They Call It 'Teleological'
Lord Slynn of Hadley *

In a judgment in 1977,1Lord Denning, speaking of the European Court'~ method
of interpretation, said:

"Some of us recently spent a couple of days in Luxembourg discussing it
with the members of the European Court and our colleagues in the other
countries of the Nine. We had a valuable paper on it by the President of the
Court (Judge H. Kutscher) which is worth studying: 'Methods of
interpretation as seen by a judge atthe Court ofJustice, Luxembourg 1976'.
They adopt a method which they call in English by strange words - at any
rate they were strange to me - the 'schematic and teleological' method of
interpretation. It is really not soalarming as it sounds. All it means is that the
judges do not go by the literal meaning of the words or by the grammatical
structure of the sentence. They go by the design or purpose which lies
behind it. When they come upon a situation which is to their minds within
the spirit - but not the letter - of the legislation, they solve the problem by
looking at the design and purpose of the legislature - at the effect which it
was sought to achieve."

Having recently returned from a spell in Luxembourg myself, I thought that it
would be appropriate to take this passage as the starting point for this year's Royal
Bank of Scotland Lecture.

In the years since that judgment, it has become widely thought that the Court of
Justice of the European Communities approaches interpretation in a very
different way from that in which English courts have traditionally approached
statutory interpretation. The latter may be described succinctly as adopting a
literal and historical approach to statutory interpretation, above all, a literal
approach. The European Court, on the other hand, generally uses the literal

*The Royal Bank of Scotland Lecture 1992, Oxford, published by arrangement with Lord Slynn and
The Royal Bank of Scotland.

1. Buchanan v. Babco [1977] 2 W.L.R. 107, at p. 112; [1977] 2 C.M.L.R. 455, at p. 458.

225



THE DENNING LAW JOURNAL

method only as a starting point for its interpretation, giving preference to the
schematic and teleological methods, and of those two, above all, the teleological
method.

"Strange words" they may be to English ears, even now. But the underlying
sense is clear and perhaps not unfamiliar. Schematic interpretation means one
which places the provision in question in its context in the overall scheme or
system to which it belongs (hence it it sometimes also referred to as 'systematic
interpretation'). To my mind "teleological" is synonymous with 'purposive', and
'purposive construction' is a notion which is familiar to English lawyers. It is for
this reason that in my opinion it is wrong to say that English judges apply simply a
literal interpretation. In the past they may have done so but for many years there
has been a willingness to look at "purpose". I suspect many judges always were
even if some were very strict. But English judges are not as blind as is sometimes
suggested: see, for example, the speech of Lord Wilberforce in Black-Clawson Ltd.
v. Papierwerke A. G.. 2 If the House of Lords were ever to hold that Courts could
look at Hansard even if in limited circumstances, the awareness of "purpose"
would increase even further. At present, however, there is a difference and the
difference lies in the predominance of the teleological over all other methods of
interpretation and in the degree to which the European Court applies it. That
Court may, in application of a teleological interpretation, go so far as to override
the clear, ambiguous words of a legal text, which certainly in the past and to a large
extent even today would be inconceivable for an English judge.

Let me take the example of Fellinger,3 a technical, social security case involving
what is known as a "frontier worker". Mr. Fellinger lived in Germany. After he
became unemployed there, he went to work across the border in the Grand Duchy
of Luxembourg, while still residing in Germany. Having become unemployed in
Luxembourg he claimed unemployment benefit from his local German
Employment Office, and a dispute arose as to whether the amount should be based
on the wage which he had last earned in Luxembourg or on that which he had last
earned in Germany. Mr. Fellinger relied on Article 68(1) of the basic social
security regulation, Regulation No. 1408/71, which reads:

"The competent institution of a Member State whose legislation provides
that the calculation of benefits should be based on the amount of the
previous wage or salary shall take into account exclusively the wage or salary
received by the person concerned in respect of his last employment in the
territory of that State."

On a literal reading of that provision it was clear that Mr. Fellinger should have
received benefit on the basis of the wage he received from his last employment in

2. [1975] A.C. 591, at pp. 629-631, especially at the foot of p. 629.
3. Case 67/79 Fellinger v. Bundesamslalrfur Arbeir [1980] E.C.R. 535.

226



THEY CALL IT 'TELEOLOGICAL'

Germany, as being "his last employment in the territory of' the Member State of
the competent institution. Surprisingly to a common lawyer, the Court did not
follow the plain words of Article 68(1) but adopted an interpretation which came
to the opposite result in the case. Its approach is interesting.

The Court began by pointing out that frontier workers often move from
countries with lower wages to countries with higher wages and that it would thus
be unfavourable to them if they could not claim unemployment benefit on the
basis of their last employment in the country of employment rather than in the
country of residence. (Mr. Fellinger's case is apparently untypical in this respect).
The Court held that in such circumstances the rules applicable "must be elicited
from Article 68(1) of Regulation No. 1408/71 in thelight of the general principle
underlying both that provision and the regulation as a whole" (paragraph 7 of the
judgment).

It looked at the preamble to the regulation. The Court emphasised the passage
in the preamble which stated that "in order to secure mobility of labour under
improved conditions" the regulation seeks to ensure the unemployed worker of
"the unemployment benefit provided for by the legislation of the Member State to
which he was last subject." From this the Court held that "such an objective
clearly implies" that unemployment benefit is regarded in Regulation No.
1408/71 in such a way as not to impede the mobility of workers and to that end
seeks to ensure that the persons concerned receive unemployment benefit
reflecting the conditions of employment, particularly the remuneration, which
they enjoyed in the Member State of last employment. It inferred from this that
Article 68(1) "is founded on the general principle" that the unemployment benefit
should be calculated on the basis of the wage received in the last employment held
by the worker immediately before his becoming unemployed (paragraph 8).

