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2.2.1 Scope of EU law

(a) Situations where EU Fundamental Rights are applicable

There would seem to be hardly any situations among those considered here where the issue addressed did not already fall within the scope of EU law, either by virtue of the application of the TFEU rules on freedom of movement or competition, or else because it was covered by the terms of EU secondary legislation on the energy sector. Member States will typically be implementing the relevant EU energy legislation or seeking in some way to justify national rules which might derogate from EU rules on free movement or competition: clearly, both scenarios will fall within the scope of application of the EU Charter(1)Article 51(1) EU Charter of Fundamental Rights [2010] OJ C83/389, confirmed that it should be read in conformity with the approach taken to fundamental rights as general principles of law: Case C-617/10 Åkerberg Fransson (judgment of 26 February 2013), ECLI:EU:C:2013:105. and/or fundamental rights as general principles of EU law.(2)See, e.g., Case C-260/89 ERT [1991] ECR I-2925, ECLI:EU:C:1991:254. The likeliest borderline candidate in this regard is the question of energy poverty. The Directives that made up the Third IEM package(3)See Directives 2009/72/EC [2009] OJ L211/55 (electricity) and 2009/73/EC [2009] OJL211/94 (gas) [together, ‘the Third IEM Directives’], and Regulations 713/2009/EC[2009] OJ L/ (ACER), 714/2009/EC [2009] OJ L211/15 (cross-border trade in electricity) and 715/2009/EC [2009] OJ L211/36 (cross-border trade in gas); for discussion, see generally Johnston & Block, EU Energy Law (Oxford: OUP, 2012) (hereafter, ‘Johnston & Block’). [I don’t understand the point of the bracketed words here, given that the book and names are then given again in full in the next footnote] referred to the concept in places,(4)Johnston & Block, paras. 7.76–7.96. but included no binding rules on the subject. Rather, at various points the Member States were encouraged to address(5)For an example of the difficulty in getting States to take concrete steps to tackle energy poverty, in the face of competing calls on the public purse, see Friends of the Earth and Help the Aged v. Secretary of State for Business, Enterprise and Regulatory Reform [200] EWHC 2518 (Admin). instances of energy poverty and vulnerable customers as part of their regulation of electricity and gas. The Clean Energy for all Europeans package highlights consumer benefits as a key interest, but does not go much further than the Third IEM package in establishing binding rules on energy poverty for the Member States.(6)See in particular Article 28 of Electricity Directive (EU) 2019/944, which broadly corresponds to Articles 3(7) and (8) of Electricity Directive 2009/72/EC. The main development appears to be that the Member States are now required to a greater extent than previously to assess their number of households in energy poverty and establish a national indicative objective to reduce such poverty if it applies to a significant number of households.(7)See Article 29 of Electricity Directive (EU) 2019/944 and Article 3(3) of the Governance Regulation (EU) 2018/1999. Moreover, the European Commission in its review of the implementation of the new Electricity Directive 2019/944 shall in particular assess whether customers, and especially vulnerable customers or those in energy poverty, are adequately protected under the Directive.(8)Article 69(2) of Directive (EU) 2019/944.

Insofar as energy poverty questions arise as a result of market or regulatory design questions covered by the relevant EU legislation or the rules of the TFEU, then any relevant fundamental rights considerations would need to be addressed;(9)One possible example concerns national rules on energy retail price regulation, which might be adopted with a view to protecting those suffering from energy poverty: it is clear that such national rules would require objective justification under EU law, given the scheme of the Third IEM package and the TFEU rules on competition (see Case C-265/08 Federutility [2010] ECR I-3377, ECLI:EU:C:2010:205; and Case C-242/10 ENEL Produzione (judgment of 21 December 2011), ECLI:EU:C:2011:861). Another point to note is that EU law’s universal service requirement concerning electricity (Art.27 of Dir. 2019/944/EU) provides a start in addressing energy poverty in the sense of requiring access to electricity to be available to all, but does nothing on its own to address concerns of affordability, requiring only that it be at “competitive, easily and clearly comparable, transparent and non-discriminatory prices”. but as a free-standing issue, it would seem likely that it would - at present - fall beyond the scope of EU law. At the same time, it is possible that some national constitutions' broader provisions concern social rights or quality of life; these might be interpreted to include access to essential energy supplies. This raises the question of domestic law situations interacting with EU Law, where national fundamental rights could be at issue concerning access to energy and energy poverty.

