disposal of domestic waste waters in the countryside through septic tanks and other individual waste water treatment
         systems (‘IWWTS’). 
      
      6        In paragraph 1 of the operative part of the judgment in Case C‑188/08 Commission v Ireland, the Court held as follows: 
      
      ‘… by failing to adopt, save in County Cavan, all the laws, regulations and administrative provisions necessary to comply
         with Articles 4 and 8 of [Directive 75/442] … as regards domestic waste waters disposed of in the countryside through [IWWTS],
         Ireland has failed to fulfil its obligations under that directive’.
      
       The pre-litigation procedure 
      7        By letter of 23 November 2009, the Commission requested the Irish authorities to notify it of the measures taken to comply
         with the judgment in Case C‑188/08 Commission v Ireland. 
      
      8        The Irish authorities replied by letter of 22 December 2009, proposing to the Commission a timetable for the adoption of the
         legislative and regulatory provisions envisaged and outlining their main features. That letter also announced, first, the
         creation of a working group to determine the appropriate performance standards and necessary changes in the planning requirements
         and building standards and, secondly, the publication by the Environmental Protection Agency (EPA) of a ‘Code of Practice’
         on on-site waste-water treatment and disposal systems.
      
      9        As it was not satisfied with that reply, the Commission, in a letter dated 25 November 2010, sent to Ireland a letter of formal
         notice calling on it to submit, within two months from the date of notification, its observations on the extent to which the
         judgment had been complied with. 
      
      10      On 3 February 2011, the Irish authorities replied to the letter of formal notice by informing the Commission of the progress
         of the legislative work. They stated that draft legislation amending the Water Services Act 2007 had been prepared and would
         be presented as soon as possible to the Government for approval. 
      
      11      In an additional reply received by the Commission on 10 May 2011, the Irish authorities stated that the draft legislative
         text had been approved by the Government. 
      
      12      As it was still not satisfied by the replies provided by the Irish authorities, the Commission, in accordance with Article
         260(2) TFEU, brought the present action before the Court. 
      
       Procedure before the Court 
      13      In the course of the written procedure, the Irish authorities sent to the Commission the initial version of the 2011 draft
         legislation amending the 2007 Act (the Water Services (Amendment) Bill 2011). The Commission, basing itself on the provisions
         of the draft legislation, expressed the view, in its reply, that such measures still did not ensure the correct transposition
         of Articles 4 and 8 of Directive 75/442. 
      
      14      The Irish authorities informed the Court, in their rejoinder, that that draft legislation had been adopted and that the Water
         Services (Amendment) Act 2012 had entered into force. 
      
       The failure to fulfil obligations 
       Arguments of the parties 
      15      The Commission, examining the Water Services (Amendment) Bill 2011, considers that the effectiveness of the monitoring and
         inspection system provided for still depends on ministerial regulations which will be approved at a later date. It points
         out that the financing of the new inspection system seems to it to be uncertain, that there is no express obligation requiring
         the competent authorities to ensure that inspections are carried out, that the national inspection plan does not appear to
         be binding, that the system envisaged for the recruitment of inspectors does not guarantee that there will be a sufficient
         number of inspectors, and that the inspections are neither systematic nor sufficiently binding. 
      
      16      Ireland is of the view that it has taken the measures necessary to comply with the Court’s judgment by adopting the Water
         Services (Amendment) Act 2012. That act provides for the establishment of a new monitoring and inspection system for septic
         tanks and other on-site systems for the treatment of waste water and drains associated with the discharge of domestic waste
         water. It also provides that the owners of such systems must ensure that they are registered with the competent water services
         authority. 
      
      17      Ireland claims that, in any event, the action should be dismissed, on the ground that the application was made too early.
         The period of 21 months between the delivery of the judgment in Case C‑188/08 Commission v Ireland and the Commission’s application is, it argues, insufficient in the light of the efforts required by the Irish authorities
         in order to comply with that judgment and does not take into account either the continuing and constructive dialogue that
         Ireland has been engaged in with the Commission after that judgment was delivered or the difficulties involved in the adoption
         of legislation in a particularly complex area. 
      
