Are EC directives directly applicable in member states?

A directive cannot, however, be directly effective before the time limit for its implementation has expired. This was proven in Publico Minnestero v Ratti. Ratti was a solvent manufacturer who sought to invoke two EC harmonisation directives on the labelling of dangerous preparations in order to defend criminal charges based on his own labelling practices, which weren’t illegal according to article 9 of the directive 77/728. But the ECJ held that since the time limit for the implementation of the relevant section of the directive had not expired it wasn’t directly effective.

A directive can even be directly effective when the state has implemented it. In Verbond van Nederlandse Ondernemingen v Inspecteur der Invorrechten en Acijnzen  the ECJ held this to be the case when they allowed VNO to invoke a second VAT directive despite implementation of the provision by Dutch Authorities, on the grounds that the useful effect of the directive would be weakened if individuals could not invoke it before national courts.

By allowing them to invoke the directive the community can ensure that national authorities have kept within the limits of their discretion.

National courts were initially reluctant to concede that Directives could be directly effective. Article 249 terms only regulations directly applicable. However, the ECJ have reasoned that the useful effect of a directive would be weakened if States were free to ignore their obligations, and if enforcement of EC law were left to direct action by Member States. Moreover, states are obliged under Art 10 EC to ‘take all appropriate measures…to ensure fulfilment of the obligations arising out of this Treaty…’ The view taken by some, including Steiner is that if the states have failed in these obligations then surely they should therefore be answerable to individuals invoking directives against them.

Vertical Direct Effects

A vertical direct effect is where the claimant seeks to invoke a directive against a public body, or arm of the state. However the concept of whom a directive may be invoked is unclear; are publicly owned or run enterprises like the former British Rail and even Universities public bodies?

Vertical direct effect principles were illustrated in Foster v British Gas Corporation. There was a claim against British Gas in respect of the different retirement ages for men and women based on the Equal Treatment Directive 76/207; the English Court of Appeal held that British Gas was not a public body against which the directive could be enforced. On appeal, the House of Lords sought clarification from the ECJ, who replied with “A Directive may be invoked against ‘ a body, whatever its legal form, which has been made responsible…for providing a public service under the state and has for that purpose special powers beyond those which result in from the normal rules applicable in relations between individuals.” On this interpretation a nationalised undertaking such as British Gas would be a public body against which a directive may be enforced, as the House of Lords decided.

Horizontal Direct Effects

A horizontal direct effect is where the claimant wishes to invoke a directive against a private person. There are points in favour and against horizontal direct effects, however the ECJ have been reluctant to rule that directives can be applied horizontally. A positive aspect of horizontal direct effect is that it promotes fairness; it would offend the principles of equality if a person did not have the right to invoke a directive depending on the status of the party against which he chooses to invoke it. Against horizontal effects is the fact that the obligation in a directive is addressed to the state and not the individual. In Marshall v Southampton and South West Hampshire Area Health Authority (teaching)  the employer was a health authority (acting in its capacity as an employer) who enforced a compulsory different retirement age for men and women, which was in breach of directive 76/207. The directive could have been invoked against a public body such as the health authority. The court said that ‘(a person) may do so regardless of the capacity in which the (employer) is acting, whether employer or public body.’ However, in the end the court followed the reasoning of Becker v Finanzamt Münster Innenstadt, and said that since a directive is binding on each member state to which it is addressed it follows that a directive may not of itself impose obligations on an individual and that a provision of a directive may not be relied upon as such against a person. The court followed this by saying that if the member state had have correctly implemented the directive in national law then the situation could have been avoided. In Marshall, therefore, the issue of horizontal direct effect was settled, and the court denied the claimants horizontal direct effects on the basis of Art 249 EC. In doing this they strengthened the principle of vertical direct effects.

Seven years after Marshall, the court heard a similar case; Dori v Recreb Srl. The court chose to affirm its position in Marshall although it was encouraged to extend its principles of direct effects to allow for the enforcement of directives against all parties, public and private. They reasoned that to extend case law to allow directives to be enforced against individuals ‘would be to recognise a power to enact regulations for individuals with immediate effect, whereas (the community) has competence to do so only where it is empowered to adopt regulations. In denying horizontal effects in Dori the court pointed out that alternative remedies may be available in Indirect Effects and State Liability.

Indirect Effects

In Von Colson v Land Nordrhein-Westfalen, the court sidestepped the public/private distinction and held that Article 5 EC (which requires all states to take ‘all appropriate measures’ to ensure the fulfilment of their community obligation) was binding on all authorities of member states, including courts. The courts therefore have to interpret national law in such a way as to ensure the objectives of a Directive are achieved. EC law can therefore be applied indirectly, by way of interpretation, even if the Community law is not directly effective.

For some while, however it was unclear whether national courts were obliged to comply with the ‘Von Colson principle’ to interpret EC law to comply with an EC directive when the domestic measure had been introduced prior to the directive. These questions were raised in Marleasing SA v La Comercial Internacional de Alimentacion SA. The Court held that the national courts’ obligation to comply with EC directives applied whether the national provision in question were adopted before or after the directive.

