Direct Effect - Direct Effect of Directives

Question 1

What are Directives?

Answer 1

Directives are important instruments of European Law that ‘direct’ Member States to achieve a particular result without imposing a specific course of action.

Question 2

Where are Directives commonly used?

Answer 2

Directives can be a popular choice in complicated and politically-charged areas of law, such as tax law or banking regulation.

Question 3

What did Article 288 TFEU say about the Direct Effect of Directives?

Answer 3

It said, they ‘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 method’.

Question 4

From the wording of Article 288, were Directives intended to have Direct Effect?

Answer 4

From the wording of Article 288 TFEU, it seemed that directives were not intended to have any direct effects in the national legal orders.

Question 5

How does the wording of Article 288 TFEU suggest there was no intention to give Direct Effect to Directives?

Answer 5

By stating that Directives ‘shall leave to the national authorities the choice of form and method’ it seemed that Article 288 TFEU suggested that Member States first had to ‘transpose’ directives before they could be relied upon in national courts.

Question 6

How do Directives grant a degree of freedom to Member States when implementing them?

Answer 6

Directives generally set a deadline for transposition, Member States who decide to implement a Directive were still free as to ‘form and method’.

Question 7

Given the degree of freedom granted to Member States by Directives, what can they be considered?

Answer 7

Directives can be considered to be a means for coordinating the adoption of national legislation dealing with European matters.

Question 8

Based on the wording of Article 288 TFEU what impact do Directives have on Member States?

Answer 8

Directives only appear to bind and oblige Member States - they are not capable of being Directly Effective against them.

Question 9

What problem did the ECJ observe with the position that Directives could not have Direct Effect?

Answer 9

The ECJ recognised an issue with this position as where Member States failed to fulfil their obligations under European Law (as provided for by Directives) the inability to rely directly on Directives through Direct Effect meant the only way to remedy the violation was to bring an action to the ECJ.

Question 10

How did the ECJ subsequently address the perceived problem with the lack of Direct Effect of Directives?

Answer 10

Unhappy with the ‘international’ solution (bringing of actions to the ECJ), the ECJ went its own way. In a number of path-breaking judgments it has allowed individuals to rely on their European rights (provided for in Directives) in national court proceedings.

Question 11

What was said regarding the potential Direct Effect of Directives in the case of Grad v Finanzamt Traunstein?

Answer 11

It was said that ‘in cases, where, for example, the [Union] authorities by means of a decision have imposed an obligation on a Member State or all the Member States to act in a certain way, the effectiveness of such a measure would be weakened if the national of that State could not invoke it in the courts’ (reference here to the aforementioned efficiency argument).

Question 12

What was said regarding the potential Direct Effect of Directives in the case of Van Duyn v Home Office?

Answer 12

It was said that ‘[Article 267] which empowers national courts to refer to the Court questions concerning the validity and interpretation of all acts of the [Union] institutions … implies furthermore that these acts may be invoked by individuals in the national courts’.

Question 13

What were the three main arguments used by the courts to justify the possibility of directives having direct effect?

Answer 13

1. Their binding effect
2. Their useful effect
3. The existence of a preliminary reference procedure (Article 267)

Question 14

What is a fourth argument that became apparent in later jurisprudence?

Answer 14

4. Estoppel Argument - here a member state is stopped from using its own failure as a defence.

Question 15

What was said in the Ratti Case regarding the estoppel argument?

Answer 15

It was said that ‘Member States which ha[ve] not adopted the implementing measures required by the directive in the prescribed period of time may not rely, as against individuals, on its own failure to perform the obligations which the directive entails’.

Question 16

When will the ECJ find directives to be directly effective?

Answer 16

While the ECJ, through the above judgements, illustrated that Directives can have Direct Effect this is not always the case, there are a number of conditions to be met for a Directive to have Direct Effect;

1. The Implementation Period must have expired
2. The specific provision must be sufficiently clear and precise
3. The specific provision must be unconditional

Question 17

What is meant by the implementation period for a Directive?

Answer 17

Member States are given a time limit for implementing the provisions of the directive (normally 2 years). If the time limit has not passed, it means that Member States can still transpose any rights derived from European law into national legislation.