The Court found that this result accorded with the basic empowering provision,
Article 51 of the E.E.C. Treaty which requires that "The Council shall ... adopt
such measures in the field of social security as are necessary to provide freedom of
movement for workers, ... ". The results also accorded with the underlying
requirement, based it seems on general principles of equity or fairness, that
unemployed workers should receive benefit proportionate to their remuneration
at the time of becoming unemployed (paragraph 8 of the judgment).

The Court concluded (paragraph 9 of the judgment) that Article 68(I), "viewed
in the light of Article 51 of the Treaty and the objectives which it pursues," must
be interpreted as meaning that the unemployment benefit must be calculated on
the basis of the wage received by the worker in the last employment held by him in
the Member State in which he was engaged immediately prior to becoming
unemployed. In the case of Mr. Fellinger this meant the wage that he was earning
in Luxembourg immediately before becoming unemployed. He was thus entitled
to a substantially lower amount of benefit than that which he was claiming, namely
that which he received during his last employment in Germany. This was a
disappointing result from his point of view, especially as it seemed that he had the

227



THE DENNING LAW JOURNAL

literal wording of Article 68(1) on his side. However, the Court's reasoning is
based on the view that his case is untypical and that most frontier workers choose
to work abroad because they earn more there. If they were unable to benefit from
those higher earnings in the event of becoming unemployed, it might discourage
people from becoming frontier workers. That would be contrary to the aim of
making possible the free movement of persons) laid down in the E.E.C. Treaty and
pursued by Regulation 1408/71. In order to achieve that aim) the literal wording
of Article 68(1) should not be followed in the case of frontier workers (last
employment in the State of the competent institution) but it should be treated as
having a different purport consistent with the overall scheme and purpose of the
regulation (last employment in the State in which the worker was engaged
immediately prior to becoming unemployed).

It is possible that the judgment could be explained on the basis that Article 68(1)
had been drafted with a view to the ordinary case of a worker who lives and works
in the same Member State without taking account of the special case of "frontier
workers". On that basis, it might be said that the Court had used the teleological
method to fill a gap in the legislation. However, even if that is a correct reading of
the judgment) an English Court faced with a similarly unambiguous domestic
legal text might well have felt bound to follow it even if it might express misgivings
or regret about doing so. That would probably have been so in the past. Whether it
would still here in the future may be more doubtful.

The methods of interpretation of the European Court have evolved in relation to
the particular type of texts coming before it for decision. One characteristic of
those texts which sets them apart from English domestic texts is that they exist and
are authentic in several languages and not just one. No one language version is
predominant. Whereas in some international conventions it is provided that only
one language version is authentic and the others rank as translations) the general
rule for Community texts is that all language versions are equally authentic. This is
so even though the pilot version of the text was drafted in one language and the
others were in fact translated from it. At the present time there are nine official
Community languages) and as more countries join there may well be more. It
follows that, from the outset) the literal method is unsuited to be the decisive
criterion for judicial interpretation of such texts and other methods are likely
perforce to take on greater prominence.

Thus) for example, in Case C-185/89 Staatssecretaris van Financien v. Velker
International Oil Company4 concerning the interpretation of Article 15of the Sixth
VAT Directive, the Court held that the term "supply of goods for the fuelling and
provisioning of vessels" was capable of bearing several literal meanings (paragraph
16of the judgment). Therefore it held) in order to interpret the term, that recourse
must be had "to the context in which it occurs, bearing in mind the purpose and
structure of the Sixth Directive." Accordingly, the Court resorted to the

4. [1990] E.C.R. 1-2561.

228



THEY CALL IT 'TELEOLOGICAL'

schematic and teleological methods, rather than to the literal method, in order to
resolve the question of interpretation before it.

Community legal texts also differ from domestic English ones in that they fall to
be applied in a number of different States (currently 12). Having taken the basic
decision that Community law was a single legal order,5 the Court was naturally led
to adopt methods of interpretation which would ensure its uniform application in
all Member States. If Community law were interpreted and applied differently in
the various Member states, its unity would be lost and ultimately its existence put
at risk.

Thus the Court has held6 that "the necessity for uniform application and
accordingly for uniform interpretation makes it impossible to consider one version
of the text in isolation but requires that it be interpreted on the basis of both the
real intention of its author and the aim he seeks to achieve in the light in particular
of the versions in all . . . languages."

In purely practical terms it is easier to glean the purpose of a Community text
than that of an English domestic one because the Community legislative texts are
legally required to state the reasons on which they are based, under Article 190 of
the E.E.C. Treaty. They invariably comprise preambles to that end, and the Court
in its judgments regularly refers to them precisely for the purpose of defining the
object pursued by the measure in question. An example of this practice was seen in
the Fellinger case to which I have referred.

Ultimately all Community legal texts relate back to the overall aim of the
Community. The preamble to the EEC Treaty in particular spells out quite clearly
the aim of increasing European unification with a view to maintaining peace and
raising living standards. That "grand design" was sketched out in the founding
treaties, but many of its details were left to be completed subsequently and the
pro~ess is a continuing, dynamic one. If the momentum were lost, the overall
objective would be at risk. The adoption of a teleological method ofinterpretation,
is particuarly well suited to satisfying this basic imperative of the Community legal
system. As the former President of the Court, Hans Kutscher, put it in the work
referred to by Lord Denning in the opening passage of this paper:

"The principle of the progressive integration of the Member States in order
to attain the objectives of the Treaty does not only comprise a political
requirement; it amounts rather to a Community legal principle, which the
Court of Justice has to bear in mind when interpreting Community law, ifit
is to discharge in a proper manner its allotted task of upholding the law when
it interprets and applies the Treaties. How else should the Court of Justice
carry out this function which it has been assigned except by an interpretation

5. See Case 6/64 Cosra v. ENEL (1964) E.C.R. 585, at p. 593.
6. Case 26/69 Stauder v. Vim (1969) E.C.R. 419; Case 55/87 Moksel v. BALM (1988) E.C.R. 3845.

