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V. Political Reaction to Judicial Politics in the United Kingdom

Judicial activity might be tightly focussed, but that does not make it any less intense within this zone of activity. Reported cases constitute a fraction of the judicial activity that took place. In 1998, 5 decisions of the Employment Appeal Tribunal were reported on TUPE, yet judicial statistics indicate that the tribunal gave 28 judgments in this area.¹⁰³ More generally, one finds that in the fields of sex discrimination and VAT, areas dominated by EC law, the Employment Appeal Tribunal and the VAT and Duties Tribunals received 99 and 2,797 cases respectively.¹⁰⁴ As both bodies are appelate bodies, this is obviously a fraction of the number of cases decided.¹⁰⁵ Even those reported often mask representative actions or generate overwhelming harmonised responses. The Foster case, which found that enforced differential ages of retirement for men and women by British Gas violated Directive 76/207/EEC, the Equal Treatment Directive, was brought upon behalf of 400 women and resulted in a £8.48 million settlement by the employer.¹⁰⁶ Similarly, the Johnston case, uncovering sex discrimination in the Royal Ulster Constabulary, was brought upon behalf of 310 police women and resulted of a settlement of around £1 million.¹⁰⁷The lifting of the cap on compensation in sex discrimination cases in Marshall (No.2) led to, according to different estimates, the Ministry of Defence having to settle between 4,500 and 5,500 cases at a cost of around £18 million.¹⁰⁸ It has also led to an general intensity of judicial activity in this area. From 1995 to 1996 there was a more than 200% increase in the size of the awards and out-of court settlements offered to victims.¹⁰⁹ More recently the decision of the Court of Justice¹¹⁰ that part-time workers had a right to participate in occupational pension schemes led, through the organisation of key trade unions such as UNISON, to 40,000 cases being lodged against employers in Industrial Tribunals.¹¹¹ Finally, one could point to the ripple effects of this activity. The effects of the Barber judgment in its requirement of the equalisation of occupational pension entitlements was costed at the Government prior to subsequent qualfication by the ECJ of that judgment's effects, at £50 billion.¹¹²

It has been argued by neo-functionalist writers that the impact of this is softened by law acting as a 'mask for politics'.¹¹³ By this it is meant that the activities of courts are less widely reported than those of legislatures and the general, universalist language of law assuages the ideological and practical implications of legal decisions, whilst its arcanity obfuscates what is at stake. Against this it may be noted that the strong asymetries of information enjoyed by courts and the necessity for them to impose 'win-lose' solutions results in a greater likelihood of seemingly inconsequential decisions having the unanticipated consequence of adversely affecting influential or broad constituencies significantly. An apparently trifling dispute about a bus pass, for example, had implications for the charges that could be imposed by public transport networks on 1.5 million Britons with corollary significant knock-on effects on the planning and financing of these networks.¹¹⁴

Be that as it may, the 'impact' of judicial application of EC law within the domestic public sphere was measured through analysis of press coverage of judicial application,¹¹⁵ domestic and ECJ, of those areas of EC law whose incidence in terms of reported case load

Table 4 - The Reporting of EC Law

was highest (and therefore impact most intense).¹¹⁸ These four areas were sex discrimination, taxation, TUPE and Intellectual Property. (Table 4)

The tables show a very high level of reporting of sex discrimination litigation - a notably feature of which was high levels of tabloid reporting (as to opposed to comment) of decisions - a reasonably high level of reporting of TUPE decisions, little reporting of VAT decisions and no reporting of Intellectual Property decisions. Whilst it may be possible to run the argument in the latter two sectors that judicial application has shielded policy development from the glare of public scrutiny and debate, as a general argument, this view does not seem to run.

More interesting are the differences in the levels of reporting between the different sectors. The difference between taxation and sex discrimination is particularly striking. Fiscal matters go right to the heart of question of sovereignty in the submission to financial obligations they impose on a populace.¹¹⁹ Debates about Directive 77/388/EEC, the Sixth VAT Directive, which is, by far and away, the most heavily litigated fiscal instrument go also to the heart of government capability. With the increasing reliance for government revenue on indirect taxation, the Sixth VAT Directive determines what can be taxed, who is taxed and, to a considerable degree, the level of taxation on VAT, the central form of indirect taxation.¹²⁰ It is also too simplistic to put it down differing levels of 'public interest' on one over the other or differing levels of legal complexity. A feature of tax cases is that their consequences can be represented fairly simply, eg 'X decision results in the Exchequer losing Y amount of money' or 'A decision results in consumers not having to pay tax on B goods or services'. There has, for that matter, been considerable public debate within the United Kingdom over the Commission proposal for a withholding tax on savings.¹²¹ Analysis of the litigation and the reports suggest that there are three variables which influence the amount of coverage a matter receives.

