Summary of Judgment

Factual and Procedural Background

Company A and Company B, two companies limited by guarantee representing sectors of the pharmaceutical industry, challenged planned domestic transposition of Directive 2024/3019 concerning urban wastewater treatment (recast). The proceedings were initiated on 13 October 2025; leave was granted on 17 November 2025 and the matter was heard on 12 May 2026. The challenge principally attacks Articles 9 and 10 and Annex III of the Directive which require Member States to introduce quaternary treatment and to ensure producers of human medicines and cosmetics cover at least 80% of related costs via an extended producer responsibility (EPR) scheme. The State respondents (collectively, The State) indicated the Directive would be transposed by secondary legislation; The State non-precedentially waived any objection to an advance challenge to the proposed transposition. The High Court (Judge Humphreys) stayed the domestic proceedings and referred questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling under Article 267 TFEU.

Legal Issues Presented

1. Are Articles 9 and/or 10 of, and/or Annex III to, Directive 2024/3019 invalid when read in light of Article 168 TFEU and/or the polluter pays principle in Article 191(2) TFEU and/or general principles of EU law (including proportionality, equal treatment, non-discrimination and legal certainty), and/or vitiated by manifest error, for any one or more of the following specific reasons:
1. (a) The exclusion of other producers of micropollutants not listed in Annex III from the minimum 80% allocation threshold;
2. (b) The inclusion of all human pharmaceutical products in Annex III having regard to effects on accessibility, availability and affordability of medicines;
3. (c) The absence of a requirement in Articles 9 or 10 for Member States to distinguish between producers of human medicines and cosmetic products despite health considerations and sectoral differences;
4. (d) The timing of Article 9(1) such that substitution of pharmaceutical constituents will be impracticable by 31 December 2028;
5. (e) An alleged significant underestimation of annual costs of quaternary treatment and resulting impacts on affordability and accessibility of human medicines;
6. (f) An alleged insufficiency of rationale or manifest errors in the Feasibility Report and Impact Assessment supporting the 80% cost allocation to pharmaceuticals and cosmetics.
2. Whether the Directive, or parts of it, should be declared invalid on those grounds and thereby prevent domestic transposition.

Arguments of the Parties

Company A and Company B (Applicants)

• They contend Articles 9 and 10 and Annex III are invalid for reasons (a)–(f) above, asserting breach of the polluter pays principle, Article 168 TFEU and general principles (proportionality, equal treatment, non-discrimination, legal certainty) and that the Directive is vitiated by manifest error.
• They rely on affidavit evidence and third-party reports challenging the Impact Assessment and Feasibility Report, arguing these documents overstate pharmaceutical contributions to micropollutant toxic load, use selective or unreliable data, and thereby produce a disproportionate allocation of costs.
• They assert the EPR scheme will disproportionately burden the pharmaceutical sector, risk shortages and reduced accessibility of medicines, and cannot realistically incentivise substitution within regulatory and technical constraints on medicine development.
• They sought a preliminary reference to the CJEU and indicated intention to seek a domestic declaration preventing transposition if the Directive is found invalid.

The State (Respondents)

• The State proposed answer was that the challenged provisions are not invalid; ultimate assessment rests with the EU legislature and CJEU.
• The State pleaded that the Impact Assessment was scientifically robust but did not adduce specific scientific evidence in these proceedings and reserved the EU institutions' role in defending the Directive's validity.
• The State confirmed the Directive would be transposed via secondary legislation and waived any objection to the advance challenge in this case.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court identified the central EU legal provisions engaged (Articles 168 and 191 TFEU) and the Directive provisions at issue (Articles 1, 2(14), 8, 9, 10, 33 and Annex III). The Court noted domestic practice normally requires challenge to follow adoption of specific transposing measures but recorded The State's waiver of objection to an advance challenge.

The Court examined the factual materials relied upon by the applicants (the Commission's Impact Assessment, the Feasibility Report, the JRC study data) and the applicants' affidavit evidence and external reports (including reports produced for industry bodies) asserting substantive defects in the Commission's evidence and methodology. The State maintained the Impact Assessment was robust but did not produce contradicting expert evidence.

Given that the factual context and affidavit evidence are relevant to assessing legality of the EU act, and absent contradiction by the State in evidence, the Court concluded it was appropriate to treat the record as raising an arguable (or "well-founded") case on the Directive's validity and to refer specific questions to the CJEU. The parties had agreed certain points of interpretation of the Directive, and the Court formulated a focused question for reference incorporating the applicants' identified grounds (a)–(f).

Because the resolution of the central questions requires authoritative interpretation and assessment of EU law, the Court stayed the substantive domestic proceedings and ordered a reference to the CJEU under Article 267 TFEU, while requesting priority consideration.

Holding and Implications

CORE RULING: The question set out in the judgment is referred to the Court of Justice of the European Union under Article 267 TFEU.

Implications:

• The High Court stayed the substantive domestic proceedings and adjourned determination of the main case pending the CJEU's judgment; interlocutory or procedural matters may be dealt with in the interim.
• The Court requested that the President of the CJEU afford priority to the reference.
• If the CJEU were to answer that the Directive (or the specified provisions) is invalid, the High Court stated it would grant the declaration sought that The State is not entitled to transpose the impugned provisions under the European Communities Act 1972. The opinion does not purport to set a new domestic precedent beyond the referral and stay.