EU legislative instruments
The two principles that help the effectiveness of the EU= supremacy and direct effect.
Two types of direct effect:
- Horizontal = between private individuals
- Vertical= between individuals and the state
Very nature of legislation defines why these distinctions are important:
- Regulations- present no problem because they are directed at EVEYRONE across member states, from individuals, companies and the national courts
- Directives- problematic because directives are aimed at SPECIFIC PARTIES e.g. a certain company or country, but they don’t apply to individuals. So EU court developed principle early on that directives can’t have horizontal effect buy as with everything in the law there’s always an ‘exception’ to the general rule.
- Never stated in any of the treaties
- Van Gen den Loos and Costa v ENEL make it clear that EU law is supreme because by signing the treaties member states surrendered their right to sovereignty. Therefore highlighting the continuing supremacy of EC law over conflicting national law.
- Simmenthal and Factortame highlight the five obligations national courts have. They must:
- Apply community law in its entirety and protect rights which the latter confer on individuals
- Any provisions of national law which may conflict with community law must be set aside
- Any conflicting provision of current national law will be rendered automatically inapplicable
- Preclude the valid adoption of new national legislative measure
- National courts should suspend national legislation that may be incompatible with EC law until a final determination on its compatibility has been made.
- Direct effect is the ability that individuals of Member States have to invoke provisions of Community law in national courts.
- Lisbon Treaty never specified who could/couldn’t use direct effect= Van Gen den Loos happened= established doctrine of direct effect.
Vertical direct effect of Treaty Articles
Van Gend en Loos= the birth of direct effect.
- Facts: A custom duty was imposed on some Dutch imports into Holland. Van Gen den Loos contested this charge on their goods and brought an action against the state
- ECJ: the principle of this case confirmed that individuals could rely on the Treaty, despite the treaty clearly never talking about individuals.
- Context and Effects: important decision because by deciding that individuals could have a doctrine of direct effect on their side= allowed the EU courts to come closer to achieve the goals that the treaties were meant to bring about for a better European Union.
- Remember at the time there was a strong push for creating a common market
- It helped cement the power and authority of EU law. Normally international treaties have no power in national spheres.
- Granted individuals a new legal heritage with new rights in addition to those conferred upon them by their own states.
- For lawyers it’s good (more law to fight with), and bad (more laws could be used against your arguments)
- Increased the chances of compliance with EU law due to the automatic internalization of EU laws within the legal systems of Member State= instant effectiveness
When will direct effect be applied?
Current position can be summarized as: a treaty article will be accorded direct effect provided that it’s intended to confer rights on individuals and that
- It’s clear and unambiguous,
- Sufficiently precise (where obligation it poses is set out in unequivocal terms (Marshall 1986)
- Unconditional, (its operation mustn’t be dependent upon the further action or direction by national or EU authorities.
This criterion clearly leaves the union courts with considerable room for manoeuvre.
Horizontal direct effect of Treaty Articles
Defrenne v Sabena No2- 1976
- Air hostess worked for an airline whose policy was to retire female employees at the age of 40. She sued on the grounds of Article 119 =equal pay for equal work. The words ‘work’ and ‘pay’ never defined in the Article. Still court deemed her claim sufficiently precise and the airline was held to be in breach of their obligations
- Confirms that employers are obligated to comply with the requirements of a treaty article and other individuals may enforce corresponding rights directly against the obligated party who has failed to comply with EU law. In this case the resultant rights are termed horizontal direct effects.
- Further relaxed Van Duyn
- Objective to achieve economic equality
Regulations and decisions
- These can have horizontal or direct effect.
This is where the problems and controversy begin.
Art 288 TFEU provides that a directive “shall be binding as to the result to be achieved upon each Member State to which it was addressed, but shall leave to the national authorities the choice of form and methods”
- Unlike Regulations and Decisions, Directives need further implementation by national authorities
- = doubt as to whether the doctrine of direct effect should even be applied to Directives in the first place!
- According to Article 189= Directives will always require further implementing measures. The aims of a Directive may be set out in general terms= may not be sufficiently precise to allow for proper national judicial enforcements.
Van Duyn v Home Office 1974
(Important case paved the way and says directives can have direct effect)
- Facts: a follower of the Church of Scientology wanted to work for the organization but was denied entry into the UK to do so. He then relied on a Directive against the UK.