(i) EC Law as a Direct or Indirect Source of Rights: It is possible that the formal salience of EC law influences domestic reaction. The mechanism of indirect effect is used heavily as vehicle of EC legal rights where EC law has been successfully invoked in the fields of taxation (46 instances), intellectual property (14 instances)and TUPE (10 instances), That is to say individuals gain their rights through national law being interpreted in the light of EC law. By contrast, there is a low incidence in the case of sex discrimination (only 7 instances) which relies far more heavily upon the direct application of EC provisions. Indirect effect is a less stark instrument than the other sources of individual rights, direct effect and State responsibility.¹²² It does not emphasise the autonomy and precedence of the EC legal order over the national one. Instead it stresses mutual adjustment and coordination between the two within a heterarchical framework. Not only is consonance suggested between the aims of the two legal orders but the national legal system appropriates responsibility for the decision. The decision is not something 'externally' foisted upon national law by EC law but rather something for which is joint responsibility.

(ii) The Imposition of Private Duties and Costs: There seems to be a resistance within the United Kingdom to the judicial application of EC law regulating private relationships. This manifests itself in part in a high level of judicial resistance to applying EC law provisions which cut across private legal relations. It manifests itself more broadly in the reaction of the press to the two areas where there is heavy involvement by EC law in the judicial regulation of private relationships, TUPE and sex discrimination, and where EC law is, in both quantitative and proportionate terms, frequently successfully invoked. In the reporting and comment upon sex discrimination litigation, adverse comments grouped in the following manner. 37 reported upon the general regulatory costs of compliance (as distinct from the individual compensation awarded). 7 reported on the costs to the taxpayer from changes in the welfare regime brought about by rulings. 5 approached it from a centre-periphery perspective, namely that there did not seem good grounds why this should have anything to do with the EC, and 5 were critical because judgment conflicted with received notions about how to regulate questions of gender or sexual orientation. A similar premium upon private autonomy is present in the reporting of TUPE. 7 reports were critical of the costs or difficulties its judicial development had placed upon the t

ransfer of business. 2 were critical of there being an EC dimension, and 7 argued that the lack of clarity of the Directive was hampering planning by business. (iii) The European Court of Justice and Its Case Law: A greater prominence of the Court of Justice and its case law tends to lead to increased comment and criticism. In the field of sex discrimination, where EC law had been successfully invoked, it was possible to identify 35 cases where the case law of the Court of Justice was determinative (47.29%). The equivalent figures were 61 for taxation (32.97%), 5 for Intellectual Property (21.774%) and 20 for TUPE (55.56%). Next to this must be placed the number of referrals to the ECJ, which, both proportionately and quantitatively, is led by quite some way by the sex discrimination field.

To be sure, the habitus of the Court of Justice, locked away in its remote, gloomy, supranational corridors in Luxembourg, is more geared towards acting as an external policing agent than national courts with their formal or informal proximities to national administrations, which leads to it possibly challenging existing national taboos and conventions more readily.¹²³ Furthermore, resistance might be provoked by the Court of Justice representing the most stark personification of the exteriority of EC law to national law. Yet if this is so, one would have expected comment to focus on more narrow centre-periphery institutional questions.

There are two more central reasons for resistance. First, the logics underpinning the majority of cases referred to Luxembourg are very different from those running through the majority of cases decided by British court. The latter will often be concerned with resolution of a dispute which is confined to narrow set of factual circumstances in which the interests are often not strongly generalisable and where the remedy sought is often pecuniary in nature. A feature of a heavy proportion of the cases referred to Luxembourg, by contrast, is that they dabble fairly explicitly in judicial politics. Litigation is brought by or concerted by organised interests - quangos, NGOs, organised industrial interests - and the remedies sought are a bid to determine the content of the law rather pursuit of some form of compensation. In this, Court of Justice judgments represent an outcome of a process in which politics is very much a form of elite competition centered around 'decision of the exception'. For matters are only litigated - and considerable expense discharged - because of the dissatisfaction of the domestic interest in question with the legal status quo. Not only is the domain litigated, therefore, naturally contentious, but, going to Europe, as part of a two-level game, is inevitably a consequence of that interest being unable to be met through domestic opportunity structures.¹²⁴