       Findings of the Court
      18      According to Article 260(2) TFEU, if the Commission considers that the Member State concerned has not taken the necessary
         measures to comply with the Court’s judgment, it may, after giving that Member State the opportunity to submit its observations,
         bring the case before the Court specifying the amount of the lump sum or penalty payment to be paid by the Member State concerned
         which it considers appropriate in the circumstances. 
      
      19      In that respect, the reference date for assessing whether there has been a failure to fulfil obligations under Article 260(1) TFEU
         is the date of expiry of the period prescribed in the reasoned opinion issued under that provision (see judgment of 11 December
         2012 in Case C‑610/10 Commission v Spain [2012] ECR I‑0000, paragraph 67). 
      
      20      In the present case, it is common ground that, at the time when the period laid down in the reasoned opinion sent by the Commission
         to Ireland on 25 November 2010 expired, Ireland had not adopted all the measures necessary to ensure full compliance with
         the obligations resulting from the judgment in Case C‑188/08 Commission v Ireland. 
      
      21      Furthermore, with regard to Ireland’s argument that the action is premature, it must be pointed out that, even though Article 260(1) TFEU
         does not specify the period within which a judgment must be complied with, it follows from settled case-law that the importance
         of immediate and uniform application of European Union law means that the process of compliance must be initiated at once
         and completed as soon as possible (see, to that effect, Case C‑278/01 Commission v Spain [2003] ECR I‑14141, paragraph 27 and the case‑law cited). 
      
      22      In the present case, however, a period of approximately 21 months elapsed between the delivery of the judgment in Case C‑188/08
         Commission v Ireland and the lodging of the Commission’s application. Even though the implementation of the judgment in Case C‑188/08 Commission v Ireland involved complex operations, such a period cannot, in the circumstances of the present case, be considered to be insufficient.
         
      
      23      In those circumstances, it must be held that, by failing to adopt all of the measures necessary to ensure compliance with
         the judgment in Case C‑188/08 Commission v Ireland, Ireland has failed to fulfil its obligations under Article 260(1) TFEU. 
      
       The financial penalties 
       Arguments of the parties 
      24      The Commission, establishing that Ireland has still not complied with the judgment in Case C‑188/08 Commission v Ireland, submits that that Member State should be ordered to pay, firstly, a lump sum of EUR 4 771.20, multiplied by the number of
         days between the date of delivery of that judgment and the date of the Court’s judgment in the present case and, secondly,
         a daily penalty payment of EUR 26 173.44 from the date of the judgment in the present case to the date of full compliance
         by Ireland with the first judgment. 
      
      25      Referring to the guidelines contained in its Communication SEC (2005) 1658 of 13 December 2005 on the application of Article
         228 EC (OJ 2007 C 126, p 15), as updated by Communication SEC (2010) 923/3 of 20 July 2010 entitled ‘Application of Article
         260 of the Treaty on the Functioning of the European Union. Up-dating of data used to calculate lump sum and penalty payments
         to be proposed by the Commission to the Court of Justice in infringement proceedings’, the Commission proposes to apply penalties
         calculated on the basis of a seriousness factor of 8 out of 20, taking account of the importance of the European Union rules
         which were the subject of the infringement, that is to say, the provisions of a directive intended to protect human health
         and the environment, the large number of IWWTS concerned by the inadequacies of the national provisions with regard to the
         requirements of that directive, and the extent of the risk of pollution resulting therefrom. The Commission, furthermore,
         considers that account must be taken of Ireland’s repeated engagement in infringing conduct which has given rise to the delivery
         by the Court of several judgments against that Member State for failure to fulfil its obligations in environmental matters.
         
      
      26      In order to determine the duration of the infringement, the Commission submits that the amount of the lump sum must be calculated
         with regard to the period between the date of delivery of the judgment in Case C‑188/08 Commission v Ireland, implementation of which is sought, and the date on which it decided to bring the present proceedings before the Court, that
         is to say, approximately 18 months, which corresponds, under the terms of its Communication of 13 December 2005, to a duration
         factor of 1.8. 
      