229



THE DENNING LAW JOURNAL

of Community law geared to the aims of the Treaty, that is to say, one which
is dynamic and teleological."7

In practice it is very common for two (or more) methods to be used together, one
confirming the other. In particular, the schematic and teleological methods are
frequently used together. For instance, it may be possible to understand the
'general scheme' of a particular set of rules only by relating them to the overriding
objectives of the Treaty to which they are meant to contribute. It may be possible
to define the precise purpose of a measure only by situating it in its broader
scheme. The literal method, although almost never decisive on its own, continues
to play an imporant role in the Court's interpretation because the Court must
necessarily start from the terms brought before it for interpretation. The three
methods are complementary and most often fall to be applied together, but among
them the teleological method has pride of place.

There are in addition to, or perhaps constituents of, the three main methods of
interpretation which have been mentioned, other guiding concepts.8 In particular
the principle of effectiveness or effet utile can play an important role. This
principle is derived from international law, and the Court's use of it has been
described by former President Kutscher in the following terms: "the Court, in
accordance with the principle of ejfet utile gives preference to the construction
which produces the maximum effectiveness and enables its effect to be developed
to the greatest possible extent. But what are the criteria by which the effectiveness
of a rule is to be judged? The only possible answer to this question is that these
criteria must be gathered from the objectives of the Treaty. According to the
principle of effet utile preference is to be given to the interpretation which is best
able to further attainment of the objectives of the Treaty."9 Hence the principle
may be seen as an extension of the teleological approach.

As a means of interpretation, the principle can be illustrated by the case of
Antonissen.10 Gustaff Desiderius Antonissen, a Belgian national, came to the
United Kingdom in October 1984 and remained unemployed until, in March
1987, he was convicted of drug offences by Liverpool Crown Court. The question
arose as to whether he could challenge a deportation order on the basis of
Community law relating to free movement of workers. While Community
provisions clearly provide rights for workers in employment to move freely
between Member States, it had long been uncertain whether and to what extent
Community law provided similar rights for the unemployed wishing to seek work

7. H. Kutscher, "Methods ofInterpretation as seen by a Judge of the Court of Justice", p. 37, Judicial
and Academic Conference, 27-28 September 1976, Court of Justice of the European Communities.
8. See, e.g., Timothy Millen, "Rules of Interpretation of EEC Legislation", [1989] Statute L.R. 163,
at pp. 175-181.
9, Kutscher, supra n. 8, pp. 41-42.
10. Case C-292/89 The Queen v. Immigration Appeal Tn'bunal, ex parte Gustaff lJesiderius Antonissen
[1991] E.C.R. 1-745.

230



THEY CALL IT 'TELEOLOGICAL'

in other member States. Article 48(3)(a) speaks only of a right to free movement
"to accept offers of employment actually made" and Article 48(3)(c) only of a right
to stay in a Member State "for the purpose of employment". A literal reading of
those provisions would have ruled out rights of free movement of the unemployed.
Although urged to do so, on the literal wording of the Article the Court expressly
refused to adapt such an interpretation, II holding that it would compromise an
unemployed worker's chances of finding employment and thus would deprive
Article 48(3) of its effectiveness (effet utile). On that basis, the Court gave Article
48(3) an extensive reading and held that it implied a right for Community
nationals to visit and stay in other Member States for the purpose of seeking
employment there.12Though after a period such a person may be required to leave
unless there is a likelihood of his obtaining employment.

The principle of effet utile had also been used, for example, to reach the
conclusion that a Commission decision requiring a Member State to alter or
abolish a State aid under Article 93(2) of the E.E.C. Treaty, in order to be .
"effective", may also include a requirement on the Member State to recover the
aid paid out in breach of the Treaty, notwithstanding the fact that Article 93(2)
does not expressly confer any such power on the Commission.13 Similarly the
principle has been used to found a ruling that the Community by necessary
implication has the power to carry out functions which are mentioned in the
Treaty or in subordinate legislation, for instance in the areas of common
commercial policyl4 or fishery conservation,15 even though the text does not
contain any express provision of such powers. This recognition of executive and
legislative powers illustrates the consequences which the principle of effet utile can
have in the practice of the Court. In a traite-cadre, where gaps were left to be filled
later, it enabled the Court to fill these gaps by a method ofinterpretation which is
sometimes seen as judicial law making. It is not difficult to find illustrations of this.
In many of such cases the Court has relied on the principle of effet utile. Whatever
the grounds relied on, one major difference between them and cases of simple
interpretation lies in the degree of predictability of the result. A method of
interpretation - even a schematic and teleological one - can usually be relied on to
give reasonably predictable results. The teleological method of the European
Court may well yield different results from the more literal methods of English
domestic law, but both methods can be expected to give relatively predictable
results in so far as they stay within the limits of interpretation.

It is sometimes said that in its "creativity" the Court moves to the limits of the
judicial function. I think that this can be exaggerated though there is little doubt
that the Court is on occasions called upon to, and does, take decisions which in a

11. Paragraph 10 of the judgment, at p. 1 - 776.
12. Paragraphs 12 and 13 of the judgments, at p. 1 - 777.
13. Case 70/72 Commission v. Germany [1973] E.eR. 829.
14. Opinion 1/75 [1975] E.eR. 1755 (conditions for the grant of export credits).
15. Case 804/79 Commission v. United Kingdom [1981] E.eR. 1045, at p. 1074.

