Direct effect

What is direct effect?

- It is a doctrine peculiar to Eu law, but fundamental to the EU law system, it concerns
the access of individuals to EU law
- It applies to all binding EU law
- It enables ‘individuals’ within EU to directly invoke EU law before national courts, be
they EU citizens or legal person

Relationship between supremacy and direct effect:

- Supreme principle is only used when there is conflict of national and EU law
- Supremacy there is always direct effect

Case 26/62 Van Gend en Loos:

- Similar supremacy direct effect
- This case established that treaty provisions have direct effect in national law, for
instance they can be relied upon by individuals in national courts
- A provision must be clear and unconditional to have direct effect

Facts:
- Dutch customs reclassified a chemical product to a high rate of import duty
- Dutch importer challenged the reclassification
- Increase existing import duties is prohibited under article 12 of the treaty of Rome
(now article 30 TFEU)
- Dutch court made preliminary referral to CJEU on whether article 12 may be relied
upon by individuals in domestic courts
Held:
- The increase in customs duty was precluded by the article 12 of the treaty

 Art 12 EEC (of the original Treaty) imposed a ‘standstill’ on customs duties:
“Member States shall refrain from introducing, as between themselves, any new customs
du9es on importa9on or exporta9on or charges with equivalent effect and from increasing
such du9es or charges as they apply in their commercial rela9ons with each other.”
  Could a company directly rely on the Treaty to challenge the actions of the Dutch
State before the Dutch Courts?
 The MSs and the AG argued that they could not
– Only the Contrac9ng Par9es could rely on the Treaty; argument based on the
‘interna9onal’ nature of the Treaty and the Commission’s role as Enforcer.

Nature of direct effect:

- ‘The community constitutes a new legal order of international law for the benefit of
which the states have limited their sovereign rights, albeit within limited fields, and
the subjects of which comprise not only member states but also their national’
- ‘Independently of the legislation of member states, community law therefore not
only imposes obligation on individuals but is also intended to confer upon them
rights which become part of their legal heritage. These rights arise not only where
they are expressly granted by the treaty, but also by reason of obligations which the
treaty imposes in a clearly defined way upon individuals as well as upon the member
states and upon the institutions of the community’

European court:
Role of individuals:
- ‘Eu law therefore not only imposes obligations on individuals but is also intended to
confer upon them rights that become part of their legal heritage. These rights arise
not only where they are expressly granted by the treaty, but also by reason of
obligations which the treaty imposes in a clearly defined way upon individuals as
well as upon member states and upon the institutions of the union’

Enforcement:
Individuals and the ‘effective supervision’ of EU law
- ‘The vigilance of individuals concerned to protect their rights amount to an effective
supervision in addition to the supervision entrusted to the diligence of the
commission and of the member states”

Conditions for direct effect:

The right for an individuals must be:

Clear, sufficiently precise obligation – if imprecise or contended it cannot be enforced to

claim rights (if a member state or individual is unclear on what they can do to comply it
cannot be enforceable)

Clear – it must be possible to identify the nature of the obligation owed to the individual
Precise – the obligation must be complete, setting out all the necessary elements
Unconditional – there may not be any discretion in relation to the obligation

The legal certainty principle is the basis for the limitations of just ability. Enforceability of
the norm as it requires a level of predictability, clarity, and stability, so the question on
whether an EU law provision can have direct effect is actually a question of enforceability
Vertical and horizontal direct effect:

- Full direct effect is when legislation has both vertical and horizontal direct effect
- Partial direct effect can only be vertical direct effect so can only be applied against
the state

Direct effect of treaty provisions:

Against whom can a treaty provision be effective?

- Against a member state – individual vs member state (vertical)
- Against an individual – individual vs individual (horizontal)

Horizontal direct effect is even available when the treaty provision is ostensibly addressed
to the member state
- Art 157 TFEU – ‘Each member state shall ensure that the principle of equal pay for
male and female worker for equal work and work of equal value is applied’
- Case 43/75 Defrenne v SABENA – unequal pension payments

Expansion of the doctrine:

- Charter of fundamental rights
- General principles of EU law
- Regulations
- Decisions
- Directives

Do other forms of EU law have direct effect?

- The charter of fundamental rights enjoys the same status as the treaty – Case C-
617/10 Aklagaren
- Charter provisions are not good candidates for direct effect as most of them are
abstract as enforceability is not clear and most require further legislative
implementation and interpretation
- General principle of EU law – Case C-144/04 Mangold had a horizontal direct effect
of general principles
 - There was controversy surrounding the use of general principle sin this way as they
differ from the rights in legal theory due to the fact that they are general and
introduce broad wake obligations

Do EU regulations have direct effect?