      27      Finally, in order to determine the factor ‘n’, which corresponds to the financial capacity of individual Member States, the
         Commission relies on its Communication of 20 July 2010, which fixes that factor, for Ireland, at 2.84. The Commission adds
         that, while it is true that, in a revision dated 1 September 2011 (SEC (2011) 1024 final), the factor ‘n’ for Ireland was
         reduced to 2.71, it is not appropriate to take account of that factor as the present action was brought prior to that revision.
         
      
      28      Ireland, for its part, contends that, since the adoption of the Water Services (Amendment) Act 2012, there is no longer any
         need to order it to pay a lump sum or penalty payment. On the assumption, however, that the Court intends to impose such financial
         penalties on it, Ireland argues that the lump sum should not be in excess of EUR 630 per day and that the penalty payment
         should not exceed EUR 5 000 per day. 
      
      29      In respect of the criterion of seriousness, Ireland considers that a factor of 3 out of 20 would be more appropriate, in view
         of the difficulties encountered by the Irish legislature, the existence in Irish legislation of provisions which could not
         have been taken into account by the Court in 2009, as being subsequent to the date fixed in the reasoned opinion, the establishment
         by the Environmental Protection Agency of stricter criteria regarding drinking water and, finally, the proven and sincere
         cooperation of the Irish authorities. 
      
      30      Ireland considers that the Court should take into account, in assessing the duration of the infringement, the commitment of
         the Irish authorities to on-going constructive dialogue with the Commission on the content of the draft legislation, which
         falls into a complex legislative framework requiring time to enact the legislation necessary to ensure compliance with the
         judgment in Case C‑188/08 Commission v Ireland. 
      
      31      Finally, the Irish authorities take issue with the method employed by the Commission to determine Ireland’s capacity-to-pay
         factor, since this does not take into account the fall in Ireland’s gross domestic product between 2008 and 2010 and the deterioration
         of Ireland’s public finances. The reference to a gross domestic product dating back to three years prior to the commencement
         of the proceedings is, it is submitted, inadequate. The factor ‘n’ should be reduced to 1. In any event, if the Court should
         decide to apply the factor ‘n’ as set out in the Commission’s Communications, Ireland argues that it would be appropriate
         to use the factor indicated in the most recent Communication. 
      
       Findings of the Court 
      32      Having recognised that Ireland has failed to comply with the judgment in Case C‑188/08 Commission v Ireland, compliance with which the Commission is seeking to ensure, the Court may impose on that Member State, pursuant to the second
         subparagraph of Article 260(2) TFEU, a lump sum or a penalty payment. 
      
       The penalty payment 
      –       The principle of the imposition of a penalty payment 
      33      According to settled case-law, the imposition of a penalty payment is, in principle, justified only in so far as the failure
         to comply with an earlier judgment of the Court continues up to the time of the Court’s examination of the facts (Case C‑496/09
         Commission v Italy [2011] ECR I‑0000, paragraph 42, and Case C‑610/10 Commission v Spain, paragraph 96). 
      
      34      It must be held in the present case that, at the time of that examination, the measures necessary for the implementation of
         the judgment in Case C‑188/08 Commission v Ireland had not yet been adopted in full. In particular, it is common ground that the Water Services (Amendment) Act 2012 requires
         implementation of texts not all of which have yet been adopted and that the national inspection plan for IWWTS has still to
         be developed. It also does not appear that a definitive deadline for the registration of IWWTS has been set. 
      
      35      In those circumstances, the Court takes the view that the imposition of a penalty payment on Ireland constitutes an appropriate
         financial means to ensure full compliance with the judgment in Case C‑188/08 Commission v Ireland (see, to that effect, Commission v Italy, paragraph 45, and Case C‑610/10 Commission v Spain, paragraph 114). 
      
      –       The amount of the penalty payment 
      36      It should be recalled that, in exercising its discretion in the matter, it is for the Court to set the penalty payment so
         that it is both appropriate to the circumstances and proportionate to the infringement established and the ability of the
         Member State concerned to pay (see Commission v Italy, paragraph 56 and the case-law cited). 
      
