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The recent pronouncements from the Court of Justice of the European Union in Cases C-152/23 (Czech Republic), C-154/23 (Estonia), C-149/23 (Germany), C-150/23 (Luxembourg), and C-155/23 (Hungary) collectively underscore the critical importance of the timely and correct transposition of EU directives, specifically Directive (EU) 2019/1937 on the protection of persons who report breaches of Union law (the Whistleblowers Directive). These judgments, delivered on the same day, highlight a consistent approach by the Court in holding Member States accountable for failing to meet their obligations under Article 26(1) and (3) of the directive, which mandated transposition by 17 December 2021.
While all five cases resulted in a declaration of failure to fulfill obligations, they also offer valuable insights into the Court's assessment of financial penalties under Article 260(3) TFEU, particularly concerning the methodology for determining the severity of the infringement. The following brief comparative analysis will delve into the similarities and key distinctions across these rulings, shedding light on the evolving jurisprudence surrounding the enforcement of transposition obligations.
Generally speaking, the five judicial decisions exhibit strong similarities in their legal framework, reasoning regarding the obligation to transpose directives, and the importance of the Whistleblowers Directive. However, they differ in the specific arguments raised by the Member States, the types of financial penalties sought by the Commission, and the final amounts of the lump sums imposed (and the consideration of a daily penalty for Estonia), reflecting the Court's tailored assessment of each specific case while adhering to consistent legal principles. The Court's consistent critique of the Commission's automatic application of a high seriousness coefficient is a noteworthy element shared across these judgments.
Similarities in the Judgments:
All five judgments (Cases C-152/231, C-154/232, C-149/233, C-150/234, and C-155/235) share a fundamentally similar structure and reasoning due to the common legal basis (Articles 258 and, where applicable, 260(3) TFEU) and the subject matter (failure to transpose the same directive). Key similarities include:
• Declaration of Failure to Fulfil Obligations: In all five cases, the Court declared that the respective Member State had failed to fulfil its obligations under Article 26(1) and (3) of Directive 2019/1937 by failing to adopt and/or communicate the necessary laws, regulations, and administrative provisions by the expiry of the period laid down in the Commission's reasoned opinion. In the case of Estonia, the Court further declared that the failure persisted until the date of the examination of the facts by the Court.
• Reliance on Settled Case-Law: All judgments extensively cite settled case-law regarding the obligations of Member States to transpose directives, the determination of a failure to fulfil obligations by reference to the situation at the end of the reasoned opinion period, and the necessity of specific transposition measures that include a reference to the directive.
• Importance of Directive 2019/1937: Each judgment emphasizes the crucial importance of Directive 2019/1937 for EU law as it lays down minimum standards for the protection of whistleblowers in areas where breaches are particularly harmful to the general interest. The non-transposition is seen as undermining EU law and its effective application.
• Rejection of Arguments Based on Existing National Law or Partial Transposition without Explicit Reference: The Court consistently rejected arguments that existing national legislation or notified provisions without an explicit reference to Directive 2019/1937 could constitute proper transposition. The need for specificity, precision, and clarity to ensure legal certainty for individuals is highlighted. For Germany and Luxembourg, the Court used this argument not explicitly but through a reference to failure in adopting and communicating the necessary laws, regulations, and administrative provisions.
• Commission's 2023 Communication as a Basis for Financial Penalties: Where the Commission sought financial penalties (lump sum and/or penalty payment), all judgments note that the Commission relied on its 2023 Communication on financial sanctions to justify its application and the proposed amounts. The Court acknowledges that these communications are not binding but contribute to transparency and predictability.
• Criteria for Imposing Financial Penalties: When considering the imposition and calculation of financial penalties under Article 260(3) TFEU, the Court consistently refers to the seriousness and duration of the infringement, and the Member State's ability to pay as relevant considerations. The objective is to impose penalties that are appropriate, proportionate, and sufficiently dissuasive to prevent recurrence.
• Criticism of the Automatic Application of the Seriousness Coefficient: A significant similarity across the judgments is the Court's criticism of the Commission's automatic application of a high coefficient for seriousness (typically 10) based solely on the failure to notify transposition measures. The Court emphasizes that penalties must be tailored to the specific circumstances and consequences of the infringement. The Court found that the Commission did not sufficiently assess the actual consequences of the failures on public and private interests to justify the automatic application.
• GDP as the Predominant Factor for Ability to Pay: In assessing a Member State's ability to pay, the Court consistently states that GDP is the predominant factor. It rejects the inclusion of demographic criteria (population) as part of the 'n' factor calculation as outlined in the Commission's 2023 Communication, citing the judgment in Commission v Poland (Whistleblowers directive) (C‑147/23).
• Costs: In all cases where the Commission was successful (which is all five), the Court ordered the unsuccessful Member State to pay the costs of the proceedings.
Differences in the Judgments:
While the underlying principles and structure are similar, some differences arise due to the specific arguments raised by each Member State and the specific penalties sought by the Commission:
• Penalties Sought:
◦ Czech Republic, Germany, Luxembourg, and Hungary: The Commission sought the imposition of a lump sum.
◦ Estonia: The Commission sought the imposition of both a lump sum and a daily penalty payment. This difference likely reflects the Commission's assessment of the ongoing nature of the infringement at the time of bringing the action. The Court in the Estonia case explicitly considered the appropriateness of a daily penalty given that the failure to transpose persisted until the close of the written procedure.
