Provisional text
JUDGMENT OF THE COURT (First Chamber)
25 April 2024 (*)
(Failure of a Member State to fulfil obligations – Article 258 TFEU – Protection of persons who report breaches of Union law – Directive (EU) 2019/1937 – Failure to transpose and notify the transposition measures – Article 260(3) TFEU – Application for the imposition of a lump sum and a daily penalty payment – Criteria for establishing the amount of the sanction – Automatic application of a coefficient for seriousness – Determination of the capacity to pay of the Member State – Demographic criterion)
In Case C‑147/23,
ACTION for failure to fulfil obligations under Article 258 and Article 260(3) TFEU, brought on 10 March 2023,
European Commission, represented by J. Baquero Cruz and M. Owsiany-Hornung, acting as Agents,
applicant,
v
Republic of Poland, represented by B. Majczyna, acting as Agent,
defendant,
THE COURT (First Chamber),
composed of A. Arabadjiev, President of the Chamber, T. von Danwitz, P.G. Xuereb, A. Kumin and I. Ziemele (Rapporteur), Judges,
Advocate General: N. Emiliou,
Registrar: A. Calot Escobar,
having regard to the written procedure,
after hearing the Opinion of the Advocate General at the sitting on 14 March 2024,
gives the following
Judgment
1 By its application, the European Commission claims that the Court should:
– declare that, by failing to adopt the laws, regulations and administrative provisions necessary to comply with Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ 2019 L 305, p. 17) and by failing to communicate them to the Commission, the Republic of Poland has failed to fulfil its obligations under Article 26(1) and (3) of that directive;
– impose on the Republic of Poland a lump sum payment of one of the following two amounts, whichever is the highest:
– a flat-rate amount of EUR 13 700 per day multiplied by the number of days between the day after the expiry of the deadline for transposition of Directive 2019/1937 set out therein and the date on which the infringement ends, or, failing compliance, the date of delivery of the judgment in the present case;
– a minimum lump sum of EUR 3 836 000;
– if the failure to fulfil obligations determined in the first indent lasts until the judgment is delivered in the present case, impose on the Republic of Poland penalty payments of EUR 53 430 per day from the date of delivery of that judgment until the date on which the Republic of Poland fulfils its obligations under Directive 2019/1937; and
– order the Republic of Poland to pay the costs.
Legal context
Directive 2019/1937
2 Recital 1 of Directive 2019/1937 states:
‘… [P]otential whistleblowers are often discouraged from reporting their concerns or suspicions for fear of retaliation. In this context, the importance of providing balanced and effective whistleblower protection is increasingly acknowledged at both [European] Union and international level.’
3 Under Article 1 of that directive:
‘The purpose of this Directive is to enhance the enforcement of Union law and policies in specific areas by laying down common minimum standards providing for a high level of protection of persons reporting breaches of Union law.’
4 Article 26 of Directive 2019/1937 provides:
‘1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 17 December 2021.
…
3. When Member States adopt the provisions referred to in paragraphs 1 and 2, those provisions shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made. They shall forthwith communicate to the Commission the text of those provisions.’
The 2023 Communication
5 Communication 2023/C 2/01 from the Commission, entitled ‘Financial sanctions in infringement proceedings’ (OJ 2023 C 2, p. 1) (‘the 2023 Communication’), enshrines in points 3 and 4 thereof, respectively, the ‘penalty payment’ and ‘lump sum payment’.
6 Point 3 of that communication states, in the second paragraph thereof:
‘The amount of the daily penalty payment is calculated as follows:
– multiplication of a flat-rate amount by a coefficient for seriousness and a coefficient for duration,
– multiplication of the result obtained by an amount fixed by Member State (the n factor) reflecting the capacity to pay of the Member State concerned.’
7 Point 3.2 of the 2023 Communication, which concerns the application of the coefficient for seriousness when calculating the daily penalty payment, reads as follows:
‘An infringement concerning a Member State’s non-compliance with a judgment or its failure to notify measures transposing a directive adopted under a legislative procedure is always considered serious. To adapt the amount of the penalty to the specific circumstances of the case, the Commission determines the coefficient for seriousness on the basis of two parameters: the importance of the Union rules breached or not transposed and the effects of the infringement on general and particular interests.
In the light of the considerations developed below, the seriousness of the infringement is determined by a coefficient fixed by the Commission of between a minimum of 1 and a maximum of 20.’
8 Point 3.2.2 of that communication states:
‘For actions brought under Article 260(3) TFEU, the Commission systematically applies a coefficient for seriousness of 10 in case of a complete failure to notify transposition measures. In a Union based on the respect of the rule of law, all legislative directives are to be considered of equal importance and require complete transposition by the Member States within the deadlines that they set.
In the case of a partial failure to notify transposition measures, the importance of the transposition gap is to be considered when setting the coefficient for seriousness which is lower than 10. In addition, the effects of the infringement on the general and particular interests may be taken into account …’
9 Under point 3.3 of the 2023 Communication, entitled ‘Application of the coefficient for duration’:
‘…
The coefficient for duration is expressed as a multiplier of between 1 and 3. It is calculated at a rate of 0.10 per month from the date of the first judgment or from the day following the expiry of the deadline for transposition of the directive in question.
…’
10 Point 3.4 of that communication, entitled ‘Member State’s capacity to pay’, provides:
‘…
The level of sanction required to serve as a deterrent will vary according to the Member States’ capacity to pay. This deterrent effect is reflected in the n factor. It is defined as a weighted geometric average of the gross domestic product (GDP) … of the Member State concerned compared to the average of the Member States’ GDPs, with a weight of two, and of the population of the Member State concerned, compared to the average of Member States’ populations, with a weight of one. This represents the capacity to pay of the Member State concerned in relation to the other Member States’ capacity to pay:
…
The Commission has … decided to revise its method for calculating the n factor, which now predominantly relies on Member States’ GDP and secondarily on their population as a demographic criterion allowing a reasonable deviation between the various Member States to be maintained. Taking into account Member States’ population for one third of the calculation of the n factor reduces to a reasonable degree the variation of Member States’ n factors, as compared to a calculation based solely on Member States’ GDP. It also adds an element of stability in the calculation of the n factor, since population is unlikely to vary significantly on an annual basis. In contrast, a Member State’s GDP might experience higher annual fluctuations, in particular in periods of economic crisis. At the same time, since the Member States’ GDP still accounts for two thirds of the calculation, it remains the predominant factor for the purposes of assessing its capacity to pay.
