The doctrine that established the supremacy of Community law and of direct effects both owe their basis to the judicial creativity of the Court of Justice. It is clear that within the E.C Treaty there is no reference to be found which suggests that Community law shall be supreme, nor to the impression that it shall be directly effective. Yet the Court has managed to interpret these fundamental principles within the foundation of Community law. Case law developed the doctrine of supremacy of Community law through important decisions of the Court of Justice. . In the case of Van Gend en Loos v Nederlandse Administratie der Belastingen a dispute arose regarding an increased customs duty on imports. It was argued that the Dutch courts violated Article 12 of the Treaty of Rome, which provided that Member States should not increase such charges. This preliminary reference under Art 234 E.C did not raise the issue of sovereignty directly. Nevertheless, in addition to declaring that Article 12 was directly effective, the Court went on to say:
“…the Community constitutes a new legal order in international law, for those whose benefit the states have limited their sovereign rights, albeit within limited fields” and: “if a Treaty provision is unconditional, clear and precise as to the rights or obligations it creates and leaves Member States no discretion in implementing it, it can be used by individuals in their own National courts”.
In the case of Costa v ENEL, Costa argued that the nationalisation of the Italian electricity industry was contrary to Community law. ENEL and the Italian government argued that this was irrelevant, since the Italian courts were obliged to apply the later Italian law under which nationalisation was legal. The Italian court referred this question to the ECJ. This time the principle of supremacy was clearly established by the Court. It cited Van Gend; “the states had limited their sovereign rights” and went on to say:
“The transfer by the States from their domestic legal system of the rights and obligations arising under the Treaty carries with it a permanent limitation of their sovereign rights, against which a subsequent unilateral act incompatible with the concept of the Community cannot prevail”.
One cannot underestimate the importance of the informative role of member states governments in Article 234 proceedings. By providing legal and factual information which would otherwise be difficult for the judges to obtain, they undoubtedly contribute to the informed nature of judicial decision making at E.U level; as can be seen by the illustrated above two cases and the following case of Amministrazione delle Finanze v Simmenthal where there had been a transfer of sovereignty to the Community and it was an integral to this new legal system that Community law took precedence over later, inconsistent national law. In the case of Amministrazione delle Finanze v Simmenthal the court ruled that:
“Not only by their entry into force render automatically inapplicable any conflicting provision of current law, but also preclude the valid adoption of new national legislative measures to the extent to which they would be incompatible with Community provisions”.
Directly applicable Community law will therefore prevail in any situation of conflict but it was not until the litigation in the Factortame case that the true impact on the sovereignty of parliament became apparent. In the case of R v Secretary of State for Transport, Ex Parte Factortame the UK court applied for an Article 234 reference about whether they were to apply the Merchant Shipping Act 1988. As the process of ruling normally takes eighteen months, the UK applied for another ruling asking whether in the meantime they should still apply the Act as it conflicted with Articles 52 and 221 of the Treaty of Rome. The ECJ ordered the UK to “temporarily suspend the Act”.
It is these cases inter alia that formed the fundamental constitutional and substantive principles of the Community legal order; and although the Court of Justice is not bound by precedence it is clear through evidence that previous cases have been quoted. Judges in member states are also informed that they must look within previous rulings of the Court of Justice before applying for a preliminary reference.
Although the Court of Justice has established the doctrine of supremacy and direct effect of Community law it still has to make way for general principles to be taken into account. The term ‘general principles’ is used to signify fundamental unwritten principles of law which underline the Community law structure. Such principles are developed by the Court of Justice primarily from the laws of the Member States and used by it to supplement and refine the Treaties. They can be said to pre-exist written law in the provision of the Treaty. Steiner and woods suggest that the court has recognised the following as general principles of Community Law:
- Equal treatment or non-discrimination
- Proportionality
- Legal certainty
- Protection of legitimate expectations fundamental rights of defence
Due to the function of general principles it is quite probable that, even without the existence of any specific Treaty provisions, the Court of Justice would apply general principles of law. Nonetheless, a justification for general principles as a source of law was also provided by the Court of Justice by reference to two Articles of the E.C Treaty, namely the following:
Article 164 states that “The Court of Justice shall ensure that in the interpretation of the Treaty the law is observed”. Since the word “law” was used in this Article, it was presumed that it had to refer to something of a more general application, beyond the Treaty itself.
Article 173 deals with judicial review and specifies the grounds upon which an annulment can be based. The first paragraph of the Article includes the words “infringement of the Treaty or of any rule of law relating to its application”. Therefore, the phrase “any rule of law” must necessarily refer to something other than the Treaty itself. This Article has been used by the Court of Justice as a basis for the principle that an act of the European Community may be quashed for the infringement of a general principle of law.