There is a second reason which explains domestic reaction, particularly in situations, such as that in the case of TUPE, where they have been very few references but heavy reliance upon Court of Justice case law. A structural feature of fields heavily regulated by Court of Justice case law is that their strong reliance upon a single, centralised, non-specialised judicial institution leads them to be, in terms of regulatory design, highly inflexible. It is not simply that the Court of Justice will suffer from asymetries of information and representation in its regulation of local labour markets and that a single regime will be insensitive to sectoral and geographical variations.¹²⁵ The problem derives from an institution such as the Court of Justice being unable to monitor and steer a sector sufficiently intensely. As a court it is only able to react in an ad hoc manner to those cases brought before it. More uniquely, in any area, the number of cases it decides, in absolute terms, is never that high. The consequence is that not only does Court of Justice case law inevitably tend to throw up more questions than answers, but that any shift in the case law will be perceived as imposing quite dramatic shifts in pre-existing working practices. In the case of TUPE, therefore, relatively subtle shifts in the reasoning in just two Court of Justice cases, three years apart, led to huge shifts in expectations, and corollary uncertainty, about the circumstances in which there was a transfer of an undertaking and employee protection activated.¹²⁶

Notwithstanding all this, is it possible to point to the litigation process having a considerable autonomy from these political pressures? Mark Pollack, in particular, has observed how the thresholds required for agreement in EC legislative procedures and Inter Governmental Conferences impose high costs and difficulties for Member States seeking to obtain legislative amendments.¹²⁷ Legislative amendments being the central tool available to administrations to police the Court of Justice, the corollary of this is that the difficulties in obtaining these give a corresponding autonomy not just to the Court of Justice but also to all other actors participating in the judicial application of EC law. For a decision of a high ranking domestic court will be as difficult to curb as that of the Court of Justice, and can be perceived by the British Government as equally significant. Thus the decision which prompted the British Government to pressure the Commission to revise the TUPE Directive was a decision of the Employment Appeal Tribunal in 1993 holding that the Directive did apply to public services contracted out through privatisation.¹²⁸ These arguments would appear to apply with particular force to the practice of British courts. A feature of the majority of rulings is that they concern either EC Treaty Articles or Directives adopted in the 1970's.¹²⁹ Not only has this length of time given these areas of law time to develop autonomous path-dependencies of their own but they all require either an Intergovernmental Conference or a unanimity vote in the Council to amend.

Institutional constraints have considerable persuasive effect in explaining 'constitutional interpretation', the autonomy of judicial interpretation of EC Treaty articles. In this instance, the central obstacle is not the unanimous agreement of other governments that must be obtained but rather the narrow time-frame within which this must be done. In practice, IGCs cannot be used to reverse decisions of 4-5 years standing. For, as parties will have had to adjust their positions to comply with these decisions, there would necessarily be considerable costs to reversal of those decisions. In practice, IGCs have therefore only been used to clarify decisions which appeared in a relatively narrow window before the IGC.¹³⁰

The position is different with secondary legislation. Here tomorrow belongs to opposing governments as they have indefinite periods to secure amendment of legislation. Furthermore, the legislative thresholds confer only a limited autonomy on the judicial sphere. It seems even a unanimity requirement in the Council will in some circumstances not prevent frequent amendment. By the end of 1999, the Sixth VAT Directive, Directive 77/388/EEC, had been amended sixteen times by the Council.¹³¹ For a decision-trap to emerge it seems that a futher requirement is that the area is one in which there is also relatively strong elite competition. In the case of TUPE, the 1994 Commission proposal to amend the Directive was stalled for a number of years, despite having the support of UNICE, the British, Italian, French and German Governments, certainly partly because the British Trade Union Congress saw the existing version as hugely beneficial and successfully lobbied the Danish and Swedish Governments and the European Parliament, both independently and with the ETUC, to oppose any amendment.¹³² This opposition by the unions reduced following the S_zen judgment when it became clear that the Directive could cut both ways.¹³³ A similar situation exists in the field of sex discrimination where women's organisations have not merely taken advantage of the opportunity structures offered by the Court of Justice but have created a powerful lobby in Brussels and a few national capitals which enables them to entrench those gains.¹³⁴

All this creates a form of decision-trap which results in strongly exacerbated tensions in areas where is both elite competition and a significant number of Court of Justice judgments. Opportunity structures are not merely available to 'outsider' elites, that are not available domestically, but the nature of the decision-making structures in Brussels makes it relatively easy to protect those gains. This leads to a reterritorialisation of difference where one elite will have hegemony in those areas regulated wholly in the domestic sphere, whilst an opposing one will have hegemony in those areas regulated by EC law. These institutional structures not only exacerbate centre-periphery tensions on grounds of ideological difference, but reinforce those tensions through providing incentives for the respective elites to engage heavily in turf-protection.