…’
11 Point 4.2 of the 2023 Communication sets out the calculation method for the lump sum as follows:
‘The lump sum is calculated in a manner broadly similar to the method for calculating the penalty payment, that is:
– multiplying a flat-rate amount by a coefficient for seriousness,
– multiplying the result by the n factor,
– multiplying the result by the number of days the infringement persists …
…’
12 Point 4.2.1 of that communication provides:
‘To calculate the lump sum, the daily amount is to be multiplied by the number of days the infringement persists. The latter is defined as follows:
…
– for actions brought under Article 260(3) TFEU, this is the number of days between the day after the expiry of the deadline for transposition set out in the directive at issue and the date the infringement comes to an end, or, failing compliance, the date of the delivery of the judgment under Article 260 TFEU.
…’
13 Under point 4.2.2 of the 2023 Communication:
‘For the calculation of the lump sum, the Commission applies the same coefficient for seriousness and the same fixed n factor as for the calculation of the penalty payment …
The flat-rate amount for the lump sum is lower than for penalty payments. …
The flat-rate amount applicable for the lump sum is set out in point 2 of the Annex I.
…’
14 Annex I to that communication, entitled ‘Data used for determining financial sanctions proposed to the Court’, provides, in point 1 thereof, that the flat-rate amount for the penalty payment mentioned in point 3 of the Communication is fixed at EUR 3 000 per day, in point 2 thereof, that the flat-rate amount for the lump sum payment mentioned in point 4.2.2 of the Communication is fixed at EUR 1 000 per day, that is one third of the flat-rate for penalty payments, and, in point 3 thereof, that the ‘n’ factor for the Republic of Poland is 1.37. It is stated in point 5 of that Annex I that the minimum lump sum fixed for the Republic of Poland amounts to EUR 3 836 000.
The pre-litigation procedure
15 On 27 January 2022, the Commission sent a letter of formal notice to the Republic of Poland, alleging that it had failed to communicate to it the measures adopted to transpose Directive 2019/1937. In its response of 23 March 2022, the Republic of Poland merely pointed out that such measures were in the process of being adopted.
16 On 15 July 2022, the Commission addressed a reasoned opinion to the Republic of Poland, in which it invited it to comply with its obligations under Directive 2019/1937 within a period of two months from the notification of that opinion.
17 In its response of 15 September 2022, the Republic of Poland pointed to the need for in-depth ministerial consultations on the issues covered by Directive 2019/1937, and therefore the Parliamentary works were scheduled for completion at the end of 2022 and the laws, regulations and administrative provisions to ensure compliance with Directive 2019/1937 were intended to be published in the Polish Official Journal in January 2023. By email of 11 January 2023, that Member State explained that that publication was to be made in August 2023.
18 It is in those circumstances that the Commission decided, on 15 February 2023, to initiate the present proceedings before the Court.
The failure to fulfil obligations under Article 258 TFEU
Arguments of the parties
19 The Commission points out that, in accordance with the third paragraph of Article 288 TFEU, Member States are required to adopt the provisions necessary to transpose directives into their national legal system, within the periods laid down in those directives, and to communicate those provisions to it immediately.
20 That institution explains that the question whether a Member State has failed to fulfil those obligations must be determined by reference to the situation prevailing in that Member State at the end of the period laid down in the reasoned opinion which the Commission addressed to that Member State.
21 In the present case, the Republic of Poland failed to adopt those provisions or inform the Commission of their adoption before the expiry of the period laid down in the reasoned opinion of 15 July 2022.
22 Whilst acknowledging the failure to fulfil obligations at issue, the Republic of Poland justifies the delay in transposing Directive 2019/1937 into its domestic legal order, first of all, by the need to extend the legislative works in the light of the wide scope of that directive. The adoption of the laws, regulations and administrative provisions necessary to comply with the directive required broad public consultations conducted by the Ministry of Family and Social Policy. In addition, the draft law intended to transpose Directive 2019/1937 underwent many amendments in the course of the inter-ministerial consultations.
23 Next, the drafting procedure for the law transposing Directive 2019/1937 was delayed on account of difficulties caused by the COVID-19 pandemic, which disrupted the organisation of the legislative works.
24 Last, the war in Ukraine and the resulting influx of refugees significantly mobilised the resources of the Ministry of Family and Social Policy, the ministry responsible for drafting that law.
25 In its reply, the Commission states, first, that the EU legislature took the view that a period of two years was sufficient to enable the Member States to comply with their obligations vis-à-vis the transposition of Directive 2019/1937. In addition, the difficulties invoked by the Republic of Poland concern provisions, practices or situations within in its domestic legal order which, in accordance with settled case-law, cannot justify a delay in transposing that directive.
26 Second, the special circumstances related to the COVID-19 pandemic and the war in Ukraine can be relevant in justifying such a delay only if the Union act concerned provides for the possibility of derogations or exceptions in such circumstances or if the criteria for a situation of force majeure are met, which is not the case here. In addition, Member States can plead force majeure only for the period required to overcome the obstacles arising from the situation in question; that period cannot be greater than two years. The present proceedings were brought more than thirteen months after the expiry of the two-year deadline for transposition provided for in Directive 2019/1937. Last, the second invasion of Ukraine by the Russian Federation commenced on 24 February 2022, that is to say, after the expiry of that deadline.
