The Direct Effect Doctrine in the EU Law - Case Study Example

EU Law Introduction A.G. Jacobs was assuredly right 15 years ago; he concluded that, it might well be conducive to greater legal certainty, and to a more coherent system, if the provisions of a directive were held in appropriate circumstances to be directly enforceable against individuals1. The European Court of Justice determined the doctrine of direct effects, which is its own opinion in relation to the effect of treaties on individual member states. Under this doctrine, the individual before the courts can call on European law, without regard about whether there are national laws in existence2. Whereas the direct effect enables the individual to be involved, some community laws such as directives can only be effective directly in specific conditions. Particular provisions in the founding treaty of the EC, as well as in EC Directives, have proved capable in the provision of direct legal effects that operate against state members to the individual citizen’s advantage. In this case, European Union regulations are applicable directly. However, in order for the provisions to have direct effects, they must be sufficiently clear, precise, and unconditional3. In cases where there are horizontal relationships such as in employment, the direct effect of directives cannot exist. In labor law, for example, the starting point is that member states’ primary legislations create the obligations and rights for parties. Generally, directives cannot directly impose obligation on the individual citizen. Direct Effect European law’s direct effect has been highlighted in judgments by the ECJ, including in Van Gend en Loos v Nederlandse Administratie der Belastingen, in which the company Van Gend on Loos wished to rely on Article 25 of the Rome Treaty against customs authorities in the Netherlands4. After taking their case to the national courts, the court then asked for guidance from the ECJ on whether the applicable article of the treaty would portend direct effect. At the time, other member states argued that the European Court of Justice did not have the right to make decisions on whether the European Union predominated over the law of the member states. In addition, these states felt that the treaty was made solely for state compliance and that the direct effect notion would contradict the intentions of the treaty5. However, the ECJ refused to consider this as an argument, explaining that the treaty was meant to create a community of states and individuals, calling for everybody to participate. As a result, the ECJ found that community law’s intention was to confer rights to the individual that then formed part of their heritage legally6. Subsequently, the ECJ identified that majority of articles in the treaty were directly effective, although it needed to fulfill specific criteria to be directly effective. In this case, the article must be unconditional, sufficient, and should not leave any room for discretion to be exercised. Several types of community legislations in the EU exist and are referred to as secondary sources, including directives and regulations. Article 288 contends that directives will be binding as to results set to be achieved, to every state party to which the article is addressed, but shall allow individual member states the choice of methods and forms7. However, the position on whether a directive’s provisions portend direct effect has proven a controversial issue. There are specific circumstances under which directives possess the capability of direct effect, although issues do come up where an individual would want to rely on such legislation of the EC. Directives, unlike regulations, are not applicable directly and, although state parties have the obligation to implement directives and attain the results intended by the directive, the member states are allowed to specify their own means of achieving the objective through addition or alterations to their domestic laws8. As a result, it would seem that directives run contrary to the doctrine of direct effects since discretion is left to member states as evidenced in the case involving Van Gend. In Pubblico Ministero v Ratti, the defendant relied on the directive of varnishes because its implementation’s time line had elapsed, although he could not rely on the directive because its implementation’s time limit was yet to elapse9. The claimants in this case were attempting to build their case on a directive against the member state and, therefore, they were allowed to do so. As such, these directives solely possessed a vertical effect, in which case the individual was allowed rights against the member state. However, there are a number several directives where the claimant could seek to invoke treaty articles against a business or a private individual, raising the question as to whether a directive can be horizontally enforced against persons. The ECJ considered this issue in Marshall v. Southampton & SW Hampshire Area Health Authority (AHA), in which they held that directives could not alone burden the individual with obligations and that a directive’s provisions may not be used against such an individual10. This was an obiter dictum as the conclusion of the case decided that the AHA did not consist of such an individual and, thus, the directive possessed a vertical order effect. The ECJ confirmed this ruling in Paola Faccini Dori v Srl, in which the court, during its deliberations on whether a directive portended horizontal direct effects, found that directives could not portend direct effects according to Article 28811. However, several problems have been identified with the use of this article in this case. When scrutinized closely under different contexts, including Article 119 of the Rome Treaty, it can be argued that, while these are addressed to state parties, they possess a direct effect to both the state and the individual. In Marshall v. Southampton & SW Hampshire Area Health Authority, A.G. Slynn argued that the implementation of horizontal direct effects in the case of directives would lead to confusions over directives and regulations12. Moreover, he also considered it wrong for unpublished laws to bind the individual since it might be possible they were unaware of specific directive obligations, creating legal uncertainty. However, the