Legal Advice in EU Law - Essay Example

PART In order to advise Christina with regard to her rights under European Community law (EC) to receive a refund, it will be necessary to evaluateindividual rights under Directives and state liability for failure to implement EC law at national level. Firstly, the implementation of the European Communities Act 1972 (ECA) expressly incorporated EC law into national law, creating what has been termed the “new legal order1”. Indeed, Lord Denning MR presiding in the case of H.P Bulmer Limited v J Bollinger SA2 asserted that the effect of the ECA was to ensure that “any rights or obligations created by the treaty are to be given legal effect in England without more ado”3. As such, Lord Denning stated that EC law was directly applicable at national level under domestic law. However, the term “directly applicable” has created ambiguity and the principles of direct effect and indirect effect will determine whether the Council Directive relating to the right of consumers to full contract price refunds (the Directive) is directly applicable under UK law4. If a provision of EC law is directly applicable, section 2(1) of the ECA asserts that “all such rights, powers, liabilities, obligations and restrictions…… shall be recognised and available in law, and be enforced, allowed and followed accordingly.” The current scenario is concerned with the failure to implement the Directive and this analysis will review whether Christina can enforce the rights she would have had if the Directive had been implemented under the doctrine of direct effect; or alternatively, what her rights are against the state for damage suffered as a result of failure to implement the Directive. The specific nature of directives lies in the type of obligations they impose5. Ultimately Member States have discretion as to how to implement a directive, however they must comply with the positive obligation to implement the directive in the first place6. Problems have arisen as to whether Directives themselves can be invoked by individuals in national courts as giving rise to individual rights7, further compounded by the question as to whether a Member State can be liable for damage resulting from its failure to implement a directive, which is pertinent to Christina’s position. In order to be directly effective, a provision of EC law must constitute a complete legal obligation capable of enforcement as such by a court8. Moreover, in the case of Francovich v Italian Republic9, it was asserted that the pre-requisite for direct effect was that the relevant provision of EC law had to be sufficiently precise and unconditional. Furthermore, in the case of Van Gend En Loos10, it was asserted that “the wording of the…….. [EC Treaty] contains a clear and unconditional prohibition which is not a positive but a negative obligation. This obligation, moreover, is not qualified by any reservation on the part of the States which would make its implementation conditional upon positive measure enacted under national law………which makes it ideally adapted to produce direct effects in the legal relationship between Member states and their subjects.11” However, this initial approach of limiting the applicability of direct effect to negative obligations has subsequently been abandoned and extended to cover a wide range of EC law, in particular Treaty provisions12. With regard to directives however, the controversy as to whether these are directly effective has continued to exercise EC judicial authorities in practice13. In the leading case of Van Duyn14, it had been argued that as directives included obligations of result and not conduct, coupled with the fact that only regulations were expressed to be “directly applicable” under the EC Treaty provisions, they were not capable of judicial enforcement under national law. However, this argument was emphatically rejected and the European Court of Justice (ECJ) asserted that “if …….. By virtue of the provisions of [Article 189], regulations are directly applicable, and consequently, may by their very nature have direct effects; it does not follow from this that other categories of acts mentioned in that article can never have similar effects15”. It has been further commented that while this decision may have signified a subtle foundation for arguing the direct effect of directives, “subsequent developments have rendered this doctrinal shift irreversible16”. Moreover, in the case of Marshall v Southampton and South West Hampshire AHA17 (Marshall II) the Court asserted that the fact that a directive gives a choice to Member States as between alternative methods of attaining a given result does not necessarily mean that the provisions in question are not capable of judicial enforcement under the principle of direct effect. Furthermore, it was also asserted in Marshall II18 that once the state had chosen pecuniary compensation as the means by which it would implement a provision, it was then bound to provide an effective compensatory remedy. As such, it had no discretion in applying the chosen solution and in reaching this conclusion the Court effectively widened the scope of direct effect, combining it with effective remedies19. If we apply the Marshall reasoning by analogy to Christina’s position, it is would appear that the Directive is capable of being directly effective based on the positive obligation on the UK government to ensure that consumers receive full contract price refunds within 15 days of purchase. However, the Marshall decision was based on the rationale that whilst the directive in that case had conferred discretion as to the method of implementation, the state had itself chosen to offer pecuniary compensation as its preferred method of