Indirect Effect and State Liability

Question 1

Which case established indirect effect?

Answer 1

Von Colson

Question 2

What was Von Colson’s claim to the national court?

Answer 2

Von Colson had applied for a job as a prison guard in a male prison. As a woman she was rejected over less qualified men.

Question 3

Why did the national court send for a preliminary reference in Von Colson?

Answer 3

They were unsure whether under Art 6 Equal Treatment Directive, as it was then, whether Von Colson should also be entitled the job as well as damages.

Question 4

How was indirect effect established in Von Colson?

Answer 4

Art 6 of the Equal Treatment Directive was found to be unclear and imprecise. They reverted instead to 4(3) TOTEU which demands MS take ‘all appropriate measures’ to ensure they are compliant with EU law. They drew from this that national courts should interpret their national legislation in line with EU legislation.

Question 5

Did Von Colson concern a vertical or horizontal claim?

Answer 5

Vertical

Question 6

What does the decision in Von Colson say about whether indirect effect is vertically or horizontally effective?

Answer 6

It effectively does away with any distinction. Indirect effect is available to anyone claiming against any kind of legal person.

Question 7

Which case affirmed that indirect effect is horizontally effective?

Answer 7

Harz v Deutsche Tradax

Question 8

What was the first indirect effect case to reach the House of Lords?

Answer 8

Duke v G.E.C Reliance Ltd

Question 9

Why did Lord Templeman dismiss the claim in Duke v G.E.C Reliance?

Answer 9

He restated that Von Colson only expected national courts to read in line with EU legislation where the national legislation was created for the purpose of complying with an EU directive and that national courts could only interpret as far as their discretion would lend them.

Question 10

What legislation did Lord Templeman refuse to reinterpret in Duke v G.E.C Reliance?

Answer 10

Section 6(4) Sex Discrimination Act 1975 allowed employers to operate different retirement ages for men and women.

Question 11

The HL revisited indirect effect in the case of Pickstone v Freemans plc. Which Act were they happy to reinterpret in light of EU legislation, and which directive did they refer to in their reinterpretation? Why were they happy to reinterpret this time?

Answer 11

Equal Pay Act 1970 as amended by the Equal Pay (Amendement) Regulations 1983 was brought in as a direct consequence of the Equal Pay Directive 75/117.

Question 12

What did the HL do to the Equal Pay Act 1970 to fix the incorrectly implemented directive?

Answer 12

They added s1(2)(c) which said an equality clause would be implied in each employment contract.

Question 13

How did the HL purposively interpret the Transfer of Undertakings (Protection of Employment) Regulations 1981 in Litster v Forth Dry Dock and Engineering Co Ltd?

Answer 13

The regulations only protected employees’ rights ‘immediately before’ the transfer. A number of employees were discharged an hour before the transfer, which according to UK law fell outside the time limit. The HL reinterpreted the legislation to include those who had been subject to unfair dismissal by reason of transfer of business ownership.

Question 14

Which two legal questions came up in Marleasing following the establishment of IE in Von Colson?

Answer 14

1. Does IE have any effect on pre-existing national legislation not implemented due to a directive?
2. How much discretion did courts have to interpret national legislation?

Question 15

What were the facts in Marleasing?

Answer 15

Marleasing, a company and creditor of La Comercial, alleged that La Comercial had been set up to defraud them and tried to have their contract nullified by a ‘lack of cause’ action available under the Spanish Civil Code. Marleasing’s problem was that the EU Company Law Directive 68/151 did not contain ‘lack of cause’ as a legitimate action to nullify a contract. Despite the fact that the directive had not been implemented by the date set the CJ allowed La Comercial to rely on the directive.

Question 16

What is the ratio in Marleasing?

Answer 16

National legislation can be interpreted as far as possible in line with an unimplemented EU directive even if the national legislation pre-exists or follows the directive and even if the action is horizontal.

Question 17

What was the issue for Wagner Miret in attempting to rely on an Directive 80/987?

Answer 17

The directive required MS to establish a fund protecting employees’ wages in the event a company went insolvent. Spain had implemented the directive incorrectly, excluding senior management from the scheme. Wagner Miret found himself excluded. The CJ said it was the discretion of the MS to interpret their legislation in line with the directive, which they couldn’t do without going against the precise meaning of their national legislation, which they had incorrectly implemented.

Question 18

What happened in Evobus? Why did CJ not enforce DE or IE?

Answer 18

Evobus were claiming a right to review a tendering process of public contracts to do with transport. They argued Austria had not implemented the directive correctly and laid down inappropriate procurement procedures. The CJ couldn’t enforce DE because the relevant directive was unclear. They didn’t enforce IE because the national legislation could not be interpreted in line with the directive.

Question 19

In which case did the CJ reaffirm that national courts do not have interpret national legislation contra legum?

Answer 19

Pupino

Question 20

What is the principle given in Adeneler?