231



THE DENNING LAW JOURNAL

national system would be likely to be dealt with by the legislature or by the exercise
of delegated legislative authority. This is not a criticism: it is inherent in the nature
of the Treaty and the development of the Community has been much advanced by
the Coures willingness to grasp the nettle. It can, however, sometimes lead to
difficulties. In the case of Gaston Schul there was at issue the importation of a
second-hand yacht from France to the Netherlands, an expensive item whose
price embodied quite a large amount of residual VAT. Since the purchase (and
subsequent importation) was from a private person (not a trader), that VAT
element could not be deducted. On the other hand the Dutch authorities, in
charging VAT on the importation, based their assessment on the full purchase
price, thus in effect charging VAT on VAT. When the matter came before it, the
European Court found that there was plainly a lacuna in the Community VAT
legislation, which the Community legislature should in due time fill. However, the
Court did not leave the matter there. It said: "although the establishment of a
system of complete neutrality in the field of competition involving full remission
of tax on exportation is indeed a mauer for the Community legislature,16 so long as
such a system is not established Article 95 of the Treaty prevents an importing
Member State from applying its system of value-added tax to imported products
in a manner contrary to the principles embodied in that article." 17 The Court went
on to spell out of Article 95 of the Treaty (not the Sixth VAT Directive which, of
course, was silent on the point) an obligation on the member State of importation
"to take into account ... the residual part of the value-added tax paid in the
Member State of exportation and still contained in the value of the product when it
is imported."IB

That ruling proved difficult to apply, gave rise to further dispute, and within a
short time the Court was seised of a series of further questions designed to
elucidate how exactly the national authorities were required to "take into account"
the residual amount of value-added tax. VAT rates were different in France and in
the Netherlands; the value of the goods had changed between the date of their
purchase and the date of their resale in France; the change in value was (unusually)
an increase not a depreciation; should an upper limit be placed on any deduction?
The complexity of such issues may explain why the legislature had refrained from
dealing with the matter at that stage. The Court, however, repeated: "although the
establishment of a system of complete competitive neutrality involving full
remission of tax on exportation is a maUer for the Community legislature,19 until
such a system has been established Article 95 of the Treaty prevents an importing
Member State from applying its VAT rules to imported goods in a manner
contrary to the principles embodied in that Article.20 It added: "Consequently,

16. My emphasis.
17. Case 15/81 Schul v. Inspecteur der Invoerrechten en Accljmzen [1982] E.C.R. 1409, at p. 1433.
18. Ibid., at p. 1436.
19. My emphasis.
20. Case 47/84 Staacssecretan's van Financien v. Schul [1985] E.C.R. 1491, at pp. 1506-1507.

232



THEY CALL IT 'TELEOLOGICAL'

pending the adoption of a legislative solution, in charging VAT on imports account
must be taken of the effect of Article 95 of the Treaty. It is therefore for the Court to
lay down guidelines21 compatible with Article 95 of the Treaty, consistent with the
general scheme of the Sixth directive and sufficiently simple to be able to be
applied in a uniform manner throughout the member States."22 And it went on to
elaborate detailed answers as to how the residual VAT element was to be
calculated and deducted. The answers are to be found in [1985] E.C.R. 1491, at
p. 1512.

Although the Court in the second Gaston Schul case maintained its decision to
step into the place of the Community legislature, when the Court was expressly
invited a few years later to do the same thing in the case of VAT on second-hand
goods, it declined to do so. The case was ORO Amsterdam Beheer, and the double
taxation at issue there was at least as clear as that at issue in Gaston Schul. Under
Dutch law, where second-hand goods are sold by a private person toa trader (i.e., a
taxable person) no VAT is charged, but when the trader re-sells them he has to pay
VAT on the full amount of their resale price without being able to deduct the VAT
already contained in their purchase price. The question before the Court was
whether the failure of the national legislation to eliminate such double taxation was
contrary to Community law. In Gaston Schul, as has been seen, the Court had laid
down new law designed to prevent double taxation. Here, it took the converse
approach, saying: "A comprehensive and positive reply to that question cannot be
given on the basis of the judgments of the Court alone."23 It went on to say: "On
the whole the Community system of VAT is the result of a gradual harmonisation
of national legislation pursuant to Articles 99 and I00 of the Treaty. The Court has
consistently held that this harmonisation, as brought about by successive
directives and in particular by the Sixth Directive, is still only partial ... Nowhere
in the common system of value-added tax, as it stands at present, are to be found
the necessary bases for determining and laying down detailed rules for applying a
common system of taxation enabling double taxation to be avoided in trade in
second-hand goods. Until the Community legislature has taken action,24 it is
therefore necessary to continue to apply Article 32 of the Sixth Directive, which
merely authorises Member States that apply a special system of VAT to second-
hand goods to retain that system but does not impose on them any obligation to
introduce such a system if none exists. "25 Thus in the result the Court ruled that
the Dutch legislation was compatible with Community law in spite of its element
of double taxation of second-hand goods.

Not only is the result the opposite to that in Gaston Schul, but the reasoning

21. My emphasis.
22. Supra n. 20, at p. 1507.
23. Case 165/88 ORO Amsterdam Beheer and Concerto v. Inspecteur der Omzetbelasting [1989] E.C.R.
4081, at p. 4099.
24. My emphasis.
25. Supra n. 23, at p. 4100.

233



THE DENNING LAW JOURNAL

leading up to it comprises an elaborate statement of judicial restraint. In the Schul
cases the Court filled the gap left unfilled by the legislature: in the ORO
Amsterdam one it declined to alter the situation "until the Community legislature
has taken action". Judicial law making must have its limits if only in the interests of
legal certainty and on matters of policy and economic or political appreciation the
Court is cautious and reluctant to intervene.

