European Private Energy Law: what is it, and why does it matter?

european private energy law european private energy private energy law energy law european private

Published on 13th February 2018ù

Written by Lucila de Almeida

The ‘Topic of the Month’ in February introduces the unusual and rather underexplored concept of European private energy law. It will do so in three blog posts over several weeks. This first will explain what European private energy law is, and why it matters, sharpening as it does our understanding of the role of public and private law in market engineering. The second will reconcile the measures of EU energy law with the concepts of private rights, procedures, and remedies. The third will focus on the most recent Clean Energy Package and show how European private energy law will be front and centre of the forthcoming legal framework, even more than it has in the past. This is the first blog post.

To begin, I would like to take us back to precisely three years ago. In February 2015, the European Commission launched the Energy Union Package[1] listing ‘fifteen action points’ to account for the forthcoming EU legislation. The Commission called for measures to accomplish a low-carbon economy, diversified gas supply and affordable prices to end-users, among other policy goals stated in the communication. However, the first and primary action demanded no particular change in market design. It did request the ‘full implementation and strict enforcement’ of EU legislation by the Member States under the close supervision of the Commission, which may take action, such as infringement proceedings against countries that fail to implement EU law and formal investigations to enforce the Treaty’s competition rules.[2]

This passage of the Energy Union Package is pertinent because it illustrates how regulators tend to channel the functions of law from the perspective of public law only: public lawmaking, public monitoring, and public enforcement. In a nutshell, it means three things. First, the EU sets new rules in EU Directives or Regulations. Second, the Member States implement them, ensuring compliance, and correcting non-compliance by market players. Finally, the Commission ultimately acts as a watchdog over the Member States. While this way of perceiving the role of law in regulating markets is not wrong per se, it casts light on only one side of the twofold enforcement mechanisms. It thus overshadows in every sense the role of private enforcement for the effective implementation of EU policies. These include actions taken by private parties before national regulators, Ombudsman, or national Courts against other market players for non-compliance with EU law. Also encompassed are proceedings brought by private parties against the Member State for poorly implementing EU legislation. These various dimensions of private enforcement comprise what I call European private energy law.[3]

What is European private energy law?

If EU energy law consists of all the rules of EU primary and secondary law that affect the markets for energy,[4] then European private energy law stands for all the rules of EU law that impact on private relationships in the energy market: more precisely, commercial and consumer contracts, property rights, and torts. European private energy law introduces an unusual way of thinking about EU law from the perspective of how measures create rights and duties for private parties involved in transactions. In doing so, it leads to a better understanding of the role of those market players in the enforcement of EU law. After all, private parties have the option to bring actions against other market participants violating EU law through civil procedures and remedies. There are also provisions of EU law that establish out-of-court procedures and remedies to boost private enforcement.[5]

European private energy law can be spotted in several provisions of almost all EU Directives and Regulations. These are, for example, the rules in the Annex I of the Gas Directive 2009/73/EC concerning the terms and conditions of consumer contracts.[6] The judgment of the European Court of Justice in the RWE case shows how end-users could bring an action against energy suppliers to nullify contractual clauses that violate EU obligations of using plain and intelligible language and transparency.[7] Other rules that belong to European private energy law are the use-or-sell-it mechanism in the Network Codes on forwarding capacity allocation, which represents a mandatory clause in all capacity reservation agreements,[8] or the liability rules in the REMIT imposing on traders, brokers, and energy exchanges the obligation of informing suspicious practices of market manipulation or insider trade.[9] Last but not the least, European private energy law is manifest in Directive 2014/104/EU, which empowers market participants with the right to seek damages against undertakings infringing the Treaty’s competition rules.[10]

The foregoing overview is by no means meant to be exhaustive. Nevertheless, listing some of the provisions of EU law that enter into the private law sphere of market participants is useful to demonstrate how the broadening of the topic and, above all, it helps to explain why it should indeed matter.

Why does it matter?

It is worth noting that defining the field of European private energy law is not a matter of formalities. Nor is it intended as a purely theoretical legal argument without having an impact in practice. On the contrary, there are real legal implications in so far as private parties are entitled to enforce EU law against other private parties. This implies, therefore, that private parties can and should function as watchdogs for the ‘full implementation and strict enforcement’ of EU law, complementing the public enforcement by the Commission and the national authorities.

Yet, as stated by Folkert Willian,[11] market players only bring actions against other undertakings for violations of EU law if, and only if, the former are aware of their rights and the available remedies. With this in mind, European private energy law aims to shed light on the effectiveness of private enforcement in the EU energy market. European private energy law seeks, above all, to raise awareness about the existence of these private rights, enforcement, and remedies as a means to the full accomplishment of EU values.

[1] COM(2015) 80 Final

[2] COM(2015) 80 Final, p. 19.

[3] Almeida L de, Integration through Self-Standing European Private Law: Insights from the Internal Point of View to Harmonization in Energy Market (PhD Thesis at European University Institute, 2017)

>[4] According to Kim Talus definition of EU energy law in the first lines of his manuscript. Talus K, EU Energy Law and Policy: A Critical Account (Oxford University Press 2013)

[5] Such as the dispute settlement procedures that serve to adjudicate complaints of undertakings against the refusal to access networks taken by operators. See Article 32(2) of the Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC.

[6] Annex I on the Measures on Consumer Protection. Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC

[7] C-92/11, RWE Vertrieb AG v Verbraucherzentrale Nordrhein-Westfalen eV, Judgment on 21 March 2013, ECLI:EU:C:2013:180.

[8] Article 2(6) of the Commission Regulation (EU) 2016/1719 of 26 September 2016 establishing a guideline on forward capacity allocation.

[9] Article 15 of the Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency.

[10] Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union.

[11] Folkert W, Private Enforcement of EU Law before National Courts: The EU Legislative Framework (Edward Elgar Publishing 2015)

Source FSR: European Private Energy Law: what is it, and why does it matter?

Disclaimer: The ownership and the opinion expressed in this article pertain to their authors. While all the effort are made by Esc Adriatic to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations may differ and should be discussed with an expert and/or lawyer. For any specific technical or legal advice on the information provided and related topics, contact us through “lorenc.gordani@euroelektra.al”.

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