CJEU stresses that consistent interpretation of domestic laws with EU provisions cannot give rise to, or aggravate liability in, criminal law

The Court of Justice of the European Union's Judgment of 28 June 2012 in Case C-7/11 Criminal proceedings against Fabio Caronna has stressed once again the general principle of EU law that the duty for national courts to interpret and apply domestic laws in a manner that is consistent with EU law (ie consistent interpretation, on the basis of art 288 TFEU) has the clear limit that it must not give rise to, or aggravate liability in, criminal law (see press release: http://tinyurl.com/CJEUCaronna).

The case concerned the wholesale distribution of medicinal products in Italy. Generally, wholesale distribution of such products is regulated under EU law by Directive 2001/83/EC on the Community code relating to medicinal products for human use, as amended by Commission Directive 2009/120/EC. The Directive requires wholesale distributors to obtain a special authorisation, for which certain harmonised requirements are set. However, relevant Italian domestic legislation sets a different requirement, since it allows pharmacists and companies of pharmacists in possession of a licence to operate a pharmacy (ie to sell medicinal products at retail level) to also operate as wholesale distributors (and that 'standard' authorisation does not impose the same requirements that the Directive sets for the 'special' wholesale authorisation).

The common understanding, even by public prosecutors in the specific case, of the Italian rules  on retail and wholesale authorisations was that a pharmacist already authorised to retail medicinal products was exempt from the obligation to obtain the special authorisation required under the material national and European Union rules applicable. On its face, the argument seemed deffective (as the referring Court of Palermo implicitly indicated by requesting the CJEU to issue a preliminary ruling), and it seems rather clear that Italian law has not properly transposed Directive 2001/83/EC, since it requires no special authorisation for wholesale distribution on top of the 'standard' retail authorisation given to pharmacists.

The point of interpretation of domestic law in light of the requirements of EU law was, then, to determine whether pharmacists engaging in wholesale trade on the basis of their 'standard' authorisation to distribute medicinal products at retail level were doing so unlawfully under EU rules. The issue was not minor since this could generate criminal liability, as Italian legislation also determined that any person that engages in unauthorised wholesale distribution of medicinal products was liable to punishment in the form of imprisonment for a term of six months to one year and a fine of between €10,000 and €100,000.

In the case at hand, the CJEU has been clear in distinguishing the consequences of consistent interpretation of Italian laws with Directive 2001/83/EC in general and for the more specific purposes of determining criminal liability.

In general terms, it has clearly indicated that the Directive imposes on Member States a general obligation to make the wholesale distribution of medicinal products subject to possession of a special authorisation, and that the requirement under the Directive to obtain authorisation for the wholesale distribution of medicinal products is applicable to a pharmacist who, as a natural person, is also authorised under domestic law to operate as a wholesaler in medicinal products; since it cannot be presumed from the simple fact that pharmacists satisfy the conditions laid down by the Member States for retail supply that they also comply with the conditions laid down by harmonised rules at EU level for wholesale distribution.

However, as such finding could determine criminal liability for the pharmacists that behaved in accordance with national law but breached EU law, the CJEU reminded that
51 It should be noted, as correctly pointed out by the Commission, that even though national courts are required to interpret domestic law, so far as possible, in light of the wording and purpose of a Directive in order to achieve the result sought by the Directive and, accordingly, to comply with the third paragraph of Article 288 TFEU, that obligation to interpret national law in conformity with European Union law is subject to certain limits in criminal matters.
52 As the Court has held, the principle of interpreting national law in conformity with European Union law is limited by general principles of law which form part of the European Union legal system, in particular, the principles of legal certainty and non-retroactivity. Thus, a directive cannot, of itself and independently of a national law adopted by a Member State for its implementation, have the effect of determining or aggravating the liability in criminal law of persons who act in contravention of the provisions of that directive (see, inter alia, Case C‑60/02 X [2004] ECR I‑651, paragraph 61 and the case‑law cited).
55 [... ultimately] the principle that criminal penalties must have a proper legal basis, enshrined in Article 49(1) of the Charter of Fundamental Rights of the European Union, would prohibit the imposition of criminal penalties for such conduct, even if the national rule were contrary to European Union law (see, by analogy, X, paragraph 63).

In this other group of cases (the vast majority, predictably), the case law of the CJEU imposes a much more demanding exercise of consistent interpretation (which could almost go so far as to impose a 'disguised' contra legem interpretation). As explained elsewhere,

given that the limits of the principle of consistent interpretation remain somewhat blurry and that the CJEU has adopted an expansive approach to the issue of the obligation of Member States to guarantee the effectiveness of directives, it is submitted that the limits of legal construction of Member States’ law with conformity to EU directives should be interpreted restrictively in order to favour to the maximum extent the (indirect) effectiveness of EU law and the goals pursued by EU directives. This is all the more necessary in view of recent developments of the rules of construction developed by the CJEU that are superseding the traditional boundaries of the theory of direct effect and point towards a more general doctrine of ‘legality review’ of the legislative actions of Member States [S Prechal, ‘Does Direct Effect Still Matter?’ (2000) 37 Common Market Law Review 1047, 1051. cf C Hilson, ‘Legality Review of Member State Discretion under Directives’ in T Tridimas and P Nebbia (eds), European Union Law for the Twenty-First Century: Rethinking the New Legal Order (Oxford, Hart Publishing, 2004) 223] and towards the expansion of the boundaries of legal interpretation that conform to the TFEU and secondary rules (in what has been termed as leveraged development) [S Treumer and E Werlauff, ‘The Leverage Principle: Secondary Community Law as a Lever for the Development of Primary Community Law’ (2003) 28 European Law Review 124]—which seem to have overcome the notorious difficulties that the early developments of the direct effect doctrine generated (although they may pose some other interpretative problems of their own) [D Curtin, ‘The Province of Government: Delimiting the Direct Effect of Directives in the Common Law Context’ (1990) 15 European Law Review 195, 220–23]. The limit seems to lie where consistent interpretation requires national courts and authorities to overcome ‘merely’ interpretative functions (broadly defined) and to assume legislative functions [R Alonso García, ‘La interpretación del Derecho de los estados conforme al Derecho comunitario: Las exigencias y los límites de un nuevo criterio hermenéutico’ (2008) 28 Revista española de Derecho europeo 385, 401]. Nonetheless, drawing the dividing line will usually be a difficult task and, as already mentioned, the clear prevalence of a pro communitate interpretative principle must be identified in the relevant case law.
To sum up, it is submitted that (except in those cases where there is potential for criminal liability), Member States are under an almost absolute obligation to guarantee that domestic legislation is interpreted and applied in a manner that is consistent with EU law and, in particular in the case of directives, to ensure that their goals and intended effects are attained through national legislation—regardless of whether that legislation was adopted for the sake of transposing those directives, and regardless of the proper or improper transposition of those directives.
In my opinion, this seems like an area of EU law where case law will continue to develop in the recent future, particularly if national courts continue to refer cases for interpretation, for instance, in relation with the ever increasing number of soft law and hybrid instruments issued by EU institutions.
Even if the Caronna Judgment does not advance EU law in this field, it is a very clear reminder of the limits of consistent interpretation in cases where criminal liability is concerned, where the exercise required from national courts is much more restricted than in cases where no criminal liability is involved.