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Implications of delayed transposition of EU Directive on whistleblowing & EU law ‘direct effects’

WIN is delighted to publish this interview conducted by WIN’s Ida Nowers with Dr Simon Gerdemann, a legal scholar on EU law and whistleblowing protection legislation. He is currently principal investigator on the ‘Impact Analysis German and European Whistleblowing Law’ at Georg-August-Universität Göttingen and a legal advisor for WIN’s member in Germany - Whistleblower Netzwerk e.V.

Gerdemann explains the current state of transposition of the EU Directive and some of the key issues for implementation including the "direct effect" of some of its provisions. Gerdemann argues that most Member States have failed to realise that many of the Directive’s provisions entered into force automatically on the 18th December last year. He also explains the need to consider the case law of the European Court of Justice and the European Court of Human Rights.


Ida:  The EU Directive on Whistleblowing (Dir (EU) 2019/1937) was adopted over two years ago and the official deadline for the 27 member States to transpose it into their national legal systems passed on 17 December 2021. What is the current state of play for transposition?

Simon:  Amongst the 27 EU member States, only Denmark[1] and (partially) Sweden[2] adopted new transposition legislation that came into effect before the deadline.  Portugal, Lithuania, Malta, Cyprus, Latvia, and France have also passed new laws which will enter into force during 2022.
 
Several other countries have introduced Bills to parliament or issued draft proposals for consultation with stakeholders or the public. Overall, the process however  has been delayed and has not been particularly transparent or inclusive.
 
The remaining countries are yet to pass the necessary legal reforms needed to transpose the groundbreaking requirements of the Directive. Four months post deadline, one country remains listed as not having started the process.
 
 
Due to the Member States’ large-scale failure to transpose the Directive in time, the Commission initiated infringement proceedings in January 2022.
 
Ida:  How would you describe the key mechanisms of the Directive?

Simon: The Directive’s main goal was to improve the effective enforcement of Union law by strengthening the individual protection of whistleblowers and the institutional framework for whistleblowing cases in general. The EU legislator seeks to establish a comprehensive minimum standard in the entire Union, thereby ending the current fragmentation of whistleblowing laws in Europe and the low level of protection in many Member States. To achieve this objective, the Directive relies on four main regulatory elements with various interlocking provisions:
 
  1. A comprehensive anti-retaliation law in favour of whistleblowers;
 
  1. Obligating organisations both in the private and public sector to set up their own whistleblowing reporting channels as addressees for internal reports;
 
  1. Establishing specialised national whistleblowing authorities as addressees for external reporting; 
 
 4.  Adopting whistleblowing-specific penalties into national law.
 
Ida:  The European Commission described the proposal for the Directive as a “game changer” for whistleblower protection.  How does the Directive measure up to whistleblowing legislation in United States and the UK?
 
Simon: Contrary to what most people would think when they remember cases like that of Edward Snowden and other whistleblowers in the United States, the US can actually be considered the motherland of modern whistleblowing legislation and one of its main driving forces. In some regulatory areas, most notably in the financial services sector, the level of whistleblower protection, incentives and administrative support go significantly beyond even what the Directive now seeks to establish in the European Union. Other whistleblowing laws around the world, and in Europe, also offer quite a robust level of protection at least in some respects, for example the UK’s Public Interest Disclosure Act (PIDA 1998) which was Europe’s first comprehensive whistleblowing law.
 
 
That being said, the Directive, while by no means perfect, truly is a game changer. This is especially true for the majority of Member States in the European Union which lacked any kind dedicated, comprehensive whistleblowing legislation.
 
Yet, even if you compare the Directive’s provisions to existing whistleblowing statutes, the sheer scope of application – especially if Member States choose to extend protection to reports of breaches of national law – is what sets the Directive apart from previous whistleblowing laws. Other countries, like the US, often only protect whistleblowers where the government can use them to compensate for a lack of existing enforcement capabilities - whilst leaving them very vulnerable in other areas of law and practice - resulting in an incoherent patchwork of different levels of protection and procedural requirements.
 
 
Since international research and experience has shown that legal certainty is of paramount importance for any effective whistleblowing law, a uniform framework like the one intended by the Directive is truly a significant and indeed an unparalleled step forward.
 

