House of Lords
Publications on the Internet|
|Judgments - Regina v. Secretary of State For Health and Others, Ex Parte Imperial Tobacco Limited and Others On 7 December 2000
HOUSE OF LORDS
Lord Slynn of Hadley Lord Nicholls of Birkenhead Lord Hoffmann Lord Clyde Lord Millett
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
SECRETARY OF STATE FOR HEALTH AND OTHERS
EX PARTE IMPERIAL TOBACCO LIMITED AND OTHERS
ON 7 DECEMBER 2000
LORD SLYNN OF HADLEY
Directive 98/43/E.C. of the European Parliament and the Council dated 6 July 1998 (O.J.L213/9) provided, subject to specified qualifications, that all forms of advertising or sponsorship with the aim or the direct or indirect effect of promoting a tobacco product shall be banned in the Community.
The Directive, made having regard to articles 57(2), 66 and 100a of the E.E.C. Treaty, recited that there existed differences between the laws and administrative provisions of the Member States in relation to such advertising and sponsorship which
Accordingly these barriers should be removed and the laws of Member States be approximated. The Directive further recited that
The Directive came into force on 30 July 1998 but it provided in article 6 that
The United Kingdom Government had already announced on 14 May 1997 in the Queen's Speech that it would be adopting measures, including legislation, to ban tobacco advertising. On 10 December 1998 the Government published a White Paper "Smoking Kills" (Cm.4177) and it subsequently published proposed regulations to give effect to the Directive with effect from 10 December 1999.
The Community Directive was controversial. Germany brought proceedings against the European Parliament and the Council challenging its validity and the four tobacco companies (the appellants) on 30 November 1998 applied for judicial review of the Secretary of State's decision to implement the Directive. Turner J. having granted leave to apply for judicial review on 16 December 1998, on 2 February 1999 ordered a reference to the European Court of Justice under article 177 (now article 234 E.C.) of the E.E.C. Treaty. On 29 October 1999 he granted an injunction restraining the Secretary of State from making regulations under section 2 of the European Communities Act 1972 in order to implement the Directive, such injunction to continue until the European Court of Justice determined the validity of the Directive on the reference.
There was an immediate appeal with the leave of the judge and on 16 December 1999 the Court of Appeal by a majority (Lord Woolf M.R. and Ward L.J., Laws L.J. dissenting) set aside the injunction  2 W.L.R. 834. The majority, whilst accepting that there were serious doubts as to the Directive's validity, considered that the grant of interim relief had to be decided in accordance with Community law principles. The latter involved the applicant showing that serious and irreparable damage would result and for that purpose financial damage could not in principle be regarded as irreparable. The majority also considered that to grant an injunction would usurp the political judgment involved in the Government's decision to promote public health.
When the appeal was opened before your Lordships' House, Mr. Sumption Q.C. on behalf of the tobacco companies, put forward forceful arguments that the Directive was invalid on the basis that it had nothing to do with the internal market or the protection of competition, but was purely a measure to protect public health which was plainly outside the powers conferred on the institutions by the Treaty. It emerged however that the Advocate General's opinion in the reference was due to be given on 15 June 2000 and it was agreed that the hearing should be adjourned. The Advocate General concluded that the Directive was ultra vires and the Secretary of State accepted that a national regulation should not be made pending the decision of the European Court and that the tobacco companies should have their costs limited to two counsel. Subsequently on 5 October 2000 the European Court of Justice held that the Directive was ultra vires: see Federal Republic of Germany v. Parliament and Council of The European Communities (Case C-376/98) . It is in those circumstances unnecessary for your Lordships to consider that question.
The appellants however ask that the House should rule on the question whether it was right in this case to grant interim relief and in particular whether the test for a national judge to consider whether to grant an injunction is that applicable only under domestic law (as the appellants contend) or whether the test under Community law is to be applied and if so whether and to what extent it is different from that under domestic law.