      37      In the assessment carried out by the Court, the criteria which must be taken into account in order to ensure that a penalty
         payment has coercive force with a view to the uniform and effective application of European Union law are, in principle, the
         duration of the infringement, its degree of seriousness and the ability of the Member State concerned to pay. For the purpose
         of applying those criteria, the Court is required to have regard in particular to the effects of non-compliance on the public
         and private interests at issue and to the urgency of compliance by the Member State concerned with its obligations (see Commission v Italy, paragraph 57). 
      
      38      In the present case, the failure to fulfil obligations identified in the judgment in Case C‑188/08 Commission v Ireland concerns the incomplete transposition of Directive 75/442, Article 2 of which provided for a transposition period expiring
         no later than 1 April 1993. Since, more than 19 years after that date, Ireland has still not complied with all of its obligations
         under that directive – the principal objectives of which are the protection of human health and of the environment – the Court
         cannot but confirm the particularly lengthy character of an infringement which, in the light of such objectives, is also a
         matter of indisputable gravity. 
      
      39      While Ireland claims that the delay in its compliance with the judgment in Case C‑188/08 Commission v Ireland was attributable to internal difficulties connected with the complexity of the implementation of Directive 75/442, it must
         be pointed out that a Member State cannot plead provisions, practices or situations prevailing in its domestic legal order
         to justify the failure to observe obligations arising under European Union law (see Case C‑407/09 Commission v Greece [2011] ECR I‑0000, paragraph 36). 
      
      40      Account must, however, be taken of the adoption of the Water Services (Amendment) Act 2012 and of significant measures such
         as, in particular, those designed to establish a national register of IWWTS and to ensure the training of inspectors of those
         systems, which demonstrate the efforts made by the Irish authorities since the delivery of the judgment in Case C‑188/08 Commission v Ireland with a view to full compliance therewith. 
      
      41      In addition, Ireland has committed itself to implementing the final steps necessary for the full implementation of that judgment
         in close collaboration with the Commission. Ireland also states, inter alia, that the recruitment of the inspectors is underway
         and that the national inspection plan should be finalised by 31 December 2012. 
      
      42      In so doing, Ireland does not dispute that it has yet to finalise the measures necessary to ensure compliance with the judgment
         in Case C‑188/08 Commission v Ireland establishing a failure to fulfil the requirements arising from Articles 4 and 8 of Directive 75/442. It is common ground in
         this regard that the transposition of that directive by the Water Services (Amendment) Act 2012 can be regarded as effective
         only when the measures referred to at paragraph 34 of the present judgment are adopted. 
      
      43      Having regard to all of the circumstances of the present case, the Court considers that it is appropriate to impose a daily
         penalty payment of EUR 12 000 to ensure implementation of the judgment in Case C‑188/08 Commission v Ireland, that sum taking into account Ireland’s capacity to pay as it stands at the date of the Court’s examination of the facts
         (see, to that effect, Case C‑610/10 Commission v Spain, paragraph 131). 
      
      44      In the present case, the data provided by Ireland, which have not been substantively disputed by the Commission, show that
         that Member State’s capacity to pay was reduced in the context of economic crisis (see also, to that effect, judgment of 19 December
         2012 in Case C‑279/11 Commission v Ireland [2012] ECR I‑0000, paragraph 79). 
      
      45      In those circumstances, Ireland must be ordered to pay to the Commission, into the ‘European Union own resources’ account,
         a penalty payment of EUR 12 000 for each day of delay in adopting the measures necessary to ensure compliance with the judgment
         in Case C‑188/08 Commission v Ireland from the date on which judgment is delivered in the present case until the date of full compliance with the judgment in Case
         C‑188/08 Commission v Ireland. 
      
       The lump sum payment 
      –       The principle of the imposition of a lump sum payment 
      46      As a preliminary point, it must be pointed out that, in the light of the objectives of the procedure laid down in Article
         260(2) TFEU, the Court is empowered, in the exercise of the discretion conferred on it by that article, to impose a penalty
         payment and a lump sum payment cumulatively (see, to that effect, Case C‑304/02 Commission v France [2005] ECR I‑6263, paragraph 83, and Case C‑610/10 Commission v Spain, paragraph 140). 
      