implementation. Accordingly, once the state had chosen this method, it was under a positive duty to implement this. With regard to the current scenario however, whilst the Directive itself required member states to implement a system guaranteeing consumer refunds within a 15 day period, the terms of the Directive are unequivocal with regard to the exact nature of the consumer rights conferred. If we consider by analogy the Francovich20 decision, the claimants had been made redundant when their employers became insolvent and Italy had failed to implement a Directive which required member states to set up guarantee funds to cover compensation claims of employees made redundant in the event of their employers’ insolvency. The employees claimed that the Italian state was responsible for payment of the compensation either by direct effect of the Directive or on grounds of liability for failure to implement the directive. With regard to the direct effect argument, the ECJ held that the minimum guarantee requirement in the Directive was not sufficiently precise as the Directive did not specify what form the guarantee was to take. As this was ultimately at the discretion of the member states, the ECJ asserted that the Directive was not directly effective. If we consider this in context of Christina’s legal position, whilst the issue of what constitutes “reasonable deductions” for supplier costs is slightly ambiguous, the obligation on Member States to ensure consumers receive a full unconditional refund of contract price within 15 days means that Christina has strong grounds for arguing that the Directive has direct effect on the basis that the Directive provisions are sufficiently clear and precise. Even if the Directive does have direct effect, the ability of Christina to enforce her rights would depend on the principles of horizontal and vertical direct effect or alternatively indirect effect21. This matter was initially considered in the case of Marshall v Southampton and South West Hampshire AHA (Marshall I)22 which stated that Directives were not horizontally directly effective. This was reiterated in the Duke case23, where it was asserted that directives did not give directly effective rights to individuals which could be relied on horizontally. On this basis, Christina would appear to have no claim against directly against Avalon Computers Limited under the Directive due to the limitations of horizontal direct effect. Furthermore, although the decision in Foster v British Gas24 extended the definition of “emanation of state” in order to widen the applicability of direct effect it is unlikely to aid Christina in the present situation. Avalon Computers Limited is a private limited company and is therefore unlikely to come within the definition of “public authority” under the broad interpretation asserted in the Foster case25. Accordingly, as asserted in Marshall I26, Christina will only be able to rely on the rights under the Directive vertically against the state. As the Directive has not been implemented, the questions pertinent to Christina’s legal positions are as follows: 1) Have the time limits for the implementation of the Directive expired? And 2) If so, are the relevant provisions of the Directive directly effective?27 In the case of Publico Ministero v Ratti28, it was asserted that an individual could only bring a claim in respect of failure to implement a Directive if the time limit for implementation had expired. With regard to the current scenario, the deadline for implementation was 1 May 2008 and accordingly the first requirement is satisfied. Therefore, the next issue to determine is whether Christina can rely on the provisions of the Directive under the principles of direct effect. As discussed above, due to the nature of the Directive requiring the unconditional refund of the full contract price to consumers within 15 days, this further strengthens Christina’s argument that the Directive satisfies the sufficiently precise and unconditional test in order to be directly effective. Alternatively, another method utilised to alleviate the consequence of the limitations upon the direct effect of directives is through the principle of construction, which requires national courts (in conformity with their duty under Article 10 of the EC treaty) to give effect to EC law and interpret all national law in light of EC law regardless of direct effect. This is referred to as indirect effect or the “Von Colson” principle. In the Von Colson29case, the ECJ held that although a directive may not be horizontally directly effective, the Member States’ courts should take the provisions of a Directive into account when applying national law, thereby according rights to individuals under EC law by the principle of indirect effect. This was reiterated in the case of Marleasing30 and Kopinghuis31 asserting the positive obligation of the ECJ to interpret national law in accordance with Article 10 of the EC Treaty. Finally, the Francovich 32decision determined that an individual could bring a claim against the state for damages caused as a direct result of failure to implement a Directive. The rationale behind this decision was that member states had a positive duty to implement EC law and failure to do so constituted a breach of Treaty provisions. This principle was refined by the decision in Factortame v Secretary of State for Transport33, which was applied in the British Telecommunications34 case where it was asserted that in order to bring a claim against the state for damages caused by failure to implement a directive, the directive itself had to expressly confer rights on individuals, the content of which was clear and not open to interpretation. If we apply this to the current