If the grant of the injunction was to depend wholly on domestic law the principle laid down in e.g. American Cyananid Co. v. Ethicon Ltd.  A.C. 396 and in Reg. v. Secretary of State for Transport, Ex parte Factortame Ltd. (No. 2) (Case C-213/89)  1 A.C. 603 are to be followed. But the essential question is whether domestic law only is relevant or whether Community law has any application. That, it seems to me plainly, involves a question of Community law. The granting of interim relief has already been considered a number of times by the European Court of Justice. Thus in Factortame (No. 2) the European Court of Justice held that in a case concerning Community law where interim relief was sought, if a national court considered that the only obstacle which precluded it from granting such relief was a rule of national law it had to set that rule aside.
There the challenge was to domestic legislation which was said to be contrary to Community law. The Court of Justice did not give guidance as to the principles to be followed by a judge in considering whether to grant interim relief. In that case on the question posed it was not necessary to do so. The House of Lords in considering whether interim relief should be granted, applied the principles in the American Cyananid case.
In Zuckerfabrik Suderdithmarschen A.G. v. Hauptzollamt Itzehoe (Joined Cases C-143/88 and C-92/89)  E.C.R. I-415 the court was specifically asked to say "under what conditions national courts may order the suspension of enforcement of a national administrative measure based on a Community regulation."
The Court of Justice recognised that judges must follow rules of procedure determined by national law. At the same time it stressed, at p. l-542, paras. 25-26 as it has consistently done, that the "uniform application [of Community law] is a fundamental requirement of the Community legal order."
It followed that even applying national procedural rules the question of whether or not to suspend the enforcement of administrative measures should be considered in all Member States, "subject, at the very least, to conditions which are uniform so far as the granting of such relief is concerned." Thus national judges should only grant relief upon the conditions on which the Court of Justice itself would grant relief under article 185 in the context of actions brought under article 183 (now articles 242 and 240 E.C.).
It seems to me now as it seemed to me in Zuckerfabrik (supra) that unless judges throughout the Community follow recognised conditions for the grant of interim relief, the review of national regulations applying Community law is going to vary widely. This is plainly wrong. There should be a Community-wide approach to the application, even via national regulations, of Community law. It is obvious that the over-ready granting of interim injunctive relief could undermine such application. National judges therefore needed to be told of the conditions to be satisfied if inconsistent and unjustified injunctive relief was to be avoided.
Neither Factortame (No. 2) nor Zuckerfabrik dealt expressly with the present situation which is not concerned with national legislation already in force and whose validity depends on Community law, but with the control of a Member State's power to adopt national regulations giving effect to a Community Directive whose validity is challenged. Clearly prima facie the State has a duty to give effect to the Directive within the time laid down and not to take steps which are liable seriously to compromise the result prescribed by the Directive to be achieved by the end of that period: (Case C-129/96) Inter-Environnement Wallonie ASBL v. Region Wallonne  E.C.R. I-7411. This is an obligation laid on all Member States equally where a regulation is made or, as here, where the Directive is addressed to all the Member States (article 249 ex 189). It seems to me that that uniformity which is "a fundamental requirement of the Community legal order" is no less necessary here than in the Zuckerfabrik situation. What States may do in adopting or refusing to adopt Community Directives for policy reasons is one thing; what courts should do in enforcing and applying Community law is another. At the least there should be a consistency of approach, whatever flexibility a judge may have in applying that approach: Commission of the European Communities v. Atlantic Container Line A.B. (Case C-149/95P(R))  E.C.R. I-2165. It seems to me highly undesirable that the question whether different governments should be restrained even temporarily from giving effect to a Directive, should be considered on wholly different tests in different national courts.
I think it is at the least arguable that if a Directive is implemented in national law before the prescribed final date, any application for interim relief to suspend the operation of the Directive would be a matter for Community law, and that the position should be the same on an application for interim relief to prevent the Directive being adopted.