      47      The imposition of a lump sum payment must, in each individual case, depend on all the relevant factors relating both to the
         characteristics of the infringement established and to the conduct of the Member State involved in the procedure initiated
         under Article 260 TFEU. In that respect, that provision confers a wide discretion on the Court in deciding whether or not
         to impose such a penalty (Case C‑610/10 Commission v Spain, paragraph 141). 
      
      48      With regard to the present case, the Court takes the view that all the legal and factual circumstances pertaining to the infringement
         established indicate that effective prevention of future repetition of similar infringements of European Union law requires
         the adoption of a deterrent measure, such as the imposition of a lump sum payment (see, to that effect, Case C‑369/07 Commission v Greece [2009] ECR I‑5703, paragraph 145, and Case C‑610/10 Commission v Spain, paragraph 142). 
      
      49      Indeed, other than the failure to comply with the judgment in Case C‑188/08 Commission v Ireland, which has given rise to the present proceedings, a finding of a failure on the part of Ireland to fulfil its obligations
         under European Union law as regards water quality was made, as the Commission points out, in the judgments in Case C‑316/00
         Commission v Ireland [2002] ECR I‑10527, Case C‑396/01 Commission v Ireland [2004] ECR I‑2315 and Case C‑282/02 Commission v Ireland [2005] ECR I‑4653. Such a situation reflects the persistent avoidance by that Member State of its European Union obligations
         in that area. 
      
      –       The amount of the lump sum payment 
      50      If the Court decides to order a lump sum payment, it must, in the exercise of its discretion, set that payment in such a way
         that it is, first, appropriate to the circumstances and, secondly, proportionate both to the infringement that has been established
         and to the ability of the Member State concerned to pay (Commission v Greece, paragraph 146). 
      
      51      The relevant factors to be taken into account in that regard include, in particular, factors such as how long the breach of
         obligations has persisted since the judgment which initially established it was delivered and the public and private interests
         involved (Case C‑121/07 Commission v France [2008] ECR I‑9159, paragraph 64 and the case‑law cited). 
      
      52      In the present case, in the light of all of the foregoing and, in particular, of the considerations set out in paragraphs
         38 to 45 of the present judgment, proper account of the circumstances of the present case will be taken by setting the amount
         of the lump sum which Ireland will have to pay at EUR 2 000 000. 
      
      53      It is therefore appropriate to order Ireland to pay to the Commission, into the account ‘European Union own resources’, a
         lump sum of EUR 2 000 000. 
      
       Costs
      54      Under Article 138(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been
         applied for in the successful party’s pleadings. Since the Commission has applied for costs and Ireland’s failure to fulfil
         its obligations has been established, Ireland must be ordered to pay the costs. 
      
      On those grounds, the Court (Fourth Chamber) hereby:
      1.      Declares that, by failing to adopt all of the measures necessary to ensure compliance with the judgment of 29 October 2009
            in Case C‑188/08 Commission v Ireland establishing that Ireland has failed to fulfil its obligations under Articles 4 and 8 of Council Directive 75/442/EEC of 15 July
            1975 on waste, as amended by Council Directive 91/156/EEC of 18 March 1991, Ireland has failed to fulfil its obligations under
            Article 260(1) TFEU; 
      2.      Orders Ireland to pay to the European Commission, into the ‘European Union own resources’ account, a penalty payment of EUR 12 000
            for each day of delay in adopting the measures necessary to ensure compliance with the judgment in Case C‑188/08 Commission v Ireland, with effect from the date on which judgment is delivered in the present case until the date of full compliance with the
            judgment in Case C‑188/08 Commission v Ireland; 
      3.      Orders Ireland to pay to the European Commission, into the ‘European Union own resources’ account, the lump sum of EUR 2 000 000;
            
      4.      Orders Ireland to pay the costs.
      [Signatures]
      * Language of the case: English.