3. Indirect Effect & State Liability

Question 1

Indirect Effect

Answer 1

INDIRECT EFFECT: The principle that domestic law must be interpreted as far as possible in conformity with EU law in order to achieve the Directive’s intended result. (Von Colson).

Question 2

Indirect Effect: The Rules

Answer 2

InDEff applies vert. (Von Colson) and horiz. (Harz).

A directive can be used to interpret legislation regardless of whether it was made before or after the directive was passed (Marleasing), even if unimplemented.

Obligation to interpret national law AS A WHOLE in conformity with EU law (Pfeiffer).

REQUIRMENTS
1. Obligation to interpret arises once IMP. DATE PASSED (Adeneler).

2. Legislation interpreted ‘as far as possible’ to harmonise with EU law (Marleasing), provided that the interpretation doesn’t:
   - Limitations
   - –Not possible where national law expressly contradicts an EU provision (Wagner-Miret). Subsequently, not required to interpret CONTRA LEGEM (Pupino). If conflict, national legislation stands.
   - –not used to contravene general principles of EU law, especially LEGAL CERTAINTY and NON-RETROACTIVITY (Nijmegen).

Question 3

UK: Extent of Interpretation

Answer 3

GR: UK Courts take a broad purposive approach to harmonising UK/EU law (Lister v Forth Dry Dock).

• Domestic law must be open to interpretation consistent with the directive, even if open to an inconsistent one (Webb v EMO Air Cargo (No. 1)).
• Legislation passed to comply with the directive will be interpreted to give effect to that directive. EVEN if it distorts the legislations meaning (Pickstone v Freemans).

EXCEPTIONS
1. when interpreting EXISTING legislation, cannot go so far as to distort the legislation’s meaning (Duke v G.E.C. Reliance).

Question 4

UK: Rules of Interpretation

Answer 4

UK legislation can be interpreted (HMRC v IDT Card Services Ireland):
- regardless of its language clarity.

• to depart from its meaning by reading it more expansively, restrictively or reading words into it.
• NOT so that it goes beyond interpretation, such as reading in words that ‘go against the grain’ or adopting a meaning that departs from the fundamental principles.
• NOT in such a way that court makes a decision it is not
  equipped to make or practical consequences will follow that the court can’t assess.

Question 5

State Liability

Answer 5

STATE LIABILITY: the principle that individuals may recover compensation from a MS where they have suffered loss through the failure of the MS to fulfil any of its obligations under EU law.

Question 6

State Liability: The Criteria

Answer 6

(Francovich v Italy) first est. SL.: “It is a principle of CommLaw that the MS are obliged to make good loss and damage caused to Individ. by breaches of CommLaw for which they can be held responsible.”

Justified decision through Art 4(3) TEU, a corresponding obligation to remedy breach of obligations.
3 conditions that MUST ALL be met:
1. The directives intended result must involve a GRANTING of rights to individuals.
2. It must be possible to IDENTIFY those rights in the provisions.
3. Must be a CAUSAL LINK between the breach and loss suffered.

(Brasserie du Pecheur) & (Factortame Ltd (No. 3)) exp. the scope. Both to do with TA, not Dir.
The BduP TEST
1. Intended to confer rights on individuals.
2. Breach must be SS (see next card).
3. Direct causal link between breach and damage/loss.

Question 7

State Liability: The BduP Test - SS

Answer 7

The state must have “MANIFESTLY and GRAVELY DISREGARDED the limits of its discretion”.

Factors to consider are:

1. Discretion available to MS.
   - more likely to be SS if limited discretion (Hedley Thomas). This case est. that SS test applicable where states had no discretion, even though easily satisfied.
2. Clarity/precision of breached rule.
   - if unclear, less likely to be SS. EU consider efforts of other MS. (ex parte BT).
3. Whether breach was intentional/excusable.
   - likely excusable if interpretation made in good faith (ex parte BT).
4. The EU’s responsibility
   - lack of guidance may be taken into account (ex parte BT).
5. Whether MS adopted or retained laws contrary to EU law.

Conditions in Ftest and BduPtest are same in substance. If MS fails to implement directive AT ALL, like in Francovich, is automatically SS and strict liability applies. Court applied BduP test in this case though. (Dillenkofer v Germany).

NB: (ex parte BT), breach WAS excusable, so not SS. Due to lack of provision precision, good faith interpreting, other MS made same interpretation mistake, not ‘manifestly contrary’, was no available guidance in case law.