I do not however exclude the possibility, if such Community test is satisfied, of a court granting interim relief against a national government, even though on the basis of Foto-Frost Hauptzollamt Lubeck Ost (Case C-314/85)  E.C.R. 4199 it is only the European Court of Justice which can declare the Directive invalid.
It seems to me, therefore, that Community law is a relevant factor or at least that it is not clear beyond doubt that it is not a relevant factor and that as a starting point the conditions referred to in Zuckerfabrik (as followed in Atlanta Fruchthandelsgesellschaft mbH. v. Bundesamt fur Ernährung und Forstwirtshaft (Case C-465/93)  E.C.R. I-3761 should be applied. It is not necessary to set them out. How far there is a difference between those conditions and the American Cyananid case has been much debated before your lordships. In many respects it seems to me that the tests overlapurgency, the need to avoid serious and irreparable damage to the applicant, serious grounds to consider that the legislation is invalidbut there may be differences e.g. as to how far financial damage can be taken into account. In respect of this the court said in Zuckerfabrik  E.C.R. I-415, I-543, para. 29 that financial damage cannot "be regarded in principle as irreparable" but it went on:
Zuckerfabrik was the first case in which the court gave such an indication of the principles to be applied but Community law develops and is refined as different situations are presented to the court. Zuckerfabrik is not necessarily the last word on the subject any more than Francovich v. Italian Republic (Joined Cases C-6190 and 9/90)  E.C.R. I-5357 could ever have been regarded as the last word on when damages against a State for breach of a Community obligation could be awarded.
I am therefore firmly of the view that if in order to give judgment in this appeal it had been necessary to consider (a) whether Community law applied and (b) what was the scope of its application in the present case, it would have been necessary and obligatory for your Lordships to refer a question to the European Court of Justice under article 234 of the E.C. Treaty.
It is, however, not necessary to decide either question in order to give judgment on this appeal so that the reference procedure is not available. Any regret that this question should be left open is reduced, at least, by the consideration that on an application of this kind the full circumstances have to be taken into account.
I would accordingly make no order on the appeal save that the appellants should have their costs in the Court of Appeal and before your Lordships' House limited to two counsel in accordance with the general practice. I am not persuaded that this is a case justifying an exceptional order for three counsel.
LORD NICHOLLS OF BIRKENHEAD
I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Slynn of Hadley and Lord Hoffmann. Lord Hoffmann is of the view that, where the validity of a directive is challenged before the date prescribed for its implementation, Community law is inapplicable on an application to a national court for interim relief. There is force in his reasoning, but I am not persuaded this can be regarded as acte claire. A directive has immediate legal effect according to its tenor. Hence, Community law does not require uniform application of the directive before the implementation date. During the prescribed implementation period member states are not in breach by failing to transpose the directive into national law. Thus, an order by a national court suspending reliance on an impugned directive during the implementation period does not put a member state in breach of its obligations under Community law. In the sense, therefore, of absence of breach of the directive, Community legal order is not affected if a member state, through its courts or any other of its institutions, delays implementation within the implementation period. But in another, broader, sense Community legal order is affected, or may be regarded as affected, by such a suspension, because the decision of the national court does interfere with the operation of the directive in a member state during the implementation period. The court order precludes the operation of the directive as a valid directive.
I have found myself compelled therefore to reach the same conclusion as Lord Slynn. Had it been necessary to give judgment on this appeal, it would have been necessary for the House to refer a question to the European Court. I have reached this conclusion with reluctance, because it means that the present appeal will not provide the answer to an important question of law. The question will have to remain open for another occasion. This is an unsatisfactory outcome in a case where an interlocutory application has come as far as this House. But, as matters have turned out, I see no escape from this conclusion.
