The Law Regarding the Binding Nature of Directives - Essay Example

168929     Any person, company, Directive or Act of (British) Parliament referred to is fictional and used only for the purposes of this problem. Candidates should ignore the English law of negligence and deal only with Euro law issues. 1. Council Directive 199X/309 on Defective Medicinal Products (the “Directive”) was purportedly implemented by the U.K. as the Defective Medicinal Products Act 2004 (“the Act”) which came into effect on 1st March 2004. The Directive should have been implemented no later than 31st December 2003. Under the Directive, liability is imposed on the manufacturer of a medicinal product (the “Product”) which causes injury or illness to/in a patient suffering an adverse reaction. Negligence need not be proved. Any damages so awarded should include an element for pain and suffering and also for loss of wages past, present and future. The onus is on the manufacturer to prove that the injury/illness was not caused by the Product. The Act excludes liability for loss of wages. It also imposes the burden of proof on the victim to prove his/her case. Both the Directive and the Act were intended to replace the existing national laws of negligence in relation to the Product. In May 2004, Byrd was prescribed a mild sedative by his doctor as he was suffering from work-related stress. The Product was manufactured by Omnia Pharma PLC (“Omnia”) a company registered in England. Two weeks after starting the treatment, Byrd developed a skin complaint, suppurating psoriasis, which was painful and also unpleasant to look at. As a result, he became a recluse and was dismissed for persistent absence by his employers. Thereafter, he attempted to commit suicide but was discovered in time. He is still very disturbed mentally. The Product is still covered by UK patents with the result that Omnia has a monopoly on sales of the Product in the UK. Answer ALL of the following questions posed by Byrd: i) Is the Directive likely to be directly effective against Omnia? ii) If so, how should the English Courts deal with the Act? iii) If the Directive were not directly effective, should Byrd rely on indirect effect? iv) Is a claim for Francovich damages against the UK likely to be the most appropriate remedy and is Byrd likely to succeed? The starting point is to consider what directives are, how they are implemented and what the overall effect of directives is. In order to deal with the above it is necessary to examine the law regarding the binding nature of Directives. It is also necessary to examine the implementation of the Directive and discuss whether there has been any breach by the company. If a breach is established it will then be possible to assess what losses the company will be liable for in respect of the claim by Byrd. A discussion on direct and indirect effect is also essential in order to establish whether Byrd can claim under either of these headings. In order to be able to assess whether Francovich damages would be the most effective claim against the UK there needs to be a discussion on what Francovich damages are and when these can be claimed. To be able to decide whether a directive is binding it is necessary to understand what a directive is. A directive has been defined as a legislative act of the European Union which places a requirement on member states to achieve a particular result. A directive will not dictate the means of achieving this and it is therefore open to interpretation. Directives are distinguishable from regulations which do not require any implementing measures and give direct instructions to the member state. A directive normally allows a member state a certain amount of leeway in the way in which the directive is implemented. There are a number of legislative procedures by which directives can be adopted. All directives are only binding on the member states to which they are addressed. This effectively means that a directive might only affect one member state or a group of them rather then all the member states. Generally speaking directives are usually addressed to all member states to ensure unity of the application of European law in al the member states. The European Commission has the power to instigate legal action against any member state that fails to comply with the directive’s requirements either by not implementing the changes or by implementing them incorrectly. Although directives were not originally thought to be binding before being implemented into the legislation the European Court of Justice introduced the doctrine of direct effect which allows unimplemented directives to have legal force. Direct effect will be discussed below along with its implications. It is important to note that directives fix the objectives to be pursued whilst allowing leeway in how this is achieved. The courts insist that the spirit of the doctrine is kept. "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." (art. 249 ex.189). The legal structure of each member state can impact on the way that the directive is implemented. In the United Kingdom most of the directives are introduced through statutory instruments. In some cases the directive may be such that the effect of implementation will bring about major changes in the law. In these cases Parliament usually passes a separate Act to incorporate the changes. When directives are issued they will specify a date by