: Article 260(3) TFEU: (some) clarity at last

By virtue of Article 260(3) TFEU, the Commission may propose to the Court, in the context of an infringement action lodged pursuant to Article 258 TFEU, to impose a lump sum or penalty payment in the same judgment in which it finds that a Member State has failed to fulfil its obligation to notify measures transposing a directive adopted under a legislative procedure. The purpose of this new provision is, naturally, to give Member States a stronger incentive to transpose directives within the period prescribed.

The text of Article 260(3) TFEU, however, raises a number of novel issues. Interestingly, until very recently there was no authoritative interpretation of the provision: all previous cases brought by the Commission under Article 260(3) TFEU were subsequently withdrawn, given that the Member States concerned had achieved compliance with the earlier judgment in the course of the proceedings.^[1] Nevertheless, in two of those cases the Opinion of the Advocate General was delivered before the withdrawal: that of AG Wathelet in Commission v. Poland, and that of AG Tanchev in Commission v. Spain. Moreover, AG Szpunar also delivered an Opinion in Commission v. Belgium³ the case in which, on 8 July 2019, the Court handed down its first judgment in this matter. Undoubtedly, that judgment goes to great lengths to clarify' some of the main doubts which, for ten years, surrounded the interpretation of Article 260(3) TFEU. However, regrettably the Court either did not expressly address, or did not address at all, some other issues debated by the parties and discussed in the mentioned Opinions.

The nature and purpose of the provision

A first issue raised by Article 260(3) TFEU concerned the purpose of the provision. In a nutshell, the issue was whether the new mechanism is meant to penalise failures to notify transposition measures or failures to comply with judgments declaring Member States to be in breach of their obligation to notify' the Commission of transposition measures. Put differently, is Article 260(3) TFEU to be understood as an ‘enhanced’ Article 258 TFEU, or as an exception to (or a variant of) Article 260(2) TFEU? The issue had an important practical consequence, as AG Szpunar pointed out in his Opinion. In the former case, a failure to notify' transposition measures within the period prescribed could, as such, give rise to the imposition of financial penalties. Conversely, in the latter case, a financial penalty imposed by the Court in the judgment would not take effect until a later date, because connected to the failure to comply with that judgment.

The former interpretation, suggested by the Commission in its Communication of 2011, was supported, implicitly or explicitly, by a number of authors in their writings.²' Without openly addressing the issue, the Opinions of AG Wathelet in Commission v. Poland and of AG Tanchev in Commission v. Spain, also appear to be based on that premise. Conversely, other authors prefer the latter interpretation of Article 260(3) TFEU.^[2] AG Szpunar is his Opinion in Commission v. Belgium also favoured this approach. A number of arguments based on a textual, contextual, and historical interpretation of Article 260(3) TFEU had been invoked in this regard. Moreover, that reading of the provision would, arguably, be more in line with the principle of proportionality' and better respect the Member States’ rights of defence. In essence, the latter approach is based on the idea that the procedure under Article 260(3) TFEU is intended to avoid a second set of proceedings under Article 260(2) TFEU in cases where they would be manifestly unnecessary. Since determining whether a Member State has failed to communicate transposition measures is a rather straightforward exercise, the drafters of the Treaties decided to empower the Court to impose sanctions in the first set of proceedings, and to determine that those penalties should take automatic effect at a later date, unless the judgment is complied with.

In its judgment, the Court did not expressly deal with this issue. However, by ordering that the imposed penalty payments would start to run from the date the judgment was delivered,⁵⁰ it is clear that the Court endorsed the interpretation of Article 260(3) TFEU as an ‘enhanced’ Article 258 TFEU. The absence of a discussion on this point is disappointing nonetheless: one is left to wonder why the Court found the, arguably forceful, arguments put forward in support of the alternative approach to be unpersuasive. The only conceivable counterargument is a possible decrease of effectiveness of the provision: interpreting Article 260(3) TFEU as an exception to Article 260(2) TFEU might have reduced the incentive for the Member State to transpose directives within the prescribed period. Indeed, they would be able to escape any sanction until the end of the ‘grace period’ that the Court had to grant them to comply with the judgment. Such an argument is not without force. However, in that respect, the principle of effectiveness in EU law cannot be understood as allowing the EU judiciary to maximise the effects of a provision of EU law, but rather should be interpreted as preventing the EU judiciary from depriving a provision of the drafters’ intended effects.⁵¹

• [1] In that connection, in its Communication - Application of Article 260(3) of the Treaty (OJ 2011 C 12, p. 1) of 2011, the Commission stated that, in the cases brought before the Court it would only seek the imposition of penalty payments. This meant that the Commission was to withdraw a case where the Member State managed to reach compliance during the proceedings (p. 5). However, in its Communication - EU Law: Better Results through Better Application (OJ 2017 C 18, p. 10) of December 2016, the Commission announced that it would change its policy on this point: in the future, it would systematically ask the Court to impose both a lump sum and a periodic penalty payment. The logical consequence of the new approach is, in the Commission’s view, that in cases where a Member State rectifies the infringement by transposing the directive in the course of the proceedings, the action will not be withdrawn. According to the Commission, the Court would be still entitled to impose a lump sum penalising the duration of the infringement up to the time the situation was rectified (p. 3). No case brought after this change of policy has, by March 2020, been decided by the Court. 2 Case C-320/13, EU:C:2014:2441. 3 Case C-543/17, EU:C:2019:322. 4 Case C-569/17, EU:C:2019:271. 5 Paras 37-38 of the Opinion.
• [2] See, e.g. I. Kilbey (2010), supra note 9, 383-384; N. Wunderlich, in von der Groeben, Schwarze, Hatje (eds), Europäisches Unionsrecht (Kommentar) (7*1’ ed., Nomos, 2015) Artikel 260 AEUV, para. 31; M. Pechstein, in Pechstein, Nowak, Häde (eds), Frankfurter Kommentar zu EUV, GRC und AEUV, Band IV (2017, Mohr Siebeck) Artikel 260 AEUV, para. 18; and P. Wenneräs, 'Making effective use of Article 260 TFEU’, in Andras, Kochenov (eds), The enforcement of EU law and values (OUP, 2017)79. 2 See A. Adinolfi, ‘Le istituzioni giudiziarie nel progetto di Costituzione europea’ (2003) Ri-vista di Diritto Internazionale 655; R. Alonso Garcia, ‘Lisbon and the Court of Justice of the European Union’ (2010) WP IDEIR 1, 18; N. Wahl, L. Prete, ‘Between Certainty, Severity and Proportionality: Some Reflections on the Nature and Functioning of Article 260(3) TFEU’ (2014) European Law Reporters 171-174; T. Van Rijn, ‘Les Sanctions Pécuniaires de 1’Article 260 TFUE: 5 ans après le Traité de Lisbonne’ (2016) Cahiers de droit européen 588; and M. Klamert, ‘Die Durchsetzung finanzieller Sanktionen gegenüber den Mitgliedstaaten’ (2018) Europarecht 162. 3 See paras 35-57 of the Opinion. 4 50 Paras 91-92 of the judgment.