The question of direct effect of a treaty article first arose in Van Gend en Loos v Nederlandse Administrative der Belastingen (case 26/62). In this case apart from its desire to allow individuals to invoke the protection of EC law, the court obviously saw the principle of direct effect as an important means of allowing EC law to be enforced properly, in all member states even when states themselves did not comply with their obligations. As the court in Van Gend suggested provisions such as Article 25 (ex 12) would qualify for direct effects, this did not appear so in Alfons Litticke Gmph Hauptzouamt Saarlouis (case 57/65).
In judging whether a certain provision is directly applicable, Sophie has to apply specific criteria. These are that the provision has to be adequately clear and precise; it must be unequivocal and should leave no room for exercising discretion in implementation by member states or community institutions. Sophie must apply this criteria freely, which will result in producing direct effect, as a result of the provisions not being cleat and precise as a result of its scope and applicability. The court will reason that while there is no discretion to the means of implementation, there is no discretion as to the ends.
The principle of direct effects in Van Gend operated to grant rights on Van Gend that could be exercised against the Dutch Customs authorities. Hence, the obligation fell on an organ of state where Article 25 (ex 12) was addressed. This is known as ‘vertical’ direct effect and reflects the relationship between an individual and state. For Sophie to take advantage of the directive and remedies available she has to see whether it is enforced by a public body and therefore it would be vertically directly effective. Treaty obligations might fall on Sophie too, this can be invoked by individuals against individuals and is known as ‘horizontal’ direct effect and reflects the relationship between two individuals. For horizontal direct effect to apply, Sophie has to see whether the directive was enforced by a private body.
In Van Gend, horizontal effect was implied and this was confirmed in Defrenne v Sabena (No.2) case 43/75. The same principle was also applied in Walrose v Association Union Cycliste Internationale.
A directive is (Article 249(ex 189) EC):
“..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 methods”. As directives are not described as ‘directly applicable’, it was thought firstly that they could not produce direct effects. An obligation in a directive is addressed to the state and gives them some discretion as to the method of implementation, for this reason its effect appears to be conditional. However this was not the conclusion decided by the ECJ in Grad v Finanzant that a directive could be directly effective, the direct effect of directives was laid down in Van Duyn v Home Office.
Directives and decisions both have to be directly effective, whether they are depends on whether they satisfy the criteria for direct effects, they need to be reasonably clear and precise, unequivocal and leave no room for discretion in implementation.
A directive is not directly effective before the time limit for implementation has ran out. It did not succeed in Pubblico Ministero v Ratti. In this case the ECJ held since the time for implementing one of the directives had not expired, it was not directly effective. It can still however be implemented by the state as seen in Verbone Van Nederlandse Ondernemingen (VNO) v Inspecteur der Invoerrechten en Acciijnzen (case 51/76).
At the beginning member states were unwilling to concede that directives might be directly effective. The supreme French administrative court in Minister of the Interior v Cohn-Bendit declined to follow Van Duyn v Home office.
The decisions of the ECJ are persuasive, in cases where individuals want to invoke a directive against the state, where the obligation is to get a result that has been enforced; this was seen in cases such as Van Duyn, where the claimant sought to invoke a directive against a public body (an arm of state). This is known as vertical direct effect, it reflects the relationship among the individual and the state. Where a claimant wants to invoke against a private person, it is known as horizontal direct effect and it reflects the relationship between individuals. The arguments for and against horizontal effects are quite equal. The argument against it is the idea of uncertainty. The argument for it is the fact that directives have always been published.
The ECJ has avoided the question even though a number of references were made in which the subject of horizontal effects of directives were raised. The ECJ either declared that the claimant’s action lay outside the scope of the directive; this was seen in Burton v British Railways Board.
In Marshall v Southampton West Hampshire Area Health Authority, the subject of horizontal effect of directives was laid down in an obiter statement. By not allowing horizontal effect on the grounds of Article 249, the court gained more power for vertical effect. The decision made gave rise to acceptance for the principle of vertical direct effects by national courts.
However this means that Sophie will encounter many problems in terms of vertical and horizontal direct effects.
The idea of a ‘public’ body or an ‘agency of state’ against whom a directive is invoked, is not very clear when looking at vertical direct effects. What constitutes of a ‘public’ body? Are universities ‘public’ bodies and which category do privatised utility companies fall within? These issues were considered in Foster v British Gas plc. The court refused to accept their argument that there was a difference between a nationalised undertaking and a state agency; it ruled that a directive could be relied upon against organisations or bodies that were ‘subject to authority or control of the State
or had powers which resulted from the normal relations between individuals’. By applying this principle, it was ruled that a directive could be invoked against ‘a body, whatever its legal form…’ by this it could be said that British Gas would be a ‘public’ body against which a directive might be enforced, this was then decided by the House of Lords in Foster v British Gas.
Where a State has not fulfilled its obligations in relation to directives, either by non-implementation or inadequate implementation, an individual following the decision in Marshall would be powerless to invoke a directive in the context of a ‘private’ claim. This applies to Sophie’s case.
In Dori v Recreb Srl, the court was invited to change its mind on horizontal direct effects. The court was urged to reconsider its position in Marshall and extend the principle of direct effects for the enforcement of directives against public and private parties, in interest of their application in Community law. This departed from the previous case law. By denying horizontal effects to directives in Dori, the court pointed out that other remedies could be available based on the principles introduced by the Court before Dori. The principle of indirect effects and the principle of State liability introduced in Francovich v Italy, suggested that an alternative remedy could be provided in El Corte Ingles SA V Rivero.