- ECJ says he could rely on this. Their justification for giving Directives direct effect was they wanted to uphold some principle of effectiveness. Basically Directives are binding and will be more effectively enforced if individuals can rely on them.
- Chalmers, Davies & Monti summarizes the problem with the ECJ’s reason well:
“The reasoning is remarkably weak. It starts from an a contrario position as to whether there is any good reason why Directives should not have direct effect. The arguments that their binding nature and their effectiveness require that they be invoked in national courts are simply non sequiturs. Put simply, neither of these qualities prescribes the types of effects Directives should have in a domestic legal system.”
- Contrario= denotes any proposition that is argued to be correct because it is not disproven by a certain case
- Non sequitur= a conclusion or statement that does not logically follow from the previous argument or statement.
When does a Directive become directly effective?
Pubblico Ministerio v Ratti 1979
- Ratti outlined a further condition which must be complied with.
- Principle: you can’t use a Directive against the state if it hasn’t been implemented yet. You have to wait until the Member State has implemented the Directive to reply on/use it.
- Verbond van Netherlands 1977– ECJ held a Directive could be invoked even after it has been implemented by the Member State to allow individuals access to the courts to determine whether the implementing authorities have acted within their powers.
- Mangold 2005– showed court was prepared to give some effect to Directives even before the period of implementation had expired. Following Wallonie 1997- created obligation for Member States not to adopt measures which could seriously undermine the result of the Directive even before the period of implementation had expired.
Horizontal direct effect of Directives
An even more controversial concept ( Important to remember the very nature of Directives i.e. aimed at particular state or company etc. but (but it doesn’t seem to include individual nationals.) and Directives always require further implementation.)
Marshall v Southampton 1986
“ With regard to the argument that a Directive may not be relied upon against an individual, it must be emphasized that according to Article 189 of the EEC Treaty, the binding nature of a directive, which constitutes the basis for the possibility of relying on the 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 a person.”
- Facts- 60yo woman worked for a hospital whose policy was to retire female employees at the age of 60 and 65 for males. She sought to use an EU Directive which gave men and women equal rights, which didn’t exist in UK national law.
- Principles: generally individuals can’t have horizontal direct effect. AG gave two reasons
- Directives aren’t published so employers won’t know about them (this has since changed as regulations and Directives published in the same way.)
- If Directives given horizontal direct effect it could blur the line between regulations which apply to everyone and Directives which don’t. But is this a strong argument? Once a regulation is passed you can use it immediately, whereas a Directive you have to wait two years before you can sue the state if by that time they haven’t implemented it yet.
- Court decided everything it said about horizontality was obiter even though the concept doesn’t exist in EU law. They expanded the concept of the state to avoid the limitation of horizontal. They said that the hospital wasn’t a private body in this case but as an emanation of the state.
- Court only gives one reason in the whole judgement in paragraph 48- it says they’re addressed to member states so you can only sue member states. Article 119 however was addressed to member states. First time EU court used strict estoppel and textual argument
- The vast majority of rights for individuals are found in directives so it causes great inequality because you can’t access right in directives if they haven’t been implemented, but directives aren’t always implemented. It creates even bigger inequality between states that comply with EU law and those like Italy which just choose not to comply with EU law sometimes. Creates gap in EU law by not allowing horizontal direct effect of directives
Who is an emanation of the state?
- As a way of bridging the gap so that more people can use Directives with direct effect, the courts have expanded the concept of the state and what it means.
- It was a way of reducing the rigour of the no horizontal direct effect of Directives rule. An individual can only rely on a Directive only against the state.
- Court seems to have interpreted emanation of the state widely.
Weakens the argument of why Directives can’t have horizontal direct effect.
“ In that respect it must be pointed out that where a person involved in legal proceedings is able to rely on a directive as against the state he may do so regardless of the capacity in which the latter is acting, whether employer or public authority. In either case it is necessary to prevent the State from taking advantage of its own failure to comply with Community law…
The State includes “all organs of administration including decentralized administrative authorities such as municipalities”
Foster v British Gas PLC 1990
- Encapsulate what the test is of determining what an emanation of the state is.