Yet examples of the Court's innovative activity can be found in many areas. One
particularly well-known example is its case-law conferring direct effect on
directives notwithstanding that the wording of Article 189 of the EEC Treaty gave
no indication to that effect. Indeed both the wording and structure of Article 189
as well as the scheme of the Treaty as a whole might have led to the view that only
regulations should have direct effect and directives not at all, being binding only
on the Member States to which they are addressed. In the event of a Member
State's failing to implement a directive fully or in time, it might have been
supposed that the sanction provided by the system of remedies under the Treaty
was confined to an infringement action against that State under Article 169of the
Treaty. However, the Court decided otherwise, and in a long line of decisions26 has
maintained that provisions of directives may under certain conditions have direct
effect, i.e. may be relied on by Community citizens before their national courts
even against, or in the absence of, national implementing measures. For the time
being, the Court has ruled out "horizontal direct effect" for directives (i.e.,
between citizen and citizen) and confined it to "vertical direct effect" (i.e.,
between the citizen and the State),27but it is increasingly being urged to recognise
horizontal direct effect. If the Court were to take that step, little would remain of
the distinction drawn in the Treaty between directives and regulations.

One extension has already been made to this line of case-law, as regards the
sanctions against a member State for failing to implement a directive. In addition
to an infringement action under the Treaty, in addition to the possibility of the
provisions of the directive becoming directly enforceable, the Court has held in the
Francovich case that a Member State may be liable in damages to a citizen who has
suffered harm as a result of its failure to implement a Community directive. 28The
contours of this new remedy are not yet clearly defined, but the principle is now set
for breach of obligation by a Member State and it seems not to be limited to a
failure to implement a directive. The consequences of this decision are likely to be
far-reaching though there are many questions to be resolved in future cases.

Another well-known area in which the Court has innovated in relation to the
express terms of the EEC Treaty is that of free movement of goods. Articles 30 to
34 of the Treaty provide for goods to move freely between Member States: Article

26. See, e.g., Case 8/81 Becker v. Finanzamr Munsrer-/nneusradr [1982] E.C.R. 53.
27. Case 152/84 Marshall v. Sourhampron and Souch- West Hampshire A rea Health A uthority (Teaching)
[1986] E.C.R. 723.
28. Case C-6/90 Andrea Francovich v./talian Republic, judgment of 19 November 1991.

234



THEY CALL IT 'TELEOLOGICAL'

36 lays down a number of exceptions to this basic rule on grounds including public
morality, the protection of health and the protection of industrial property. As
drafted, Article 36 appears to lay down an exhaustive, closed list of exceptions.
Moreover, the Court's case-law has repeatedly emphasised that exceptions to the
Treaty's basic rules, Article 36 among them, must be construed strictly. However,
in its judgment in'Cassis de Dijon29 the Court admitted new grounds for derogating
from the basic rules of free movement of goods. Those grounds were the
"mandatory requirements" relating to matters such as consumer protection and
the fairness of commercial transactions, but the category is not closed and further
"mandatory requirements" may potentially be added. Some commentators have
had difficulty in reconciling this case-law with the provisions of the Treaty. On the
one hand, these "mandatory requirements" appear to have little foundation in
Articles 30 and 34 as drafted; on the other, it seems hardly possible to insert them
in Article 36 in as much as it comprises a closed list of exceptions subject to
restrictive interpretation.30 Yet the Court's decision in that case is of remarkable
importance - it opened up trade in the Community, removing the need for the
Commission to lay down myriad harmonising regulations, and at the same time
recognised that at the then state of Community development Member States must
have some powers of control.

Cassis de Dijon has given rise to further litigation, partly seeking clarification of
the innovations which it brought to the law on free movement of goods. One such
was the case of TorfaenBorough Council v. B & Qp.I.C.,31 in which the Court was
asked to rule on the question whether Britain's Sunday trading rules were affected
by Community law. Instead of simply declaring the matter to be outside the ambit
ofthe Treaty rules, which it might well have done,32 the Court added a rider which
has caused much uncertainty. It ruled:

"Article 30 of the Treaty must be interpreted as meaning that the
prohibition which it lays down does not apply to national rules prohibiting
retailers from opening their premises on Sunday where the restrictive effects
on Community trade which may result therefrom do not exceed the effects
intrinsic to rules of that kind."

Such a ruling in effect leaves the matter entirely to be decided by the national
judge. One newspaper reporting the decison, entitled its article: "Britain handed

29. Case 120/78 Rewe-Zintral AG v. Bundesmonopolveruraltung fur Branntwein [1979J E.C.R. 649 (the
Cassis de Dijon case).
30. See, e.g., the discussion and articles cited by L. W. Gormley in Halsbury's Laws of England 4th
edition, Vol. 52, para. 12.83.
31. Case 145/88 [1989J E.C.R. 3851.
32. It made a ruling of that kind at about the same time in another case on free movement of goods: Case
C-23/89 Quietlynn Ltd. v. Southend Borough Council [1990J E.C.R. 1-3059. The difference in approach
between the two cases remains hard to reconcile.

235



THE DENNING LAW JOURNAL

decide-it-yourself Sunday ruling".32 Mr. Justice Hoffman, speaking at the Bar
Conference 1991 said:

"Sunday trading is a case in which the supremacy ofEC law had produced a
complete dog's breakfast. But it is the exception. On the whole the system
works."34

The Court has subsequently gone some way towards clarifying the matter in its
judgments in Conforama35 and Marchandise.36 A further reference from the United
Kingdom, made by the House of Lords in Stoke-on-Trent and Norwich City
Council v. B & Q p.l.c.37 is now pending before the European Court. It is to be
hoped that it will result in the issue being finally elucidated.