Art 288 TFEU: a regulation ‘shall be binding in its entirety and directly applicable in all
member states’
 Case C-253/00 Munoz
“owing to their very nature and their place in the system of sources of Community
law, regula9ons
operate so as to confer rights on individuals which the na9onal courts have a duty to
protect”
 Regula3ons are directly applicable, but are also capable of having direct effect
 Regula3ons can have both Ver3cal and Horizontal Direct Effect

Do EU decisions have direct effect?

Art 288(3) – ‘a directive shall be binding, as to the result to be achieved, upon each member
state to which it is addressed, but shall leave to the national authorities the choice of form
and methods’
- Member states are given discretion when introducing legislation that will make the
directive part of national legislation, so it is not automatically binding

• Case 9/70 Grad

– The Court relied on the ‘principle of effec3veness’ to find that a Decision could

be capable of producing Direct Effects

• Case C-80/06 Carp

 –  Ver3cal Direct Effect when addressed to a MS

 –  Horizontal Direct Effect when addressed to an individual

Do EU directives have direct effect?

- They have vertical direct effect

Case 41/74 Van Duyn

 –  A Dutch na3onal entering the UK to take up a position in the Church of Scientology
 –  Restriction of the Free Movement of Persons on the basis of Public Policy
 –  An EU Directive prohibited restriction that were not based on personal conduct
• The UK had not implemented the Directive
Direct effect of directives:
- Art 288 TFEU “a directive shall be binding as to the result to be achieved, upon each
member state to which it is addressed, but shall leave to the national authorities the
choice of form and methods”

3 reasons for direct effect:

- Excluding the possibility of direct effect of a directive would be incompatible with its
binding effect (textual argument)
- The useful effect of directives would be weakened if directives could not be invoked
by individuals
- The art 267 TFEU procedure makes no distinction between EU acts

Vertical direct effect of directives:

- Directives are binding on the member states to which they are addressed

Estoppel principle:
- A MS which has not implemented measures required by the directive in the
prescribed periods may not rely on its own failure to perform the obligations as a
defence against a claim
- The obligation in the directive must confer a right on an individual which is 1) clear,
2) precise, and
- 3) unconditional – this will only occur when the time limit for implementation has
passed
- Case 148/78 Ratti

Horizontal direct effect of directives:

• Case C-152/84 Marshall
“it must be emphasised that according to article [288 TFEU] the binding nature of a directive
before a national court, exists only in relation to ‘each member state to which it is
addressed’. It follows that a directive may not of itself impose obligations on an individual
and that a provision of a directive may not be relied upon as such against such a person”.

• Confirmed in Case C-91/92 Faccini Dori

– Individuals not to blame for the MS’s failure to implement – Despite the argument of the
AG

Broad conception of the state:

 Includes organisations beyond the central administration – Case C- 103/88 Costanzo
 Public Authorities – Case C-152/84 Marshall
 Private entities endowed with public functions - Case C-188/89 Foster v
British Gas
“... a body, whatever its legal form, which has been made responsible, pursuant to a
measure adopted by the State, for providing a public service under the control of the State
and has for that purpose special powers beyond those which result from the normal rules
applicable to rela9ons between individuals.”
Problems with not having horizontal direct effect on directives:
• AG Lenz in Case C-91/92 Faccini Dori, EU:C:1994:45
“[50] Foremost among the arguments in favour of directives' having horizontal effect is that
relaxing to equality of the conditions of competition. Moreover, in the absence of horizontal
effect, persons in Member States which comply with Community law are frequently placed
at a disadvantage.”
“[54] ... A provision of a directive, which the Community legislator intended to be binding,
should be recognized as having substantive effect and the conduct of a Member State
contrary to the Treaty should not be able to impede the assertion of legal positions which
are in themselves complete.”