However, even the ECJ conceded that there were limits to the principles of indirect effect. In Von Colson, the national courts’ obligation to give indirect effect to Community Directives was expressed to exist ‘insofar as they have discretion to do so under national law.’ Even under Community Law therefore, it seems that national courts may refrain from interpreting domestic law against its clear and intended meaning where to do so would breach the legitimate expectations of individuals.

State Liability

Until Francovich v Italian State, there was no general principle of state liability in damages for breaches of Community Law in the absence of direct or indirect effects. Many breaches of EC law by member states concerned the inadequate implementation of directives. Many of these directives were designed to confer rights on individuals. When states fail to implement them or implement them incorrectly then individuals are deprived of their Community rights.

The principle of state liability was needed for a few reasons. The principle of direct effects was effective to provide remedy in the individual case- where the individual is aware of his/her community rights and willing to enforce them. This principle is not available against private enterprises nor is the principle of indirect effects. The primary problem in the EC at the time was the non-implementation of directives by member states, and neither direct nor indirect effects remedied this problem.

In Francovich, the court established this new principle, that, under certain circumstances, a state may be ‘liable to make good damage to individuals caused by a breach of Community Law for which it is responsible.’ The breach in question was the non-implementation of directive 80/987 by the Italian State. The directive concerned the protection of employees in the event of their employer’s insolvency. It required the states to set up a guarantee institution to ensure that employee’s arrears of wages were paid in the event of their employer’s insolvency. In this case the Italian State had not implemented the directive; the claimants were owed arrears of wages and they sought compensation from the Italian State. They based their claim on two points; the first being direct effect, which the court found that the provision was not directly effective.

The second base of their claim was the state’s breach to implement the directive, for which the court found the state liable. They held that the failure by the member state to take all necessary steps to achieve the results required by a directive gave rise to a right to obtain damages based directly on Community Law.

Three Conditions must be met in order for the State to be held liable. Firstly, the result required by the directive includes the conferring of rights for the benefit of individuals. Secondly, the content of these rights may be determined by reference to the provisions of the directive, and finally there must be a causal link between the breach of the obligation of the state and that damage suffered by the person affected.

Thus in Francovich the court laid down a new principle wholly independent of direct and indirect effect. It was to supplement for individuals the inadequacies of the principles of direct and indirect effects, and it would also provide states with a powerful incentive to fulfil their obligations under Community Law.

Conclusion

The question of whether EU directives are directly applicable in Member States is a difficult one to answer. Directly applicable can mean law which is applicable as part of our internal system, it can also mean law which is capable of application by national courts at the suit of individuals; directly effective. In many circumstances EU directives can have direct effects; as shown previously. There must be three conditions for a directive to be directly effective. After the cases Marshall and Dori, it is presumed that directives can only have vertical effect, i.e. the claimant has to be invoking the directive against an arm of the state. The second condition necessary is that the implementation period for the directive must have expired, and thirdly the obligations in the directives must be unconditional and sufficiently precise. Directives can also be applicable through indirect effect; when the courts have to interpret national law in such a way as to ensure that the objectives of a directive are achieved, even if Community Law is not directly effective. EU directives can also be enforced through the principle of State Liability. As many directives are put in place to confer rights on individuals, if member states don’t implement them then they can be held liable.

To conclude, I think that EU directives are directly applicable in Member States.

Methodology

When I received my project title, I started by going to the library and looking in Halsbury’s Laws and Statutes to try and find something of relevance to the question. I found the European Communities Act of 1972.  This mentioned the fact that all EC law became directly applicable. This led me to the HP Bulmer case.

After this I decided to search for some secondary legislation, so I looked on ‘Star,’ the library catalogue for textbooks on EC law and its enforcement. When I had found some textbooks, including Steiner, Shaw, Weatherill and Collins, I decided to go home and read around the subject. In the textbooks, I found out what direct applicability and effect were, and the textbooks mentioned cases which I went and looked up in the library; my search was very successful and I managed to find them all in the European Court Reports. In order to find the cases, I used the case citator in the library and looked them up in chronological order. As there were quite a few cases relevant to the topic, this took quite a long time.

After I had done this I had to see if any of the laws had been updated or the decisions changed, so I looked in European Current Law. Fortunately none of the relevant laws had been changed, so I felt that I could carry on with my project.

The textbooks also referred me to lots of directives mentioned in the cases, so I looked those up and read about them as well. Finding the directives was something I had never done before, so I went to the European Reference Collection in the library and read them there.

I also decided to look at the Treaty Establishing the EC for the relevant articles that the textbook mentioned, so that I could have a full understanding of the meaning of the books and cases. To find these, I went to the European Reference section of the library, however I could only find the Treaties Establishing the European Coal and Steel Communities, and amendments to the original treaties; I think that people may have already been using the ones I needed. Instead of waiting, I looked on Westlaw and found the Treaty Articles I needed straight away.

After this I decided that I had enough information to answer the question, so I started to write my project.