scenario, the terms of the Directive clearly confer rights on individuals, with the primary purpose being to confer refund rights to consumers. Moreover, in the case of Dillenkofer,35 it was stated that if the Directive has not been implemented by the prescribed limit, this would be sufficient for a ruling of serious breach of EC law in order to impose state liability. Moreover, in the Francovich36 case, it was determined that damages payable to a claimant must be in respect of all losses incurred directly as a result of the breach. In summary, it is evident that due to the nature of the obligations in the Directive being sufficiently clear and precise, Christina has strong grounds for arguing that the provisions have direct effect. In any event, any claim of direct effect would only be applicable against the State as Directives do not have horizontal direct effect. However, an alternative for Christina would be to rely on the principle of indirect effect on the basis that national courts have a duty to interpret national law in accordance with the Treaty provisions. However, the factual scenario indicates that Christina’s best option would be to pursue a claim against the state for damages caused by its failure to implement the Directive. As such, she would be able to claim full loss and damages directly caused by the failure to implement the Directive. 2. If the legislation had been introduced by way of a Regulation, Christina would be able to rely on the rights under the Regulation directly against Avalon Computers Limited in the national courts as Regulations are directly applicable without further action required by Member States37. PART 2 Article 230 of the EC Treaty is the relevant source of law which enables challenge to the validity of Community acts. In the case of Parti Ecologiste ‘Les Verts V. Parliament38 it was held that “Article 230 (ex173) … makes a direct action available against “all measures adopted by institutions… which are intended to have legal effects”39. If we apply this to the current scenario, the Directive in the current scenario is clearly intended to have legal effects and satisfies the requirement of being a “reviewable act” for the purpose of Article 23040. Furthermore, in case of Cimenteries v Commission41 it was reiterated that measures which create legal effects are subject to review under Article 230. In the case of Parliament v Council42 it was held that an act must be implemented by one of the Community institutions in order to be amenable to review under Article 230. If we apply this to the current scenario, it is evident that the Directive was adopted by a qualified majority of the Council and as such satisfies the requirements of an Article 230 review. Moreover, in the case of Commission v BASF43 it was held that “acts tainted by an irregularity whose gravity is so obvious that it cannot be tolerated by the Community legal order”44 will be subject to review under Article 230. Any party seeking a review under Article 230 must have locus standi and the Government has privileged application locus standi and can challenge any measures adopted by any of the institutions45. The Government does not have to prove a specific interest in the act challenged, but must have a general interest to act46. Moreover, the measure must be of direct concern. A measure will be regarded as being of direct concern if there is a direct cause and effect between the act and impact on the applicant47. Moreover, the Government has a time limit of two months from “the publication of the measure, or notification to plaintiff of date on which it came to the knowledge of the latter, as the case may be” to challenge the validity of the Directive under Article 23048. There are four grounds for review under Article 230, namely: 1) lack of competence; 2) infringement of essential procedural requirement; 3) infringement of treaty or rule relating to its powers; and 4) misuse of powers. Whilst in the current scenario, the Government feels that the Directive encroaches sovereign powers of the UK; the result of the ECA 1972 may render it difficult to argue lack of competence in challenging the Directive. Alternatively, the most common ground is failure to comply with procedural requirements, however in the current scenario the Government’s main contention is that the Directive uses the wrong Treaty provision as a legal base for the measure. If the Government is successful in establishing this, then the ECJ will make a declaration that the Directive is void. Alternatively, the Government may make an indirect challenge under Article 241 arguing the plea of illegality. In the case of Simmenthal SpA v.Commission49it was held that Article 241 can only be brought if a party is not entitled to bring an action under Article 230. BIBLIOGRAPHY Craig & Burca (2007). EU Law: Text, Cases and Materials. 4th Edition Oxford University Press. Damian Chambers, Christos Hadjiemmanuil, Giorgio Monti & Adam Tomkins (2006). European Union Law. Cambridge University Press Trevor Hartley., (2004). European Law in a Global Context: Text Cases and Materials. Cambridge University Press. Norbert Reich., (2003). Understanding EU Law: Objectives, Principles and Methods of Community Law. Intersentia. Hanlon, J., (2003). European Community Law. 3rd Edition Sweet & Maxwell. Lasok, D., & Bridge, J.W (1994). Law and Institutions of the European Communities. Butterworths. Franz C. Mayer (2006). Supremacy –Lost WHI Paper 2/06 German Law Journal Vol 6 No 11 pp1497-1507. Jo Shaw. (2000). Law of the European Union. 3rd Edition Palgrave Macmillan Steiner, Woods & Twigg-Flesner (2003). Textbook on EC Law. 8th Edition Oxford University Press. All Treaties available at www.eur-lex.europa.eu and www.eurotreaties.com Read More