Case C‑147/23

European Commission

v

Republic of Poland

Judgment of the Court (First Chamber) of 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)

1. Approximation of laws – Protection of persons who report breaches of Union law – Directive 2019/1937 – Failure to transpose within the prescribed period – Failure to fulfil obligations

   (Art. 258 TFEU; European Parliament and Council Directive 2019/1937, Art. 26(1) and (3))

   (see paragraphs 36-38, operative part 1 and 2)

2. Actions for failure to fulfil obligations – Judgment of the Court establishing the failure of a Member State to fulfil its obligations – Failure to fulfil the obligation to notify measures transposing a directive – Pecuniary penalties – Discretion of the Court – Criteria

   (Art. 260(3) TFEU; European Parliament and Council Directive 2019/1937, Art. 26(1) and (3))

   (see paragraphs 57, 59, 60, 62, 63, 66-69, 72-82, 84-86)

3. Actions for failure to fulfil obligations – Judgment of the Court establishing the failure of a Member State to fulfil its obligations – Failure to fulfil the obligation to notify measures transposing a directive – Pecuniary penalties – Periodic penalty payment – Failure continuing up to the Court’s examination of the facts – Imposition of a penalty payment – Condition – Continued failure to fulfil obligations by date of delivery of the judgment

   (Art. 260(3) TFEU; European Parliament and Council Directive 2019/1937)

   (see paragraphs 64, 65, 109, operative part 3)

4. Actions for failure to fulfil obligations – Judgment of the Court establishing the failure of a Member State to fulfil its obligations – Failure to fulfil the obligation to notify measures transposing a directive – Pecuniary penalties – Lump sum payment – Determination of the amount – Criteria

   (Art. 260(3) TFEU; European Parliament and Council Directive 2019/1937, Art. 26(1) and (3))

   (see paragraphs 87-90, 92, 94, 97-103)

5. Actions for failure to fulfil obligations – Judgment of the Court establishing the failure of a Member State to fulfil its obligations – Failure to fulfil the obligation to notify measures transposing a directive – Pecuniary penalties – Periodic penalty payment – Determination of the amount – Criteria

   (Art. 260(3) TFEU; European Parliament and Council Directive 2019/1937, Art. 26(1) and (3))

   (see paragraphs 104-108)

Résumé

Having found that the Republic of Poland has failed to fulfil its obligations under EU law by failing to transpose the ‘Whistleblowers Directive’ ( 1 ) and to notify the measures for its transposition, the Court examines the method applied by the Commission to determine the amount of the financial penalties.

Since measures transposing the Whistleblowers Directive had not been notified to the European Commission, that institution sent a letter of formal notice to the Republic of Poland on 27 January 2022 and addressed a reasoned opinion to that Member State on 15 July 2022, in which it asked the Republic of Poland to comply with its obligations within a period of two months. In its written responses, that Member State stated that the transposition measures would be published in the Polish Official Journal in January 2023, and then in August 2023.

In that context, the Commission asks the Court, first, to declare that the Republic of Poland has failed to fulfil its obligations to adopt the provisions necessary to transpose the Whistleblowers Directive and to notify them to the Commission and, second, to impose on it in that regard financial penalties in the amounts determined on the basis of the guidelines contained in the 2023 Communication. ( 2 )

Findings of the Court

In the first place, with regard to whether a failure to fulfil obligations exists, the Court finds that, assuming that the Republic of Poland is of the view that the COVID-19 pandemic and the influx of refugees as a result of the aggression against Ukraine by Russia constitute a case of force majeure which prevented the Whistleblowers Directive from being transposed within the prescribed period, that Member State cites those events as justification for the delay in transposing that directive for the first time at the response stage. In addition, while those circumstances are beyond the control of the Republic of Poland and both 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. Moreover, it is established that that Member State had still not proceeded with the transposition of the Whistleblowers Directive at the end of the written part of this procedure, that is to say, almost one year after the period laid down in the reasoned opinion had expired and over a year and a half after the expiry of the deadline for transposition provided for in that directive.