Maastricht treaty has somewhat resolved this issue by requiring that directives are published13. The courts have come up with various methods to enable directives portend legal effects in EU state parties. For example, the courts have expanded the definition of entities that constitute a state. In Foster v. British Gas, the ECJ defined a state as a body or institution that is subject to state control or authority, as well as those that had special powers above powers resulting from normal applicable rules between persons14. Still, this has been a controversial issue because it can be argued that a state should be an entity with the authority and control over the effecting of directives, which has led to Marshall’s position being disregarded because the individual can impose his/her rights against non-state entity bodies. Additionally, a directive’s provisions can be indirectly enforced in a horizontal manner between persons. Where national laws are found to agree with directives that are yet to be implemented, the individual is allowed to invoke another person using it, instead of attempting to horizontally affect a directive15. As such, loop holes do exist through which a directive may still portend a direct effect on EU state parties. In such cases, legal changes that come as a result of interpretive obligation will generally determine the case’s result when brought before national courts in the EU16. Thus, the result of the case will differ from a case where national law would have been interpreted sans the directive. In Centrosteel Srl v. Adipol GmbH, A.G. Jacobs explained that legal uncertainty could arise as a result of the interpretative obligation, especially where the burden of the individual regarding civil liability would not have existed before this. Several issues beset this approach, for example, where the court’s credibility declines in the knowledge that directives do not have direct effect horizontally but can be affected indirectly via this route of interpretation. Still, harmonious interpretation is not deemed by the ECJ and national courts to be as important today17. The EC found that doing this would amount to imposing an obligation via a directive on an individual that is yet to be transposed. In practice, one of the parties still finds that it is at a disadvantage. Indirect effect The indirect effect is especially significant in overcoming specific shortcomings inherent in situations of a horizontal nature, as well as where provisions are not clear enough. The Von Colson principle in effect set out the definition of direct effects in 1986. Here, two female applicants who had been denied social worker posts because of their gender and had asked to be appointed or given six months’ salary as a remedy. They could only have claimed reliance losses under German law and the German court made a reference to ask if the Equal Treatment of 1976 had direct effect18. Rather than restricting it itself to the issue of vertical or horizontal direct effect, the court used Article 5 that requires all binding member states authorities to undertake all measures appropriate for the fulfillment of EC obligations19. Where national courts are concerned, this can be interpreted as meaning that even if the direct effect principle is inapplicable, national legislation should be interpreted according to the purpose and wording of the directive to attain the results that the directive sought to pursue. The indirect effect was further expanded in 1990 in Marleasing v La Commercial, in which it was concluded that all laws at national level must be interpreted according to EU law, at that time EC law, but only as far as it was possible20. The doctrine originally only applied where there was ambiguity in national legislations, as well as where national legislation was considered as part of EC provision implementation as discussed. Marleasing v La Commercial also strengthened interpretive duty, contending that it was no longer adequate for EC member state courts to rely on EC obligations only where there was ambiguity in national provisions and that the initial priority should be the establishment of a definition for EC obligation. The ECJ, after identifying the limitations of directives with horizontal direct effects, began to look increasingly for other instruments for use in expanding EC law’s juridical effect. Indirect effect was primarily borne out of the ECJ’s willingness to extend the EC’s competence in cases involving private actors, even in light of the ruling in Marshall v. Southampton & SW Hampshire Area Health Authority21. There was ambiguity in the strength of interpretative duty that, at its broadest, would need member state courts to interpret national laws as effecting EC law with minimal regard to national law and its wording22. This interpretation would have been almost the same as granting directives a direct effect in horizontal cases under any circumstance, apart from where interpretable national legislation was absent. Such a powerful obligation in interpretation, however, was considered as significantly problematic for legal certainty. However, there is a potential for conflict between indirect effect, legal certainty, and the legitimate expectation principle23. In addition, in order for it to be met realistically, legal certainty requirements necessitates that individuals are equally aware of directives and regulations. In a way, this contradicts the direct effect doctrine by virtue of only treaty articles and regulations being enforceable against the individual. To assuage such concerns related to legal certainty, in Teodoro Wagner Miret v. Fondo de Garantía Salarial, the ECJ accepted advice from A.G. Van Gerven that indirect effect in some cases should not require national laws to be interpreted contra legem, i.e. interpretation contradicting national provisions’ ordinary meanings24. The primary focus in the development of indirect and direct effects was the strengthening of EC and now EU law enforcement systems. The implicit and incessant power relationships and bargain between EU member states and the ECJ is clear evidence of this. As such, the ECJ was not concerned primarily with simply protecting the rights of the individuals but with universal enforcement of laws in the EC25. Without doubt, the ECJ has been one of the most active players in pushing for