Findings of the Court
27 Under Article 26(1) of Directive 2019/1937, Member States were to bring into force, by 17 December 2021, the laws, regulations and administrative provisions necessary to comply with that directive. In addition, pursuant to Article 26(3) of that directive, it fell to the Member States to communicate to the Commission the text of those provisions.
28 According to the Court’s settled case-law, the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation prevailing in that Member State at the end of the period laid down in the Commission’s reasoned opinion, the Court being unable to take account of any subsequent changes (judgments of 25 February 2021, Commission v Spain (Personal Data Directive – Criminal law), C‑658/19, EU:C:2021:138, paragraph 15, and of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 28 and the case-law cited).
29 Here, a period of two months was granted, in the reasoned opinion dated 15 July 2022, to the Republic of Poland for it to comply with its obligations set out in that opinion.
30 However, as is apparent from the defence and the rejoinder lodged by the Republic of Poland in these proceedings, on expiry of the period laid down in the reasoned opinion of 15 July 2022, the Republic of Poland had not adopted the laws, regulations and administrative provisions necessary to comply with Directive 2019/1937 and, therefore, nor had that Member State communicated those provisions to the Commission on expiry of that period.
31 Nevertheless, as stated in paragraphs 22 to 24 above, according to the Republic of Poland, a number of circumstances justify the failure to comply with the deadline for transposition of that directive.
32 First, that Member State points to the extension of the legislative works in the light of the wide scope of the directive.
33 In that regard, it should be recalled that, according to the Court’s settled case-law, a Member State cannot plead provisions, practices or situations prevailing in its domestic legal order to justify failure to observe obligations arising under EU law such as failure to transpose a directive within the period prescribed (judgment of 25 February 2021, Commission v Spain (Personal Data Directive – Criminal law), C‑658/19, EU:C:2021:138, paragraph 19 and the case-law cited).
34 In addition, under Article 26(1) of Directive 2019/1937, the EU legislature took the view that a two-year deadline for transposition was sufficient to enable the Member States to comply with their obligations.
35 Second, the Republic of Poland submits that the transposition procedure for that directive was delayed on account of difficulties caused by the COVID-19 pandemic and the influx of refugees as a result of the aggression against Ukraine.
36 However, first, assuming that the Republic of Poland is of the view that the organisational difficulties associated with the COVID-19 pandemic and the influx of refugees as a result of the aggression against Ukraine constitute a case of force majeure which prevented Directive 2019/1937 from being transposed within the prescribed period, it must be observed, first and foremost, that that Member State cites those events as justification for the delay in transposing that directive for the first time at the response stage. Next, in accordance with settled case-law, although the concept of force majeure is not predicated on absolute impossibility, it nevertheless requires the failure in question to be attributable to circumstances beyond the control of the party claiming force majeure, which are abnormal and unforeseeable and the consequences of which could not have been avoided despite the exercise of all due diligence, and a situation of force majeure may be pleaded only for the period necessary in order to resolve those difficulties (judgment of 8 June 2023, Commission v Slovakia (Right of termination without fees), C‑540/21, EU:C:2023:450, paragraph 81). While a health crisis on a scale such as the COVID-19 pandemic and the influx of refugees as a result of the aggression against Ukraine are circumstances beyond the control of the Republic of Poland, which are abnormal and unforeseeable, the fact remains that it fell to that Member State to act with all due diligence by informing the Commission in good time of the difficulties it faced, at the very least before the expiry of the period laid down in the reasoned opinion of 15 July 2022. Last, it is established that the Republic of Poland had still not proceeded with the transposition of Directive 2019/1937 at the end of the written part of this procedure, that is to say, almost one year after the expiry of the period laid down in the reasoned opinion of 15 July 2022 and over a year and a half after the expiry of the deadline provided for in Article 26(1) of that directive.
37 In those circumstances, the failure at issue cannot be justified by the occurrence of a pandemic in the course of 2020 or by the difficulties experienced by that Member State on account of the aggression against Ukraine, circumstances which, as the Advocate General observed, in essence, in points 45 and 48 of his Opinion, can have had only an indirect impact on the process to transpose the directive.
38 Accordingly, the Republic of Poland cannot effectively rely on those circumstances to justify the failure to transpose Directive 2019/1937 within the period prescribed. It must therefore be held that, by failing, on expiry of the period laid down in the reasoned opinion of 15 July 2022, to adopt the laws, regulations and administrative provisions necessary to comply with Directive 2019/1937 and, therefore, by failing to communicate them to the Commission, the Republic of Poland has failed to fulfil its obligations under Article 26(1) and (3) of that directive.
The financial penalties under Article 260(3) TFEU
Arguments of the parties
39 Taking the view that the Republic of Poland’s alleged failure to fulfil obligations persisted when the Commission brought the present action before the Court, the Commission proposes, on the basis of Article 260(3) TFEU, to have imposed on that Member State both a lump sum and a daily penalty payment.
40 With a view to setting the amounts of those financial penalties, the Commission takes as a basis the general principles referred to in point 2 of the 2023 Communication and the method of calculation set out in points 3 and 4 of that communication. In particular, that institution states that those penalties must be determined on the basis of the following fundamental criteria: the seriousness of the infringement, its duration and the need to ensure that the penalty has a deterrent effect in order to prevent repeat infringements.
41 With regard, in the first place, to the seriousness of the infringement, the Commission points out that the applicable coefficient under the 2023 Communication is between a minimum of 1 and a maximum of 20. That institution explains that, in accordance with point 3.2.2 of that communication, it systematically applies a coefficient for seriousness of 10 in the case of a complete failure to notify the transposition measures for a directive, as any failure to transpose a directive or to notify those measures is of the same degree of seriousness, regardless of the nature of the provisions of the directive concerned. Such automatic application ensures that the equality of Member States before the Treaties is guaranteed, in accordance with Article 4(2) TEU.
