QUESTION:‘Recent case law has left the doctrine of direct effect with uncertain boundaries and dubious justifications with regards to where those boundaries should lie. The European Court of Justice has failed to establish a principled means to determine when and why Directives may exert an impact on the position of private parties in litigation before national courts.’ Discuss.
A key feature of the European Integration project is the perceived remoteness and aloofness of the EU institutions by the European citizenry. This alleged democratic deficit of the EU is caused by a few factors include the wholly appointed and largely unaccountable nature of the officials making decisions and the absurdity of some of the publicized EU decisions in the past.
However, the development of the doctrine of Direct Effect was an early endearing position for the EU project. Direct Effect simply put; means the capacity of any EU citizen to enforce rights conferred on him/her by a provision of European Law. This doctrine was substantively developed from the 1963 Van Gend en Loos decision, (Case 26/62); although the issues surrounding the concept have been flagged since 1956 relating to the ECSC Treaty. In the Van Gend case, the court held that:
“The wording of Article 12 contains a clear and unconditional prohibition which is not a positive but a negative obligation. This obligation, moreover, is not qualified by any reservation on the part of states which would make its implementation conditional upon a positive legislation measure enacted under national law. They are very nature of this prohibition makes it ideally adapted to produce direct effects in the legal relationship between Member States and their subjects.”
The main contention in this case was whether Article 12 of EC Treaty was directly effective. There are two types of Direct effects. First is the Vertical Direct Effect, which relates to relationship between a citizen and an EU member state (or agents of the state). That is; an EU law is vertically effective, if it is enforceable against the state. Secondly there is the Horizontal Direct Effect with relates to EU laws that are enforceable against private individuals (corporations and individuals).
The direct effects doctrine hinges on the principle of the supremacy of EU law over national law. As such; this principle will make no sense unless citizens can enforce EU laws in national courts. This enforceability of EU legal rights in national law is the basis of the doctrine of Direct effect.
In Van Gend en Loos, the European Court of Justice (ECJ), held that Van Gend could enforce Article 30 (formerly Article 12, then 25) against the Dutch government based on three main criteria:
- That the Article was a clear and unconditional
- That it imposes duty on the EU State without discretion or exception given
- That it produced direct effects between citizens and EU member States.
However, UE laws come in four main instruments. These are:
- Treaty Articles – These can be both vertically and horizontally effective.
- Regulations – These can be both vertically and horizontally effective.
- Directives and – These are vertically directive only.
- Decisions – These are addressed to particular parties, so they are enforceable against those to home it is addressed.
A large part of EU laws comes in form of Directives. Directives are instructions to a EU state to introduce a law nationally. Hence why they are only vertically effective. The European Court of Justice (ECJ) in Van Gend case held that Directives have only vertical effects. This position many believed was due to the ECJ taking account of potential reaction from the EU Member states; who were not keen on the direct effects doctrine in the first place. But as years go by, it became unsustainable to maintain this position where the largest legal instrument the EU has (Directives), cannot be enforced against private individuals or companies. Hence the ECJ began expanding the original narrow scope of the direct effects application.
Over the years after the Van Gend case, the ECJ has through cases adjudicated upon clarified the key requirements for a Directive to become directly effective. In Case 43/75 Defrenne v Sabena (No. 2), the ECJ posited that Directives must give Clear and Identifiable rights to individual EU citizens. Then, in Case 148/78, Ratti. the ECJ stated that the time limit for an EU State to implement a Directive must have passed, before it can become directly effective. And finally the ECJ decided that Directives can be enforced only against the State and not individuals in Case 152/84 Marshall.
With pressure mounting on the ECJ to change its position on the non-horizontal direct effectiveness of Directives, more cases emerged that showed the court trimming on the edges of its agreed position. For instance to increase the scope of the effects of Directives; the ECJ expanded the definition of what a “State” is. Originally State simply mean an EU Member government. But in Case 188/89 Foster v British Gas  ECR I-3313; the ECJ said a body will be classed as a State if:
- It is subject to the control of the State
- It has special powers given to it by the State.
Later in the case NUT v Governing Body of St Mary’s Church of England (Aided) Junior School  3 CMLR 630; the court held that the definition of “the State” should be a “Broad one”; thus extending the direct effects to schools and educational establishments. Spectacularly, in Case 14/83, Von Colson and Kaman; the court also decided that national courts are part of the “State”; hence they are under obligation to interpret national law in line with EU law. This could mean that individuals could enforce through national courts EU Directives against other individuals.