Ida: Given the significant delay of EU countries in adopting the necessary legislation to transpose the Directive – why do you think most countries failed to meet the official deadline?
 
Simon: It seems that a lack of experience of European policy makers and legislatures with the topic of whistleblowing has likely contributed to delays in many Member States. Until very recently, whistleblowing legislation was relatively unknown to most law makers and legal experts alike. Furthermore, the Directive’s provisions will foreseeably have a very significant impact on existing national laws and legal standards, often completely changing existing national laws and principles, which has led to some intense debate in many Member States.
 
One major point of contention was, and still is, the question as to whether law makers should extend the scope of application of the law to also cover reports and disclosures of breaches of national law.
 
Read more: WIN Series: Implementing the EU Directive on Whistleblowing – Whistleblower protection laws must cover breaches of national law
 
While such a unifying legislative approach, now commonly called “gold plating,” would quite certainly result in a higher level of whistleblower protection, and – consequentially – a higher number of illegal activities being uncovered or public funds being recovered, some political actors argue against this expanded approach. These voices claim that this approach would also bring about significant additional costs for private companies, especially since their internal whistleblowing units would have to deal with increased level of reporting.
 
Yet, if you look at past experiences of compliance departments, it is quite clear that a uniform standard of whistleblowing rules will by and large not increase the burden due to the amount of reporting, but in fact decrease the burden for implementation costs for private companies and public administrations alike. This is because it would save compliance officials and those otherwise responsible for handling whistleblowers, a lot of time and energy they would otherwise have to spend determining the applicable conflicting EU and/or national legal standards in each individual case.
 
Read more: 2018 Impact Assessment accompanying the proposal for a Directive of the European Parliament and of the Council on the protection of persons reporting on breaches of Union law

Ida: You have described considerable apprehension on the part of policy makers to undertake the required reforms and introduce these mechanisms, are there legal implications for having delayed in doing so?

Simon: There are several legal as well as political consequences that flow from the Member States’ failure to meet the transposition deadline. First of all, the Commission initiated infringement proceedings against 24 of the 27 Member States on 27th January 2022, which may have significant financial and political repercussions depending on how each Member State acts in the future.
 
More importantly, however, is that most Member States have failed to realise that many of the Directive’s provisions entered into force automatically on the 18th December last year – the day after the transposition deadline expired.
 
This “direct effect” of the Directive occurs by virtue of principles established by case law of the European Court of Justice (ECJ). According to these principles, a directive’s provisions automatically enter into force if they impose obligations or detrimental legal effects on the Member State that violated its duty of transposition to the extent that the individual provisions are unconditional and sufficiently precise to be applied directly.
 
While these principles naturally leave some room for interpretation, it is quite clear that at least the Member States’ obligations to establish internal whistleblowing channels across public administrations, as well as many elements of protection for public sectors whistleblowers, have thus actually come into force already.
 
This not only allows whistleblower to rely on these provisions regardless of whether a national transposition law exists, but also puts many Member States in a state of constant violation of Union law for as long as they don’t establish functioning whistleblowing units in the administration - which most have failed to do.
 
Finally, the whole situation is of course significantly detrimental for potential whistleblowers and their need for legal certainty, since Member States inability to meet their obligations under EU law has yet again complicated the current patchwork of different legal rules on whistleblower protection across Europe.

Ida: Despite the apprehension of some governments to implement the minimum standard requirements, the Directive includes a ‘more favourable’ clause and civil society, as well as the Commission, has encouraged Member States to go beyond the minimum standards. Some countries, such as France, have taken the opportunity to implement more comprehensive laws which go further than the minimum requirements – what are the benefits of this more progressive approach?

Simon: One fundamental advantage for whistleblowers as well as all other parties concerned in whistleblowing cases is that only comprehensive laws with a broad material scope can truly accomplish the directive’s goal of unifying whistleblowing standards and thus create a level of legal certainty and coherence which the minimum standards alone cannot fully achieve.

Due to the limits of EU competences, the Directive could only cover legal areas which have a direct material connection to matters regulated by EU law, which resulted in a very complex regulatory structure with long annexes detailing in which specific cases whistleblowers would be protected. The Directive itself acknowledges that the current patchwork of insufficient whistleblower protection will only end if the Member States voluntarily expand the scope of the directive by extending it to matters of national law. Some Member States, like for example France and Denmark, have correctly identified these issues and acted accordingly, while others have not.