Another area in which the European Court has been active in making new law
by way of judicial decision is that of its own jurisdiction and remedies generally.
The relevant cases may be grouped for convenience into those concerning
preliminary rulings and those concerning direct actions. I give a few illustrations
in the field of preliminary rulings, starting with the famous Defrenne case in the
mid-1970's.38

In that case Gabrielle Defrenne, an air hostess with the Belgian airline Sabena,
established her right to equal pay with male employees doing equal work and in so
doing led the court to deliver a landmark judgment establishing that Article 119of
the EEC Treaty had direct effect, in other words that it could be relied on by
workers before national courts throughout the Community in order to claim equal
pay with the opposite sex. That ruling should in principle have applied both to past
and future claims, but several member States urged on the Court the high cost
which might be entailed by allowing such back claims. As a result, the Court
limited the effect of its ruling to pending and future claims only, ruling: "Except as
regards those workers who have already brought legal proceedings or made an
equivalent claim, the direct effect of Article 119 cannot be relied on in order to
support claims concerning pay periods prior to the date of this judgment. "39

That part of the ruling produced surprise and criticism in some quarters since
Article 177of the EEC Treaty, the basis of the Court's jurisdiction in preliminary
rulings such as Defrenne, made no provision for the Court to limit the temporal
effect of its rulings in this way. In the judgment the Court did not give any grounds
for exercising this power, and confined itself to stating the reasons why it
considered a temporal limitation appropriate in the instant case. In a small number

33. The Times, 23 November 1989.
34. Counsel, September/October 1991, p. 22.
35. Case C-312/89 [1991] E.C.R. 1-997.
36. Case C-332/89 [1991] E.C.R. 1-1027.
37. Case C-169/91.
38. Case 43/75 Defrenne v. Sabena [1976] E.C.R. 455 ("Defrenne No.2").
39. Ibid., at p. 482.

236



THEY CALL IT 'TELEOLOGICAL'

of subsequent preliminary rulings the Court has again limited the effect of its
ruling to the future and has indicated that there is an analogy between the power
which it has thus granted itself and Article 174 of the E.E.C. Treaty which
empowers the Court, where it declares a Community regulation void in a direct
action, to state which of the effects of the regulation are definitive.40That reason
was not, however, supplied at the time, and it is by some thought a narrow basis for
claiming a power, not expressly granted in the Treaty, to deprive persons of a right
of action on grounds of financial expediency. It has, however, been often used with
major consequences.

Still in the field of preliminary rulings, the Court ruled in a 1988 decision,
Foto-Frost,41 that "the national courts have no jurisdiction themselves to declare
that measures taken by Community institutions are invalid."42This exclusivity of
jurisdiction for the European Court is not expressly provided for in Article 177 of
the Treaty: the Court laid it down by case-law after many years of academic
discussion on the point (confirming the generally accepted view). The decision
was foreshadowed by a dictum in Joined Cases 239 and 275/82 Allied
Corporation.43 In Foco-Frost, it was at the heart of the case and the decision was
fully reasoned. The Court gave three reasons for the decision: first, the purpose of
Article 177, uniform application of Community law; second, the coherence of the
system of remedies under Articles 173, 177 and 184 (plea of illegality); and third,
efficient administration of justice. The judgment has been applied for example by
the English High Court in ex parte FEDESA, 44where it referred the question of the
validity of Directive 88/146 to the European Court.

The European Coal and Steel Community (ECSC) Treaty provides for
preliminary rulings by the Court but, unlike the EEC Treaty, confines them to the
validity of acts of the Commission and the Council, with no mention of
interpretation.45 In the case of Busseni, 46the Court was asked to rule on a question
precisely of the interpretation of a Commission recommendation under the ECSC
Treaty. On a literal reading of that Treaty it might have been concluded that the
Court had no jurisdiction, but the Court held on the contrary that it did have
jurisdiction to rule on questions of interpretation under the ECSC Treaty
notwithstanding the wording ofthat Treaty. It based that decision on the need for
it to ensure the uniform application of Community law. It deduced that it would
be contrary to the aim and the coherence of the three founding treaties for it to
have the last word on the interpretation of acts under the EEC and Euratom

40. E.g., Case 109/79 Maiseries do Beauce v. ONIC [1980] E.C.R. 2883, at p. 2913; cf. Case 309/85
Barra v. Belgian Seaee and Ciey of Liege [1988] E.C.R. 355.
41. Case 314/85 Foro-Frose v. Haupezollame Lubeck-Ose [1987] E.C.R. 4199.
42. Ibid., at p. 4235.
43. [1984] E.C.R. 1005, at p. 1030.
44. [1988] 3 C.M.L.R. 661.
45. See Article 41 of the ECSC Treaty; cf. Article 177 of the EEC Treaty.
46. Case 221/88 ECSC v. Busseni [1990] E.C.R. 1-495.

237



THE DENNING LAW JOURNAL

Treaties whilst acts under the ECSC Treaty remained subject to the sole
jurisdiction of a multiplicity of national courts whose interpretations might
diverge. Accordingly it declared itself competent and went on to give an
interpretation of the ECSC measures in question. It is difficult to see how it could
have done otherwise. To decide whether a provision is valid the provision must
first be interpreted.

Turning to direct actions, a remarkable development in recent years has been
the extension, under the Court's case-law, of rights of action relating to the
European Parliament. Article 173 of the EEC Treaty, providing for annulment
actions, stipulates that "the Court of Justice shall review the legality of acts of the
Councilor the Commission other than recommendations or opinions." It does not
by its terms provide for the review of any act adopted by the European Parliament.
Therefore it might have been thought that the legality of any of the Parliament's
measures could not be challenged in the Court. The Court, however, held
otherwise. In the 1986 decision in Case 294/83 Les Verts v. European Parliament47
it ruled that legally binding acts of the European parliament could be the subject of
an annulment action under Article 173 even though that Article does not mention
them expressly.

