Foster and Others v British Gas (Case C-188/89)

In this appeal six women, formerly employed by the British Gas Corporation, claimed that they were unlawfully discriminated against in that they were required to retire at the age of 60, whereas their male colleagues were only required to retire at the age of 65. The retirements took place between December 1985 and July 1986. Since then the gas industry has been privatised and British Gas Plc is a party to the appeal solely as successor to the liabilities of the British Gas Corporation. Had it been the employer at the time, different considerations would have arisen.

It is common ground that, apart from the effects of E.E.C. law, there was nothing unlawful in the retirement policy of the British Gas Corporation. It is also common ground that, at the relevant time, the United Kingdom was in breach of its obligations as a member of the E.E.C. in not having amended its domestic law to bring it into line with the requirements of Council Directive 76/207/EEC of 9th February 1976. Such an amendment would have rendered this differential retirement policy unlawful.

The crucial, and indeed the only, issue in this appeal is whether the British Gas Corporation was a corporate entity of such a type that its employees are entitled in the English courts to rely directly upon the requirements of the directive and to found a claim for damages upon the fact that its retirement policy was contrary to the terms of that directive. Similar problems arose in Marshall v. Southampton Health Authority[1986] Q.B. 401 and Johnston v. Chief Constable of the Royal Ulster Constabulary [1987] 1 Q.B. 129. In each case the European Court of Justice ruled that the claimant employees were entitled to rely upon the directive.

Prima facie Council directives do no more than give rise to a duty upon the part of member states to amend their national legislation to bring it into conformity with the directive. However, the European Court of Justice has developed a doctrine which is akin to estoppel. It works this way. If a citizen sues a member state in the national courts claiming that the state has caused him damage by acting in a way which is contrary to the directive, and has done so at a time when, if the state had fulfilled its duty under community law, national law would have been amended to make such action unlawful, the state is not permitted to defend itself on the basis that its actions were lawful in terms of national law. It is otherwise if the defendant is a private citizen.

The rationale of this doctrine is that the state cannot rely upon the consequence of its own breach of community duty in failing to amend its national law, but the private citizen, who cannot legislate and is in any event under no duty to do so, is in a wholly different position. This is clear from Marshall's case, per Sir Gordon Slynn, the Advocate General, at page 412:

"The state cannot rely on its own failure to confer those rights. The citizen may assert them against the state either as a sword or as a shield."

And at page 413:

"The state can legislate but a private employer cannot. It is precisely because the state can legislate that it can remedy its failure to implement the directive concerned. This consideration puts it at the outset in a fundamentally different position from a private employer, and justifies its being treated differently as regards the right of a person to rely upon the provisions of a directive."

In the same case the court itself ruled, at page 421:

"Wherever the provisions of a directive appear, as far as their subject matter is concerned, to be unconditional and sufficiently precise, those provisions may be relied upon by an individual against the state where that state fails to implement the directive in national law by the end of the period prescribed or where it fails to implement the directive correctly."

It added, at page 422:

"It is necessary to prevent the state from taking advantage of its own failure to comply with Community law."

This at once raises the question of what constitutes "the state" for this purpose and, more specifically, whether it extends to include a nationalised industry such as the British Gas Corporation. This is a mixed question of European and national law. We have to look to European law to determine what kind of bodies constitute "the state" for purposes of an E.E.C. estoppel and to English law to determine whether any particular body can be said to be "the state" as so defined.

Guidance on what is "the state" is to be found in Marshall's case ( supra) and in Johnston's case ( supra).

In Marshall's case Sir Gordon Slynn, as Advocate General, asserted that "the 'state' must be taken broadly as including all organs of the state". The court in its judgment concerned itself more with the argument that, whilst the estoppel would operate against the state when acting as such, it had no operation against the state as an employer. This argument it rejected. It treated the question of whether the health authority was "the state" as a matter for the English courts which had been conclusively determined by this court (the English Court of Appeal) having held that the health authority was "a public authority". This was a terminological error. In fact this court had held no such thing. It had held that the health authority was "an emanation of the state" (see page 403H of the report) and this use of the words "a public authority" in this context has to be read as meaning neither more nor less than "an emanation of the state".

In Johnston's case it was established that the Chief Constable was independent of the government of the state, but the court held that he was subject to the E.E.C. estoppel. Having referred to its decision in Marshall's case, it said, at page 154 of the report:

"56. The court also held in that case that individuals may rely on the directive as against an organ of the state whether it acts qua employer or qua public authority. As regards an authority like the Chief Constable, it must be observed that, according to the industrial tribunal's decision, the Chief Constable is an official responsible for the direction of the police service. Whatever its relations may be with other organs of the state, such a public authority, charged by the state with the maintenance of public order and safety, does not act as a private individual. It may not take...