The Doctrine of Direct Effect in EU Law - Essay Example

?the DoctrIne of DIrect effect In eu law Introduction From the small six-member European Economic Community (EEC) to the current European Union (EU) with twenty-seven member-states, the signatories to the Treaty on European Union had struggled to integrate the general provisions of EU law into the legal system of member states. However, injecting a one-size-fits-all community law into the differing if not conflicting domestic laws of the members was a major issue. Hence, the doctrine of direct effect came into being. The doctrine makes EU laws operative and effective within the legal framework of all member-states. This paper shall discuss the development of the doctrine of direct effect, the issues arising therefrom, and how the European Court of Justice resolved them. Moreover, it shall examine the dynamics in the relationship between the EU and the member-states and their individual citizens. Finally, it shall look into how the courts settle issues with regard to conflict arising from the implementation or non-implementation of EU laws and directives. Supremacy of EU Law The principle of supremacy of the EU law holds that in the event of conflict between the provisions of EU law and domestic law, the EU law shall prevail.1 This principle is anchored on the fact that when states signed the treaty creating the former EEC, the members had also signed off a part of their sovereignty to create a new sovereign that can bind both the state and its individual citizens.2 The Preamble of the Treaty on European Union declared in no uncertain terms that it aims to “establish a citizenship common to nationals of their countries”3 and create “an even closer union among the peoples of Europe, in which decisions are taken as closely as possible to the citizen in accordance with the principle of subsidiarity.”4 Finally, the supremacy of EU law is sanctioned by the Treaty on European Union itself which mandates all states to “facilitate the achievement of the Community’s tasks… [and] abstain from any measure which could jeopardise the attainment of the objectives of this Treaty.”5 Aptly, the European Court of Justice interpreted the foregoing provision as a conferment of legal and enforceable rights unto the individual citizens of member states. EU treaties produce direct effects and “individual rights which national courts must protect.”6 Needless to state, concomitant with the exercise of these rights is compliance with the obligations created by virtue of the Treaty. Doctrine of Direct Effect The landmark case of Van Gend en Loos saw the birth of the doctrine of direct effect which made the EU law a reliable source of statutory rights and obligations for parties litigating cases before domestic courts. In particular, the Court ruled that Article 30 of the Treaty on the Functioning of the European Union (TFEU) which prohibits the imposition of custom duties within the Union has confered rights upon the individual nationals which may not be impaired by domestic laws and which may be invoked before national courts.7 Apparently, the realm of treaties does not end with member states; it extends further to individual citizens, vested rights and imposed obligations alike. The court has upheld the rights acquired by individual citizens by virtue of the provisions of the Treaty and declared that it “must be interpreted as producing direct effects and creating individual rights which national courts must protect.”8 Van Gend en Loos became the controlling jurisprudence insofar as direct effect of treaties is concerned. However, subsequent cases had pushed the bar and thus expanded the doctrine’s application to include other forms of EU legislations. Seven years after the 1963 case of Van Gend en Loos, the Court ruled in the case of Grad v Finanzamt Traunstein that provisions of Council Decisions are also capable of “producing direct effects in the legal relationships between the member states to which the decision is addressed and those subject to their jurisdiction.”9 Then in 1972, the Court promulgated in the case of Leonesio v Italian Ministry of Agriculture that EU Regulations also enjoy the same level of direct effect direct as treaties.10 Finally, in 1974, directives were added to the list of EU laws having direct effect by virtue of the court’s ruling in the Van Duyn case where the court declared that “it would be incompatible with the binding effect attributed to a directive by Article 189 [of the Treaty] to exclude, in principle, the possibility that the obligation which is imposes may be invoked by those concerned.”11 The foregoing case creates stability and reliability upon EU legislations, which was explained further in this wise: “In particular, where the community authorities have, by directive, imposed on member states the obligation to pursue a particular course of conduct, the useful effect of such an act would be