- An individual was suing BG which at the time was a nationalized industry. In paragraph 20 the ECJ tried to explain what an emanation of the state was. You have to ask:
- Is it providing a public service?
- Is it doing so under state control?
- Have they been given special powers?
- It is important to note that all three don’t have to be proved.
Griffin v South West Water 1995
- Privatised industry was an emanation of the state since it provided a public service and was under the control of the SOS
National Union of Teachers case 1997
- Court suggested that the Foster test shouldn’t be seen as a statutory definition and should be interpreted broadly
Kamplemann 1997…a directive…may…be relied on against organisations and bodies which are subject to the authority or control of the state or have special powers beyond those which result from the normal rules applicable to relations between individuals, such as local and regional authorities or bodies which, irrespective of their legal form, have been given responsibility by the public authorities and under their supervision, for providing a public service.
Doughty v Rolls Royce 1992
- RR employee wanted to sue under an equal treatment Directive. At the time RR was 100% owned by the state and the service was under the control of the state. It was a commercial undertaking and so wasn’t responsible for any public service and it wasn’t exercising any special powers.
- The court suggested that ownership wasn’t relevant at the time. RR provided engines and military equipment and was the only company entrusted with transporting the Queen.
- The court said it was a service TO the public but not a public service.
- It must be something the public has access to and benefits from.
Rieser v Asfinag 2004
- If an entity is carrying out a service and for that reason has special powers, the presence of state control isn’t required
- Autonomously governed Italian hospital in receipt of PLC funding was deemed a part of the state.
Incidental horizontal effect
- Incidental direct effect involves actions usually between individuals which are actually based on a provision of national law but not EU law, but one of the parties incidentally by chance uses EU law directive. In very simple terms this looks like horizontal direct effect. And the other party ends up having obligations. The courts have said that this isn’t horizontal direct effect.
CIA Security International
- This is an instance of the EU court being creative
- Facts: Signalsson took CIA to court and tried to stop CIA producing alarm systems as they didn’t comply with Belgian technical standards. CIA counter acted and brought a case saying that the Belgian national law was contrary to EU law- as Belgium hadn’t complied with a Directive that required them to report these technical standards. CIA won.
- While an individual cannot be sued for failure to comply with an EU directive, the state’s failure to comply can be an incidental factor in a suit against an individual, where it will not impose legal obligations upon them
- The courts refused to acknowledge that this was horizontal direct effect and they IGNORED the case law of Marshall and simply said they were disapplying a national law which contravened EU law.
Unilever v Central Food 2000
- Facts: Unilever sold oil to Central Food; however CF refused to pay because the oil didn’t comply with EU regulations. So the Unilever took CF to court saying as this rule didn’t comply with EU law because Italy hadn’t complied with a Directive which required them to report such rules to the commission. So CF had to accept and pay for the oil
- Once more the court insists this isn’t horizontal direct effect
- The limit on horizontal direct effect doesn’t seem to apply when we are discussing a national rule which renders EU law ineffective. In such cases the Directives are said to have an exclusionary effect but NOT a substitutionary effect.
- Exclusionary= they exclude the application of the national provision
- Substitutionary= they don’t substitute the national provision and don’t provide rights and obligations themselves.
Arcor v Germany 2008
- Facts: Arcor was suing the German Regulatory Authority (GRA) which had authorised a company to charge for use of its networks. Arcor brought a claim against Germany and relied on a Directive that said the use of telecommunications network should be free of use and not subject to a charge. Problem in this case was that the GRA decision was contrary to the Directive, a private body obtained obligations- you can’t use direct effect on a private body.
- The end result in this case= court acknowledged the creation of an obligation on a private entity, another company= looks like horizontal direct effect.
- Courts still insist that this doesn’t exist and isn’t possible.
- Undermines the previous reasoning of Marshall which says Directive can’t give rise to individual obligations but Arcor says otherwise.
- It’s almost close to saying that direct effect does exist.
Horizontal direct effect through general principles
Mangold v Helm 2005
- Facts: contract of employment was contrary to EU Directive on fixed contracts and age discrimination. The EU law had to be implemented by 2006 before the period of implementation had expired, but the German government had allowed fixed term contracts to continue for older people to encourage the economy so it had been done in good faith.