Remedies for horizontal direct effect:

- Direct effect provides enforcing rights for individuals and contributes to the effective
application of EU law, but it has gaps, particularly in relation the directives

The court has used various means to mitigate this:

- Broad concept of the state
- General principles of law
- Indirect effect
- Incidental direct effect
- State liability

Broad concept of the state:

- Broad definitions that goes beyond Mss central organs; includes the organs of the
administration such as municipalities (which have control over the implementation
of the directive as seen by the estoppel principle)

– Private entities endowed with public functions: Case C-188/89 Foster v British Gas
“... a body, whatever its legal form, which has been made responsible, pursuant to a
measure adopted by the State, for providing a public service under the control of the State
and has for that purpose special powers beyond those which result from the normal rules
applicable to relations between individuals.”
- Contrary to the EU fundamental human rights
- Public enterprises brought into the existence by special act of parliaments
- The problem at this time was that British gas was privatised, but the court however
decided that it was part of the state so vertical direct effect applied
- This was for providing a special service to the state, so it has special powers that
result from the normal rules applicable to relations between individuals
- So, in this case the court focused on the function of the authority rather than the
nature of them

– Public authority engaged in private activities (Case 152/84 Marshall)

An individual can rely on a directive as against the State ‘regardless of the capacity in which
the latter is acting, whether employer or public authority’
Whitty v Farrell Case - C–413/15 [2017] ECR I-03036
 Governed by public law that are part of the State in a broad sense; or
 Subject to the authority or control of a public body; or
 Perform a task in the public interest and have been given, for that purpose, special
powers

General principles of law:

- Unwritten, judge-made principles that carry primary law status

The general principles of law may be derived from:

- Common constitutional traditions of member states
- International law sources
- Eu legislative framework

The general principles were combined with direct effect in case C-144/04 Mangold v Rudiger
Helm
- Case showed that an unimplemented directive may have direct effect in a horizontal
situation where it constitutes the expression of a general principle of EU law
- Non-discrimination on grounds of age is a general principle

 –  Case between private parties – horizontal dispute.

 –  Age discrimination - A German law removed an employment protection from
people over 52 years old
 –  The law would have been contrary to the Employment Equality Framework
Directive 2000/78/EC, but its implementation period had not expired.

“[74] ... Directive 2000/78 does not itself lay down the principle of equal treatment in the
field of employment and occupation. ... the sole purpose of the directive is ‘to lay down a
general framework for combating discrimination on the grounds of religion or belief,
disability, age or sexual orientation’, the source of the actual principle [is] in various
international instruments and in the constitutional traditions common to the Member
States.”
“[76] ... observance of the general principle of equal treatment, in particular in respect of
age, cannot as such be conditional upon the expiry of the period allowed the Member
States for the transposition of a directive intended to lay down a general framework for
combating discrimination on the grounds of age”.

 Case C-555/07 Kücükdeveci v Swedex

- This case was the introduction of an act to the encouragement of the employment of
young people
 –  Case between private parties
 –  Age discrimination - German law that did not recognised employment
service by those that were under 25 in entitlement calculations
 –  Age discrimination contrary to the Employment Equality Framework
Directive 2000/78/EC, but implementation period had expired
  –  General principle (non-discrimination on the grounds of age)?
 The Directive merely gives expression to the General Principle of non-discrimination
in EU law, and the Charter of Fundamental Rights Article 21(1).

Indirect effect:
- Not peculiar to horizontal cases, established in vertical case
- Especially if a member state failed to implement a directive
- But in horizontal cases, there is the principle of consistent interpretation
- Consistent interpretation is when national laws have to be interpreted (by the
national courts) in light of the directives and in light of European law, so the member
states have to cooperate with the EC

- Article 4(3) TEU: principle of sincere cooperation

“Pursuant to the principle of sincere cooperation, the Union and the Member States
shall, in full mutual

respect, assist each other in carrying out tasks which flow from the Treaties.

The Member States shall take any appropriate measure, general or particular, to
ensure fulfilment of the obligations arising out of the Treaties or resulting from the
acts of the institutions of the Union.

The Member States shall facilitate the achievement of the Union's tasks and refrain
from any measure which could jeopardise the attainment of the Union's objectives.”

Case C-14,83 Von Colson:

 Female social workers denied employment in a male only prison – sex
discrimination – reimbursed for travel expenses
 No effective transposition of the EU Directive on equal treatment (called for effective
sanctions)
[28] “It is for the national court to interpret and apply the legislation adopted for the
implementation of the directive in conformity with the requirements of Community law, in
so far as it is given discretion to do so under national law.”
• The duty of consistent interpretation applies to both vertical and horizontal relationships

- The applicants of this case argued that the candidates were less qualified and states
that this was incompatible with EU law
- The equality directive had to be implemented into German law and both parties
agreed and stated that the action was not in line with the EU directive
- The translation into German law and implantation was wrong
- The court held that they were wronged by gender discrimination and were entitled
to pursue judicial remedies