Question 18

At what point in the implementation period for a Directive will it be capable of having Direct Effect?

Answer 18

Direct effect can only be invoked once the time limit has passed and the Member State has either (1) failed to implement the directive, or (2) has implemented the directive incorrectly.

Question 19

What is the authority for the Direct Effect of Directives following a failure to implement it or incorrect implementation?

Answer 19

Pfeiffer and Others, Joint Cases C-397-403/01, ECR I-8835, paragraph 103; Becker, paragraph 25

Question 20

What must Member States refrain from doing before the expiry of the time limit for implementation of a Directive?

Answer 20

Even before the expiry of the time limit for implementation, Member States must refrain from taking any measures liable to seriously compromise the result prescribed by the directive - Inter-Environment Wallonie ASBL Case.

Question 21

What is the requirement that the relevant provision be sufficiently clear and precise?

Answer 21

Any provision of EU law (not just directives) must be found to be sufficiently clear and precise in order to be directly effective. It does not have to be 100% clear, but when you read the provision you have to understand who has to do what. This flows from the case of Van Gend en Loos.

Question 22

What is the potential impact of discretion in regards to the clear and precise requirement?

Answer 22

Discretion is key, if a provision gives a lot of discretion to a Member State or institution, the courts may be unable to determine the precise scope of the obligation and thus it may fail to satisfy the clear and precise requirement.

Question 23

What is the requirement that the relevant provision be unconditional?

Answer 23

This means that it (the relevances provision) must not be conditional on any other provision, or any positive action taken by the Member States.

Question 24

Where will a provision fail to meet the unconditional requirement?

Answer 24

A provision of EU law is not unconditional if a Member State has been given the freedom to make its own policy choice - Francovich Case.

Question 25

What additional limitations apply to the direct effect of directives?

Answer 25

1. If a Member State fails to implement a directive, it cannot then invoke direct effect against an individual on the basis that the individual has violated the directive - Kolpinghuis Case.
2. Directives cannot be used by a Member State to aggravate the criminal liability of an individual - Berlusconi Case.
3. Directives cannot be invoked in horizontal situations.

Question 26

What is vertical direct effect?

Answer 26

This is where an individual claims European Rights granted under a directive as against a Member State - the State is above the individual. Vertical Direct Effect is a straightforward (accepted) concept.

Question 27

What is horizontal direct effect?

Answer 27

This is where an individual claims European Rights granted under a directive against another individual - the two individuals are on the same level. Horizontal Direct Effect is. a more controversial concept.

Question 28

How may the four main arguments used by the ECJ to justify the Direct Effect of Directives apply to Horizontal Direct Effect?

Answer 28

In horizontal situations, the estoppel argument will not work, since it was the Member State that failed to implement the directive and not a private individual. However, the other three arguments might still provide strong reasons for accepting the ‘horizontal’ direct effect of directives.

Question 29

What is the position of the courts on the direct effect of directives?

Answer 29

The Court has consistently declared that directives are not capable of having horizontal direct effect.

Question 30

What was said regarding the horizontal direct effect of directives in Marshall v Southampton and South-West Hampshire Area Health Authority Case?

Answer 30

It was said that ‘the binding nature of a directive … exists only in relation to “each member state to which it is addressed”’.

Question 31

What was said regarding the horizontal direct effect of directives in the Faccini Dori Case?

Answer 31

It was said that ‘a directive is binding only in relation to ‘each member state to which it is addressed’.

Question 32

Given that directives do not have Horizontal Direct Effect, what are the alternative options for an individual seeking to enforce rights stemming from a directive against another individual?

Answer 32

1. Broad definition of the State

2. Indirect Effect or the Duty of Consistent Interpretation

Question 33

What is the concept behind the broad definition of the state as an alternative to horizontal direct effect?

Answer 33

The principal reason against horizontal direct effect was that directives are addressed to States. But what institutions were considered to be part of the ‘State’?

Question 34

What was said in the case of Fratelli Constanzo SpA v Comune di Milano regarding definitions of the state?