The Court's reasoning for that decision is founded on the assertion that the EEC
is a Community based on the rule oflaw, in as much as neither its Member States
nor its institutions can avoid a review of the question whether the measures
adopted by them are in conformity with the basic constitutional charter, the
Treaty.48 The Court inferred therefore that an interpretation of Article 173 of the
Treaty which excluded measures adopted by the European Parliament from those
which could be contested by means of an action for annulment would lead to a
result contrary both to the spirit of the Treaty as expressed in Article 164 and to its
scheme, which is to make a direct action available against all measures adopted by
the institutions which are intended to have legal effects. Measures adopted by the
European Parliament in the context of the EEC Treaty could encroach on the
powers of the Members States or of the other institutions, or exceed the limits
which have been set to the Parliament's powers, without its being possible to refer
them for review by the Court. It must therefore be concluded that an action for
annulment may lie against measures adopted by the European Parliament
intended to have legal effects vis-a-vis third parties.49

Having thus affirmed its right to entertain annulment actions against the
European Parliament, the Court was soon faced with the converse question of
whether the Parliament could itself bring such an action. The problem here is that
Article 173 again does not mention the Parliament. Its first paragraph states that
an annulment action may be brought by a Member State, the Councilor the

47. [1986] E.C.R. 1339.
48. Ibid., at p. 1365.
49. Ibid., at p. 1366.

238



THEY CALL IT 'TELEOLOGICAL'

Commission without proof of locus standi; its second paragraph provides that a
natural or legal person may bring such an action on proof of direct and individual
concern; but neither makes any mention of the Parliament. The first time that the
question came before it, in the so-called "Comitology" case,50 the Court
accordingly ruled out any right of action for the European Parliament, on the
grounds that it was neither a "privileged applicant" within the terms of the first
paragraph of Article 173 nor a "natural or legal person" within the terms of the
second paragraph.

This Court thus adhered to a more literal reading of Article 173, rejecting all the
arguments put forward in favour of granting the Parliament the right to sue. It was
urged on the court that it was difficult to reconcile such a narrow approach with
that adopted in Les Verts only two years earlier. The Court put forward a number
of responses. One of them, particularly interesting for present purposes, was that
the prerogatives of the European parliament had only recently been augmented by
the Single European Act (1986) but without any changes having been made to
Article 173 of the Treaty.51 Indeed the Member States in adopting the Single
European Act had not only had an opportunity to extend the Parliament's powers
to the bringing of annulment actions but had specifically rejected a proposal to do
so. The Court's reasoning appeared to be that it should not do what the Member
States had just refused to do.

lt was not long, however, before the question came before the Court again. This
time though, in the so-called "Chernobyl" case,52 the Court came to a different
result. Having categorically stated less than two years earlier that the Treaty
contained no power for the Parliament to bring an annulment action, the Court
now recognised a qualified right in the Parliament to resort to Article 173. The
Court gave its reasons in the following terms:

"The Treaties set up a system for distributing powers among the different
Community institutions, assigning to each institution its own role in the
institutional structure of the Community and the accomplishment of the
tasks entrusted to the Community. Observance of the institutional balance
means that each of the institutions must exercise its powers with due regard
for the powers of the other institutions. It also requires that it should be
possible to penalise any breach of that rule which may occur. The Court,
which under the Treaties has the task of ensuring that in the interpretation
and application of the Treaties the law is observed, must therefore be able to
maintain the institutional balance and, consequently, review the observance
of the Parliament's prerogatives when called upon to do so by the
Parliament, by means of a legal remedy which is suited to the purpose which

50. Case 302/87 European Parliament v. Council [1988] E.C.R. 5615.
51. At p. 5644.
52. Case 70/88 European Parliament v. Council [1990] E.C.R. 1-2041.

239



THE DENNING LAW JOURNAL

the Parliament seeks to achieve.
In carrying out the task the Court cannot, of course, include the

Parliament among the institutions which may bring an action under Article
173 of the EEC Treaty or Article 146 of the Euratom Treaty without being
required to demonstrate an interest in bringing an action. However, it is the
Court's duty to ensure that the provisions of the Treaties concerning the
institutional balance are fully applied and to see to it that the Parliament's
prerogatives, like those of the other institutions, cannot be breached without
it having available a legal remedy, among those laid down in the Treaties,
which may be exercised in a certain and effective manner. The absence in the
Treaties of any provision giving the Parliament the right to bring an action
for annulment may constitute a procedural gap, but it cannot prevail over
the fundamental interest in the maintenance and observance of the
institutional balance laid down in the Treaties establishing the European
Communities. Consequently, an action for annulment brought by the
Parliament against an act of the Councilor the Commission is admissible
provided that the action seeks only to safeguard its prerogatives and that it is
founded only on submissions alleging their infringement."53

In Les Verts, the Court had used the word "interpretation", although it may be
thought that there it was in fact making new law. In Chernobyl the Court makes it
clear that it is not interpreting any text but is itself recognising a new remedy as
being necessary. The origin of its power to do so is: "the Court's duty to ensure
that the provisions of the Treaties concerning the institutional balance are fully
applied."54 It follows that the power to create the new remedy stems from an
inherent power of the Court based on the Treaty provisions but not expressly
spelled out in them.

That position, it has been suggested, differs from the long-held view that the
Court had only the powers specifically conferred on it by the Treaty, what in
French is called "une competence d'attribution". That view was largely based on
Article 4 of the Treaty, which provides inter alia: "Each institution shall act within
the limits of the powers conferred upon it by this Treaty." On the other hand,
Article 164 of the Treaty, which supplies the foundation of the Court's
jurisdiction, provides that, "the Court of Justice shall ensure that in the
interpretation and application of this Treaty the law is observed", and it may be
possible to read that provision very broadly as conferring on the Court all powers
necessary for ensuring the proper administration of justice, including the power to
create new remedies not specifically provided for in the Treaty. Whether or not
such a construction is valid is in any event theoretical, since it appears clear from
the cases cited that the Court has created new remedies. As a part to the Chernobyl

53. At pp. 1-2072-1-2073.
54. At p. 1-2073.

240



THEY CALL IT 'TELEOLOGICAL'

decision I feel neither regret nor embarrassment about it.55 The proposed
Maastricht Treaty (except in relation to the Barber case) recognises and gives
effect to such decisions of the Court.