42 In the second place, as regards the duration of the infringement, the Commission notes that, pursuant to point 3.3 of the 2023 Communication, the coefficient for duration is expressed as a multiplier of between 1 and 3 and calculated at a rate of 0.10 per month from the day following the expiry of the deadline for transposition of the directive in question until the Commission decides to refer the matter to the Court. Since, in the present case, that period is 13 months, the coefficient for duration to be applied is 1.3.
43 As for, in the third place, the criterion related to the need to ensure that the penalty has a deterrent effect taking into consideration the capacity to pay of the Member State concerned, that criterion is expressed by the ‘n’ factor fixed for each Member State in point 3 of Annex I to the 2023 Communication. It is calculated on the basis of the ratio between the GDP of the State concerned and the national average GDP of the European Union multiplied by the ratio between the population of that State and the national average population of the European Union. The first ratio is assigned a two-thirds weighting, whereas the second is assigned a one-third weighting. The end result is that the Republic of Poland has an ‘n’ factor of 1.37. According to the Commission, by taking into account the population of the Member State concerned as a secondary criterion when determining that factor, a reasonable deviation in the ‘n’ factor between Member States can be maintained and a degree of stability in that coefficient guaranteed, in accordance with the Court’s case-law. In addition, since the data used by the Commission are updated annually, due account is taken of the GDP fluctuations of the Member State concerned.
44 Therefore, first, with regard to the calculation of the amount of the lump sum, the Commission proposes, pursuant to point 4.2 of the 2023 Communication, that a coefficient for seriousness of 10 be used and the ‘n’ factor of 1.37 applied. The product of those two elements should be multiplied by the flat-rate amount of the lump sum fixed in point 2 of Annex I to that communication, that is to say, EUR 1 000, which amounts to a sum of EUR 13 700, which is to be multiplied by the number of days for which the infringement has persisted, in accordance with point 4.2.1 of the Communication. The Commission states that the payment of that lump sum must be imposed, provided that it is greater than EUR 3 836 000, which is the minimum lump sum fixed for the Republic of Poland under point 5 of Annex I to the 2023 Communication.
45 Second, with regard to the setting of the amount of the penalty payment, the Commission proposes that the flat-rate amount of the penalty payment fixed in point 1 of Annex I to the 2023 Communication, which stands at EUR 3 000 per day, is multiplied by the coefficient for seriousness of 10, the coefficient for duration of 1.3 and the ‘n’ factor of 1.37, equating to a penalty payment in the amount of EUR 53 430 per day.
46 Last, the Commission proposes that the date of the delivery of the forthcoming judgment in the present case be regarded as the date on which the payment obligation takes effect.
47 The Republic of Poland takes the view that the amounts of the penalty payment and lump sum proposed by the Commission are excessive and disproportionate.
48 First, that Member State observes that the systematic application of a coefficient for seriousness of 10 in case of a complete failure to notify the measures transposing a directive prevents any consideration being given to the specific circumstances particular to the legislative process and to the state of progress of national legislation. Here, various provisions of Directive 2019/1937 are mirrored in rules in force in existing national legislation which, even though they were not notified as such to the Commission, should be taken into account to determine the coefficient for seriousness. First of all, the Polish Labour Code contains a provision which implements Article 19 of Directive 2019/1937. Next, the Polish Code of Administrative Procedure provides for the creation of channels to report breaches of the law and for the protection of the persons reporting such breaches. Finally, the Polish law on banking law requires banks to establish management and internal review systems which allow breaches of the law to be reported and guarantee the protection of the persons reporting those breaches.
49 In addition, automatically fixing a coefficient for seriousness prevents account from being taken of those elements of national legislation or the specific consequences of the failure established on private and public interests.
50 Moreover, the Republic of Poland points out that it cooperated with the Commission throughout the pre-litigation procedure, and therefore that fact should mean, in its opinion, that the coefficient for seriousness is reduced.
51 Second, the inclusion of a demographic criterion in the method for calculating the ‘n’ factor means that the financial penalty does not reflect the actual financial capacity of the Member State concerned; this is contrary to the Court’s case-law. In its particular case, the Republic of Poland states that, by applying such a demographic criterion, the ‘n’ factor is increased unjustifiably.
52 In any case, the Republic of Poland takes the view that the amounts of the financial penalties sought by the Commission should be revised because of a significant decline in the pace of economic growth and a high level of inflation in the course of 2023 in that Member State.
53 In its reply, the Commission argues, with regard to the seriousness factor, first of all, that, if the Court were to decide to take into account the importance of the provisions of EU law, as the Republic of Poland submits in essence, this would mean that that factor would have to be increased because Directive 2019/1937 is of particular importance both for the general interest and for private interests. Next, the national provisions mentioned by that Member State are immaterial in the context of determining the seriousness factor since they were not notified to the Commission as measures transposing that directive. Finally, the duty of sincere cooperation invoked by that Member State is irrelevant in case of a complete failure to notify the measures transposing a directive and, in any case, cooperation in good faith with the Commission cannot constitute a mitigating circumstance since it is an obligation under Article 4(3) TEU.
54 In its rejoinder, the Republic of Poland contends that, when fixing the coefficient for seriousness, the Commission cannot disregard applicable national legislation solely because that legislation has not been notified to it. In addition, the draft law on the protection of persons who report breaches of EU law has passed through the successive stages of the legislative process.
Findings of the Court
The application of Article 260(3) TFEU
55 The first subparagraph of Article 260(3) TFEU provides that, when the Commission brings a case before the Court pursuant to Article 258 TFEU on the grounds that the Member State concerned has failed to fulfil its obligation to notify measures transposing a directive adopted under a legislative procedure, that institution may, when it deems appropriate, specify the amount of the lump sum or penalty payment to be paid by the Member State concerned which it considers appropriate in the circumstances. In accordance with the second subparagraph of Article 260(3) TFEU, if the Court finds that there is a failure to fulfil obligations it may impose a lump sum or penalty payment on the Member State concerned not exceeding the amount specified by the Commission, with the payment obligation taking effect on the date set by the Court in its judgment.
