European Union law – in the case of conflict between national law and European law

Walker (Appellant) v Innospec Limited and others (Respondents) [2017] UKSC 47 On appeal from [2015] EWCA Civ 1000

When discussing European directives and regulations we invariably end up talking about implementation and the extent to which individuals can rely upon them in terms of their rights. This in turn brings us to issues surrounding their effect and applicability to individuals in the event of non implementation. There is also the point that Regulations have both vertical and horizontal direct effect but directives do not have horizontal direct effect. However Walker (Appellant) v Innospec Limited and others (Respondents)2017 serves to highlight that, just because the UK government has implemented an EU Directive, it does not necessarily mean that there is no conflict between the subsequent UK legislation and the overall purpose of the Directive. As we know, Parliament passed the European Communities Act in 1972. Since then, if there is a conflict between national law and European law, the UK courts must give priority to European law.

 

In addition to the issue of conflict, the case of Walker (Appellant) v Innospec Limited and others (Respondents) (2017) is a reminder that legislation does not have effect retrospectively and this applies to EU legislation as much as to UK law.

 

The appeal before the Supreme Court was brought by a John Walker who worked for the respondent, Innospec Ltd, from 1980 until his retirement in 2003. Throughout his employment he made regular contributions to the firm’s occupational pension scheme.

Mr Walker is gay and had lived with his male partner since 1993.

 

They entered into a civil partnership in 2006 and are now married. In 2006 Mr Walker asked Innospec to confirm that, in the event of his death, they would pay the spouse’s pension, which the scheme provides for, to his civil partner. Innospec refused. The reason given being that because his service pre dated 5 December 2005, the date that civil partnerships were introduced in the UK, and any discriminatory treatment is therefore permitted under paragraph 18 of Schedule 9 to the Equality Act 2010.

 

Paragraph 18 provides that it is lawful to discriminate against an employee who is in a civil partnership or same-sex marriage by preventing or restricting them from having access to a benefit, facility or service the right to which accrued before 5 December 2005 or which is payable in respect of periods of service before that date. The refusal concerned a significant “spouses pension” and as things were, John's husband would not benefit.

 

Mr Walker’s claim for discrimination was upheld by the Employment Tribunal. Innospec appealed to the Employment Appeals Tribunal and this was allowed. Mr Walker appealed to the Court of Appeal and this was dismissed. Mr Walker now appealed to the Supreme Court.

 

The Supreme Court unanimously allowed Mr walker's appeal and made a declaration to the effect that Paragraph 18 of Schedule 9 of the Equality Act 2010 was incompatible with EU law and that it should be disapplied. The Court further declared that Mr Walker's husband be entitled to a “spouses pension on Mr Walker's death provided that they remain married."

 

The Court felt that the issue in the case was not about whether UK law was in conflict with EU law over discrimination in the work place in relation to sexual orientation because in giving the leading judgment, Lord Kerr made it clear that Parliament had recognised same-sex partnerships, first through the introduction of civil partnerships and subsequently through the recognition of same-sex marriages. The UK had therefore complied with the requirements of the EU Directive 2000/78/EC (the Framework Directive) which required member states to prohibit discrimination in employment on several grounds including sexual orientation.

 

The essential issue in the court's mind was whether Paragraph 18 of Schedule 9 of the Equality Act 2010 was incompatible with EU law for other reasons and in particular the principle that legislation operates “prospectively” and not “retrospectively”.

 

It is necessary to make a distinction between the retroactive application of legislation to past situations (which is prohibited unless expressly provided for) and its immediate application to continuing situations (which is generally permitted). The majority of judges felt that the Court of Appeal had erred in their attempts to identify whether the entitlement to a “spouses pension” had become a permanent entitlement at the date of retirement.

 

Lord Kerr was of the view that two recent decisions of the Grand Chamber of the CJEU about the equal treatment rights of same-sex partners to survivor’s pensions put success for Mr Walker’s claim beyond doubt (Case C-267/06 Maruko v Versorgungsanstalt der Deutschen Bühnen and Case C-147/08 Römer v Freie und Hansestadt Hamburg).

 

From these cases it is clear that, unless evidence establishes that there would be unacceptable economic or social consequences of giving effect to Mr Walker’s entitlement to a survivor’s pension for his husband at the time that this pension would fall due, there is no reason that he should be subjected to unequal treatment as to the payment of that pension. Lord Kerr was convinced that the Court of Appeal had made a mistake in being influenced by the Barber case (and “the Barber line”) principle (Barber v Guardian Royal Exchange Assurance Group (Case C-262/88) [1990] ECR I-1889;[1991] 1 QB 344) which tried to take account of financial and economic factors in judgments which might result in unfairness on others. As a result, the Court of Appeal were distracted away from the issue in Mr Walker's case which was one of discrimination not of equal pay as was the case in Barber. In addition, the Barber case was an instance of imposing restrictions on a judgment for essentially practical reasons and not an example of a general principle of non-retroactivity for EU legislation.

 

Lord Kerr began to home in on two recent decisions of the Grand Chamber of the CJEU concerning the equal treatment rights of same-sex partners to survivor’s pensions which in his words “put success for Mr Walker’s claim beyond doubt” (Case C-267/06 Maruko v Versorgungsanstalt der Deutschen Bühnen and Case C-147/08 Römer v Freie und Hansestadt Hamburg).

 

From these cases, Lord Kerr was able to reason that “it is clear that, unless evidence establishes that there would be unacceptable economic or social consequences of giving effect to Mr Walker’s entitlement to a survivor’s pension for his husband, at the time that this pension would fall due, there is no reason that he should be subjected to unequal treatment as to the payment of that pension”.

 

Lord Kerr concluded that I would therefore hold that Mr Walker’s husband, provided he does not predecease him, and that they remain married at the time of Mr Walker’s death, is entitled under the Framework Directive to a spouse’s pension calculated on the basis of all the years of Mr Walker’s service with Innospec. On that account, paragraph 18 of Schedule 9 is incompatible with the Framework Directive. In particular, paragraph 18(1)(b) which authorises a restriction of payment of benefits based on periods of service before 5 December 2005 cannot be reconciled with what I consider to be the plain effect of the Directive.”

 

Lord Carnwath and Lord Hughes, whilst agreeing with the majority that Mr Walker's appeal be allowed, preferred to leave the broader question of whether or not the Barber line of case law is of any relevance to the application of the Framework Directive to be determined by the CJEU in O’Brien v Ministry of Justice [2017] UKSC 46, in which the Court has decided to refer to the CJEU a question relating to the pension entitlement of part-time workers.

 

 

 

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