Beyond that, there are various matters of whistleblowing legislation which the Directive does deal with in detail that would consequentially benefit from well-designed national rules and regulations. One example of this are disclosures in the general public interest, i.e. matters which are of fundamental importance for a democratic society and should thus be discussed in public, like, for example, the issue of mass-surveillance raised in the Snowden case and others. The Directive does not explicitly deal with such matters since its main focus is on improving the effective enforcement of existing EU laws, not on whether current laws and practices actually serve the greater good of society or in fact pose a threat to the public interest or the protection of human rights in the long run.

These and other matters of fundamental importance to democracy are to be decided by the sovereign Member States themselves and should be addressed head-on if a country wants to create a national whistleblowing law that truly serves as a comprehensive framework for all whistleblowing cases.
 
Read more:  The new French whistleblowing law: renewed hope for European whistleblowers?

Ida: You have described how EU directives can have “direct effect” – does that mean EU citizens can rely on the EU Directive directly even if their governments haven’t transposed it into their national legal systems yet?
 
Simon: To some extent they can, yes. You can think of the European Court of Justice’s (ECJ) direct effects doctrine as something of a punishment for Member States for their failure to transpose a directive in time, which in turn results in legal benefits for that state’s citizens.
 
From this idea it follows that citizens can generally rely on the provisions of a directive if the other party is the state, which, for example, leads to public servants being able to invoke the rights of the Directive directly after the transposition deadline has expired - in this case starting from 18th December 2021.
 
Importantly, this principle applies to all state-affiliated entities, no matter if the non-transposition is their fault or not, including, for example, public municipalities. On the other hand, if the other party has no direct affiliation with the state, especially if the employer or contractor is a private company, the direct effects doctrine does not apply. Nonetheless, the Directive can have some effect on private relationships by way of interpreting national laws in accordance with the principles of the Directive, which is another doctrine set up by the ECJ.
 
Even if we are talking about civil servants or public employees, it is, however, important to keep in mind that only those provisions which are unconditional and sufficiently precise to allow for direct application may be applied directly. According to the ECJ’s case law, this inter alia excludes provisions from direct effects which grant Member States a certain level of discretion when transposing them. This in turn affects whistleblower protection in cases of external reporting to public authorities, which is predicated upon the establishment of a proper whistleblowing authority and therefore most likely can not be invoked so long as a Member State has not yet set up such authorities or not named specific national authorities to be responsible for external reports.
 
This leaves us with primarily two scenarios in which citizens can directly rely on the Directive’s whistleblower protection provisions:
 
  • First, they can in principle claim protection if they report breaches within the scope of the Directive internally within administrative entities with 50 or more employees and/or civil servants.
  • Second, they can get protection under most of the public disclosure provisions, e.g. if they publicly disclose information about breaches which constitute an imminent or manifest danger to the public interest.
In all of these cases, however, one has to keep in mind that the provisions of the Directive and their direct effects are ultimately subject to future interpretation by the ECJ, yet again adding to the legal uncertainty many whistleblowers are still facing in their respective countries.

Ida: It sounds as though only certain provisions of the Directive will therefore have ‘direct effect? What mechanism would you say are enforceable as of 18 December 2021?

Simon: From the four main regulatory elements - 1. A comprehensive anti-retaliation law in favour of whistleblowers; 2. Obligating organizations, both in the private and public sector, to set up their own whistleblowing reporting channels as addressees for internal reports; 3. Establishing specialized national whistleblowing authorities as addressees for external reporting; and 4). Adopting whistleblowing-specific penalties into national law - only the obligation to establish internal whistleblowing units in the public sector as well as certain anti-retaliation provisions for whistleblowers in the public sector can be assumed to have direct effects.  As mentioned before, the duty to establish public whistleblowing authorities grants Member States ample discretion on how exactly those authorities will be structured and how they should function in practice, which – in all likelihood – excludes them from direct effects under the ECJ’s case law.
 