56 Since, as is apparent from paragraph 38 above, it is established that, on expiry of the period laid down in the reasoned opinion of 15 July 2022, the Republic of Poland had neither adopted nor, therefore, communicated to the Commission the laws, regulations and administrative provisions necessary to transpose the provisions of Directive 2019/1937 into its domestic law, the failure thus established falls within the scope of Article 260(3) TFEU.
57 Furthermore, it should be recalled that the objective pursued by the introduction of the system set out in Article 260(3) TFEU is not only to induce Member States to put an end as soon as possible to a breach of obligations which, in the absence of such a measure, would tend to persist, but also to simplify and speed up the procedure for imposing financial penalties for failures to comply with the obligation to notify a national measure transposing a directive adopted through a legislative procedure (judgment of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 68 and the case-law cited).
58 In order to achieve that objective, Article 260(3) TFEU provides for the imposition of two types of financial penalty: a lump sum and a daily penalty payment.
59 While the imposition of a daily penalty payment seems particularly suited to inducing a Member State to put an end as soon as possible to a breach of obligations, the imposition of a lump sum is based more on assessment of the effects on public and private interests of the failure of the Member State concerned to comply with its obligations, in particular where the breach has persisted for a long period (judgment of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 70 and the case-law cited).
60 In that regard, the Commission states reasons for the nature and amount of the financial penalty sought, taking into account the guidelines which it has adopted, such as those in its communications which, although not binding on the Court, contribute to ensuring that the action brought by the Commission is transparent, foreseeable and consistent with legal certainty (see, to that effect, judgment of 13 January 2021, Commission v Slovenia (MiFID II), C‑628/18, EU:C:2021:1, paragraph 50).
61 In the present case, the Commission relied on the 2023 Communication to justify the Republic of Poland being ordered to pay a daily penalty payment and a lump sum, and to fix the amounts thereof.
Whether it is appropriate for the financial penalties to be imposed as proposed by the Commission
62 It is settled case-law that, in order to assess whether it is appropriate for a financial penalty to be imposed, in each case, it is for the Court to determine, in the light of the circumstances of the case before it and according to the degree of persuasion and deterrence which appears to it to be required, the financial penalties that are appropriate, in particular, for preventing the recurrence of similar infringements of EU law (judgments of 13 January 2021, Commission v Slovenia (MiFID II), C‑628/18, EU:C:2021:1, paragraph 71, and of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 72).
63 First, with regard to the imposition of a lump sum payment, it must be found that, notwithstanding the fact that the Republic of Poland cooperated with the Commission services throughout the pre-litigation procedure and kept them informed of the difficulties faced by that Member State in attempting to ensure the transposition of Directive 2019/1937 into national law, all the legal and factual circumstances culminating in the breach of obligations established – namely, the fact that no laws, regulations or administrative provisions necessary for the transposition of that directive had been notified at the expiry of the period laid down in the reasoned opinion of 15 July 2022 or even when the Court examined the facts – indicate that if the future repetition of similar infringements of EU law is to be effectively prevented, a dissuasive measure must be adopted, such as a lump sum payment (see, by analogy, judgments of 25 February 2021, Commission v Spain (Personal Data Directive – Criminal law), C‑658/19, EU:C:2021:138, paragraph 70, and of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 73).
64 Second, as regards the imposition of a penalty payment, such a penalty is necessary, in principle, only if the failure to fulfil obligations continues up to the time of the Court’s examination of the facts, which must be considered as being made at the date of conclusion of the proceedings (judgment of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 89). It must be pointed out that in a case, such as the present case, in which no hearing was held, the date to be taken into account in that regard is that of the close of the written part of the procedure.
65 It is not disputed in the present case that, on the date of the close of the written part of the procedure before the Court, that is, on 9 August 2023, the Republic of Poland had neither adopted nor, therefore, communicated the laws, regulations and administrative provisions necessary for the transposition of Directive 2019/1937 into its domestic law. Accordingly, it must be held that that Member State persisted in its failure to fulfil obligations up to the time of the Court’s examination of the facts.
66 The Court therefore considers that the imposition of a daily penalty payment on the Republic of Poland, as sought by the Commission, is an appropriate financial means by which to ensure that that Member State puts a prompt end to the failure established and complies with its obligations under Directive 2019/1937. Conversely, since it cannot be ruled out that, on the date of the delivery of the judgment in the present case, that directive will have been transposed in full, it is appropriate to impose a penalty payment only in so far as the failure persists at the date of delivery of that judgment (see, by analogy, judgments of 25 February 2021, Commission v Spain (Personal Data Directive – Criminal law), C‑658/19, EU:C:2021:138, paragraph 61, and of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 91).
The amount of the financial penalties
– The method of determining the amount of the financial penalties
67 Under Article 260(3) TFEU, the Court alone has the power to impose a financial penalty on a Member State. However, in the context of proceedings brought on the basis of that provision, the Court has only a limited power to assess, since, where it finds that there is a failure to fulfil obligations, the Commission’s proposals are binding on it as to the nature of the financial penalty which the Court may impose and the maximum amount of the penalty which it may set (judgment of 13 January 2021, Commission v Slovenia (MiFID II), C‑628/18, EU:C:2021:1, paragraphs 49 and 51).
68 In exercising its discretion in the matter, as delimited by the Commission’s proposals, it is for the Court, as recalled in paragraph 62 above, to fix the amount of the financial penalties imposed on a Member State pursuant to Article 260(3) TFEU, in an amount appropriate to the circumstances and proportionate to the failure to fulfil obligations. Relevant considerations in that respect include factors such as the seriousness of the failure to fulfil obligations, the length of time for which the failure has persisted and the relevant Member State’s ability to pay (judgments of 13 January 2021, Commission v Slovenia (MiFID II), C‑628/18, EU:C:2021:1, paragraph 74, and of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraphs 74 and 93).