This development appears to resolve the difficulty created by the earlier limits of direct effects of Directives; hence this is known as the doctrine of Indirect effects. It is however important that national law exists that National courts can interpret in the first place; as noted by the court in Case 106/89 Marleasing. The UK court affirmed this position in Litster v Forth Dry Dock  2 WLR 634.
It is also now possible for a State to be sued for non implementation of a EU Directive or law. This principle of State Liability was established firmly in Case C-6&9/90 Francovich v Italy  ECR I-5357. As customary, the ECJ again imposed three conditions that must be met for state liability to be established. These are that:
- A Directive gives rights to individual citizens
- These rights are clearly stated in the words of the Directive
- A causal link is established between the state’s failure to implement a Directive and the damage for which a redress is sought.
This principle has now been applied to all forms of EU law in sufficiently serious cases as noted in Case C-46/93 Brasserie du Pecheur v Germany. Several difficulties have arisen in the past when States have failed to implement Directives, causing individuals not being able to get remedies. This incongruity is the reason why the split created by the court between public and private sectors on the vertical effects of Directives look unfair. This is due to the fact that those in the public sector can claim to be suing “an emanation” of the State as established by the Foster v British Gas case; but those who may want to enforce Directives against the private sector cannot do so. In post Lisbon, the European Commission can push for a fine to be imposed the first time a State is brought to the ECJ for non-compliance with EU Law.
So from the foregoing; it is clear that the ECJ has failed to establish a principled means for Directives to have Horizontal effects. There are several ways the court have tried to mitigate the effect of this anomaly; either through Indirect effects or State Liability principles. These make the EU legal framework unnecessarily complex and unfair in this area. There are many that believe some of the above scenario stems from the ECJ unwillingness to reverse itself after the Van Gend case. Regardless, I am hopeful that clarity and certainty will be put in place in the near future.
- Case 26/62 Van Gend en Loos.
- Case 11/70 Internationale Handelsgesellschaft GmbH.
- Case 106/77 Simmenthal SpA.
- Case 27/67 Firma Fink-Frucht GmbH.
- Case 148/78, Ratti.
- Case 152/84, Marshal.
- Case 14/83, Von Colson and Kaman.
- Case C-106/89, Marleasing.
- CRAIG, Paul & DE BÚRCA, Gráinne, EU LAW. Text, Cases, and materials. Oxford University Press, 2003, Third Edition
- HARTLEY, Trevor C., The Foundations of European Community Law, Oxford University Press, 1998, Fourth Fdition
- ARNULL, Anthony, The European Union and Its Court of Justice, Oxford University EC Law Library, 2006, Second Edition
- PRECHAL, S., Does Direct Effect Still Matter?, 37 CML Rev. 1047-1069, 2000
- WINTER, Direct Applicability and Direct Effect-Two Distinct and Different Concepts in Community Law, (1972), CMLR 425
- CRAIG, Paul, Directives: Direct Effect, Indirect Effect and the Construction of National Legislation, 22 EUR. L. REV. 519, 519 (1997)
- CURTIN, Directives: the Effectiveness of Judicial Protection of Individual Rights, (1990), 27 CMLR,
- OJANEN,t., The Changing Concept of Direct Effect of European Community Law, ERPL/REDP, vol.12, no.4, winter/hiver 2000
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Tagged as EU LAW
This essay will aim to address the principle of state liability, by critically evaluating the principle in reference to Francovich v Italy (1990) C-6/C-90, as well as similar cases after this date. But firstly a brief introduction to the European Union (EU) and EU law will be provided. Cases will be compared on the basis of what was held and how the cases concluded. A conclusion will be drawn from all the findings.
The EU is made up of twenty eight Member States and the latest Treaty to be signed by these states is the Lisbon Treaty which amends the Treaty on European Union (TEU) and the Treaty on the Functioning of European Union (TFEU) (Barnard and Peers, 2014). Cuthbert (2014) refers to the Lisbon Treaty as having both TEU and TFEU under “one umbrella.” Being a member of states of the European Union means that their legislative, executive and judicial powers will be controlled and has to be operated within the framework of EU law (Kelly et al., 2014). There are four main institutions of EU; Kelly et al. (2014) suggests these to be, the Council of Ministers; The European Parliament; European Commission; and the European Court of Justice (ECJ). Each of these institutions have their own roles within the EU. These include ensuring objectives in the Treaty achieved; adopting and instating new legalisations; and to make sure that the law is not broken while interpreting or applying a Treaty (Barnard and Press, 2014). In whole, none of these institution have full control over Europe; in fact Davies (2001) concludes by stating that it is run through “co-operation and negotiation” between the institutions.