(b) The UK distinctions between ECHR under the HRA and the EU Charter

There were practical fundamental rights implications for courts and applicants/claimants in the UK, which could be relevant for any current Member State where fundamental rights are vulnerable to national legislation. In the face of UK legislation which is found incompatible with fundamental rights requirements under the UK's Human Rights Act 1998 ('HRA'), the strongest tool(10)Under s. 4 HRA 1998, acknowledging, of course, that where possible some judges have striven hard to find an interpretive solution to such incompatibility under s. 2 HRA 1998: see, e.g., Ghaidan v. Godin-Mendoza [2004] UKHL 30, [2004] 2 AC 557. at the national court's disposal remains the declaration of incompatibility. But under EU law, it was open to (and indeed positively required of) a UK court to disapply the offending national law rules in favour of the protection of fundamental rights.(11)E.g. Case C-60/00 Carpenter [2002] ECR I-6279, ECLI:EU:C:2002:434, concerning fundamental rights as general principles. And see now Benkharbouche v. Embassy of Sudan [2014] 1 CMLR 40, nicely showing that the limits under the HRA drove national courts to engage in creative interpretation (albeit in that case one that could not help the applicant under national law) and, as a result, leading to the use of EU fundamental rights law as a stronger tool (Art. 47 EU Charter of FRs). The Court of Appeal reached the same conclusion, [2015] EWCA Civ 33; the Supreme Court, meanwhile, did similarly, but with barely a mention of the EU Charter. Thus, EU law could offer stronger protection in a given area or wider protection than the ECHR (and thus the HRA).(12)See Case C-300/11 ZZ (France) v. Secretary of State for the Home Department, ECLI:EU:C:2013:363, and the subsequent domestic ruling of the Court of Appeal: [2013] Q.B. 1136. In Norway, meanwhile, it follows from Norwegian legislation that the main part of the EEA Agreement as well as ECHR apply as Norwegian law with priority before other legislation. The complexities of what might survive of such disapplication of UK domestic law in the face of EU law after the UK's withdrawal from the EU pending any formal and final agreement are interesting,(13)See, e.g., A. Young, ‘Benkharbouche and the Future of Disapplication’, U.K. Const. L. Blog (24 Oct. 2017) (https://ukconstitutionallaw.org/2017/10/24/alison-youngbenkharbouche-and-the-future-of-disapplication/). but beyond the scope of the present piece.

2.2.2 Vertical and Horizontal Direct Effect

(a) Of the relevant TFEU provisions and/or EU legislation

So far as the various potentially relevant provisions of the TFEU are concerned, their ability to confer rights upon individuals is subject to the usual restrictions derived from the case law, so that some Treaty provisions are capable of granting rights and imposing obligations between private individuals (e.g. Articles 101 and 102 TFEU), while others can only do so vertically upwards as against the state (e.g. Article 34 TFEU). Regulations are in principle capable of operating vertically and/or horizontally, while Directives typically only function to grant rights to private individuals vertically upwards as against the state. This sets the context in which EU fundamental rights may be applicable in cases concerning Energy law.

With regard to the internal energy market Directives which comprise the Clean Energy for all Europeans package, the interesting judgment in Portgás(14)Case C-425/12 Portgás (CJEU, 12 December 2013), ECLI:EU:C:2013:829, discussed by E. Szyszczak (2014) 5(7) JECLP 508, at 512; and A. Albors-Llorens (2014) 39 E.L. Rev. 851.seems to reinforce the approach taken in Foster v. British Gas concerning direct effect: the case concerned a company limited by shares under Portuguese law, yet seen as providing a public-interest service, and so it could be bound by the provisions of an unimplemented Directive (there, on procurement). This is seen by Albors-Llorens(15)A. Albors-Llorens (2014) 39 E.L. Rev. 851. as a version of 'intermediate horizontal direct effect', and is of interest here as it shows the potential to expand further the possible scope of application of the EU Charter concerning Member States' implementation of EU law.

(b) Of Fundamental Rights(16)D. Leczykiewicz, ‘Horizontal Application of the Charter of Fundamental Rights’ (2013) 38 ELRev 479.