Answer 34

It was said that the state should be considered to be ‘all organs of the administration, including decentralised authorities such as municipalities’.

Question 35

Which other cases illustrate the broad approach to the interpretation of the ‘state’?

Answer 35

Fratelli Constanzo involved local authorities, but the “State” can more generally be seen as encompassing all public authorities including; tax authorities - Becker Case, health authorities - Marshall Case, police - Johnston Case.

Question 36

How else have the court illustrated a broad approach to the definition of the ‘state’?

Answer 36

The Court has also shown willingness to accept a private body as an ‘emanation of the State’ - Foster v British Gas Case.

Question 37

What were the relevant details of the Foster Case?

Answer 37

Foster involved an action against the ‘British Gas Corporation’, a company established by a statute of the UK parliament and which was subsequently replaced by the private-law company ‘British Gas plc’.

Question 38

What was said in the case of Foster v British Gas in regards to the potential ‘emanation of the state’?

Answer 38

It was said that ‘a body, whatever its legal form, which has been made responsible, pursuant to a measure adopted by the State, for providing a public service under the control of the State and has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals is included in any event among the bodies against which the provisions of a directive capable of having direct effect may be relied upon.’

Question 39

What, in summary, was the Court’s judgement in the case of Foster v British Gas?

Answer 39

Essentially, the Court’s judgment clearly states that any corporate body “whatever its legal form” (i.e. established by statute or private company law) could be considered to be an organ of the State.

Question 40

How did the court seek to explain or justify its decision in the case of Foster v British Gas?

Answer 40

The Court highlighted two points: British Gas had “special powers” because it provided a public service, and the company was also under the “control” of the State (e.g., the Secretary of State had the right to appoint members of the company).

Question 41

Must both ‘special powers’ and ‘control’ be present to facilitate the finding of an ‘emanation of the state’ as in Foster v British Gas?

Answer 41

The court indicated in the recent case of Farell that either one will suffice.

Question 42

What was said in the case of Farrell?

Answer 42

In this case it was said that ‘[a body] can be distinguished from individuals and must be treated as comparable to the State, either because they are legal persons governed by public law that are part of the State in the broad sense, or because they are subject to the authority or control of a public body, or because they have been required, by such a body, to perform a task in the public interest and have been given, for that purpose, such special powers’.
(Note - either or requirements)

Question 43

What is the position of the courts in the case of a decision in a vertical situation (against the state) having an indirect impact horizontally (upon other individuals)?

Answer 43

In such a case the court take the position that it is irrelevant if individuals are indirectly affected by it - Wells Case. Individuals who suffer indirectly may be said to suffer “mere adverse repercussions”, which is not the same as consequences suffered by imposing obligations on individuals.

Question 44

What is the concept of ‘incidental’ horizontal direct effect of directives?

Answer 44

While the Court has consistently held that directives cannot have horizontal direct effect, certain cases suggest that directives can have a limited form of “incidental” horizontal direct effect.

Question 45

Which case illustrated the potential ‘incidental’ horizontal direct effect of directives?

Answer 45

Unilever Italia v Central Food

Question 46

What are the (5 step) details of the Unilever Case?

Answer 46

1. Unilever had concluded a contract with Central Food to deliver a certain amount of olive oil to them.
2. Upon delivery, Central Food refused to accept and pay for the olive oil, because they argued that the olive oil did not comply with the relevant Italian legislation on how olive oil should be produced.
3. Unilever accepted that this was the case but argued that the Italian legislation did not comply with an EU directive and that under this directive, the Italian State should have notified the Italian legislation on olive oil to the European Commission.
4. Unilever argued the failure to notify the European Commission meant they were acting in breach of the relevant EU directive.
5. Could Unilever rely on the directive against Central Food and, in doing so, force Central Food to accept and pay for the olive oil?

Question 47

How did the courts resolve/conclude the Unilever Case?

Answer 47

The Court held that the fact that Italy had not notified the Italian legislation to the European Commission meant that individuals could not rely on the Italian legislation before the national courts.

Question 48

How did the court further justify their decision in the Unilever Case?

