DIRECT EFFECTEuropean Union Law; Study notes.

WHAT IS DIRECT EFFECT?• Defines the relationship between the citizens of member

states and the EU.• Supranational nature of EU (Concept ties in with supremacy)• Creation of the European Court of Justice• Enforceability of EU law in national courts• Monitoring the incorporation and the carrying out of treaties

obligations.• Evolvement allowing cohesion to be better achieved.

VAN GEND EN LOOS!Dutch government reclassified import duties, standstill article of EU said that wasn’t allowed. Producer went to court relying on the EU article 30 stating that the raised costs he was experiencing were unfair.

Dutch court made an article 267 reference seeking an interpretation of the article. (standstill article, they did breach it. Dualist view= do the treaties give enforceable rights to citizens? Did article 30 do this?

HELD: initial literal approach, article 258 proceedings. Considered irrelevant. Clear that it was intended to affect individuals as well as member states. Clear, unconditional provision=direct effect. More effective way of ensuring citizens rights are met.

THE CRITERIA NEEDED FOR DIRECT EFFECT.

• 1: Defrenne v Sabena Equal pay for men and women. A measure need not be clear as long as it is understandable. • 2: It should not depend on

the intervention of another body to implement it.

• 3:Provision must obviously relate to citizens some how.

Van Gend en

Loos Criteria

Provision must be sufficiently clear and precise

Provision must be unconditional/non dependent.

There must be an identifiable right granted by the treaty.

TWO DIFFERENT FORMS OF DIRECT EFFECT

• Defrenne v SABENA: Claim for equal pay was made under article 157.

• Argument raised by defence that direct effect only applies when it is citizen v state.

• Rejected argument, held that there were two forms of direct effect- Defrenne entitled to be paid the same.

• Actions against the state. Citizen v State. Measures of EU law creates obligations on state to ensure rights are given to citizens correctly.

• Relationship between EU law and national law.

Vertical direct effect

• Concerns the relationships between citizens and citizens. Private corporations.

• Applies to primary and secondary EU law. Rights are still created for the citizens.

Horizontal Direct

Effect

Some cases:

Vertical Direct Effect

Van Duyn: Directives are not considered to have direct

effect but state discretion does not mean a measure

will not be directly effective. Uk could make use of

derogations. Directives can only be vertically directly

effective.

Foster v British Gas: Emanation of the

state=direct effect vertically. Organisation or body who

provides a public service, is controlled by the state & has

special powers is an emanation of the state. Direct effect applied.

Horizontal Direct Effect

Gloszczuk: Relaxed provisions for direct effect.

Court assumes responsibility for effective integration of EU

law. Criteria to only be generally met. Denied only

when serious political consequence. POLICY.

Marshall v Southampton: The

binding nature of a directive only exists in relation to

states it is addressed to. A directive itself may not

impose obligations on an indivicual. NO HORIZONTAL

DIRECT EFFECT.

Vaneetveld: Even wider

interpretation of state.

(Inconsistentcy of Foster test!)

DIRECT EFFECT & REGULATIONS• Regulations have general applicability• & are directly applicable.• Create obligations with no need for

further implementation.• Satisfy Van Gend en Loos criteria

>>>Direct effect.• Never conditional, recognizable right?

The only test required is if it is sufficiently clear & precise.

• If too vague… NO direct effect.

ERIDANA:

Case was considered to involve an article that was considered too vague

Held to give no direct effect because of this. (HAS TO BE SUFFICIENTLY CLEAR AND PRECISE… GOD.]

“By reason of their nature & their function in the system of the sources of the community law, regulations have direct effect and as such as capable of creating individual rights which national courts have to protect.”

DIRECT EFFECT & DECISIONS.

• A decision is binding in its entirety on the party to whom it is addressed.

• Often addressed to parties in breach of EU obligations…

• There is a clear need for citizens to be able to rely on these decisions.

• All of the Van Gend en Loos criteria need to be present.

• Direct applicability a non issue.

• Private party issues???

Case

• Involved a challenge by a German company in regards of a tax that was imposed on it.

• This tax was not in cohesion to a directive in regards of national VAT Laws.

ARGUMENT

• Company argued that the new tax was in breach of the directive and also a previous decision that gave a time limit for the implementation of the directive etc. (Remember nature of continental civil law & precedence)

• Were the company entitled to rely upon this decision????

HELD

• That it could and would be;• “incompatible with the binding nature of decisions… to exclude the

possibility that persons affected may invoke the obligation imposed by a decision, the effectiveness of such a measure would be weakened if national courts could not invoke it & disregard it.”