which time the member states will have put the directive into effect. The council of Ministers usually sets the date by which these should be implemented. In cases where the Council of Ministers does not set a date then an automatic date of twenty days following the date of publication is presumed. The European Court of Justice provides guidelines for judges from member states in how to deal with cases where the directives have not been implemented into national law or have been transposed incorrectly. The European Court of Justice has stated that when national law has multiple possible interpretations, the judge must choose the interpretation that conforms with EU law. The same rule is also applicable with directives that have not been transposed into national law. In cases against the state or any state body, directives have "direct effect". A state that hasnt transposed a directive on time may not invoke this to its own benefit. "Direct effect" only applies to rules that are sufficiently clear. Where the directive has not been transposed into national law or has been transposed incorrectly individuals can sue the state for damages. Staring with the Directive itself and whether it is binding on the company it is important to make the point that regulations have direct effect and are binding as part of national law whereas directives require implementation by national legislation in order to be effective. States that refuse to implement Directives as part of national law can be fined by the European Court of Justice. Directives can be phrased as maximum harmonisation or minimum harmonisation. With maximum harmonisation the national law may not exceed the terms of the legislation, whereas with minimum harmonisation the national law may exceed the terms of the legislation if desired. Minimum harmonisation sets a threshold which national legislation must meet. When looking at the way in which a Directive can be applied it is necessary to consider direct and indirect effect. Direct effect is a principle which allows citizens of the Member States to enforce certain pieces of European legislation. The principle of direct effect was established in Van Gend en Loos v. Nederlandse Administratie der Belastingen (Case 26/62); [1963] ECR 1; [1970] C.M.L.R. 1. In this case the court held that the rights conferred on individuals by EC legislation should be enforceable by such individuals in the national courts. This case established the "Van Gend en Loos criteria". The criteria stated that the provision must be sufficiently clear and precisely stated, it must be unconditional or non-dependent and the provision must confer a specific right for the citizen to base his or her claim on. Defrenne v. SABENA (Case 2/74) [1974] ECR 631 brought about the decision of the courts that there are two varieties of direct effect, vertical direct effect and horizontal direct effect. The distinction in the two comes is based on against whom the right is being enforced. Vertical direct effect is concerned with the state’s obligation to ensure its observance and its compatibility with national law, thereby allowing actions against the state. Horizontal direct effect is concerned with the relationship between individuals and companies. In general terms Directives do not usually have horizontal direct effect as they are usually only enforceable against the state. Regulations can have horizontal direct effect as was noted in Courage Ltd v. Crehan (case c-453/99) which concerned the direct application of Article 81 of the EC Treaty and the effectiveness of the procedural law of the Member State. Since directives only specify the results that are to be achieved and the governments are free to implement these directives in whatever method they see fir they are not capable of having direct effect. Directives as such do not create rights. There have been occasions where the courts have given direct effect to a directive. In Grad v Finanzamt Traunstein (Case 9/70) [1970] ECR 825 which was involved with VAT the European Court of Justice made the ruling that a directive and a decision could have direct effect if they imposed an obligation to achieve a required result. Problems can arise if the directive has not been implemented by the national government. In such cases the courts will examine whether the deadline for the implementation has passed. In Pubblico Ministero v. Ratti (Case 148/78) [1979] ECR 1629 the defendant had violated an Italian law in order to comply with an EEC directive on product packaging. The Italian government was seeking to prosecute the defendant for breaking the law. The courts stated in this case that the Italian government had no authority to prosecute the defendant. The directive should have been implemented and the government had failed to do so within the time frame of the directive. The defendant in being compliant with the directive was not at fault but the government was for not implementing the directive on time. Directives can also have direct effect where the directive has not been correctly implemented1. Directives can only have vertical direct effect where such direct effect is allowed as it is contrary to the principles of fairness to allow horizontal effect against a private individual or company2. Direct effect is therefore only against a state and not an individual when dealing with directives. Having looked at direct effect it is necessary to consider indirect effect