• Is there a limit on the extent of the ‘interpretation’ required? No indirect effect before the
expiry date! – Case C-212/04 Adeneler
[115] “[W]here a directive is transposed belatedly, the general obligation of the national
courts to interpret domestic law in conformity with the directive exists only once the
period for its transposition has expired.”
Incidental horizontal direct effect:
- This allows the use of unimplemented directives in cases between private parties
- It is permissible if they do not directly (but only incidentally) impose legal obligations
on private parties
- First seen in the case of case c-194/94 CIA security
- Best example case c-443/98 Unilever Italia

State liability:
- This is the most distinctive of the court’s efforts to provide a particular remedy as a
matter of EU law
- A state must be liable for loss and damage caused to individuals as a result of
breaches of EU law for which the state can be held responsible

 Inherent in the system of the Treaty. See Case C-453/99 Courage v Crehan
“[26] The full effectiveness of [EU law] would be put at risk if it were not open to any
individual to claim damages for loss caused to him...”

State liability for breaches of EU law:

Cases C-6 and 9/90 Francovich & Bonifaci v Italy
 Mr. Francovich was left with unpaid salaries when his employer company
went into liquidation.
 EU Directive 80/987 guaranteed employees a minimum level of protection in case of
employer’s insolvency.
 Italy failed to implement the Directive – deadline for implementation had passed.
 No direct effect - the rights conferred were not sufficiently clear, precise and
unconditional.
 There were no other domestic remedies available.

Francovich:
• Court found for plaintiffs: Although the Directive’s provisions lacked sufficient precision to
have DE, they clearly intended to confer rights of which these individuals had been deprived
through the state’s failure to implement them.
“[33] The full effectiveness of Community rules would be impaired and the protection of the
rights which they grant would be weakened if individuals were unable to obtain redress
when their rights are infringed by a breach of Community law for which a Member State can
be held responsible.”
“[35] It follows that the principle whereby a State must be liable for loss and damage caused
to individuals as a result of breaches of Community law for which the State can be held
responsible is inherent in the system of the Treaty”.

Conditions for state liability:

Francovich set out 3 conditions for finding state liability:
- The directive must entail the grant of rights to individuals
 - It must be possible to identify the content of those rights on the basis of the
provisions of the directive
- There must be a causal link between the breach of the state’s obligation and the loss
and damage suffered by the injured parties

When is the state liable:

Case c-46 & 48/93:

 A French brewery sued the German State for damages for not allowing it to export
beer to Germany. The Commission successfully challenged the German law under Art
34 TFEU - Brasserie du Pecheur.
 Spanish fishermen sued the UK government for compensation in relation to
Merchant Shipping Act 1988. The Act was found to be contrary to EU law in
Factortame (No 2)
 Both States argued the laws had been adopted legitimately and should not be found
to be the basis of a claim in compensation.

 [55] “... as regards both Community liability under Article [340 TFEU] and Member
State liability for breaches of Community law, the decisive test for finding that a
breach of Community law is sufficiently serious is whether the Member State or
the Community institution concerned manifestly and gravely disregarded the limits
on its discretion”.
 [56] “... the clarity and precision of the rule breached, the measure of discretion left
by that rule to the national or Community authorities, whether the infringement and
the damage caused was intentional or involuntary, whether any error of law was
excusable or inexcusable, the fact that the position taken by a community institution
may have contributed toward the omission, and the adopted or retention of national
measures or practices contrary to Community law”

Conditions for state liability after the above case:

- The directive must entail the grant of rights to individuals
- It must be possible to identify the content of those rights on the basis of the
provisions of the directive
- The breach of the state’s obligations must be sufficiently serious
- There must be a casual link between the breach of the state’s obligations and the
loss and damage suffered by the injured parties

• Case C-178, 179 & 188-190/94 Dillenkofer v Germany

– A failure to implement the Package Holiday Directive 90/314 within the time
limit was, in itself, a sufficiently sufficient breach of EU law
• Cases C- 283, 291, & 292/94 Denkavit
 –  An incorrect implementation of a Directive
 –  Not a sufficiently serious breach as most MSs had adopted the same interpretation
of the Directive, and there was no existing case law on the provision.
The extent of state liability:
 What is the scope of SL? Broad Concept of the State!
 Case C-224/01 Köbler v Austria
–––
An Austrian entitlement to pay was determined on years of service, but service outside
Austria not considered
Austrian Administrative court referred a question the CJEU, but rejected Köbler’s claim
Köbler brought another action before the civil courts for the court’s failure to comply with
EU law.
[36] “... it follows from the requirements inherent in the protection of the rights of
individuals relying on Community law that they must have the possibility of obtaining
redress in the national courts for the damage caused by the infringement of those rights
owing to a decision of a court adjudicating at last instance”.