The Principle of Indirect Effect - Essay Example

For analyzing how the principle of indirect effect effectively bridges the gap between the vertical and the horizontal direct effects, the requirements for the applicability of the direct and indirect effects have to be considered. Direct effect is of two types, namely Vertical Direct effect or Individual versus the State and the Horizontal Direct effect, wherein the litigation is between Individuals. The concept of direct effect follows from the supremacy of European Law as formulated by the ECJ. This implies that if an EC Law has direct effect then such law grants rights to individuals, which must be upheld by the national courts. For any EC Law to have direct effect, it must satisfy two conditions. First, the relevant EC Law must be part of the recognized legal order, i.e., it must be a treaty article, a regulation or a directive. Secondly, the terms of the relevant EC Law must be such as are appropriate to confer rights on individuals. Directives have vertical Direct effect only if they have clarity, precision, unconditionality in as much as they fulfil the Van Gend criteria, independence in operation and its date of implementation should have been over and the person or body against whom the directive is pleaded must be public body1 or an emanation of the state2. This has created a duty to try to interpret national law consistently with EC Law, whether or not is has Direct effect. This is the underlying principle of the indirect effect, which establishes the supremacy of EC Law. The doctrine of direct effect enables national courts to apply EC Law. Uniformity is preserved through the preliminary reference procedure using which the national courts refer to the European Court of Justice for interpretation of EC Law. The ECJ is the sole authority for interpreting the various treaties of the EC. However, this dual court system is not conducive to a single uniform interpretational application of EC Law. Treaty Articles should be so worded that they have direct effect. They must further fulfil the Van Gend En Loos criterion and should have both the vertical as well as the horizontal direct effect. This criterion states that the EC Treaty should be applicable not only to the member states but to the individuals also. EC Treaty Articles will overrule any provision of the national law, which does not conform to it, irrespective of whether it was passed before or after the passing of the articles. Similarly, regulations of the EC Treaty are capable of having vertical and horizontal direct effect. Direct applicability of these regulations is enabled by Article 249 of the consolidated version of the European Treaties. These have to be enforced by the national courts. As such limitations were imposed on the doctrine of direct effect in order to ensure that national courts did not face difficulty in implementing community law. For the application of the principle of direct effect the conditions discussed above in respect of the directives, articles and regulations of the treaty should be complied with. Whenever these conditions can not be fulfilled and the direct effect in not applicable, the principle of indirect effect will take over and the implementation of EC Law through the national courts is ensured. In the case Marshall v. Southampton Area Health Authority3 (1986) the European Court of Justice ruled that the relevant Directive had direct effect as it satisfied the four requirements of direct effect. It contended that Marshall could rely upon this to proceed legally against the State. It was also held that the Health Authority, which was Marshall's employer, was part and parcel of the State as it performed a public function on behalf of the State. This case is an example of the horizontal direct effect and in this case the health authority was considered to be an emanation of the state. In the case of Foster v. British Gas the Marshall principle was extended and the European Court of Justice ruled that the Directive had direct effect even against the private British Gas. This decision was taken by The European Court of Justice after it concluded that British Gas provided a public service under the control of a State and was therefore an emanation of the state. The issue involved in this case is whether the claimant, could take recourse to the Equal Treatment Directive in making claims in the UK courts. What had transpired was that female employees were retired from service on attaining the age of 60 years while male employees were retired from service only on attaining the age of 65 years. The English Courts were not in favour of prohibiting discrimination. The female employees approached the ECJ, which ruled that the state must be prevented from taking advantage of its own failure to comply with European Law4. The Horizontal Direct effect is a legal doctrine developed by the European Court of Justice (ECJ), which permits individuals to take the support of direct effect of provisions in the Treaties. These Direct effect provisions confer individual rights, which enable an individual to make claims against other private individuals before national courts. By virtue of this doctrine of direct effect of Treaty provisions, individuals can rely directly on EC law before their national courts, without any necessity for implementation of EC law by Member States through national law. This doctrine was created by the ECJ to counter the failure of Member States to comply with EC law. "The initial rationale of 'Direct effect' - to secure the effectiveness (effet utile in French) of EC law by enabling individuals to rely on EC law against Member States that fail to implement or comply with EC law (vertical Direct effect) - was then extended to allow individuals to rely on Treaty provisions against other private individuals also: for example, requiring respect for the principle in Article 141 EC of equal pay for women and men5." The European Court of Justice has developed a legal doctrine which is known as the Vertical Direct effect. This doctrine allows private individuals to take the direct help of Treaty provisions and EU directives in claims against the state before national courts. This doctrine proved to be relatively insignificant where Treaty provisions relating to employment and industrial relations were limited. All the same, the effect was found to be substantial where such provisions did exist, as demonstrated in the provisions on equal pay for women and men in Article 141 EC. Likewise, the implications in the field of employment and industrial relations were much greater as the Court concluded that the doctrine of vertical direct effect applied also to the substantial body of EU legal measures in the