The case of Foster v British Gas plc (1990) C-188/89 is a landmark decision by the European Court of Justice (ECJ) that addresses the concept of the “state” in European Union (EU) law. It is particularly significant in determining the extent to which directives, which are primarily addressed to member states, can have direct effect against state-controlled entities. The ruling in Foster v British Gas plc clarified when an organisation could be classified as an emanation of the state, thereby making it subject to obligations imposed by EU law, even if it was not formally part of the government.
This case arose from allegations of gender-based discrimination by British Gas, then a nationalised entity, which required female employees to retire at 60 while allowing male employees to work until 65. The dispute centred around whether Foster v British Gas plc could be brought under the Equal Treatment Directive (76/207/EEC), despite the directive being addressed to the state rather than private companies. The judgement set a crucial precedent in employment law and the applicability of EU directives to publicly controlled bodies.
Facts of Foster v British Gas plc
Mrs Foster and four other female employees were forced to retire from British Gas at the age of 60, while male colleagues were permitted to continue working until 65. They challenged this practice as discriminatory under the Equal Treatment Directive (76/207/EEC), which mandated gender equality in employment. However, as directives typically only bind member states and not private individuals or companies, the key legal question in Foster v British Gas plc was whether British Gas could be considered part of the state.
At the time, British Gas was a nationalised industry, operating under government oversight. The Secretary of State appointed its board members, had the power to issue directions, and required the company to submit periodic reports. Despite this, British Gas argued that it was a commercial entity and thus not directly subject to the directive.
Legal Issues
Foster versus British Gas plc case raised two primary legal questions:
- Could the Equal Treatment Directive (76/207/EEC) be directly enforced against British Gas?
- What constitutes an “emanation of the state” for the purposes of applying directives against entities that are not formally government bodies?
The House of Lords, recognising the significance of these questions, referred the matter to the ECJ for a preliminary ruling on whether British Gas fell within the scope of the directive.
Foster v British Gas plc Judgement by the European Court of Justice
In its ruling, the ECJ in Foster v British Gas plc held that British Gas, at the time of the events, was indeed an “emanation of the state.” The Court established clear criteria for determining when a body could be classified as part of the state for the purpose of enforcing EU law.
Key Findings of the ECJ
- State Control: A body is considered part of the state if it operates under the authority or control of the government, regardless of whether it is legally separate from the state. British Gas met this criterion, as it was state-owned, and its board members were government-appointed.
- Public Service Responsibility: Entities responsible for providing a public service under state control may be classified as state bodies. British Gas was the sole supplier of gas to the public, operating in a government-regulated industry.
- Special Powers: If an entity has special powers beyond those applicable to normal private businesses, it may be considered an extension of the state. British Gas, for instance, had regulatory privileges not available to private companies.
Based on these criteria, the Court ruled that Foster v British Gas plc was a valid claim, as British Gas was an emanation of the state. Therefore, the claimants could directly rely on the Equal Treatment Directive to challenge their forced retirement.
Foster v British Gas plc Judgement by the House of Lords
Following the ECJ’s ruling, the House of Lords applied the criteria set out in Foster v British Gas plc and upheld the women’s claim. The Court ruled that British Gas was bound by the directive and that its retirement policy was unlawful under EU law. As a result, the case was remitted for assessment of compensation to the affected employees.
Conclusion
Foster v British Gas plc remains one of the most influential cases in EU law regarding the direct effect of directives and the concept of state-controlled entities. By establishing a broad definition of what constitutes an emanation of the state, the ruling ensured that publicly controlled organisations could not evade obligations imposed by EU law. The case significantly impacted employment rights, state responsibility, and the broader interpretation of EU directives in national legal systems. Through its judgement, the ECJ reaffirmed that individuals could rely on EU directives to challenge discriminatory practices, even when their employer was not formally part of the government but remained under its control.
The case of Foster v British Gas plc continues to be cited in legal proceedings involving state-controlled bodies and the enforcement of EU directives, highlighting its enduring relevance in the fields of employment law, equal treatment, and the direct effect of European law on national legal frameworks.