The following cases show how general principles can affect or even annul Community law. Stauder v City of Ulm concerned a community scheme for the distribution of butter at reduced prices on the disclosure of the name of the receipt. During proceedings before the German Court, the plaintiff claimed that his requirement of disclosure was contrary to his fundamental rights as protected under the German constitution. The issue was referred to the Court of Justice which interpreted the scheme as not necessarily requiring the said disclosure and that “interpreted in this way the provision at issue contains nothing of prejudicing the fundamental human rights protected by the court”. It is clear that the Court of Justice here accepted the concept as a general principle of E.C law.
In the Internationale Handlesgellschafe case the question referred was whether the import and export licensing system under the common organisation of the grain market was valid. The plaintiff had claimed that such system was not compatible with the principles of German constitutional law. In its ruling, the Court refused to impugn a Community act for incompatibility with the constitutional law of a member state. Nevertheless, the Court added that:
“An examination should be made as to whether or not any analogous guarantee inherent in Community law has been disregarded. In fact, respect for fundamental rights forms an integral part of the general principles of law protected by the Court of Justice”.
While Stauder v City of Ulm confirmed that fundamental rights exist in E.C law, and Internationale Handlesgellschafe identified the constitutions of member states as a primary source of these rights, Nold KG v Commission went a step further. In the first place it confirmed that it would not hesitate to annul an E.C rule which goes contrary to fundamental rights.
Another general principle applied by the Court of Justice is that of proportionality. This principle is derived from German law in the case of Internationale Handlesgellschafe mentioned above. It was stated that:
“A public authority may not impose obligations on a citizen except the extent to which they are strictly necessary in the public interest to attain the purpose of the measure.”
It is clear, therefore, that if the burdens imposed are clearly out of proportion to the object in view, the measure will be annulled by the Court. Proportionality has since found confirmation in the E.C Treaty itself and is consequently enshrined within Article 5 (appendix 2).
According to the principle of non-retroactivity, a measure cannot take effect before it is published. This concept was successfully invoked in R v Kirk which dealt with non-retroactivity of penal provisions brought into effect by an E.C Regulation. An important pronouncement was that in Defrenne v Sabena (No.2) wherein the Court of Justice stated that, given the exceptional circumstances, important considerations of legal certainty required that its ruling on the direct effects of Article 119 should not apply retrospectively.
Most commonly the general principles are invoked in order to obtain the annulment of a community measure within the procedure under Article 234. An increasing awareness of Article 234 EC is being used as a means of challenging national laws, policies and practices, thereby calling for government’s participation to defend them. Governments can influence judicial decision making at EU level, to some extent because they have external means of formal and informal control over the structural properties of that process, but to a greater extent because they can influence judicial outcomes by means of persuasion, in particular in preliminary reference proceedings. A greater acknowledgement of the courts integrative role and law making powers, together with a greater understanding of the nature of judicial decision making, i.e., that case law is not ‘the inevitable consequence of Community law and legal rules’, and can be influenced through submissions of quality arguments.
Member state representatives make better impressions on the Court if their observations fit well into the preliminary reference participatory framework. Their views are more likely to be taken on board by the judges if they fall within the ‘normal’ as opposed to ‘revolutionary’ reasoning when participating in a preliminary case under Article 234. Member states representatives must refer to recognised sources of law that is Treaty provisions, secondary legislation and general principles and Community case law if they are attempting to persuade the Court.
The jurisprudence of the Court of justice within Article 234 is to rule on the point of European Community law and does not decide the actual outcome of the case brought before it, this is often referred to as ‘interpretation’ not ‘application’. The Court of Justice has established the element of supremacy and of direct effect within its judicial creativity; it has also gained knowledge from member states of policy implications and infringements through the preliminary reference procedure. This would not have been so easy if member states (and sometimes individuals) did not have this procedure. Thus it is apparent that the member states have taken on an informative role under Article 234. It is also apparent, given the evidence, that member states also act as ‘players’ under the very same procedure, using persuasion on an intellectual level to influence the decision making process and fill in the gaps of the Treaties.
J. Steiner and L. Woods, Textbook on EC Law, 8th Edition, (2003) Oxford University Press pp548
Extract taken from Article 234 EC (see appendix 1)
(case 26/62) [1963] ECR 1
(case 60/64) [1964] ECR 585
(case 106/77) [1978[ ECR 629
(case 213/89) [1990] ECR I-2433
E.g. cases 26/62 Van Gend en Loos [1963] ECR 1, 6/64 Costa v ENEL [1964] ECR 585, 36/76 Simmenthal [1976] ECR 1871, 213/89 Factortame I [1990] ECR 2433, 221/89 Factortame II [1991] ECR 3905
see judgement of Costa v ENEL (case 60/64) [1964] ECR 585
Steiner, J, and Woods, L, Textbook on EC Law, Oxford University Press, 8th Ed, 2003
(Case 29/69) [1969] E.C.R 419
(Case 11/70) [1970] E.C.R 1125
(case 4/73) [1974] E.C.R 491
Internationale Handlesgellschafe (Case 11/70) [1970] E.C.R 1125
(Case 63/83) [1984] E.C.R 2689
(case 43/75) (Defrenne II) [1976] E.C.R 455