to see whether an action for the breach of a directive can be brought by this method instead. Indirect effect compels the national courts to interpret national legislation in accordance with the desired aims of the directive wherever possible. There is leeway within the government as far as interpretation of the directive is concerned. So long as the interpretation satisfies the requirements of the directive there can be a variety of ways in which each directive is interpreted and applied. Where a government has failed to implement a directive, individuals can bring an action against the state. The state has been defined as any entity under the control of the government. This was applied in Case C-188/89 Foster v. British Gas [1990] ECR I-3133) where it was held that British Gas was a part of the state as it was state controlled. Local authorities and municipal governments have also been deemed to be state controlled3. As mentioned above directives do not have direct effect on individuals. It is however, possible for directives to have an incidental effect on individuals. Incidental effect has the effect of linking the indirect effect of directives with law suits against individuals. Individuals cannot be sued for failing to comply with a directive but a state’s failure to comply with such a directive can have an incidental effect on a claim against an individual. In Case C-194/94 CIA Security International SA v. Signalson SA and Securitel Sprl ([1996] ECR I-2201) the CIA had attempted to market a burglar alarm in Belgium that did not comply with the technical specifications required in Belgium. In this case the Belgian government had failed to report the specifications required to the EU as they had been directed to by a 1983 directive. The court held that this was a substantial degradation of the effectiveness of the directive and Belgium’s breach of the directive made the Belgian law inapplicable to individuals. Indirect effect is specifically important when dealing with contracts. The court of Justice has made the point that a substantial defect in the implementing of a directive could nullify a contract under national law4. If the directives are not properly implemented the national courts could interpret legal problems based on their own contract law5 In general terms the states have a duty to implement the directives as they are instructed. In Case 14/83 Von Colson and Kamann v. Land Nordrhein-Westfalen ([1984] ECR 1891), the Court of Justice held that Germany was in breach of an EU directive because it did not provide for appropriate sanctions against violators of the directive. Where a member state has not implemented a directive but the deadline has not passed the directive cannot be used to overturn national laws6. The courts do have the ability to take all measures to achieve the desired result of the directive and can therefore sometimes interpret a case as though the directive had been implemented7 Having discussed the law on direct and indirect effect it is possible to decide whether Omnia are likely to be bound by the directive and direct effect applied. It would appear from the information given that Omnia are a company and not state controlled. In such a case this would mean that the directive cannot have direct effect on the company. This would mean that Byrd could not bring an action himself against the company. Compensation in this case would be obtained by the state taking action against the company for the breach of the directive. The difficulty arises in this case as the directive has not been correctly implemented. It is stated above that the directive is supposed to place liability on any medicinal company that causes injury or illness to a patient suffering an adverse reaction. The directive instructs that damages should be awarded to include an element for pain and suffering as well as loss of wages past present or future. It has been stated above that the Defective Medicinal Products Act 2004 excludes liability for loss of wages. This is against the aim of the directive which means that the courts would class the directive as not been properly implemented. It was also stated above that the directive was supposed to replace the existing national laws of negligence in relation to the product. The state has not implemented the directive correctly as the rules on negligence have not been amended in the Act. Despite the fact that the directive is defective the courts still have the power to interpret the case in the light of the directive and make the company responsible for the injuries caused and the loss of wages. As the implementation of the directive was defective the directive can have direct effect on the company. Should the court decide that the directive does not have direct effect because it was incorrectly implemented then Byrd could have a cause of action under indirect effect. This would effectively mean that Byrd could claim that the defect by the state in the implementation of the directive should have an incidental effect on the company. If Byrd is successful either in a claim under direct or indirect effect he would be able to claim for past loss of earnings as well as potential earnings for the future. If the damage caused is likely to affect his chances of gaining employment in the future then he would be able to claim the amount he would have received in payments fro his previous employment had his employment not been