69 That said, it should likewise be remembered that, in the context of that discretion, guidelines such as those in communications from the Commission, which set out mathematical variables as indicative rules, are not binding on the Court but rather contribute to ensuring that the Commission’s own actions are transparent, foreseeable and consistent with legal certainty when that institution makes proposals to the Court (see, to that effect, judgments of 11 December 2012, Commission v Spain, C‑610/10, EU:C:2012:781, paragraph 116, and of 20 January 2022, Commission v Greece (Recovery of State aid – Ferronickel), C‑51/20, EU:C:2022:36, paragraphs 95 and 110).
70 First, as regards the seriousness of the failure to fulfil obligations established, it follows from point 3.2 of the 2023 Communication that, according to the Commission, the failure to notify the measures transposing a directive adopted under a legislative procedure is always considered to be serious. Accordingly, that failure justifies the automatic application of a coefficient for seriousness of 10.
71 The Republic of Poland contests the level of that coefficient and the automatic nature of its application in the circumstances of the failure established.
72 In that regard, it should be borne in mind that the obligation to adopt measures for the purposes of ensuring that a directive is transposed in full and the obligation to notify those measures to the Commission are fundamental obligations incumbent on the Member States in order to ensure optimal effectiveness of EU law and that failure to fulfil those obligations must, therefore, be regarded as definitely serious (see, to that effect, judgment of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 75 and the case-law cited).
73 In the present case, it must be observed that Directive 2019/1937 is a crucial instrument of EU law in that it lays down, pursuant to Article 1 thereof, read in conjunction with recital 1 thereof, common minimum standards providing for a high level of balanced and effective protection of persons reporting breaches of EU law in areas in which such breaches are likely to be particularly harmful to the general interest. By establishing a system for the protection of persons reporting breaches of EU law in a work-related context, that directive contributes to preventing harm to the public interest, in particularly sensitive areas, such as public procurement, the prevention of money laundering and terrorist financing, and the protection of the environment or of the financial interests of the European Union. Thus, the provisions of the directive provide for the obligation, for entities in both the public and private sectors, to establish internal reporting channels and procedures for receiving reports and their follow-up, whilst safeguarding the rights of the persons reporting breaches of EU law and the conditions under which those persons can qualify for the protection laid down therein.
74 The non-transposition of the provisions of Directive 2019/1937 necessarily undermines compliance with EU law and its uniform and effective application, since breaches of EU law are unlikely to be reported if the persons with knowledge of such breaches are not protected against any retaliation.
75 That said, the amount of the financial penalties imposed on a Member State pursuant to Article 260(3) TFEU must be appropriate to the circumstances and proportionate to the failure to fulfil obligations, as recalled in paragraph 68 above.
76 Accordingly, the automatic application of the same coefficient for seriousness in all cases in which a directive is not fully transposed and, therefore, the measures transposing that directive are not communicated necessarily precludes the amount of the financial penalties from being tailored to the circumstances characterising the failure to fulfil obligations and proportionate penalties from being imposed.
77 In particular, as the Advocate General observed in points 84 to 89 of his Opinion, by presuming that a failure to comply with the obligation to notify the measures transposing a directive must be regarded as being of the same degree of seriousness regardless of the directive concerned, the Commission is unable to tailor the financial penalties according to the consequences of the failure to comply with that obligation for private and public interests, as provided for in point 3.2.2 of the 2023 Communication.
78 In that regard, the Commission cannot rely on the principle of the equality of Member States before the Treaties, as enshrined in Article 4(2) TEU, to justify the automatic application of a single coefficient for seriousness where a directive is not transposed fully and, therefore, the measures necessary for its transposition are not notified. It is quite clear that the consequences of Member States failing to comply with their obligations for the private and public interests at stake can vary not only from one Member State to another, but also depending on the normative content of the untransposed directive. In addition, according to the Court’s settled case-law, that principle requires inter alia that different situations must not be treated in the same way unless such treatment is objectively justified (judgment of 19 December 2018, Commission v Austria, C‑51/18, EU:C:2018:1035, paragraph 55 and the case-law cited).
79 Therefore, the Commission cannot discharge its obligation to assess, in each Member State and in each specific case, the consequences of the failure established on private and public interests simply by automatically applying a coefficient for seriousness in the context of setting financial penalties, taking into account any mitigating or aggravating circumstances. Specifically, in the present case, the failure to comply with the obligation to adopt the laws, regulations and administrative provisions necessary to transpose Directive 2019/1937 is particularly serious since, as stated in paragraph 73 above, the provisions of that directive, in so far as they are intended to protect the persons who report breaches of EU law in the areas covered by the directive, contribute to ensuring the uniform and effective application of EU law.
80 Second, when assessing the duration of the infringement, it must be recalled that, as regards the beginning of the period which must be taken into account in order to fix the amount of the lump sum, the relevant date for evaluating the duration of the infringement at issue is not the date of expiry of the period laid down in the Commission’s reasoned opinion, but the date of expiry of the transposition deadline laid down in the directive in question (judgment of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 81 and the case-law cited).
81 Third, as regards the ability to pay of the Member State at issue, it is clear from case-law that, without prejudice to the possibility for the Commission to propose financial penalties which are based on multiple criteria, with a view, in particular, to allowing a reasonable gap between the various Member States to be maintained, it is necessary to rely on the GDP of that State as the predominant factor for the purpose of assessing its ability to pay and for the fixing of penalties that are sufficiently dissuasive and proportionate in order effectively to prevent a repeat of similar infringements of EU law in the future (judgments of 20 January 2022, Commission v Greece (Recovery of State aid – Ferronickel), C‑51/20, EU:C:2022:36, paragraphs 111, 116 and 130, and of 28 September 2023, Commission v United Kingdom (Fiscal marking of gasoil), C‑692/20, EU:C:2023:707, paragraph 115).