Grad v Finanzamt Traustein 1970

DIRECT EFFECT & DECISIONS:• Directives are binding but need to

be implemented• More of an order to do something

rather than creating an enforceable “right.”

• Not directly applicable & are conditional.

• VERTICAL DIRECT EFFECT ONLY!!!

• An unimplemented directive can be relied upon & enforced against a member state if

• the member state is prevented from its OWN failure to implement the provision correctly or in order to try avoid the obligation.

Faccini Dori v Recreb: Directives do not have horizontal direct effect & the courts should

interpret their own national law in line with the EU law.

Mangold: A directive can be relied upon

horizontally if it can be considered as

fundamental to the fulfilment of an essential key obligation of EU law.

(Founding principles.)

REMEMBER!

Marshall v Southampton also! As well as Van Duyn cases both essential!

INDIRECT EFFECT:

Vol Colson worked for the state in the prison service.

Both cases involved the improper implementation of a directive relating to provide compensation to

workers after insolvency proceedings.

Von Colso

n Harz

• Creation of the ECJ to avoid the strict limitations of direct effect & Directives.

• Article 4(3) of the TFEU >>>• All appropriate measures should be

taken by member states to ensure fulfillment of the treaty obligations.

• Should interpret their national law in line with EU law.

• Applies to EU law in general.

Harz however worked for a private company.

Von Colson had vertical direct effect, allowing him a remedy via EU law, however Harz did not meaning no remedy.

Held that under article 4(3) both parties had the right to have the law interpreted in a manner that complied with EU law. Both were entitled to compensation.

• Indirect effect initially lacking in definition.

• Has been applied inconsistently also:

Marleasing.Question from Spanish

courts in regards to their failure to implement a

directive was whether an applicant could rely on the

directive regarding company harmonisation

despite it being an unimplemented directive with conflicting provisions

in national law.

“In applying national law, whether the provisions concerned pre date or post date

the directive the national court asked to interpret the national law is bound to do so

in every way possible in the light of the text & the aims of the directive to achieve

this.”

Lister v Forth Dock:Purposive interpretation of legislation was used

in order to implement the directive in question in regards of the case

However

Duke v GEC Reliance: Sex discrimination Act of 1965 had not come into force yet

implementing the equality directive relating to retirement. Marshall case ignored, held that

British statute cannot be distorted to enforce a community directive that had no direct effect.

STATE LIABILTY FOR BREACH OF EU LAW

• Third process of avoiding problems of direct effect & directives.

• If the reason a citizen lack a remedy & suffers loss or damage is the failure of the states implementation the member state will be liable for damage suffered.

Francovich 1991

• Italy failed to set up a scheme to provide minimum compensation for workers after insolvency.

• Unemployed claimants were unable to recover wages.

• Italy was in breach of its obligations; were liable to compensate the workers for the loss it had caused them.

THREE CONDITIONS REQUIRED FOR STATE LIABILITY:

Directive must confer rights onto

individuals.

Contents of said rights must be

identifiable in the wording of the

directive.

There must be a causal link between

the damage and the states failure.

FACTORTAME:

• Involved quotas under the merchant shipping act 1988.

• The action involved was a breach of Article 49 & a decision.

• Reference made to the ECJ was for clarification of the conditions for & the scope of state liability.

• HELD: It was irrelevant that the breaches involved directly effective treaties and also irrelevant what organs of the state were responsible for the breach,

~ The rule of EU law infringed must be intended to confer rights to individuals.

~The breach must be sufficiently serious enough to justify imposing state liability

~ There must be a direct causal link between the breach & the damage suffered.

Definition of state widened & scope of liability widened..

DISCRETION OF THE STATES.• Directives give wide

discretion to member states in regards of how to act.

• If action is different from directive, it could be excused on grounds that the directives phrasing was questionable (not precise or clear enough.)

• Uk government incorrectly implemented a directive on public procurement of water.

• BT suffered loss due to this.• Directive failed van gend en loos criteria.• Breach not sufficiently serious enough

(Factortame conditions)

British Telecommunications

• Failure to implement directive by due date is a breach

• This justifies state liability.

Dillenkopfer

• Act of government rather than legislation.• UK government refused to grant licenses for the export

of Spanish cattle.• Export before slaughter was a breach.• Refusal to grant this was a clear breach>>>• No clear justifiable exemption; state liability applicable.

Hedley Lomas