terminated. Where the courts are of the opinion that his status of being unemployed is only likely to be temporary then an adjustment to the amount payable would be necessary to take into account the chances of him returning to work in the future. The case of Francovich and others v Italy cases C–6/90 and C–9/90 requires discussion in this scenario to be able to decide whether Byrd can claim Francovich damages. In this case the appellant sued the Italian government on the grounds that he had suffered a loss as a result of the government’s failure to implement EC Directive 80/987. This directive was intended to provide protection for employees in the event of the insolvency of their employer. Francovich was employed by an electronics company in Vicenza. The employer went bankrupt owing Francovich 6 million lira. He was able to gain a judgment in court for the money but as the employer had gone bankrupt he was unable to recover the money. If the directive had been properly implemented his loss would have been eliminated or reduced. The court in Vicenza referred the matter to the European Court of Justice with the result that the Italian government was ordered to pay compensation to Francovich. The implication this case has for individuals is that it can achieve the objective of circumventing the problem of non-horizontal enforceability of a directive. This would effectively mean that in cases where an individual cannot rely on direct effect as the action being pursued is against a company and not the state there is still a remedy for the individual in being able to get compensation from the state. One of the other advantages of Francovich damages is that the individual can often claim significantly more than they would have been able to against an individual. In the past the member states have attempted to avoid liability for a wrongly implemented directive or a directive that has not been implemented at all by using the defence that the time limit for the implementation was too short. In Dillenkofer & ors v Germany [1997] IRLR 60, ECJ joined Cases C-178 and 179/94 and C-188, 189 and 1990/94 the courts rejected the defence offered by the government that the time for implementation was too short. In this case the member state had been asked to implement directive 90/314/EEC which was designed to give package holiday travellers rights in the event that their travel agent became insolvent. In this case the court ordered that the failure to implement the directive within the required time limits meant that they were liable to compensate those travellers who had loss money when the travel agent became insolvent. Questions have been raised as to when the time limit should run for claims to be brought under the Francovich provisions. In general terms the time limit is the same in the European courts as it would be in the national courts. It was however decided in Emmott v Min for Social Welfare and A-G (ECJ) 1993 ICR 8, ECJ that the time for bringing a claim could not start to run until the directive had been properly implemented. The reasoning behind this was that it is impossible for anyone that has been affected by the directive to know of their exact rights until the directive has been implemented. Where the directive results in a change in internal laws the time might not start to run until the legislation of that country has been amended8. It would seem reasonable in the present case that Byrd may well be best advised to bring a claim fro damages under the Francovich ruling. In order to claim using this ruling he would have to satisfy three conditions. These conditions are that the result prescribed by the directive entails the grant of rights to individuals, it is possible to identify yhe content of those rights from the provision of the directive and there is a casual link between the state’s breach of obligation and the loss or damage suffered. The case of Brasserie du Pécher SA v Germany and R v Secretary of State for Transport ex p. Factortame (cases C–46/93 and C–48/93 added a further proviso that the breach must be sufficiently serious in order for the appellant to be able to claim. The courts have held that where a member state fails to implement a directive within the given time limit this will be a sufficiently serious breach per se9. In other cases the courts will examine the clarity and precision of the rule breached to determine whether the infringement was intentional or inadvertent, as well as whether the community objected or contributed towards the omission10. In Bowden v South West Water and others (December 1997) an action was brought by a mussel fisherman for the failure of his business as a result of pollution of the water. Under the bathing water and urban waste water directive the government had a duty to bring about improvements as to the quality of the water. In this case the court held that the directive did not give individual rights to shell fishermen and that a failure to designate protection areas under shellfish directives constituted a breach of duty to the public in general and therefore did not give individual rights. The essence of this is that environmental directives might not be enforceable by individuals as they offer wide scale protection to the general public as a whole and not to individual persons. When looking at the situation with Byrd it has been stated that he developed a skin complaint two weeks after starting the