This development of the Court's function is also illustrated by a recent decision
of 1990: Case 2/88 Imm. Zwartveld.56 In that case an examining magistrate in the
Netherlands was investigating alleged frauds against Community fishing quotas in
relation to a wholesale fish market within his jurisdiction, and for the purpose
sought access to European Commission records of inspections which its staff had
carried out. The Commission refused to give him access, relying on its immunities,
in particular Article 2 of the Protocol on Privileges and Immunities which
provides unconditionally that, "the archives of the Communities shall be
inviolable". The Dutch judge asked the Court of Justice to order the Commission
to produce the documents to him, notwithstanding that no provision of
Community law provided for such a procedure. He referred to Articles 1 and 12 of
the Protocol, but they plainly could not found such a procedure, as the Court
implicitly recognised. However, it did not dismiss the Dutch judge's request, but
declared itself competent to entertain it and indeed granted an order along the
lines sought.

The grounds for this decision are to be observed. It is based on an assertion that
Article 5 of the EEC Treaty imposes a "duty of sincere co-operation" on the
Community institutions. On its terms, however, Article 5 imposes duties
exclusively on the Member States as signatories of the Treaty, according to the
maxim pacta sunt servanda. It provides: "Member States shall take all appropriate
measures to ensure fulfilment of the obligations arising out of this
Treaty ",57 but makes no mention of the Community institutions.58 There is,
therefore, a certain creativity in the Court's decision that: "relations between the
Member States and the Community institutions are governed, according to
Article 5 of the EEC Treaty, by a principle of sincere co-operation. That principle
not only requires the Member States to take all the measures necessary to
guarantee the application and effectiveness of Community law ... but also
imposes on Member States and the Community institutions mutual duties of
sincere co-operation."59 It has been suggested that even adopting the most
teleological interpretation it is arguable that Article 5 does not impose any duty on
the Community institutions and that such a duty is of the Court's own creation.

On that basis, however, the Court went on to assert: "It is incumbent upon
every Community institution to give its active assistance to such national legal

55. Cf. A. Arnull, "Does the Court of Justice Have Inherent Jurisdiction?", [1990] Common Market
L.R .., p. 683.
56. [1990] E.C.R. 1-3365.
57. My emphasis.
58. For an interpretation in that sense, see, e.g., Case C-374/89 Commission v. Belgium [1991] E.C.R.
1-367, at p. 1-379.
59. At p. 1-3372.

241



THE DENNING LAW JOURNAL

proceedings, by producing documents to the national court and authorising its
officials to give evidence in the national proceedings. "60 It then proceeded to
found its jurisdiction on the need for it to be able to review whether the
Community institutions were complying with the duty which it had just laid
down. The relevant passage of its decision is in the following terms:

"The Court, which is responsible under Article 164 of the EEC Treaty for
ensuring that in the interpretation and application of the Treaty the law is
observed, must have the power to review, at the request of a national judicial
authority and by means of a legal procedure appropriate to the objective
pursued by that authority, whether the duty of sincere co-operation,
incumbent on the Commission in this case, has been complied with.

Consequently, the Court has jurisdiction to examine whether the
Community institutions' reliance on the Protocol in order to justify the
refusal to co-operate sincerely with the national authorities is justified in
view of the need to avoid any interference with the functioning and
independence of the Communities."61

This takes matters a step further than Chernobyl and preceding cases. There the
Court opened up new remedies on the basis that the rule oflaw required review to
be available of acts provided for by the Treaties: in Zwartveld the Court bases its
jurisdiction on the need to review compliance with a duty which it found to exist.

The Court itself does not appear inclined to set limits to this development, but
rather is consolidating theZwartveldline of case law. In a 1991case relating to the
enforcement of Community competition rules before national courts, the Court
stated that the Commission is required to give the national court details relevant to
pending competition cases.62It based that statement again on the "duty of sincere
co-operation" which it says rests on the Commission by virtue of Article 5 of the
Treaty. It is probable that such dicta will be repeated, and in due course the Court
may be able to assert that the "duty of sincere co-operation" results from its
"settled case law" (jurisprudence constance, in French). From there, further
construction will be possible, in the form either of new duties or of new remedies.

The days of the 1960's and 1970's are past when the European Court stepped in
to keep up the momentum of Community construction in the face of the inactivity
of the Community legislature. At the present time, the Community legislature has
never been so active: the last of the approximately 300 measures for the Single
Market programme are being adopted and placing substantial burdens on the
Member States to adopt implementing measures. The Member States for their
part adopted the Single European Act in 1986, the Maastricht Treaty this year

60. At p. 1-3373.
61. Ibid ..
62. Case C-234/89 Sterqios Delimitis v. Henninger Brau AG, judgment of28 February 1991, para. 53.

242



THEY CALL IT 'TELEOLOGICAL'

(1992) and are likely shortly to adopt the European Economic Area Treaty. In the
presence ofthis intense 'legislative' activity, the need for the judicial body to make
up for the inactivity of the legislature may be less great and may be questioned. I
do not consider that the 'creative' role of the Court is or should be at an end. There
will be times when it goes ahead but there will be times when it holds back as it did
in the BEUC case of 1991,63 where it held at paragraph 30:

"It is for the Community legislature to consider whether the basic anti-
dumping regulation should grant an association representing the interests of
consumers the right to consult the non-confidential file."

Whatever happens in the future, the words of Lord Denning, from his 1979
Lord Fletcher Lecture, come to mind:

"All this shows that the flowing tide of Community law is coming in fast. It
has not stopped at high water mark. It has broken the dykes and the banks. It
has submerged the surrounding land, so much so that we have to learn to be
amphibious if we wish to keep our heads above water."

In view of all the intense activity we are witnessing in the making of Community
law, those remarks are now truer than ever. In those words, as so often, Lord
Denning showed acute vision and great foresight.

63. Case C-170/89 Bureau Europeen des Unions de Consommateurs (BEUC) v. Commission, judgment of
28 November 1991.

243