82 In that regard, the Court has repeatedly held that it was necessary to take account of recent trends in the Member States’ GDP at the time of the Court’s examination of the facts (judgment of 20 January 2022, Commission v Greece (Recovery of State aid – Ferronickel), C‑51/20, EU:C:2022:36, paragraph 107 and the case-law cited).
83 Here, the ‘n’ factor, which represents the capacity to pay of the Member State concerned as compared with the capacity to pay of the other Member States and is applied by the Commission in accordance with points 3.4 and 4.2 of the 2023 Communication, is defined as a weighted geometric average of the GDP of the Member State concerned, compared to the average of the Member States’ GDPs, accounting for two thirds of the calculation of the ‘n’ factor, and of the population of the Member State concerned, compared to the average of Member States’ populations, accounting for one third of the calculation of the ‘n’ factor, as is apparent from the equation set out in paragraph 10 above. The Commission justifies that method of calculating the ‘n’ factor both by reference to the objective of maintaining a reasonable gap between the ‘n’ factors of the Member States, as compared to a calculation based solely on Member States’ GDPs, and the objective of ensuring a degree of stability in the calculation of the ‘n’ factor, since population is unlikely to vary significantly on an annual basis.
84 In the first place, while it is true that the method of calculating the ‘n’ factor set out in the 2023 Communication does primarily take into account the GDP of the Member State concerned, it must nevertheless be observed that that method is based on the presumption of a correlation between the size of a Member State’s population and its capacity to pay, which is not necessarily the case. Accordingly, taking into account a demographic criterion such as that resulting from the method breaks the link between the ‘n’ factor and the actual capacity to pay of the Member State concerned, which may result in the determination of an ‘n’ factor that does not necessarily reflect that capacity, as the Advocate General noted in points 119 to 121 of his Opinion.
85 In the second place, whilst taking account of a demographic criterion to fix the ‘n’ factor, with a view to determining the capacity to pay of the Member State concerned, does allow a certain gap to be maintained between the ‘n’ factors of the Member States, that objective cannot justify that Member State’s capacity to pay being determined according to criteria which do not reflect that capacity.
86 Therefore, when determining the capacity to pay of the Member State concerned, a demographic criterion cannot be taken into account in accordance with the detailed rules laid down in points 3.4 and 4.2 of the 2023 Communication as part of the method of calculating the ‘n’ factor.
– The lump sum
87 In accordance with the case-law recalled in paragraph 68 above, for the purposes of calculating the lump sum which a Member State can be ordered to pay pursuant to Article 260(3) TFEU, it is for the Court, in exercising its discretion, to fix the amount of the lump sum in an amount appropriate to the circumstances and proportionate to the failure to fulfil obligations. Relevant considerations in that respect include factors such as the seriousness of the failure to fulfil obligations, the length of time for which the failure has persisted and the relevant Member State’s ability to pay (judgment of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 74 and the case-law cited).
88 As regards, first of all, the seriousness of the failure to fulfil obligation, that seriousness cannot be determined by the automatic application of a coefficient for seriousness, as made clear in paragraph 79 above.
89 In addition, it should be recalled that, for the reasons stated in paragraphs 72 to 74 above, the failure to comply with the obligation to adopt the laws, regulations and administrative provisions necessary to transpose Directive 2019/1937 in full and with the obligation to communicate those provisions to the Commission must be regarded as particularly serious.
90 The seriousness of that failure is, furthermore, heightened by the fact that, at the end of the written part of the procedure, the Republic of Poland had still not adopted the laws, regulations and administrative provisions necessary to transpose Directive 2019/1937, as that Member State itself conceded in its written observations.
91 That said, the Republic of Poland argued, in its defence, without being contradicted in that respect by the Commission, that certain rules that protect persons who report breaches of the law, which are consistent with the requirements of Directive 2019/1937, do already exist in its legislation.
92 In those circumstances, it must be found, as the Advocate General observed, in essence, in point 144 of his Opinion, that it has not been established that the consequences of the failure established in the present case for private and public interests were as negative as in the case of a complete failure to transpose Directive 2019/1937. In so far as the Commission claims that that national legislation should not be taken into account when assessing the seriousness factor because the legislation was not notified to it, it is sufficient to find that that line of argument is irrelevant because the failure to notify is immaterial as regards whether the existence of the legislation has an impact on those interests.
93 The fact remains that the Republic of Poland itself acknowledged, in its defence, that the rules protecting persons who report breaches of the law are scattered throughout the Polish legal order and, contrary to the requirement laid down in Article 26(3) of Directive 2019/1937, do not make explicit reference to the protection of such persons.
94 The lack of clear and specific rules concerning the protection of persons who report breaches of EU law, as provided for in Directive 2019/1937, is a barrier to the effective protection of those persons and can, therefore, call into question the uniform and effective application of EU law in the areas covered by that directive.
95 As recalled in paragraph 73 above, by establishing a system for the protection of persons who report breaches of EU law in a work-related context, Directive 2019/1937 contributes to preventing harm to the public interest in particularly sensitive areas, such as public procurement, the prevention of money laundering and terrorist financing, and the protection of the environment or of the financial interests of the European Union.
96 In addition, as stated in paragraph 74 above, without effective protection, persons with knowledge of a breach of EU law in such areas may be discouraged from reporting them where, by so doing, they may open themselves to retaliation.
97 Accordingly, in the light of the objective set out in Article 1 of Directive 2019/1937, read in conjunction with recital 1 thereof, that directive is intended, as mentioned in paragraph 73 above, to lay down common minimum standards providing for a high level of balanced and effective protection of persons reporting breaches of EU law, and therefore the failure to adopt the laws, regulations and administrative provisions necessary to transpose the directive fully and precisely is particularly serious.