treatment which was painful and unpleasant to look at. This condition led him to become a recluse and eventually be dismissed for being persistently absent from work. It has also been stated that he has attempted suicide and is mentally disturbed. In examining the directive it can be seen that Omnia should be held responsible for the suffering that has been caused to Byrd as he has been in quite a lot of pain. It could also be argued that the suffering caused has led to his dismissal from work. When looking at what Byrd could claim in respect of all of the above it is obvious that he should be able to claim for the pain and suffering as well as the loss of employment. Even though the Defective Medicinal Products Act 2004 has not been amended by the directive Byrd should still be entitled to claim for this as the directive was supposed to allow for such claims. The wrong implementation of the directive by the state would mean that if Omnia were not held liable for the loss of earnings due to the Act not being amended the member state could be held liable under the Francovich principles. Such losses for earnings would cover not only the amount lost at the date of the claim but would also be assessed to cover future loss of earnings. To do this the state would have to analyse the probability of Byrd being able to secure employment in the future. if the condition with his hands is so severe that he is unlikely to be able to gain employment in the future then the award made to him should cover future loss of earnings until he is due to retire from work. It is unlikely that he would be unable to work ever again in the future, although he might have to change careers in order to be able to return to work. This could mean that he has to undergo training for a new role as well as maybe having to take a lesser paid job then he had before. Compensation awarded to Byrd should reflect all of the above so that he is not financially affected. The aim would be to ensure that he gets at least the same amount of money that he received before being dismissed. A further claim could arise from the stress that has been caused by his illness and the fact that he is described as mentally disturbed. This could affect his chances of being able to get a new job. There is nothing in the directive to indicate that there would be any allowance made for mental stress or anxiety caused by injuries and so Byrd might not be able to claim for this element of the injuries. The conclusion that can be drawn from the above is that it is unlikely that the directive would have direct effect against Omnia as they are a company and directives do not generally have direct effect against companies and individuals. The member state could be in breach for failing to implement the directive properly as they did not include the amendments to national law that the directive specified. Given that the directive was incorrectly transposed into national laws this could give rise to Byrd being able to bring an action against the member state for failing to implement the directive correctly. Byrd would be able to pursue a claim under the Francovich Principles and it is likely that he would be compensated not only for the injuries suffered but for the loss of earnings and the loss of earning potential. Bibliography Craig, P and De Burca, G, EU Law Text Cases and Materials, 2nd edition, 1998, Oxford University Press, Oxford. Hanlon, J, European Community Law, 2003, Sweet & Maxwell Lenaerts, K, Van Nuffel, P Bray, R, Constitutional Law of the European Union,2004, Sweet & Maxwell Plender and Usher, Cases and Materials on the Law of the European Communities, 3rd edition, 1993, Butterworths, London. Schwarze, Prof. J, European Administrative Law, 1st Ed, 2006, Sweet & Maxwell Slapper, G & Kelly, D The English Legal System, 4th Ed, 1999, Cavendish Publishing Ltd Table of Cases Van Gend en Loos v. Nederlandse Administratie der Belastingen (Case 26/62); [1963] ECR 1; [1970] C.M.L.R. 1 Courage Ltd v. Crehan (case c-453/99 Pubblico Ministero v. Ratti (Case 148/78) [1979] ECR 1629 Case C-188/89 Foster v. British Gas [1990] ECR I-3133) Case C-194/94 CIA Security International SA v. Signalson SA and Securitel Sprl ([1996] ECR I-2201) Case 14/83 Von Colson and Kamann v. Land Nordrhein-Westfalen ([1984] ECR 1891) Dillenkofer & ors v Germany [1997] IRLR 60, ECJ joined Cases C-178 and 179/94 and C-188, 189 Emmott v Min for Social Welfare and A-G (ECJ) 1993 ICR 8, ECJ Brasserie du Pécher SA v Germany and R v Secretary of State for Transport ex p. Factortame (cases C–46/93 and C–48/93 Verbond van Nederlandse Ondernemingen Marshall v Southampton and South West Hampshire AHA (1986 Case 103/88 Fratelli Costanzo v. Milano, [1989] ECR 1839 Case C-443/98 Unilever Italia SpA v. Central Food SpA, [2000] ECR I-7535 Case 80/86 Officier van Justitie v. Kolpinghuis Nijmegen ([1987] ECR 3969 Case C-106/89 Marleasing SA v. La Commercial Internacional de Alimentacion SA, [1990] ECR I-4135 Rankin v British Coal Corporation [1993] IRLR 69 Dillenkofer and others v Germany cases C–178/94 R v HM Treasury ex p BT case C–392/93 and compare R v MAFF ex p Hedley Lomas (Ireland) Ltd C–5/94 Grad v Finanzamt Traunstein (Case 9/70) [1970] ECR 825 Defrenne v. SABENA (Case 2/74) [1974] ECR 631 Francovich and others v Italy cases C–6/90 and C–9/90 Bowden v South West Water and others (December 1997) Case C-159/00 Sapod Audic v. Eco-Emballages SA, June 6, 2002 Read More