form of directives. This enabled employment rights contained in directives to be enforced directly against the state before national courts. What is more, in many forms of public authority it was possible to give directives the direct effect against the state. In respect of the emanations of the state the scope of the doctrine of vertical direct effect depends on the relevant criteria developed by the European Court in this context the criteria established enabled the inclusion of privatised industries and services that had previously provided public services. This has enabled employees in these industries and services to take direct recourse to the provisions in EU directives and in this manner a large proportion of the national workforce has been enabled to directly enforce the rights contained in EU directives6. Most of the EC law is implemented by means of the Directives, which are passed down to Member States to be incorporated into domestic legislation. Some important examples are the EC Acquired Rights Directive which has been implemented in UK law by the Transfer of Undertakings (Protection of Employment) Regulations 1981 and the Working Time Directive (93/101/EEC). In addition to articles and directives, EC law in the UK devolves upon its citizens by means of the decisions made by the European Court of Justice. This is particularly so whenever a conflict arises between EC law and UK law. The fundamental principle that has always to be foremost in one's mind is that EC law is superior and should therefore prevail. A telling recent example of this was the abortive attempt of the UK Government to render the Working Time Directive null and void. In summary it can be stated that the three pillars of EC law are the Treaty of Rome, secondary legislation under Article 189 of that Treaty, and the decisions handed down by the European Court of Justice. Wherever a conflict arises between UK legislation and EC law the deciding court, has to first ask establish whether the UK fully complied with its treaty obligations If such has not been the case, then an individual citizen may seek remedy by asking the courts to either apply EC law under the doctrine of Direct effect, apply UK law in accordance with EC law by means of the indirect effect or he might proceed legally against the UK Government in the European Court for having failed to discharge its obligations under its treaty obligations resulting in an improper implementation of EC law7. In order to reduce market barriers and to create a single European market harmonization is essential and this forms the justification for issuing directives. The co decision procedure is resorted to in order to decide most policy areas, employing a process of multiple treaties. After consulting member states it is the task of The European Commission to submit a proposal, which may then be adopted by the Council of responsible Ministers. The Union gives directives to all member states and specifies the date on or before which, these states must begin implementation. Such dates are either dates as determined by the Council of Ministers during the time of the main agreement, or in the alternative the twentieth day following the date of publication. These deadlines are often not met by Individual states and when this lapse is serious, the European Commission commences proceedings against the recalcitrant member states in the European Court of Justice. If the State has failed to implement a Directive which confers identifiable rights on an individual, the Van Gend criteria have been met, this breach of the directive is sufficiently serious and if State's failure to implement properly and the Claimant's loss are causally linked then the claimant can claim the so called Francovich damages from the State. Hence, the claimant can sue the Crown for damages. These damages do not constitute the direct effect but are compensation for the lack of this effect. Article 249 clearly states and enjoins upon the Member States that Directives are addressed to the Member State and are binding as to the effect to be achieved. In the Van Gend & Loos legal dispute, the Dutch transport company Van Gend & Loos proceeded legally against the Netherlands customs authorities for imposing an import duty on a chemical product from Germany which was higher than duties on earlier imports. The company contended that this was tantamount to an infringement of Article 12 of the EEC Treaty (now Article 25 of the EC Treaty), "which prohibits the introduction of new import duties or any increase in existing customs duties between the Member States". The Netherlands Court suspended the proceedings and referred the matter to the European Court of Justice, seeking clarification in respect of the scope of applicability and the legal implications of the abovementioned Article of the Treaty establishing the EC. The European Court of Justice utilized this case as an opportunity to propound a number of findings of a fundamental nature Vis--vis the legal nature of the EC. In its pioneering judgment, the Court stated that: "the objective of the EEC Treaty, which is to establish a common market, the functioning of which is of direct concern to interested parties in the Community, implies that this Treaty is more than an agreement which merely creates mutual obligations between the contracting States". The preamble to the Treaty confirms this. The establishment of institutions endowed with sovereign rights, the exercise of which affects Member States and their citizens, affirms this very strongly. The conclusion to be drawn from this is that the Community constitutes a new legal order of international law, and in whose furtherance and benefit the States have limited their sovereign rights, although within limited fields, and most importantly the subjects of this comprise not only Member States but also the individuals living in these member states8. The case of Marshall v. Southampton shows that a Directive cannot be enforced horizontally against a private party. In the case of Marleasing SA v. La Commercial Internacional de Alinientacion SA, it was held that this doctrine of indirect effect can apply even if a Member State had not taken steps to implement such a Directive in its domestic law. The European Court of Justice used Article 5 of the Treaty which provides that the Member States have agreed to the taking of all appropriate measures to meet their obligations under community law. In respect of compensation for non-implementation of European Union the European Court of Justice held that a Member state, which failed to implement a Directive, would have to pay damages in the domestic court to the citizen. To a very large extent, the European Court of Justice had