weakened if individuals were prevented from relying on it before their national courts and if the latter were prevented from taking it into consideration as an element of community law.”12 Subsequent jurisprudence further strengthened the legal standing of nationals of member states to invoke the rights conferred by EU laws, the most notable of which are the Internationale Handelsgesellschaft and the Simmenthal cases. In the former, the Court ruled that the doctrine applies regardless of the nature of domestic law that the EU laws are in conflict with. It does not matter whether the community law is in conflict with the constitutional, penal or common laws of member states; the EU law shall prevail.13 In the same vein, the Simmenthal case reminds national courts that they are “under a duty to give full effect to those provisions, if necessary refusing of its own motion to apply any conflicting provision of national legislation.”14 Hence, regardless of the dynamics within the domestic justice system and regardless of the significance or triviality of the issues and conflicting laws involved, the EU law shall be enforced. The court explained further that, “directly applicable provisions are a direct source of rights and duties for all those affected thereby, whether member states or individuals.”15 As such, national courts are mandated to protect these vested rights of citizens, as it does to constitutional and statutory rights under national laws.16 However, the doctrine’s application is not without limitations. Aware of the implications that the doctrine will have on the European Community, both on the member states and their individual nationals, the Court has formulated a set of parameters against which a contested provision of EU law is measured. To determine whether or not the EU law shall be enforced as having a direct effect on the individual national, the same must pass the three-pronged Kupferberg test: (1) Does it confer rights on individuals? (2) Is it clear and precise? (3) Is it unconditional and readily enforceable without need of any enabling legislation or action by the EU or member state concerned? 17 Notably, these parameters have already been used by the courts in resolving key issues in the past, albeit they were articulated only in later cases. A classic example is Van Gend en Loos case which resolved the issue of conferred rights in this wise: “Independently of the legislation of Member States, Community law not only imposes obligations 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.”18 Finally, the court has had the occasion to issue a guideline in assessing whether or not the provision complies with the conditions of precision and clarity. Lest the words be subjected to literal or trivially technical meanings, the court ruled that in assessing the provision of EU law against the aforementioned tests, the same must be made within the context of the entire treaty and the designed purpose of the law.19 Horizontal and Vertical Direct Effect The doctrine of direct effect is applied either horizontally or vertically. On the one hand, horizontal direct effect refers to disputes between individuals where persons, associations and corporations fall within the ambit of the term individual. On the other hand, vertical direct effect pertains to cases involving an individual and the state. Indubitably, treaties, which have been accorded the force and effect of a law, have both vertical and horizontal direct effects. Provided the requirements set forth in Van Gend en Loos have been complied with, then the provisions of the treaty shall prevail, regardless of the parties involved in the litigation. The doctrine of direct effect also applies to regulations and directives. However, only regulations enjoy the same level of applicability as treaties and other EU legislations of general nature, directives do not. Article 288 of the Treaty on the Functioning of the European Union (TFEU) explicitly provides that, “[a] regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.” The preceding provision gives to regulations the same weight and enforceability as treaties, hence, it has both vertical and direct effect. On the contrary, the TFEU provides that, “[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,”20 (emphasis added). Therefore, only when it has been implemented shall the directive become unconditional and pass the third part of the Kupferberg test. Notwithstanding, even if a directive is clear, precise and unconditional, it can never be given horizontal direct effect. The Court pronounced in Marshall v. Southampton that directives cannot be given horizontal direct effect because it does not create obligation and needs to be implemented first before conferring rights upon individuals.21 Direct Effect on EU Directives Although prior and proper implementation is a condition precedent in order for a directive to have vertical direct effect, an aggrieved party is not without recourse in the case of wrongly implemented or non-implemented directives. Wrongly implemented directive is nevertheless given direct effect as if it has been implemented without vice or defect, while non-implemented directives shall be deemed to have passed the Kupferberg test after the time given to the member-state for its implementation had already lapsed.22 In sum, a state may not undermine the rights conferred by a directive by means of ignoring or refusing to implement the same. The state is deemed to be in estoppel and the individual who relied thereon shall acquire the rights conferred by the non-implemented directive. 