Answer 48

According to the Court, the disapplication of Italian law on the basis of the directive did not directly impose obligations on Central Food, since those obligations were already included in the contract.

Question 49

How convincing is the reasoning of the court in the Unilever Case?

Answer 49

The judgement is seemingly straying very close to Horizontal Direct Effect - Central Food would not have had to pay to Unilever if it had not been for the EU directive imposing a notification obligation on Italy! That certainly comes very close to horizontal direct effect.

Question 50

What is the nature of this kind of reasoning and/or decision?

Answer 50

These set of cases can be regarded as exceptional or ‘incidental’. The Court has never applied a similar kind of reasoning to other directives.

Question 51

What is the principle of indirect effect or duty of consistent interpretation?

Answer 51

This can be understood as an obligation on national courts to interpret national law consistently with the wording and aims of the directive. This is an alternative mechanism to circumnavigate the restriction on horizontal direct effect.

Question 52

What was said in the case of Van Colson regarding the duty of consistent interpretation or direct effect?

Answer 52

It was said that ‘national courts are required to interpret their national law in the light of the wording and the purpose of the Directive’.

Question 53

Which cases illustrated that the duty of consistent interpretation can apply in horizontal cases (thus making it an alternative to horizontal direct effect)?

Answer 53

Marleasing Case

Pfeiffer Joint Case

Question 54

What are the four main conditions/limitations for indirect effect?

Answer 54

1. There has to be national law which can be interpreted consistently with the directive
2. The implementation period must have expired
3. The interpretation cannot be contra legem
4. Indirect effect cannot be used to aggravate the criminal liability of individuals

Question 55

What is the requirement that there has to be national law which can be interpreted consistently with the directive?

Answer 55

Courts cannot create laws, therefore, there needs to be an existing national law which can be interpreted consistently with the directive. It is irrelevant if the national was adopted prior to the Directive, or if it derives from a seemingly unrelated area of law.

Question 56

Which case demonstrates how broadly this first duty is construed?

Answer 56

Marleasing Case

Question 57

What is the requirement that the implementation period must have expired?

Answer 57

As explained previously, if the implementation period has not expired, it is assumed that the Member State could still transpose a directive into national law.

Question 58

What is the requirement that the interpretation cannot be contra legem?

Answer 58

This means that you cannot interpret national law in a way which would clearly go against the wording of the provision of national law.

Question 59

What is the implication of the requirement that the interpretation cannot be contra legem?

Answer 59

This requirement essentially precludes application of indirect effect or the duty of consistent interpretation to explicit provisions of national law. Indeed, this condition suggests that only general or vague provisions in national law will allow for consistent interpretation - Arcaro Case.

Question 60

What is the requirement that indirect effect cannot be used to aggravate the criminal liability of individuals?

Answer 60

Similarly to direct effect, consistent interpretation cannot be invoked by the State to aggravate the criminal liability of individuals because it would threaten legal certainty and the non-retroactivity of criminal law - Kolpinghuis, Arcaro.

Question 61

In which situations can indirect effect be relied upon?

Answer 61

Indirect effect can be used in both horizontal and vertical situations.

Question 62

What is the significance of indirect effect in horizontal situations?

Answer 62

It is obviously important in horizontal situations because individuals cannot rely on horizontal direct effect when it comes to directives.

Question 63

What is the significance of indirect effect in vertical situations?

Answer 63

It is important in vertical situations because we can still rely on indirect effect even if it is difficult to prove that a particular provision is clear, precise & unconditional - Van Colson.

Question 64

What were the details of the Mangold Case?

Answer 64

1. Mr Mangold, aged 56, was employed under a fixed term employment contract.
2. He brought an action in German courts against his private sector employer, claiming that the fixed-term nature of the contract breached an EU directive which prohibited various forms of discrimination. 3. His main argument was that German law was incompatible with the EU directive because protection against fixed-term contracts only applied to employees aged 52 or younger, which he claimed was discrimination on grounds of age.

Question 65

Was Mr Mangold able to rely upon direct effect of the relevant directive?