There has been case where individuals have gone out to exploit direct effects, not for claiming Community rights denied them under national law, but to establish illegality of national law and therefore preventing it from applying to them. This can occur on a two party situation, where an individual seeks to invoke a directive against the state. Problems occur where there is a challenge based on an EC directive by an individual to a domestic law or practise, even though directed at action by the state it might affect third parties. In cases like this, the effect of the directive would be horizontal.
Although the ECJ has not allowed horizontal direct effect of directives, it has developed an alternative; this is where individuals can rely on directives against another individual. This is known as the principle of ‘indirect effect’, which is an interpretation tool, applied by domestic courts in interpretation of national legislation that conflict with a directive in the same area. The principle of indirect effects was introduced in two cases prior to Marshall; these cases were both based on Article 6 of the Equal Treatment Directive 76/207.
An alternative remedy that is available to Sophie is ‘State liability’, by looking at the claim against the state and their failure to implement the directive in the time. The imperfection of the principles of direct and indirect effects led the court to advance a third separate principle known as ‘State liability’, seen in the case of Francovich v Italy. In this case the court held that where a state did not implement an EC directive, it would have to compensate individuals for damage caused because of its failure to implement the directive should certain conditions have been satisfied. These conditions were, where:
- The directive included rights awarded on individuals
- The content on those rights were identified on the basis of the provision of the directive
- Where there was an initiating link in both the state’s failure and damage experienced by the people affected.
The court’s reasoning was on the basis of Member State’s obligation to implement directives under Article 249 and their obligation under Article 10 to ‘take all appropriate measures...that certain provisions of EC law are intended to give rise to rights for individuals and that national courts are obliged to provide effective protection for those rights as in the Factortame case. The conclusion reached was that a ‘principle of State liability for damage to individuals caused by a breach of Community law for which it is responsible is inherent in the scheme of the Treaty’.
Therefore, where the three conditions of Francovich are fulfilled, individuals who seek compensation because of activities and practices that are inconsistent with the EC directives may proceed directly against the State. There is no need to rely on the principles of direct/indirect effects. For non-implementation of a directive, responsibility will not be placed on the employer, ‘public’ or ‘private’ but on the State, where it should always have been.
Provided the conditions for liability are fulfilled, it can be applied to all breaches of Community law, whether they are directly effective or not. However, by arguing about the principles which apply to the Community’s non-contractual liability under Article 288, the court held where a State faces situations including choices compared to those made by Community institutions when they adopt measures, it will only be liable where three conditions are met. These are:
- The rule of law that is infringed must be intended to confer rights on individuals
- The breach must be somewhat serious
- There has to be a causal link between the breach of obligations resting on the State and the damage sustained by parties who are injured.
To decide whether a breach has occurred, Sophie must decide whether the institution concerned has ‘manifestly and gravely exceeded the limits of its discretion’. The factors which she will need to take into account in deciding whether a breach has occurred include ‘the clarity and precision of the rule breached, whether the infringement and the damage caused was intentional or voluntary and the fact that the position taken by a Community institution may have contributed towards the omission. In Brasserie du pecheur, the court rephrased the three conditions laid down in Francovich, and the requirement that the breach must be quite serious.
It will be important for Sophie to establish that she has suffered a loss of damage as in Schmidberger v Austria.
If Sophie is to take advantage of the directive and the remedies that are available, she has to decide whether it was from a private or public body. If it is by a public body, it will take vertical direct effect as long as the three conditions I have discussed are satisfied. Directives do not take effect horizontally; therefore Sophie will not be able to bring an action against the private body. She can however look at the doctrine of indirect effect to enforce the directive horizontally. This depends however on the Member State in question and whether they want to translate domestic law to comply with the EC directive. The courts will give discretion to comply with the directive only if it is possible to do so.
An alternative method is to look at the claim against the State and argue that their failure to implement the directive in the time limit amounted to a breach and of EC law. For this reason Sophie was denied the right to obtain foreign language training which the purpose of the directive was and claim damages against the State. In the Factortame case it was decided that the claimant should be entitled to compensation where there was discrimination against nationality.
2,906 words
European Communities Act 1972
H.P Bulmer Ltd v J.Bollinger SA (1974) Ch 401
Van Gend en Loos v Nederlandse Administrative der Belastingen (case 26/62) [1963] ECR 1
Alfons Litticke Gmph v Hauptzouamt Saarlouis (case 57/65) [1966] ECR 205
Defrenne v Sabena (No.2) case 43/75 (NO.2) [1976] ECR 455
Grad v Finanzant [1970] ECR 825
Van Duyn v Home Office [1974] ECR 1337
Pubblico Ministero v Ratti [1979] ECR 1629
Verbone Van Nederlandse Ondernemingen (VNO) v Inspecteur der Invoerrechten en Acciijnzen (case 51/76) [1977] ECR 113
Minister of the Interior v Cohn-Bendit
Burton v British Railways Board [1982] ECR 555
Marshall v Southampton West Hampshire Area Health Authority [1986] ECR 723
Foster v British Gas plc [1990] ECR 3313
Dori v Recreb Srl [1994] ECR 3325
Francovich v Italy [1991] ECR 5357
El Corte Ingles SA V Rivero [1996] ECR 1281
Brasserie du pecheur [1996] ECR 1029
Schmidberger v Austria [2003] NOT YET REPORTED