Thus, the failure to fulfil obligations cannot be justified by those circumstances, which can have had only an indirect impact on the process to transpose the Whistleblowers Directive.

In the second place, as regards the question whether the imposition of financial penalties is appropriate, the Court takes the view that, in the present case, both a lump sum and a daily penalty payment must be imposed.

With regard to the imposition of a lump sum payment, it observes that the fact that no provisions necessary for the transposition of the Whistleblowers Directive have been notified indicates that if the future repetition of similar infringements is to be prevented, such a dissuasive measure must be adopted. As for the daily penalty payment, taking into account the fact that the Republic of Poland’s failure to fulfil its obligations continued up to the time of the Court’s examination of the facts, the imposition on that Member State of a daily penalty payment is an appropriate financial means by which to ensure that it puts a prompt end to the failure established. However, the Court considers that it is appropriate to impose a penalty payment only in so far as the failure persists at the date of delivery of the judgment in this case.

In the third place, as regards the method of determining the amount of the financial penalties, the Court explains, in connection with the factor relating to the seriousness of the failure established, that the amount of the penalties imposed on a Member State must be appropriate to the circumstances and proportionate to the failure to fulfil obligations. The automatic application of the same coefficient for seriousness in all cases in which a directive is not fully transposed necessarily precludes the imposition of proportionate penalties.

In particular, by presuming that a failure to comply with the obligation to notify the transposition measures for 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 on private and public interests, as provided for in the 2023 Communication. In that regard, that institution cannot rely on the principle of the equality of Member States to justify the automatic application of a single coefficient for seriousness, because it is quite clear that the consequences of Member States failing to comply with their obligations for the private and public interests concerned may vary not only from one Member State to another, but also depending on the normative content of the untransposed directive.

Accordingly, the Commission cannot discharge its obligation to assess, on a case-by-case basis, the consequences of the failure established for private and public interests. In the present case, the failure to comply with the obligation to transpose the Whistleblowers Directive is particularly serious because that directive is a crucial instrument of EU law, in that it is intended to protect persons who report breaches of EU law. In addition, the failure to transpose its provisions necessarily undermines compliance with EU law and its uniform and effective application.

As regards the capacity to pay, the Court observes that the method of calculating the ‘n’ factor, the criterion which reflects the deterrent effect of the penalty and is determined in the 2023 Communication for each Member State, primarily takes into account the GDP of the Member State concerned. Nevertheless, that method is based on the presumption that there is 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 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.

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.

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 the 2023 Communication as part of the method of calculating the ‘n’ factor.

In the fourth and final place, taking into consideration those clarifications, the Court fixes, in the present case, the amounts of the lump sum and the daily penalty payment.

In that context, it points out that the particularly serious nature of the failure established is heightened by the fact that, at the end of the written part of the procedure, the Republic of Poland had still not adopted the provisions necessary to transpose the Whistleblowers Directive.

In addition, despite the fact that there are certain provisions scattered throughout the Polish legal order which the Republic of Poland alleges are compatible with some of the requirements under the Whistleblowers Directive, the lack of clear and specific rules concerning the protection of persons who report breaches of EU law 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.

The Court also observes that, in view of the fact that the Republic of Poland failed to adopt, within the period that it had announced, the provisions necessary to comply with the Whistleblowers Directive, its cooperation with the Commission during the pre-litigation procedure cannot be taken into account as a mitigating circumstance.

Thus, the Court takes the view that, in order effectively to prevent a repeat of infringements similar to that resulting from the infringement of the obligation to transpose the Whistleblowers Directive in the future, a lump sum must be imposed, the amount of which must be fixed at EUR 7000000. In the event that the failure established in that judgment were to persist on the date of delivery of that judgment, the Court orders the Republic of Poland 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 40000.

( 1 ) 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) (‘the Whistleblowers Directive’).

( 2 ) Communication from the Commission 2023/C 2/01, entitled ‘Financial sanctions in infringement proceedings’ (OJ 2023 C 2, p. 1) (‘the 2023 Communication’).