- Directives are only capable of having direct effect after expiry of their transposition date (Pubblico Ministero v Ratti: 148/78  ECR 1629) and Mangold had entered into his contract in July 2003. Accordingly, on a traditional analysis Mangold would not have been able to rely on the Directive.
- This is a clear case about horizontality between private individuals YET the EU court allowed it!
- Court’s reasoning is disquieting and flimsy:
- Court treads on very well settled ground concerning Directives- two certainties= Directives only apply after the period of implementation has expired and only works with vertical direct effect.
- Undermines Ratti and these certainties as it allowed the use of a Directive before the period of implementation
Arguments of the court:
- Instead holding that the national court was under a duty to set aside any provision of national law which conflicted with the Directive even if the time limit for transposition had not expired. The court gave two main reasons for this:
- First Argument: The court uses the Wallonie judgement – creating an obligation for Member States not to adopt measures which would seriously undermine the result of the Directive even before the period of implementation has expired. e. saying the national courts shouldn’t do anything that will seriously compromise the Directive, so while pending implementation we will allow the Directive to be used!
- Objections to this reasoning in Wallonie: in a subsequent case called Riser it was ruled that it didn’t create a right to sue the state so why was the court saying that an individual can be sued?
- How can Wallonie be used horizontally if it can’t even be used vertically?
- Even if you apply the Wallonie case- whatever the Member State has done during implementation, it must seriously and gravely compromise EU law. it was an interim solution
- Second Argument: we aren’t relying on the Directive itself BUT the general principles of law which are found in the Directive but not sourced in the Directive. So in the case Mangold relied on an age discrimination Directive and the court is saying we aren’t allowing him to rely on the age discrimination Directive BUT we are allowing him to rely on the general principles of not discriminating by age. = UNCONVINCING.
- Objectionable as the principle of age discrimination didn’t even exist before the Directive!
- The first principle of direct effect = it has to be CLEAR. General principles are general traditions followed by Member States, so by definition general principles are very vague
- General principles never defined by the curt or said to have direct effect
- On so many levels the judgement doesn’t stand- court was pushed into a corner and at this point in time EU making a lot of decisions on equality. Backed into a corner- protecting employee rights vs saying horizontal direct effect can’t be used as they had been adamant about before
- Mangold and incidental direct effect and why it doesn’t work:
- Basically a Directive being used to displace national law.
- Understand: when the national law is displaced by an EU Directive, it doesn’t substitute rights themselves rather it has an exclusionary effect. The Directives don’t create rights themselves; the Directive will only take you a step further in displacing bad law
- Mangold doesn’t fit into incidental direct effect because Mangold itself creates rights and obligations which from that point on regulate the relationship.
- represented a major extension of existing case law, as it enabled the horizontal enforcement of a Directive prior to its implementation date
- It was unclear whether this new change would be confined to age discrimination or the EU was actually creating a new principle
- Kucukdeveci v Swedex GmbH 2010 confirms they were actually creating a new principle
- Trevor Tayleur professor at college of law: In Kücükdeveci the ECJ reiterated that Directives are not capable of horizontal direct effect, but then granted them horizontal direct effect by the back door under the guise of enforcing general principles of EU law. It is possible to discern some logic in its reasoning, as in neither Mangold nor Kücükdeveci did the ECJ actually rule that national courts should apply the Directive directly against the employers concerned. The duty imposed on national courts was merely to disapply conflicting provisions of national law. The practical effect, though, is virtually identical. Both Mangold and Kücükdeveci succeeded in horizontal claims against private employers.
- Kucukdeveci v Swedex GmbH 2010 confirms they were actually creating a new principle
Indirect effect- Interpretation of national law
- Where national courts are required to interpret national law in line with an unimplemented or badly implemented legislative act (directive) of the European Union.
- Indirect effect arises from the failure of a member state to implement a directive—either correctly or at all—but where direct effect cannot apply because the party against whom the directive is sought to be enforced is a private entity or otherwise fails to meet the conditions which would give the directive direct effect
- Article 4(3) TEU – as interpreted by the ECJ
- National courts are under a duty to interpret national law consistently with EU LAW, so far as it is possible to do so, whether or not the Directive has direct effect.
