Ground of Application:
Ireland, supported by Slovakia, asked the ECJ to annul a directive adopted by the Council on the basis of Article 95 EC concerning the retention of data processed and stored in connection with the provision of publicly available electronic communications services or data in public communication networks for the purposes of the prevention, investigation, detection and prosecution of criminal offences. Ireland argued that the directive had not been adopted on an appropriate legal basis – taking the view that the directive cannot be based on Article 95 EC since its ‘centre of gravity’ does not concern the harmonization of national laws to improve the functioning of the internal market but rather the fight against crime, and that measures of this kind ought therefore to have been adopted on the basis of the articles of the EU Treaty relating to police and judicial cooperation in criminal matters.

Facts:
In April 2004, France, Ireland, Sweden and the UK submitted to the Council a proposal for a framework decision based on the articles of the EU Treaty relating to police and judicial cooperation in criminal matters. The Commission took the view that Article 95 EC, which permits the adoption of measures which have as their object the establishment and functioning of the internal market, was the appropriate legal basis for the obligations imposed on operators to retain data for a certain period. On a proposal from the Commission, the Council opted for the adoption of a directive based on the EC Treaty. On 21 February 2006, the data retention directive was adopted by the Council by qualified majority. Ireland and Slovakia voted against the adoption of that directive.

Decision:
The ECJ held that the directive was correctly adopted on the basis of the EC Treaty. The Court noted that the action brought by Ireland related solely to the choice of legal basis and not to any possible infringement by the directive of fundamental rights resulting from interference with the exercise of the right to privacy. The ECJ observed that, following the terrorist attacks in New York, Spain and UK, several Member States had introduced measures aimed at imposing obligations on service providers in regard to data retention, but that those measures differed substantially, particularly in respect of the nature of the data retained and the respective retention periods. These obligations could have significant economic implications for providers by involving substantial investment and operating costs.

Therefore, the Court felt that the use of Article 95 EC was justified since disparities between national rules would create distortions of competition and effect the functioning of the internal market. Furthermore, it was found by the ECJ that the measures provided for by the directive did not, in themselves, involve intervention by the police or law-enforcement authorities of the Member States. The Court therefore concluded that the directive relates predominately to the functioning of the internal market, and so its adoption based on Article 95 EC was justified.