• Specific Arguments of the Member States:
◦ Czech Republic: Primarily propose an argument based on an alleged alteration of the subject matter of the dispute between the reasoned opinion and the application, claiming the Commission did not adequately consider partial transposition measures notified during the pre-litigation phase. This argument was rejected by the Court.
◦ Estonia: Contested the level and automatic application of the seriousness coefficient, arguing that existing national legislation provided some level of whistleblower protection ("sectoral legislation corresponding, to a certain extent, to the protection regime prescribed by Directive 2019/1937"). The Court acknowledged the existence of this legislation but found it insufficient for proper transposition as it lacked specific reference to the Directive and did not meet the required clarity and precision.
◦ Germany: Argued that the 2023 Communication should not apply as the reasoned opinion period expired before it entered into force (the amount of the financial penalties should have been calculated instead following the modalities established by Commission Communication 2022/C 74/02), and that mitigating circumstances (ongoing legislative procedure, staggered transposition deadlines for certain articles) justified a lower seriousness coefficient. The Court rejected the argument regarding the applicability of the 2023 Communication and did not find the cited circumstances to constitute mitigating factors sufficient to reduce the seriousness assessment significantly.
◦ Luxembourg: Emphasized that its transposing law had a broader scope than the Directive (covering breaches of national law as well), which explained the delay, and argued transparency and speed in cooperation as mitigating circumstances. The Court did not accept the broader scope as a justification for the delay in transposing the Directive within the prescribed period.
◦ Hungary: Notified existing legislation as partially transposing the Directive during the pre-litigation procedure and argued that the absence of a specific reference should not preclude these from being considered. The Court reiterated the need for a specific transposition measure with a clear reference to the Directive. Hungary also invoked delays in transposition by other Member States as a mitigating factor, which was rejected by the Court.
• Assessment of Seriousness and Determination of Lump Sum: While all judgments criticize the automatic application of the seriousness coefficient, the actual assessment of seriousness and the resulting lump sum amounts differ, reflecting the Court's consideration of the specific duration of the infringement and its discretion. For example, even though the Court found the failure to transpose to be particularly serious in all cases, the final lump sum amounts imposed varied:
◦ Czech Republic: Ordered to pay a lump sum of EUR 2,300,000.
◦ Estonia: Ordered to pay a lump sum of EUR 500,000.
◦ Germany: Ordered to pay a lump sum of EUR 34,000,000.
◦ Luxembourg: Ordered to pay a lump sum of EUR 375,000.
◦ Hungary: Ordered to pay a lump sum of EUR 1,750,000.
• Decision on Daily Penalty Payment (Estonia): Only in the case of Estonia did the Court need to decide on the imposition of a daily penalty payment of EUR 1,500. It found that the failure to transpose persisted until the date of the examination of the facts and deemed a daily penalty appropriate to ensure prompt compliance, although the actual penalty was only to be imposed if the failure persisted until the date of the judgment.
• Intervention by Belgium (Czech Republic): Case C‑152/23 concerning the Czech Republic was distinct in that the Kingdom of Belgium was granted leave to intervene in support of the form of order sought by the Czech Republic. This introduction of a third party aimed to bolster the arguments presented by the Czech Republic to the Court, a feature absent in the proceedings of the other cases concerning Estonia, Germany, Luxembourg, and Hungary within the provided sources.
The Court of Justice of the European Union’s rulings in these cases not only reaffirm the binding nature of transposition obligations under EU law but also expose a broader and persistent reluctance among Member States to establish robust whistleblower protections, reflecting the paradoxical stance that was explored during the recent international roundtable on “The Paradoxical Approaches to Whistleblowing: American and European Perspectives” (Corporate Crime Observatory, 2024).
Despite the directive’s clear mandate to safeguard individuals who report wrongdoing, the failure of multiple EU states to implement adequate transposition measures underscores the tension between formal legal commitments and the practical reality of inadequate enforcement. This situation exemplifies the well-documented whistleblowing paradox: while whistleblowers are widely recognized as essential for maintaining transparency and accountability, they continue to face systemic barriers, institutional inertia, and, in some cases, outright hostility from the very entities meant to protect them.
The Court’s rejection of Member States’ arguments that existing national frameworks were sufficient highlights the necessity of explicit and precise legal provisions, reinforcing the principle that vague or partial protections are insufficient to guarantee real safeguards. Moreover, the Court’s critique of the Commission’s approach to financial penalties raises important questions about the effectiveness of enforcement mechanisms, further illustrating how legal systems often fail to provide meaningful deterrents against non-compliance. These rulings, therefore, serve as a pivotal moment in the ongoing struggle to move beyond symbolic protections and toward a legal environment where whistleblowers are not only acknowledged in law but genuinely protected in practice. Relevant documents:
CJEU Whistleblowing - Case European Commission v Germany C‑149/23
CJEU Whistleblowing - Case European Commission v Luxembourg C‑150/23
CJEU Whistleblowing - Case European Commission v Czech Republic C‑152/23
CJEU Whistleblowing - Case European Commission v Estonia C‑154/23
CJEU Whistleblowing - Case European Commission v Hungary C‑155/23
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