achieved its aim of establishing supremacy of community law over domestic law. European Court of Justice had taken various steps stipulated above to ensure the supremacy of the community law. The concept of direct effect in the EC Law follows from the principle of supremacy of European Law which has been devised by the European Court of Justice. The implication of this concept is that whenever a European Community Law has direct effect then such a law grants rights to individuals. Further, it must be borne in mind that these rights must be upheld by the National Courts. For any EC Law to have direct effect two very important conditions have to perforce be satisfied. These are, first, the EC Law under consideration must be part of the recognized legal order in as much as that it must be a treaty article, regulation or directive. Secondly, the terms of EC Law concerned must be such as are appropriate to confer rights on individuals. This eventuality will depend on the relevant provision in EC Law. In order to have the vertical direct effect it essential that the directives be expressed in clear, precise and unconditional terms, in other words they should fulfil the Van Gend criteria. Further, these directives should be independent of any additional steps taken by the Community or national authorities. The date of their implementation must have passed and these directives must be pleaded against a public body. National legislation as also any legislation, which transposes a directive into the national law of a member state must be interpreted in such a way as to give effect to the provisions of the directive. However, if this is not possible, and the other party is not the emanation of the state, EC law cannot have Direct effect. Whenever a party suffers loss due to the non implementation of the provisions of a directive, and the other party is not an emanation of the state, the state itself is deemed to be liable for the loss suffered. The EC has used directives as the main mechanism for implementing its laws through the length and breadth of the Union. This enables harmonization of EC Law bereft of the uniformity and rigidity issues, which harmonization by regulation create. Direct effect enables an affected individual to use a Directive's provisions in a domestic court subsequent to the date of transposition, if the member state has been guilty of either non implementation or incorrect implementation. The horizontal direct effect refers to the utilization of the directive as a source of legal rights between private parties. This concept was developed by the ECJ to permit individuals and organizations, to use the provisions of EC Law within the member state's Domestic Courts without having to wait for the member state to fulfil some obligation, which it had omitted to perform. The objective of the EC is to ensure that no member state should be allowed to benefit from its own failure to implement EC Law. However, the ECJ contended that certain requirements had to be fulfilled in order to allow a provision of EC Law to gain direct effect. Horizontal Direct effect interferes excessively with the member state's legal system and autonomy. Whenever, the member state does not enact legislation in consonance with the EC Law, the domestic courts are empowered to invoke the relevant EC Law and incorporate it in the domestic law. The Court of Justice is much seized with the all important requirement of uniformity in EC Law. The operation of the doctrine of direct effect implies that national courts can apply EC Law. Uniformity is preserved through the preliminary reference procedure whereby the national courts when faced with doubts regarding the interpretation of the EC Law can refer to the Court of Justice. The Court of Justice is the only competent court to issue authoritative interpretations of the treaties. The Court of Justice conceded that it is not possible to have an interpretation of EC Law which was the same in all the member states. Hence, it directed that whenever there is a conflict between the national and community rule, EC Law is supreme and is to be applied rather than the national law and that this has to be implemented by the national courts. Thus the uniformity of EC Law is reinforced through the doctrine of supremacy. In this manner the role of national courts in implementing the EC Law when the member state fails in its implementation of the same, bridges the gap or fills up the lacuna between the vertical and horizontal Direct effects9. The doctrine of indirect effect is of vital importance in the enforcement of EC Rights against individuals. By means of the technique of judicial interpretation of domestic law, this doctrine obtains results. This converts the national courts into organs of the member states, whose purpose is the fulfilment of community obligations. The onus for consistent interpretation of domestic laws, in conformity with the EC Directives, rests with the domestic courts. However, this is possible only as long as domestic law and the EC Directives are not drastically disparate. From the foregoing it can be concluded that the principle of indirect effect is not only as an addition to but is also a corollary of the doctrine of direct effect. Further, it can be concluded that the direct effect both in its horizontal and vertical manifestations is limited in its scope of applicability, namely to directives, regulations and articles of the EC Treaty. On the other hand, the principle of indirect effect overrules the applicability conditions, wherever the direct effect fails to be applicable. Bibliography European Union directive, (6th February 2006), Wikipedia, [online] retrieved from http://en.wikipedia.org/wiki/European_Union_directive European Community Law, (n.d), [online] available from http://www.oilc.org /wtd_eclaw.cfm Foster V. British Gas (1990), IRLR 353 Horizontal Direct effect (6th February 2006), [online] available from http://www.eurofound.eu.int /areas/industrialrelations /dictionary/ definitions /HORIZONTALDIRECTEFFECT.htm Marshall v. Southampton & S.W. Hampshire Area Health Authority (No. 2) (1993) ECR 1-4367 Marson, James (2004), Access to justice: a deconstructionist approach to horizontal Direct effect, [online] available from http://webjcli.ncl.ac.uk /2004 /issue4/marson4.html Roberts, Nigel and Lane, Andy, EU Law, (n.d), [online] available from http://spamlegalaction.pbwiki.com/EULaw Van Gend & Loos. The Legal Character of the EC and EU. 27th April 2004.Eur-lex. < http://europa.eu.int/eur-lex/en/about/abc/abc_13.html> Vertical Direct effect (6th February 2006), [online] available from http: // www. eurofound.eu.int /areas/industrialrelations/ dictionary/definitions /VERTICALDIRECTEFFECT.htm Read More