Foster (2011) defines state liability allows an individual take action against a Member State when a Member state has not followed “EU law obligations” and as a result the individual has suffered loss; this term made its first appeared and was accepted by ECJ in Case 6/90 Francovich : Francovich lost six million lira due to his employer going bankrupt. He sued his employer but could not impose judgement as the employer was bankrupt. So Francovich decided to sue Italian State based on the Directive 80/987, which had not been implemented in Italy even though time set for implementation had passed. Foster (2000) defines the term directives as a set of aims a Member States is obliged to implement within a specified date but the way in which they achieve this is up to the Member State. Directives comes secondary legislation, which is one the sources of EU law (Kelly et al., 2014). Article 202 defines secondary legislations as the under the provision of the Treaty allows the Council of Ministers and Commission to issue directives, make regulations, and take decisions. Directive 80/987 is on the protection of employees in the event of the insolvency of their employers; so basically the directive required Member States to set up a scheme to so that in such cases employees of insolvent companies would receive some of their outstanding wages.
In Case 22/87 Commission v Italy the ECJ held that Italy breached EU law for not implementing Directive 80/987. The Italian court suggested under Article 267 TFEU whether the “provision of the Directive in relation to payment was directly effective,” (Kaczorowska, 2013); and so whether the Italian State was in liable for loses arising from its failure to implement the Directive. Foster (2011), explains how directives were meant to be “general rule” to get the end result; the Court of Justice did not think it was detailed enough to result in rise of direct effects as they were not direct applicable. Direct applicable is when a “provision of the European Union” which will be in effect within the Member of State without the national authorities having to implement it (Davies, 2001). Direct effect is a principle found by the ECJ in Case 26/62 Van Gend where the court held that “[EU Law]…not only imposes obligations on individuals but it is also intended to confer upon them rights which national courts must protect,” (Kaczorowska, 2013). Kelly et al. (2014) identifies that there are two different types of direct effects; these are horizontal and vertical direct effects. Horizontal direct effect allows an individual to use EU provisions against other individuals whereas vertical direct effect allows individuals to rely on EU law when going against their national courts (Kelly et al, 2014).
In the case of Francoivich (Cuthbert, 2014)…. What was held and established
By establishing such a principle ECJ shows that EU law is more supreme in contrast to national law; for example if a Member of state does not implement properly, the power of Community law would suffer (Reinisch, 2009). Other than Direct effect there is also indirect effect. This came about as a result of ECJ refusing to allow “horizontal direct effect of directives,” in the case of Von Colson ; this made EU law less effective, so in order to redeem themselves they created the principle of indirect effect (Reinsich, 2009). The principle states a Member State can interpret national law in a way it follows the requirements of European directives (Kent, 2008).
Kaczorowska (2013) explains how the ECJ felt that for the existence of the EU itself it was a necessity for EU law to be supreme over national law; a couple of years after the Van Geld case the ECJ voiced the principle supremacy of EU law in the Case 6/64 Costa v ENEL : Mr Costa was a shareholder of an electricity company nationalised by the Italian Government and he was sued for refusing to pay electricity bills to the national electricity company ENEL. In the court he raised in his defence that nationalism was in contrary to EU law. The ECJ held that national courts could not create legislations that would go against or would prevail over EU law; furthermore being part of the EU means that the Member State have given the power to legislate to EU and finally they held that EU law cannot vary from one Member State to another; there can’t be any exceptions all the Member States have to follow the same laws. Reinisch (2009) explains how the “effet utile” causes helps ECJ to see this through; EU law being supreme over national law increases and strengthens “the legal uniformity and effectiveness of EC law.”
Foster (2014) and Reinisch (2009) both suggests that the idea of direct effect was inspired by “effet utile” also known as “useful effect” of the Union law; the idea to view the objectives of the Treaty in a broad way and not interpret using the words used. This principle was delevoped by ECJ to help them be more effective in carrying out EU law within Member States (Reinisch, 2009). In fact, Foster (2014) goes on to say that in the Francovich case the principle of state liability could have never be established from reading the Treaty or secondary law in a literal sense.
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