Answer 65

He could not rely on direct effect because the implementation period for the directive had not expired.

Question 66

How did the courts seemingly get around the lack of direct effect of the directive in the Mangold Case?

Answer 66

The Court invoked the general principles of EU law in its reasoning. The Court stated that the directive did not itself create the principle of equal treatment - ‘Directive 2000/78 does not itself lay down the principle of equal treatment in the field of employment and occupation’.

Question 67

Where did the courts say the principle of equal treatment came from in Mangold?

Answer 67

The source of the principle underlying the directive was found “in various international instruments and in the constitutional traditions common to the member states”. Non-discrimination on grounds of age was therefore a general principle of EU law - ‘The principle of non-discrimination on grounds of age must thus be regarded as a general principle of Community law’.

Question 68

What are general principles of EU law in the context of the Mangold Case?

Answer 68

General principles of EU law are “unwritten” principles that have the same legal value as the “written” rules in the Treaties. They are a form of primary European law and are typically used as aids to interpretation or to fill in gaps in secondary legislation.

Question 69

How did the courts utilise the finding of an underlying general principle in the Mangold Case?

Answer 69

On the basis that the directive concretised the general principle of equal treatment, the Court declared that national courts are required to set aside national law that conflicts with the principle of non-discrimination in respect of age. This implies that, even though the implementation period had not expired - ‘observance of the general principle of equal treatment, in particular in respect of age, cannot as such be conditional upon the expiry of the period’ - and even if the situation was a horizontal one, Mr. Mangold could rely on the directive.

Question 70

What was the response following the Mangold Case?

Answer 70

A strong critical reaction followed against Mangold, most notably by the German Constitutional Court in Honeywell.

Question 71

What was unclear following the Mangold Case?

Answer 71

It was also unclear whether the Mangold doctrine was limited to age discrimination.

Question 72

How was the question of application of the Mangold Doctrine resolved/clarified?

Answer 72

Kücükdeveci confirmed – the more general rule – that individuals can invoke general principles of EU law to set aside provisions of national law even proceedings between private parties.

Question 73

What were the details of the Kücükdeveci Case?

Answer 73

1. Ms Kücükdeveci had been employed by a company since the age of 18.
2. After 10 years, she was given a notice of termination. The notice was applicable to those employed for 3 years, because German law provided that periods of employment under the age of 25 should be disregarded when calculating the length of employment.
3. In a first preliminary reference, the ECJ ruled that this provision of German law violated the principle of non-discrimination in respect of age. 4. The German court then issued a second preliminary reference, asking whether national courts had to disapply the relevant legislation in proceedings between private individuals.

Question 74

How did the court resolve/address the Kücükdeveci case?

Answer 74

The ECJ repeated the rule that directives could not have horizontal direct effect. The Court then turned to indirect effect: since the national provisions were very precise, it was impossible to interpret national law consistently with the directive. Even so, the Court stated that the directive merely “gives expression to” the general principle of equal treatment. As such, national courts must disapply any provisions of national law that conflict with the directive.

Question 75

What distinction should be noted in the decision of the court in the Kücükdeveci Case?

Answer 75

The ECJ did not state that national courts should apply the directive horizontally against private employers. However, requiring national courts to disapply the law in question has a virtually identical effect on the private employers.

Question 76

What was the general effect of the Mangold and Kücükdeveci Cases?

Answer 76

More generally, the effect of these judgements is to make obligations found in a directive immediately applicable in proceedings between individuals, so long as directive gives effect to a general principle.

Question 77

What is the overall conclusion of the Mangold and Kücükdeveci Cases?

Answer 77

Mangold indicates that if a directive gives expression to a general principle of EU law - even when it is impossible to reconcile the wording of national law with the directive - national courts must disapply national law. Apart from instances dealing with non-discrimination, it is unclear which EU directives give expression to general principles of EU law.

Question 78

Why is it somewhat peculiar that general principles can be used to directly confer rights upon individuals if directives fail to do so?

Answer 78

General principles are, generally, interpretative tools. How is it then possible to rely on general principles to confer rights to individuals if the directives - which are intended to give flexibility to Member States - do not?