103 Lord Chancellors Department, Judicial Statistics: Annual Report 1998 (1999, Government Statistical Service, London) Table 7.1

104 Ibid., Table 7.1 & Table 7.5.

105 Appeals come from the Employment Tribunals and Commissioners of Customs and Excise respectively. There are no statistics available for how many decisions these bodies make.

106 Case C-188/89 Foster v British Gas [1990] ECR I-3313. C. Davies, '£8 m payout for gas women forced to retire' Daily Telegraph 14 June 1996

107 Case 222/84 Johnston v Chief Constable of the RUC [1986] ECR 1651. D. Hearst, 'RUC women officers win £1 million sex bias award' Guardian, 10 November 1988, p. 9.

108 Case C-271/91 Marshall v Southampton & South-West Area Health Authority [1993] ECR I-4367. Bellamy, 'The £100 million babies: Everyone in the armed forces knew the rules: get pregnant and you are fired. But the MoD says it didn't know the rules were against the law. Now they are paying the price' Independent, 13 July 1994.

109 The average rose from £6,481 in 1995 to £18,732 in 1996. B. Clement, 'Middle-class woment boost sex bias claims' Independent, 20 June 1997, p7.

110 Case C-57/93 Vroege v NCIV Instituut [1994] ECR I-4541. The basis for this as that as far more women are part-timers, a distinction between full-timers and part-timers breached Article 141 EC, the provision on equal pay for work of equal value.

111 Initial estimates put the cost to pension firms if these were successful at £95 million, C. Dyer, 'Pensions test cases may net £95m for part-timers: Tribunal ruling will cover 60,000 workers after Euro judgment on sex bias' The Guardian, 15 November 1995, p. 6. Many of these actions were withdrawn following a 1997 decision that a claim must be brought within 6 months of cessation of employment, Preston v Woverhampton Health Care Trust [1997] EuR 386. The matter has been referred. See Case C-78/98 Preston v Wolverhampton Health Care Trust, Opinion of Advocate General L_ger of 14 September 1999.

112 Case C-262/88 Barber v Guardian Royal Exchange Assurance Group [1990] ECR I-1889. The submissions of the Attorney General, Sir Nicholas Lyell, to the ECJ in the Coloroll judgment. See J. Carvel, 'Backdated pension rights for men of 60 "would cost 50 billion pounds"' Guardian, 27 January 1993, p 43.

113 A-M Burley & W. Mattli, `Europe Before the Court: A Political Theory of Legal Integration' (1993) 47 International Organization 41,

114 Atkins v Wrekin (1994) 1.58 million men would have benefited from this decision. See R. Ford, 'Bus pass verdict could prompt huge pay-out', Times 1 May 1996.

115 In this sense, to examine the United Kingdom case may be atypical as during the Major Administration there were unsuccessful attempts to curb the powers of the Court of Justice both by the administration at the 1996 Intergovernmental Conference and, more unilaterally, through a 1996 Private Members Bill before the House of Commons. For discussion of both of these see D. Chalmers, `The Application of EC Law in the United Kingdom 1994-1999' (2000) 37 Common Market Law Review 83. Judicial application of EC law therefore enjoys a salience in British political discourse not found in some other Member States. Notwithstanding this, some generalisable conclusions are possible.

116 These do not refer to law reports published in newspapers. These were omitted for the same reason as the Financial Times, and that there are not really evidence of a 'political' reaction. Reports here reported to where newspapers deemed a judgment sufficiently newsworthy to be covered as a legal or political event.

117 These were reports of decisions of the ECJ that were invoked in non-judicial settings.

118 The papers used were The Independent, The Independent on Sunday, The Guardian, The Daily Mirror, The Sunday Mirror, The Daily Mail, The Mail Upon Sunday, The Times, The Sunday Times, The Daily Telegraph, The Sunday Telegraph. Deliberately omitted from the survey was the Financial Times on the grounds of its reasonably specialised readership. The papers were chosen on account of the spread of ownership, spread of style - 4 were tabloid, 7 broadsheet - and spread on general attitudes to European integration - 5 are broadly positive, 6 are broadly negative.