The EU Charter of Fundamental Rights of the European Union(17)[2012] OJ C 326/391, 26.10.2012. gained status as EU primary law by the Treaty of Lisbon entering into force on 1 December 2009, which amended Article 6(1) of the Treaty on the European Union (TEU). Article 6(1) TEU now sets out that the Union recognises the rights, freedoms and principles set out in the charter "which shall have the same legal value as the Treaties".

The well-known and much discussed AMS case(18)Case C-176/12 Association de Médiation Sociale v. Union Locale des Syndicats CGT, EU:C:2014:2. suggests that it is possible for fundamental rights under the EU Charter to apply directly in cases between private parties, provided that the matter falls within a Member State's implementation of EU law. While on its own facts, the nature of the relevant provision of the Charter (its Article 27 concerning workers' rights to information and consultation) was not such as to be directly effective, the implication is that others certainly can be. By contrast, the subsequent Egenberger judgment(19)Case C-414/16 Egenberger v. Evangelisches Werk für Diakonie und Entwicklung, ECLI:EU:C:2018:257. is careful to explain that the principle of non-discrimination (to be found in Article 21(1) of the Charter) could be invoked between private parties because it was a general principle of law, rather than due to its status under the Charter. The even more recent judgment of the Court in Bauer and Brosson(20)Joined Cases C-569/16 and C-570/16 Stadt Wuppertal v. Bauer and Wilmeroth v. Brosson, ECLI:EU:C:2018:871. These cases make the point especially clearly, since the first was a vertical situation, so that Article 7 of Directive 2003/88/EC sufficed to protect the employee via vertical direct effect against a State body, while the second case was a horizontal situation, under which only Article 31(2) of the Charter could offer protection to the employee, given the bar on horizontal direct effect of directives. See paras. 76 and 87-92 of the judgment.shows clearly that, where the provision of the Charter is capable in itself of conferring rights upon private individuals (there, workers), then it can be relied upon directly in a dispute, even between private parties. Thus, it would seem that the potential for the application of fundamental rights under the Charter in such horizontal situations will depend upon the wording of each provision of the Charter and the context within which it is to be applied. The relevance of this framework for our discussion is that it establishes the potential availability of the EU Charter of Fundamental Rights in actions between private parties in the Energy field, as well as when cases involve the position of private individuals vis- à-vis the State.

The case of Alemo-Herron(21)Case C-426/11 Alemo-Herron v. Parkwood Leisure, ECLI:EU:C:2013:521, discussed by J. Prassl, ‘Freedom of Contract as a General Principle of EU Law? Transfers of Undertakings and the Protection of Employer Rights in EU Labour Law’ (2013) 42(4) Ind. LJ 434; and M. Bartl & C. Leone, ‘Minimum Harmonisation after Alemo-Herron: The Janus Face of EU Fundamental Rights Review’ (2015) 11(1) Eur. Const. LRev. 140. is worth dwelling upon under this heading for its apparent beefing up of freedom of contract as part of the coverage of business freedom under Article 16 of the EU Charter of Fundamental Rights.

This has potential implications for regulatory attempts to shape, attenuate or even overturn certain contracts which may raise questions under competition law or the broader EU liberalisation scheme for the internal energy market. In this regard, a possible link has been tentatively suggested(22)A. Johnston, ‘Seeking the EU “Consumer” in Services of General Economic Interest (with a focus upon the Energy sector)’ in D. Leczykiewicz & S. Weatherill (eds.), The Images of the Consumer in EU Law (Hart Publishing, 2015), in section D(i)(c) on the links and overlaps between EU energy-specific and EU general consumer protection law. between the implications of Alemo-Herron and some consumer law cases in the energy sector in Germany. In Schulz and Egbringhoff,(23)Joined cases C-359/11 and C-400/11 Schulz v. Technische Werke Schussental and Egbringhoff v. Stadwerke Ahaus (judgment of 23 October 2014), ECLI:EU:C:2014:2317.the CJEU acknowledged that, where mandatory national rules apply due to the need to provide for a supplier of last resort so as to ensure that a Universal Service Obligation is respected (as was indeed the case on the facts of both of those cases):

[a]s those suppliers of electricity and gas are required, in the framework of the obligations imposed by the national legislation, to enter into contracts with customers who request this and who are entitled to the conditions laid down in that legislation, the economic interests of those suppliers must be taken into account in so far as they are unable to choose the other contracting party and cannot freely terminate the contract.(24)At para [44] of the Schulz judgment (emphasis added).