Answer 20

Member States do not have to interpret national legislation in line with EU directives until the implementation date has passed.

Question 21

In Kolpinghuis Nijmengen the Dutch authorities attempted to criminally prosecute the defendant for marketing carbonated tap water as mineral water. Why didn’t they succeed?

Answer 21

The Dutch authorities were relying on an unimplemented directive. The CJ concluded that it was not possible to rely on an unimplemented directive without an implemented national law determining or aggravating criminal liability.

Question 22

What was the first case in which the HL had the chance to consider the judgment in Marleasing?

Answer 22

Webb v EMO Air Cargo (UK) Ltd (No 1)

Question 23

What question did the HL refer to the CJ in Webb v EMO Air Cargo (UK) Ltd (No 1)?

Answer 23

Could it be held to be discriminatory under the Equal Treatment Directive 76/207 to dismiss a woman, unable to completer her work, due to pregnancy?

Question 24

The Court of Appeal added four points to the help the process of interpreting national legislation with regards to indirect effect in HMRC v IDT Card Services. What are they?

Answer 24

1. No need to find statutory language ambiguous before interpreting;
2. There can be a substantial departure, in restricting or expanding, from the original meaning;
3. The court must not rewrite beyond or go against the grain the meaning of the legislation;
4. The court may not make policy decisions that will have a practical repercussions.

Question 25

What does the principle of state liability allow for?

Answer 25

Individuals may seek compensation from the state for not implementing a directive correctly and where direct effect or indirect effect is not available.

Question 26

What is the leading case on state liability?

Answer 26

Francovich & Bonafaci v Italian Republic

Question 27

What happened in Francovich & Bonafaci v Italian Republic?

Answer 27

Italy had not implemented the directive which would have protected employees' wages in case of their employer becoming bankrupt. Francovich & Bonafaci attempted to rely on the directive but direct effect was not available due to its being imprecise and neither was indirect effect available due to there being no pre-existing legislation. Still, the court held Italy liable for not implementing the directive.

Question 28

What three conditions did the court identify in Francovich & Bonafaci should be met to use State Liability?

Answer 28

1. The directive should grant rights to individuals; 2. Those rights should be identifiable; and 3. There should be a causal link between the State's breach and the loss of the claimant.

Question 29

Which case clarified the three conditions laid out in Francovich & Bonafaci to impose State Liability?

Answer 29

Brasserie du Pecheur and Factortame (No 4)

Question 30

What are the three conditions to impose State Liability following Brasserie du Pecheur?

Answer 30

1. Legislation must confer individual rights; 2. The breach should be 'sufficiently serious'; and 3. There must be a causal link between breach and damage

Question 31

How was it suggested a sufficiently serious breach could be identified in Brasserie du Pecheur?

Answer 31

The main question was whether the State had 'manifestly and gravely disregarded the limits of its discretion.' Other factors include the clarity and precision of the rule breached, the measure of discretion left to MS, intentionality of the breach, excusability of the breach, Union institution's fault, retention of national measures over EU obligations.

Question 32

BT sought damages against the UK for not implementing a directive correctly, but why did the CJ not hold the UK liable? They gave five reasons.

Answer 32

1. The relevant provision in the directive was imprecise; 2. The UK had acted in good faith in interpreting the directive; 3. The same mistake in interpretation had been made by other Member States; 4. The UK's interpretation was not manifestly contrary to the objective pursued; 5. There was no guidance available through case law or the Commission, who had not raised any objection when the UK implemented the directive.

Question 33

What happened in the case of Hedley Lomas?

Answer 33

Hedley Lomas were refused export grants for live animals by the UK due to Spanish slaughtering practice which the UK argued was against EU law. However, the UK could not find evidence and the UK's 'mere infringement' was found to be sufficiently serious to warrant state liability because the UK had no legislative backing for their discretionary behaviour.

Question 34

How has the case of Dillenkofer clarified the rulings in Francovich and Brasserie du Pecheur?

Answer 34

Dillenkofer suggests the Brasserie du Pecheur test incorporates Francovich, setting a lower bar of 'sufficiently serious' breach for state liability to come in play. It also clarified that failure to implement a directive by the implementation date is a sufficiently serious breach.

Question 35

Which case has extended state liability to include breaches by individuals of competition law?

Answer 35

Courage Ltd v Crehan

Question 36

Which case shows that failure of a national court to make an obligatory reference to the CJ for a preliminary reference can trigger state liability?

Answer 36

Kobler v Republik Osterreich

Question 37

What is the time limit on state liability claims? Which case tells us when time starts for a cause of action?

Answer 37

Six years from the cause of action. Spencer v Secretary of State for Work and Pensions tell us that the cause of action starts from the time of measurable damage suffered.

Question 38

In which case did the HL get to first apply the test of State Liability given in Brasserie du Pecheur?

Answer 38

Factortame (No 5)