This doctrine initially created in Von Colson
Von Colson v Land Nordhein-Westfalen 1984
- Directive not being implemented correctly
- Facts: vertical effect case, woman applied for a job at a prison but was rejected because she was a woman. German law provided that if you were discriminated against on the basis of gender you would be entitled to travelling expenses. But she wasn’t happy with this. She brought a case on national law.
- A Directive has the effect of direct effect as long as the period of implementation has expired and subject to the normal conditions of is it sufficiently precise and unconditional. Level of precision has become more flexible
- Court– she could use the Directive in a different way, in paragraph 26 they point out that the national courts are subject to interpret their own domestic implementation in light of the wording or parts of the Directive.
- What Von Colson says: when the court is assessing what is/isn’t sufficient it has to do it in the light of the purpose of the Directive so sufficient would be what the EU Directive has already said. So it’s basically manipulating national law to mean what the EU Directive has already prescribed in a very roundabout way
- It’s an interpretive tool manipulating national laws.
The ambit of the interpretive obligation
- Does the obligation only apply to national legislation which is passed in order to implement a Directive?
- To what extent should national courts engage in ‘creative’ or ‘artificial’ interpretation in order to comply with this obligation? Is it applicable in a horizontal situation?
- Is there such a thing as horizontal indirect effect?
Marleasing SA v La Comercial International direct effect Alimentacion 1990
- Directive not being implemented
- Facts: clear horizontal relationship= two companies suing each other on a point of national law saying that the other company wasn’t valid in the way in which it was set up, one side used EU Directive as a defence saying it was set up properly.
- Issue: can the list of reasons why a company is null and void be interpreted in light of EU law?
- It applies indirect effect horizontally and applies it to pre-existing national law. So even if you have a law form the 1920s it must be interpreted in compliance with EU law.
- Court: Para “…in applying national law, whether the provisions in question were adopted before or after the directive, the national court called upon to interpret it is required to do so, as far as possible, in the light of the wording and the purpose of the directive in order to achieve the result pursued by the latter…”
- The national courts are required to interpret law as far as is possible. Indirect effect has advantages in relation to vertical effect– there’s no conditions.
- Limitations: if the national law is clear you can’t interpret the law in whatever way you need.
- In order to rely on a Directive there has to be a pre-existing national law – in the absence of national law, you can’t use the Directive. So if there’s no national there first you can’t use it.
- It appears that a national court must interpret pre-existing national law in the light of a directive only where the internal law is reasonably capable of that interpretation.
- Question to consider- is the ECJ improperly asking national courts to perform tasks which belong with national legislators?
- Issue: can the list of reasons why a company is null and void be interpreted in light of EU law?
Oceano Grupo 2000
- Advocate General Saggio proposes something close to horizontal direct effect: a duty on national courts to give effect to unimplemented Directives by refusing to apply any conflicting rules of national law, EVEN in cases concerning disputes between individuals (‘exclusionary effect’ of unimplemented Directives).
Centrosteel Srl v Adipol GmbH 2000
- Concerned independent civil law obligation not arising in national law
- Court: decided that the courts of Member States are under a obligation to interpret their national laws in such a way as to achieve the result pursued by the directives. That obligation also applies to proceedings between individuals.
Pfeiffer v Deutsches Rotes Kreuz 2004
- Case takes it one step further than Centrosteel
- Para 111: “it is the responsibility of the national courts in particular to provide the legal protection which individuals derive from the rules of Community law and to ensure that those rules are fully effective.”
- Para 113- the national court is BOUND when applying domestic law to interpret it so far as possible in light of the wording and purpose of the Directive concerned.
- Key element: It sets out the interpretive obligation in para 115: “it does not entail an interpretation merely of those provisions but requires the national court to consider national law as a whole in order to assess to what extent it may be applied so as not to produce a result contrary to that sought by the directive.”
- The case tells court that they must do whatever lies in their jurisdiction having in regard to the whole body of rules
- Interpreting the whole body of laws to give results of a Directive.
- It enables the court to look not just at national law, but other provisions that you could interpret in light of the Directive.
- Wide reaching impact if indirect effect
- The interpretive obligation continues to apply even after the transposition of the Directive into national law:
Marks and Spencer plc v Commissioners of Customs and Excise 2002
As to what happens where the EU rule is not in the form of a Directive see C-322/88 Grimaldi  ECR 4407 and C-60/02 Rolex – Regulation also subject to interpretative obligation.
