Insights

On 25 January 2022, the Court of Justice (“ECJ”) in delivering a ruling in the case of Vysočina Wind A.S. V Česká Republika (C- 181/20) held that Directive 2012/19 dealing with waste electrical and electronic equipment (“the Directive”) is partially invalid in relation to the obligation set out under Article 13(1), requiring producers of photovoltaic panels (“PV panels”) to finance the management of waste caused by PV panels which were placed on the market prior to the entry into force of the said Directive. The timeframe in question runs from the 13 August 2005 up to the 13 August 2012.

The ECJ was called upon to give a preliminary ruling concerning the interpretation and validity of Article 13(1) of the Directive and the conditions under which a Member State may be found to have infringed EU Law for having adopted national legislation in contrary to the Directive. During the Court’s deliberations, two primary principles were discussed, the principle of legal certainty and the principle of non-retroactivity.

Background

Vysočina Wind is a Czech company (“the Company”) operating a solar power plant furnished with PV panels which were placed on the market after 13 August 2005 but before 13 August 2012. In May 2012, Czech law introduced an additional obligation upon solar power plant operators/users to pay contributions in view of the management of waste produced by the PV panels, an obligation which was duly satisfied by the Company in 2015 and 2016.

The Company brought an action for damages against the Czech Republic before its national courts, on the basis that the imposed Czech law runs contrary to Article 13(1) of the Directive and consequently, implies a wrong transposition of the Directive. The Company argued that Czech law places the obligation for the financing of the costs relating to the management of waste produced by PV panels during the abovementioned timeframe upon their users and not the producers, as is required by the Directive.

The Company held that they had unnecessarily paid the contributions and subsequently suffered harm in doing so. The national courts decided in favour of the Company at both first instance and on appeal in 2018.  The Czech Republic later brought an appeal on a point of law before the Supreme Court (“the Referring Court”) wherein the Court of Justice was further requested to give a preliminary ruling.

Legal considerations

The first question which was referred for a preliminary ruling dealt with the validity and interpretation of Article 13(1) of the Directive. The ECJ began by confirming that photovoltaic panels fall within the definition of electrical and electronic equipment as determined by the Directive.

The ECJ examined whether the management of waste from PV panels placed on the market after 13 August 2012, a date on which the Directive had entered into force, is to be borne by the producers or the users and concluded that as per Article 13(1) of the Directive, this burden is to be borne by the producer and not the user.

The ECJ further went on to address the contentious matter regarding the validity of article 13(1) of the Directive in relation to PV panels placed on the market after 13 August 2005 but before 13 August 2013, a time prior to the entry into force of the Directive. It’s significant to point out that prior to the introduction of the Directive, Member States were given discretion as to whether they are to oblige the producers or the users to bear the costs relating to waste management of PV panels. This shows that the introduction of the Directive affected situations established before its entry into force, particularly for Member States who decided to impose costs upon users and not producers, as was the situation in the Czech Republic.

Consequently, the ECJ considered the principle of legal certainty and held that such principle disallows a new legal rule from applying to a situation which was established before the entry into force of the legislation as it breaches the principle of non-retroactivity. The ECJ reasoned that at the time when the PV panels were produced, the producers were unable to foresee that future financing requirements will be imposed upon them; requirements of which may subsequently create economic risks. The Court held that the new legal rule is to apply in two scenarios; to new legal situations altogether and to future effects of a situation which originally arose under the old law.

The second question put forth by the Referring Court regarded whether the Czech Republic is liable for damages suffered by individuals as a result of the fact that the national legislation runs contrary to the Directive.

The ECJ’s Ruling

In view of the above considerations and in answering the Referring Court’s first question, the ECJ ruled that Article 13(1) of the Directive applies ratione temporis, applying solely to those operations dealing with the management of waste produced by PV panels from 13 August 2012, thus precluding its application vis-a-vis operations which took place before the entry into force of the same Directive.

The ECJ thus concluded that the Directive is invalid insofar as it obliges producers to deal with the financing of waste management in relation to PV panels which were placed on the market between 13 August 2005 and 13 August 2012.

In answering the Referring Court’s second question, the ECJ held that since the Directive entered into force after the adoption of the Czech legislation, there lies no sufficiently serious breach of EU law. The ECJ decided so on the basis that the Directive’s primary aim cannot be seen as gravely compromised, especially since this concerns the time before which the Directive formed part of the EU legal order.

This article was first published in the Malta Independent (6 October 2022).