23 A state may not circumvent the EU rules and defeat the directive that it is opposed simply by failing to implement the same. Further, a state may not benefit from its non-compliance by allowing it to use the same act or failure to act as a shield against conferred rights of individual nationals. Finally, states that fail to implement a directive are prohibited from promulgating rules that may jeopardise the said directive’s desired goal.24 Interestingly, the limited applicability of the direct effect doctrine in directives has resulted in the development of several concepts and strategies that are designed to offset and ease the impact of the absence of horizontal direct effect in disputes involving EU directives. Firstly, the concept of “state” has been broadened to include government owned and controlled corporations. The Court held in the Foster case that, “unconditional and sufficiently precise provisions of a directive could be relied on against organizations or bodies which were subject to the authority or control of the State or had special powers beyond those which result from the normal rules applicable to relations between individuals.”25 Secondly, the principle of indirect effect was developed which calls for the interpretation of national laws that are in harmony and in consonance with EU directives. The leading jurisprudence for this principle is the Von Colson case where the Court ruled that the national court of member-states have the discretion and power to interpret national legislation in such a way that it conforms with the EU directive.26 Lastly, the incidental horizontal effect argues that although non-implemented directives cannot impose obligation on individuals, it can compel the national court to set aside the conflicting domestic legislation. This in effect tilts the balance in favor of the person who relies on the EU directive, as what happened in the CIA Security case.27 Conclusion The 27 governments signed the Treaty and joined the European Union in the hope of achieving peace, cooperation among the states and their citizens. To achieve this, EU promulgated legistations for its uniform implementation in all the member states. However, because the membership of EU have diverse cultures and traditions, not to mention histories of war and conflict among the states, the process of integrating a uniform set of laws into the domestic legal, political and commercial framework of the states was never easy. Hence, the doctrine of direct effect was introduced which gave the EU and the member states a common ground to stand on. Through a long line of cases, the European Court of Justice have defended and upheld the principle of supremacy of EU law and the concomitant doctrine of direct effect. However, every so often, a trivial case would challenge the doctrine, wherein the court either steadfastly stick to the rules or flexibly adapt to the situation. Either way, the decision is always guided by the perpetual tenet of protecting vested rights of the member-states and its citizens. Bibliography Consolidated Version of the Treaty on European Union [2010] C 83/15 Treaty on European Union, Article 10 Treaty on the Functioning of the European Union [2010] C 83/172, Article 288 Case 6/64 Flaminio Costa v E.N.E.L. [1964] ECR 585 Case 9/70, Franz Grad v Finanzamt Traunstein, [1970] ECR 825 Case 11/70 Internationale Handelsgesellschaft GmbH [1970] ECR 1161 Case 14/83 Sabine von Colson and Elizabeth Kamann v Land Nordrhein-Westfalen [1984] ECR 1891 Case 26/62 NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration [1963] ECR 1 Case 41/74 Van Duyn v. Home Office [1974] E.C.R. 1337 Case 93/71 Leonesio v Italian Ministry of Agriculture [1092] ECR 293 Case 104/81 Hauptzollamt Mainz v C.A. Kupferberg & Cie KG A. A., [1982] ECR 3641 Case 106/77 Amministrazione delle Finanze dello Stato v Simmenthal SpA (1978) ECR 629 Case 148/78 Pubblico Ministero v Ratti [1979] ECR 1629 Case 152/84 Marshall v. Southampton and South-West Area Health Authority (1986) ECR 723 Case C-129/96, Inter-Environnement Wallonie ASBL v. Region Wallone, [1997] E.C.R. 1-741 1 Case C-188/89, Foster v British Gas [1990] ECR I-3133 Case C-194/94 CIA Security international SA v Signalon SA and Securitel SPRL [1996] ECR I-2201 Read More