In December 1998 the Government published a White Paper, "Smoking Kills" (Cm. 4177) in which it announced its intention to bring forward secondary legislation in the 1988/99 Parliamentary session to implement Council Directive (98/43/E.C.) "on the approximation of the laws, regulations and administrative provisions of the Member States relating to the advertising or sponsorship of tobacco products." The power under which it proposed to legislate was that conferred by section 2(2) of the European Communities Act 1972:
The Act defines a "Community obligation" in Schedule 1 as "any obligation created or arising by or under the Treaties, whether an enforceable Community obligation or not."
By article 189 of the E.E.C. Treaty (now article 249 E.C.), a directive is "binding as to the result to be achieved" upon each Member State. The objective stated by Council Directive (98/43/E.C.) in article 1 was to "approximate the laws, regulations and administrative provisions of the Member States relating to the advertising and sponsorship of tobacco products." The form of approximation required by the Directive was, by article 3, that all forms of advertising and sponsorship should be banned. By article 6, Member States were to bring into force the laws, regulations and administrative provisions necessary to comply with the Directive not later than 30 July 2001.
Prima facie therefore, the Directive gave rise to a Community obligation which the Secretary of State was entitled to make regulations under section 2(2) to implement. By article 191 of the E.E.C. Treaty (now article 254 E.C.) , a directive enters into force on the date which it specifies. Article 8 of Council Directive (98/43/E.C.) said that this was to be the date of its publication in the Official Journal. That happened on 30 July 1998. The duty to implement a directive comes into existence when it enters into force although it does not become enforceable until the implementation date. The Community obligation is, so to speak, debitum in praesenti, solvendum in futuro. Meanwhile, however, the directive is not without practical effect in Community law. In Inter-Environnement Wallonie ASBL v. Région Wallonne (Case C-129/96)  E.C.R. I-7411 the Court of Justice said (in paragraphs 43-45 at p. I-7499) that although Member States "cannot be faulted for not having transposed the directive into their internal legal order before expiry of [the implementation period]," they were obliged during that period to "refrain from taking any measures liable seriously to compromise the result prescribed." And of course as a matter of U.K. domestic law, the "Community obligation" which creates the power to make regulations under section 2(2) of the Act of 1972 comes into existence immediately the directive enters into force. The definition in Schedule 1 specifically provides that the obligation need not be enforceable.
The appellants, who are four tobacco companies, challenge the exercise of the power on the grounds that the Directive is invalid and that no Community obligation therefore exists at all. The basis for the challenge is that the Directive is ultra vires the powers conferred upon the Community institutions by the Treaty. It purported to be made pursuant to article 100a (now article 95 E.C.). This gives the Council power to adopt measures "which have as their object the establishment and functioning of the internal market." The Directive recites that its object is to eliminate barriers between Member States in the provision of services in connection with tobacco advertising and sponsorship and the movement of products which serve as media for such advertising and sponsorship. The appellants say, putting the matter shortly, that the internal market in the provision of services in connection with tobacco advertising and sponsorship cannot be made more efficient by a total prohibition on those activities
The appellants therefore commenced judicial review proceedings in which they claimed a declaration that the Directive was invalid and requested a reference to the Court of Justice. On 2 February 1999 Turner J. made an order requesting a preliminary ruling. In June 1999 the government published draft regulations to implement the Directive and, after a period of consultation, announced its final proposals on 11 October 1999. On the same day the appellants gave notice of an application to Turner J. for an order that the decision to implement the regulations should be stayed pending the preliminary ruling of the Court of Justice, which was expected in late 2000 or early 2001. On 29 October 1999 the judge granted the order. He directed himself in the exercise of his discretion by the principles laid down by the House of Lords in American Cyanamid Co. v. Ethicon Ltd.  A.C. 396 as applied to the peculiar problems of restraining the enforcement of legislation by the decision of the House in Reg. v. Secretary of State for Transport, Ex parte Factortame Ltd (No. 2)  1 A.C. 603. He concluded that the appellants had a strong case on the merits and that damages would not be an adequate remedy either for them or the Secretary of State. He made a careful examination of the various factors relevant to the balance of convenience and said that it came down firmly in favour of the grant of interlocutory relief.