The same can be said for the whistleblowing-specific penalties, which place a criminal burden on private citizens and can therefor only be applied once they are transposed into national law.  Generally speaking, the Directive’s provisions have no direct effects in the private sector but may inform the way in which national courts interpret existing statutes and legal rules that concern whistleblowing cases. Nonetheless, if public sector whistleblowers invoke the rights and privileges under the Directive in cases of internal reporting and public disclosures, those provisions may serve as a powerful tool to fight retaliation, since the conditions and legal consequences of protection are significantly more potent than under most existing national laws.
 
There is even a case to be made for an additional large-scale right to disclose breaches of EU law directly to journalists. According to one provision in the Directive, whistleblowers may immediately disclose information to journalists or the general public if they have sufficient reason to assume that the whistleblowing authorities do not function properly, e.g. if an authority appears to be in collusion with the perpetrator of a breach. If one assumes that the worst kind of dysfunctionality is the non-existence of an appropriate body to report to, then whistleblowers can reasonably claim that they are allowed to disclose any kind of information within the material scope of the Directive to a journalist without any further requirements for as long as a Member State fails to establish national whistleblowing authorities with proper external reporting channels. It is, however, hard to tell if the ECJ would eventually follow such a rather bold interpretation of its own direct effects criteria.

Ida: Further to the legal “direct effects” you have described, will the Directive have any indirect consequences?

Simon: There are various potential indirect effects of the Directive which may benefit whistleblowers in certain cases. For one, national courts now have to interpret national laws in general accordance with the principles of the Directive after the transposition deadline has expired even before a national transposition law is in effect. Furthermore, the Directive’s provisions will in all likelihood affect the European Court of Human Rights’ current case law on whistleblowing, since the court has already declared that it draws from the Directive’s provisions as one legal source that informs its own decisions on the protection of freedom of speech.
 
From a solely national perspective, the Directive can also incentivise national legislators to create a coherent national whistleblowing statute in order to harmonize the level of protection for whistleblowers and the handling of whistleblowing cases in practice. In Member States that consider a discrepancy in legal standards caused by differences in EU and national law to potentially violate the rights for equal treatment under their national constitutions, such as in Germany, Austria and Italy, harmonizing the standards of protection and improving upon the current state of whistleblowing laws in their country may even be a constitutional necessity.
 
Read more: EU Directive: Experts say Germany must change approach to protect whistleblowers  

Ida: You said that the EU Directive may affect the case law of the European Court of Human Rights with respect to the protection afforded to whistleblowers under Article 10 of the Convention on Human Rights (freedom of expression). What does this mean for protections afforded under the Directive? 
 
Simon: The interplay of the two protection schemes under the rules of the Directive and the European Court of Human Right’s case law is rather complicated and not always easy to predict but will certainly play an important role in the future.
 
On the one hand, the Directive will likely inform the court’s case law, especially to the extent that it tends to be more favourable for the protection of freedom of speech. This, for example, concerns the right for direct external reporting and the irrelevance of a whistleblower’s motives for his or her protection, both of which in not yet found in the court’s case law.
 
On the other hand, the Directive explicitly mentions the court’s case law as a source of reference for the level of protection granted under the Directive. Bearing in mind that the case law grants some additional bases for protecting public disclosure in cases of fundamental importance for the public interest which are not explicitly reflected in the Directive. Therefore, the European Court of Human Rights’ decisions may serve as an interpretative tool to expand protection under the Directive as well as play a separate and important role as an additional source of protection in cases that are not sufficiently covered by the Directive.
 
Read more: Luxleaks whistleblower: ECHR reconsiders criminalisation of whistleblowing

Ida: Simon, thank you for your time and for sharing your insights with us on this important matter. WIN works with over 30 partners across EU Member States who are monitoring their government’s approach and progress of transposition. The question of whether the Directive has any direct effect is repeatedly asked and so I am very grateful for this opportunity to share your expertise to help all the human rights activists, anti-corruption advocates and legal practitioners who take a keen interest in the topic.

Ida Nowers is Law and Policy Coordinator at the Whistleblowing International Network and leads the EU Whistleblowing Monitorwhich monitors the transposition of the EU Directive on Whistleblowing into member States national law.

This interview is part of WIN’s EU Series: Implementing the EU Directive on Whistleblowing. Visit our Publications page to read more.

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