European integration. As a result, individuals only interest the court in as far as they increase compliance of the member states with EC/EU law, as well as enforcement of EU laws when there is involvement of private actors and undertakings. While the rhetoric of the ECJ is always referent to realization and protection of the individual’s rights and the effectiveness of the EU’s competence, it is more of a political and strategic institution than a purely ethical and moral body for the protection and enforcement of rights26. Indeed, the story is similar with the issue of state liability as discussed below. State liability State liability is a means through which the limitations of indirect and direct effect discussed above can be overcome. State liability was established in 1991 in Francovich v. Italian State, in which the ECJ sought to extend the EU law’s impact in relation to directives. In this case, the plaintiff was owed LIT 6 million by the employer27. However, Italy was yet to comply with a directive passed in 1980 that protected employees where the employer became insolvent through requirements for the setting up of a guarantee fund. After the Italian courts sought the ECJ’s opinion of whether the state was liable to making payments to Francovich for the sum owed to him. The ECJ ruled that if individuals could not get redress for infringement of their rights by member states, then the full effectiveness of EU rules would be weakened, as would the protection of rights granted by these rules28. Prior to this ruling, the ECJ’s charge was assumed to solely involve liability in the EU. The case’s novelty was that it concerns the member state’s liability where directives are not implemented. The preconditions for liability in the Francovich case were that there must be clarity regarding the content of the rights, the directive should be intended to confer rights to individuals, and that a causal link must exist between failed implementation of directives and the individual’s loss29. Conditions for the state’s liability were set out in two joint cases; Brasserie du Pêcheur v. Germany and Factortame. The decision in the Francovich case was quite controversial until the ECJ elected to reaffirm the Francovich principle involving liability of the state, although this was to be under limited conditions. Brasserie du Pêcheur was a French fir that was forced to stop beer exports to Germany due to the Purity Law that disallowed marketing of beer with additives. The firm sought compensation after the law was declared illegal as it was in contravention of the EC’s Article 3030. Factortame involved a similar case where fishermen in Spain sought for damages against the government of Britain, which had imposed illegal registration systems. The ECJ ruled that for liability to apply, the intention of the infringed provision must have been to confer rights to individuals, the illegal breach should be sufficiently serious, and that a direct causal link must be established between the member state’s breach and sustained damage31. Although the extent of reparation duty is left to national jurisdiction, the discretion is limited by provisions holding, which the reparation and the loss should be commensurable and that the remedy national regime should not make it excessively difficult or impossible for applicants to get reparations32. Practically, Francovich was significant in the securing increased protection for individuals in various ways. By providing incentives for the state parties of the EU comply, it would be expected to prevent EU laws from being breached. In addition, it would also provide for re-enforcement of the system of enforcement through provision of incentives for the individual to present more actionable cases to the ECJ. Finally, the Francovich principle would also narrow judicial protection lacuna that came from the limitations of both indirect and direct effect33. Francovich was essential in ensuring that individuals could sue for damages where the member state fails to implement EU directives, rather than go via the direct effect. As a result, member states will also be encouraged to implement directions prior to their time limit, while also ensuring that individuals are compensated where states fail to do so. Conclusion The direct effect doctrine allows individuals to use EU laws before national courts whether national laws exist or not. This doctrine has had a significant effect on member states and their legal systems. Directives have continued to arouse controversy in the EU, which has resulted in the EU legal system’s coherency and certainty being undermined. The directive could have vertical direct effect, although there does seem to be confusion regarding the horizontal direct effect and its limitations. The very fact regarding how the term “state” is defined has been broadened by the ECJ, as well as the fact that the indirect effect notion can enable directives by giving them legal effect in the member states sans the requirement to use direct effect, has undermined the imposition of directives by the courts. Thus, Advocate general Jacobs was right in concluding that it is conducive to greater legal certainty and a more coherent system if a directive’s provisions were held in appropriate circumstances for direct enforceability against individuals. However, with time, the Marshall ruling has become entrenched in EU law, making it unlikely that any possibility of change exists. The reason for this is because if the ECJ altered its direction, the last twenty years and the progression of this area of EU law would be a mistake. References Beatson, J, and T. Tridimas. New Directions in European Public Law. Oxford, Hart Publishing, 2013 Chalmers, D, G. Davies, and G. Monti. 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The Modern Law Review, vol. 74, no.6, 2011, p878-910 Prinssen, J. and A.M. Schrauwen. Direct Effect: Rethinking a Classic of EC Legal Doctrine. Groningen: Europa Law Pub, 2012, Schütze, R. An Introduction to European Law. Cambridge, Cambridge University Press, 2012 Schütze, R. European Constitutional Law. Cambridge, Cambridge University Press, 2012 Schütze, R. Foreign Affairs and the EU Constitution: Selected Essays. Cambridge, Cambridge University Press, 2014 Smith, C. Direct Effect of European Law. Hoboken: Taylor and Francis, 2013 Read More