Limits on interpretive obligation
Kolpinghuis Nijmegen 1987
Rule- the courts musnt interpret domestic law contra legem i.e. against ordinary meaning.
- Facts: There’s a water purity directive and he was stocking water that was contrary to this. Holland hadn’t implemented that standard into their standard law. But they did have national law which provided for a much more lenient standard of purity. They prosecuted on the directive which had harsher ramifications, but they hadn’t implemented the directive yet. Can you use the directive against an individual by state authorities , they said no this would amount to horizontal direct effective, and this cannot work as its working against the individual, and Directives can’t have horizontal direct effect
- Instead asked can we use national law interpreted in light of the directive to make the national law to essentially mean the Directive, ECJ said you can’t use indirect effect in this way. The national law couldn’t be interpreted isn’t such a way as the criminal being retrospectively liable. You can’t be retrospectively be liable
- It stated that the obligation on the national court to construe domestic legislation in the light of non-implemented directives was limited by ‘principles of certainty and non-retroactivity’, which in the context of this case meant that the prosecutor could not use the directive to interpret national law in such a way as to determine or aggravate the individual’s criminal liability.
Luciano Arcaro 1996
- “However, the obligation of the national court to refer to the content of the directive when interpreting the relevant rules of its own national law reaches a limit when such an interpretation leads to the imposition on an individual of an obligation laid down by a directive which has not been transposed, or more especially, where it has the effect of determining or aggravating, on the basis of the directive…the liability in criminal law of persons.”
What if national law is not reasonably capable of an interpretation conforming with the relevant directive? Will the Court require national courts to override the language of a national measure which clearly conflicts with a directive?
AS far as possible is the next limitation i.e. the court mustn’t interpret the law contra legem. High threshold- but recent case law suggests even that is weakening as a threshold:
Case C-334/92 Wagner-Miret  ECR I-6911 (contra legem interpretation)
- Classic contra legem case. Employees in a company which went bust and there was no money to pay final salaries to employees. Clearly a horizontal situation. There was an EU directive, on final salary payments following insolvency. Spain hadn’t set up such an institution to pay employees in case of insolvency, it excluded managerial staff from final pay.
Case C-282/10 Dominguez v CICOA Judgment of 24 January 2012
- Fell sick and couldn’t work for 14 months. EU Directive says we are eligible to 20 days of annual leave each year but French law said that you were only entitled to this, if you had worked for at least one month during the year. She tried to claim for leave from her employer. Could she rely on the Directive? Horizontal case= couldn’t use the directive. So she had to use indirect effect using national law, French law said you couldn’t claim and EU law was saying you can ALWAYS claim. This is contra legem.
- The national court in their reference stated that it encountered a contra legem limitation. The court proceeded to interpret the five obligations and suggested that there seems to be an exception in the national law in relation to an accident at work. So if you look at national law it says if you had an accident at work then you would be able to claim your paid holiday.
- Para 29- period of absence due an accident to and from work should be treated the same as having an accident AT work. So basically interpret your national law to mean this. The court is essentially asking national courts to legislate and create loopholes and cover ‘gaps’ in the law. EU suggesting this is a way around the contra legem limitation- creative thinking
- Objections: There’s a lot of contrived interpretation which is very worrying. It creates a lot of legal uncertainty as you wouldn’t know what law will be applied and how far.
- Creation of hybrid law= creation of interlegality= interesting concoction of EU law and national law and you don’t know which cocktail the court will deliver until you find yourself in a case.
Chalmers, Davies and Monti:
“The expansion of indirect effect in this manner has closed to a considerable degree the lacunae created in Marshall, which did not allow Directives to be invoked against private parties. With indirect effect, as long as there is a relevant national law and the national legal system allows some room for interpretation, Directives govern the substance of disputes between private parties.
In Marleasing and, arguably, Dominguez, the dispute was between two private parties with the substantively determinative provisions being those of the Directive, albeit that the formal vehicle governing the parties’ rights was national law.”
 European Union law: cases and materials – Damian Chalmers, G. T. Davies, Giorgio Monti 2010