119 P. Bourdieu, 'Rethinking the state: Genesis and Structure of the Bureaucratic Field' (1994) 12 Sociological Theory 1, 7.

120 Directive 77/388 sets out what can be taxed and who bears the tax, OJ 1977, L 145/1. The principles under where VAT is levied and floors for the level of VAT that Member States must charge were first set out in the amending Directives, Directive 91/690/EEC, OJ 1991, L 376/1 and Directive 92/111, OJ 1992, L384/47.

121 The matter has proved sufficiently contentious to be discussed first at the Vienna European Council, Conclusions of the Presidency, EU Bulletin 12-1998, I. 5 11 and then at the Cologne European Council, Conclusions of the Presidency, EU Bulletin 6-1999, I.7.

122 On the difference between these see D. Chalmers, EU Law: Law and EU Government (1998, Ashgate, Dartmouth) Chapter 7.

123 The legal debate about the 'judicial activism' of the ECJ suggests there may be something in this. Although how far it, per se, has provoked national resistance is doubtful.

124 Application of this form of analysis to EU law and politics can first be found in M. Anderson & D. Liefferink (eds) European Environmental Policy - The Pioneers (1997, MUP, Manchester) 10-35.

125 A perennial criticism of TUPE that a piece of employment protection legislation. Its merits are more apparent in the case of transfer of reasonably successfully undertakings with a relatively immobile labour force than in the case of transfer of undertakings which are either bankrupt or where the employees are highly mobile. In the case of the former it endangers the transfer and therefore the employment of the workers and in the case of the latter it damages wage flexibility. See B. Hepple, Main Shortcomings and Proposals for Revision of Directive 77/187 (1990, Commission, OOPEC) 6-8; P. Inman, 'Unions and Bosses Unite to Bash Law: When a company takes over another business, what protection is there for the employer and employee' Guardian, 5 December 1998, p. 18.

126 The first of these was Case C-392/92 Schmidt v Spar- und Leihkasse der fr_heren ?mter Bordesholm, Kiel and Cronshagen [1994] ECR I-1311. By holding that transfer of assets was not central to transfer of an undertaking but rather all that was necessary was a continuation of similar activity and and re-employment of the workers it extended the protection of the directive to all contracting-out services and embroiled the directive centrally in the debate about privatisation in the early 1990's. On this and reaction to the judgment in the United Kingdom and France see G. More, 'The concept of "undertaking" in the Acquired Rights Directive: the Court of Justice under pressure (again)' (1995) 15 Yearbook of European Law 135. The other was Case C-13/95 S_zen v Zehnacker Geb_udereining [1997] ECR I-1255 where the ECJ refused to apply to extend the directive to where a service contract with one undertaking was terminated and transferred to a competing undertaking.

127 M. Pollack, 'Delegation, Agency and Agenda Setting in the European Community' (1997) 51(1) International Organization 99, 119-121.

128 Wren v Eastbourne [1993] ICR 955. See J. Wolf, 'UK Fails to Ease contract-out law' Guardian 4 June 1994.

129 Of the 5 Directives mentioned earlier, only Directive 89/104/EEC was adopted by qualified majority vote.

130 In the case of Maastricht Case C-159/90 SPUC v Grogan [1991] ECR I-4685; Case C- 262/88 Barber v GRE [1990] ECR I-1889. In the case of Amsterdam see Case C-233/94 Germany v Parliament & Council [1997] ECR I-2405 & Case C-450/93 Kalanke v Freie Hansestadt Bremen [1995] ECR I-3051.

131 See most recently Directive 1999/59 as regards value added taxation on telecommunications services, OJ 1999, L 162/63. This has been shown to be more generally true in Golub's pioneering piece which shows the limited encumbrance placed on decision-making by the veto. See J. Golub, supra n.56.

132 Cf D. Goodhart, 'Britain close to victory on contracting out services' Financial Times, 31 May 1994 p.1; J. Wolf & S. Milne, 'Get Britain on the Other Side to Win in Brussels-UK Trade Unions find way to Gain Support on the European Stage' Guardian, 28 February 1996, p. 16. See also G. More, supra n.126, 149-150.

133 The Directive was eventually amended by Directive 98/50, OJ 1998, L 201/88. On the history to the revision see J. Hunt, 'Success at last? The amendment of the Acquired Rights Directive' (1999) 24 ELRev 215.

134 C. Hoskyns, Integrating Gender: women, law and politics in the European Union (1996, Verso, London) 202-207.

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