98 Moreover, in so far as the Republic of Poland contends that it cooperated with the Commission throughout the pre-litigation procedure, it should be recalled that the duty of sincere cooperation with the Commission, as laid down in Article 4(3) TEU, means that every Member State is under a duty to facilitate the Commission’s accomplishment of its task consisting, in accordance with Article 17 TEU, in ensuring, as guardian of the Treaties, the application of EU law under the control of the Court of Justice. Accordingly, only cooperation with the Commission characterised by steps showing an intention to comply within the shortest time possible with the obligations arising from a directive may be taken into account as a mitigating circumstance in the context of assessing the seriousness of the infringement (see, to that effect, judgment of 28 September 2023, Commission v United Kingdom (Fiscal marking of gasoil), C‑692/20, EU:C:2023:707, paragraphs 106 and 107 and the case-law cited).
99 In the present case, as is apparent from paragraph 17 above, the Republic of Poland had announced in its letter of 15 September 2022 that the laws, regulations and administrative provisions necessary to comply with Directive 2019/1937 would be published in the Polish Official Journal in January 2023, if not in August 2023, as announced by email of 11 January 2023; this did not happen. In those circumstances, the Republic of Poland’s cooperation with the Commission during the pre-litigation procedure cannot be taken into account as a mitigating circumstance.
100 Next, as regards the duration of the infringement, it is established that the Republic of Poland had not, on expiry of the transposition deadline provided for in Article 26(1) of Directive 2019/1937, that is to say, on 17 December 2021, adopted the laws, regulations and administrative provisions necessary to ensure the transposition of that directive and, therefore, had likewise failed to communicate them to the Commission.
101 Since the written part of the procedure before the Court was closed on 9 August 2023, the failure at issue had persisted for almost one year and eight months as at the date of that close.
102 Last, as for the determination of the capacity to pay of the Republic of Poland, account must not be taken, as explained in paragraphs 84 to 86 above, of the size of that Member State’s population to the extent that the Commission did pursuant to the 2023 Communication in the method of calculating the ‘n’ factor.
103 In the light of those considerations and having regard to the discretion conferred on the Court by Article 260(3) TFEU, which provides that the Court cannot, in respect of the lump sum payment imposed by it, fix an amount exceeding that specified by the Commission, the view must be taken that, in order effectively to prevent a repeat of infringements similar to that resulting from the infringement of Article 26(1) of Directive 2019/1937 and undermining the optimal effectiveness of EU law in the future, a lump sum must be imposed, the amount of which must be fixed at EUR 7 000 000.
– The daily penalty payment
104 In exercising its discretion, it is for the Court to set the daily penalty payment so that it is, first, appropriate to the circumstances and proportionate to the infringement established and the ability to pay of the Member State concerned and, second, does not exceed, in accordance with the second subparagraph of Article 260(3) TFEU, the amount indicated by the Commission (judgment of 29 February 2024, Commission v Ireland (Audiovisual media services), C‑679/22, EU:C:2024:178, paragraph 92 and the case-law cited).
105 In the assessment which it is for the Court to carry out for the purposes of determining the amount of a penalty payment, the criteria which must be taken into consideration in order to ensure its coercive effect so that EU law is applied uniformly and effectively are, in principle, the duration and seriousness of the infringement and the ability to pay of the Member State in question. In applying those criteria, the Court must have regard, in particular, to the effects of the failure to fulfil its obligations on the public and private interests in question and to how urgent it is for the Member State concerned to be induced to fulfil its obligations (judgment of 25 February 2021, Commission v Spain (Personal Data Directive – Criminal law), C‑658/19, EU:C:2021:138, paragraph 63 and the case-law cited).
106 As regards, first of all, the seriousness of the infringement at issue, it is established that, on expiry of the period laid down in the reasoned opinion of 15 July 2022, the Republic of Poland had failed to fulfil the obligations specified in Article 26(1) of Directive 2019/1937, and therefore, in view once again of the considerations contained in paragraphs 91 to 97 above, it must be found that the optimal effectiveness of EU law has clearly not been ensured.
107 With regard, next, to the duration of the infringement, which must be taken into account to fix the amount of penalty payment to be imposed, it must be observed that the failure at issue continued after the period laid down in the reasoned opinion of 15 July 2022 had expired.
108 Last, as regards the determination of the capacity to pay of the Republic of Poland, account must not be taken, as explained in paragraphs 84 to 86 above, of the size of that Member State’s population to the extent that the Commission did pursuant to the 2023 Communication in the method of calculating the ‘n’ factor.
109 In the light of the foregoing and having regard to the discretion conferred on the Court by Article 260(3) TFEU, which provides that the Court cannot, in respect of the penalty payment imposed by it, fix an amount exceeding that specified by the Commission, in the event that the failure to fulfil obligations established in paragraph 38 above were to persist on the date of delivery of this judgment, the Republic of Poland must be ordered to pay to the Commission, as from that date and until that Member State has put an end to that failure, a daily penalty payment in the amount of EUR 40 000.
Costs
110 Under Article 138(1) of the Rules of Procedure of the Court of Justice, 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 the Republic of Poland has been unsuccessful, the latter must be ordered to bear its own costs and to pay those incurred by the Commission.
On those grounds, the Court (First Chamber) hereby:
1. Declares that, by failing, on expiry of the period laid down in the reasoned opinion of the European Commission of 15 July 2022, to adopt the laws, regulations and administrative provisions necessary to comply with Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law and, therefore, by failing to communicate them to the Commission, the Republic of Poland has failed to fulfil its obligations under Article 26(1) and (3) of that directive;
2. Declares that, by failing to adopt, when the Court examined the facts, the provisions necessary to transpose into its domestic law the provisions of Directive 2019/1937 and, therefore, failing to communicate those measures to the European Commission, the Republic of Poland persisted in its failure to fulfil its obligations;
3. Orders the Republic of Poland to pay the European Commission:
– a lump sum in the amount of EUR 7 000 000;
– in the event that the failure to fulfil obligations established in point 1 of the operative part were to persist on the date of delivery of this judgment, as from that date and until that Member State has put an end to that failure, a daily penalty payment in the amount of EUR 40 000;
4. Orders the Republic of Poland to bear its own costs and to pay those incurred by the European Commission.
[Signatures]