While this point does not receive any attention in the remainder of the judgment, it may yet prove of no little significance for suppliers faced in the future with arguments based upon the reasoning in the case: the willingness of the Court to accept the need to consider the supplier's economic interests here shows potential interactions with the approach taken to Public Service Obligations in the cases under Article 106(2) TFEU, and, indeed, the Altmark judgment.(25)Case C-280/00 Altmark Trans GmbH and Regierungspräsidium Magdeburg v. Nahverkehrsgesellschaft Altmark GmbH, and Oberbundesanwalt beim Bundesverwaltungsgericht [2003] ECR I-7747, ECLI:EU:C:2003:415. In these cases, the Court has shown more tolerance for the terms on which Member States confer public service obligations, acknowledging that these functions must be able to be performed under 'economically acceptable conditions' for the undertaking concerned,(26)Cases C-157/94 Commission v Netherlands [1997] ECR I-5699, ECLI:EU:C:1997:499, at [43]: the question was whether the enterprise would not be able to fulfil its public duties, not the much higher threshold that the Member State must show that the enterprise’s financial viability would be threatened as the Commission had argued in its submissions. which would justify prima facie infringements of the free movement or competition rules by virtue of Article 106(2) TFEU.(27)For further discussion, see A. Johnston, n. 28, above, section 3.2.2 of that chapter. In other words, undertakings entrusted with a public service function - like many in the energy field - could enjoy some degree of exemption from the strictures of the TFEU rules on trade and competition, by virtue of how the Member State sets the conditions for the performance of such functions. This shows a measure of acceptance of the interests of suppliers of such services and the need for them to be able to operate under 'economically acceptable conditions'.

One could speculate whether the Court's reasoning in the Alemo-Herron judgment(28)N. 27, supra, discussed (critically) by J Prassl, ‘Freedom of Contract as a General Principle of EU Law? Transfer of Undertakings and the Protection of Employer Rights in EU Labour Law’ (2013) 42(4) Ind LJ 434. concerning the inclusion of freedom to conduct a business - and its incorporation of the principle of freedom of contract - in Article 16 of the Charter of Fundamental Rights of the EU(29)[2010] OJ C83/389. might be used to bolster claims that such energy supplier interests be respected in a proportionate fashion. This might seem no less paradoxical an argument here in the consumer protection scenario than in the employee protection context of Alemo-Herron itself,(30)E.g. in other recent cases, the Court has emphasised that “the freedom to conduct a business is not absolute, but must be viewed in relation to its social function [and may] be subject to a broad range of interventions on the part of public authorities which may limit the exercise of economic activity in the public interest” (Case C-281/11 Sky Österreich v. Österreichischer Rundfunk (CJEU, 22 January 2013), ECLI:EU:C:2013:28, [45]-[46]. In Alemo-Herron, the distinction relied upon by the Court was that the UK measure adversely affected the “core content” (Sky Österreich, at [49]) or “very essence” (Alemo-Herron, at [35]) of that freedom, in a way that it had not found in the Sky Österreich case. and typically the Court has shown a willingness to interpret EU consumer legislation to provide far-reaching protection for the consumer,(31)See, e.g., H Unberath and A Johnston, ‘The Double-headed Approach of the ECJ Concerning Consumer Protection’ (2007) 44 CMLRev 1237, esp. 1252ff and, generally: S Weatherill, EU Consumer Law and Policy (Cheltenham, Edward Elgar, 2nd edn, 2014); and N Reich et al, European Consumer Law (Antwerp, Intersentia, 2nd edn., 2014). as well as a refusal to give much weight to the argument in consumer cases to date.(32)See Case C-12/11 McDonagh v. Ryanair (CJEU, 31 January 2013), ECLI:EU:C:2013:43, [60]-[64], where the EU objective of ensuring a high level of protection for consumers is emphasised. Still, the link to the need to ensure "the performance, under economically acceptable conditions, of the tasks of general economic interest which [the member State] has entrusted to an undertaking"(33)Case C-157/94 Commission v. Netherlands [1997] ECR I-5699, ECLI:EU:C:1997:499, at [43]. would be relevant in a situation such as that in Schulz and Egrbinghoff, where the energy supplier concerned has been appointed as a supplier of last resort.