The Court of Appeal, by a majority (Lord Woolf M.R. and Ward L.J., Laws L.J. dissenting) allowed an appeal and discharged the injunction. They said that the judge had been wrong to exercise his discretion according to the relevant principles of English law. He should have applied the principles of Community law laid down by the Court of Justice in Zuckerfabrik Süderdithmarschen A.G. v. Hauptzollamt Itzehoe (Joined Cases C-143/88 and C-92/89)  E.C.R. 415. These principles were to be applied by all Member States in applications to suspend the enforcement of national measures based on Community legislation. The Court of Appeal said that they imposed a more demanding standard than English domestic law. The applicant had to demonstrate that he had a strong case on the merits and that, in the absence of interlocutory relief, he would suffer irreparable damage. For this purpose, "purely financial damage" was deemed not to be irreparable merely because damages would not be an adequate remedy. The applicant had to show that it would be "placed in a situation which could endanger its very existence or irremediably affect its market share." Pfizer Animal Health S.A./N.V. v. Council of the European Communities (Case T-13/99R)  3 C.M.L.R. 79, 114 (para. 138). The majority held that the appellants had failed to satisfy this condition.
Laws L.J. said that the principles in Zuckerfabrik Süderdithmarschen A.G. v. Hauptzollamt Itzehoe (Joined Cases C-143/88 and C-92/89)  E.C.R. I-415 had no application. The question of whether the Directive should be implemented sooner or later within the implementation period was entirely a matter for the United Kingdom to decide. Therefore the question of whether a United Kingdom court should restrain implementation within that period in the interests of justice was a matter for domestic law. It followed that there were no grounds for interfering with the exercise of discretion by Turner J.
The appellants appealed to your Lordships' House. The position of counsel for the Secretary of State (Mr. Vajda Q.C.) was that on the merits the appellants had an arguable case but no more. Mr. Sumption Q.C. for the appellants argued that the case was a very strong one. He also submitted that Turner J. was right in deciding the question according to English law and that in any case, the criteria in Zuckerfabrik, when properly examined, were no different from those applied by Turner J. In particular, there was no European doctrine that financial damage was deemed not to be irreparable even if it was not capable of being repaired.
The oral hearing in the reference which Turner J. had made in February 1999, together with conjoined proceedings brought by the Federal Republic of Germany to annul the Directive, took place on 12 April 2000. On 15 June 2000, after the conclusion of argument before your Lordships, Advocate General Fennelly issued his opinion. He expressed the firm view that the Directive was invalid for a number of reasons, including ultra vires on the grounds for which the appellants contended. In view of this turn of events, the Secretary of State offered an undertaking in substantially the form of interlocutory relief sought by the appellants. He also made an offer to pay the appellants' costs, limited to two counsel instead of the three actually employed. In view of this offer, the Secretary of State submitted that the proceedings had become moot and that your Lordships should accept the undertakings and make no order or express any views on the matters debated at the Bar. Since then, the European Court has annulled the Directive and the power to make regulations under section 2(2) has disappeared: see Federal Republic of Germany v. Parliament and Council of the European Communities (Case C-376/98), (unreported) 5 October 2000. Even the undertakings are therefore no longer needed.
Mr. Sumption on the other hand said that as the appeal was properly before the House, it had jurisdiction to give a judgment if it considered that there were good reasons in the public interest for doing so: see Reg. v. Secretary of State for the Home Department, Ex parte Salem  1 A.C. 450, 456-457. In the present case, the important question as to whether the decision to grant interlocutory relief should have been decided according to English or Community law divided the Court of Appeal and was fully argued before your Lordships. Mr. Sumption submits that if your Lordships consider that the majority Court of Appeal were wrong, you should say so. Their judgment should not be left to stand as authority, leaving some future litigants to bear the trouble and expense of bringing the matter once more before your Lordships' House.