#15568 - Indirect Effect And State Liability - GDL EU Law

EU Law: Indirect Effect and State Liability

Recap: limitations to direct effect

• (1) No direct effect unless the Van Gend en Loos criteria are satisfied: (a) precise and (b) unconditional.

• (2) Directives cannot have horizontal effect. Can thus be unfair. Contrast Marshall with Doughty.

Further methods of enforcement

• Two further methods of enforcement: Indirect effect & State Liability.

• All three of these methods are ENTIRELY INDEPENDENT methods of enforcement, each with their own criteria. The availability of any one does not depend on any other. So all three methods could be available for any one case.

• Case of Lister v Forth Dry Dock (1989): a good illustration of indirect effect. Purposive interpretation by HofL. HofL read words into the Regs in order to ensure that they achieve the purpose of implementing the Directive.

Indirect effect, and the interpretative obligation it entails

• Relies on national courts interpreting.

• First established in Von Colson re equal treatment directive (this was before Marshall was decided): recognised that directives, even if not directly effective, are capable of having ‘indirect effect’, in that their provisions can be used by national courts in interpreting the meaning and scope of national legislation.

  • Facts of case: case from West Germany, concerning Equal Treatment Directive, which dealt with sex discrimination in employment situations. 2 female social workers applied for a job at a state prison, they were best applicants, but 2 male applicants got the job, as was a male prison. The 2 women bring a sex discrimination case. Germany has implemented the Directive 76/207 (Equal Treatment Directive). Women bring the case in German court under German law, and they win. The problem is with the remedies. Under the German law implementation of the Directive, the only remedy they were entitled to was repayment of their travel expenses. So, their lawyers in court are trying to rely on the Directive itself (rather than its implementation in German law) to get a better remedy (the job itself, or higher compensation). Case referred to ECJ.

  • Principles ruled in ECJ: (1) Firstly considered whether the Directive has direct effect, concludes that it doesn’t, because there is nothing in there indicating what remedies should be awarded, so not sufficiently clear/precise. No Direct Effect. (2) ECJ comes up with second method of enforcement, indirect effect.

• Indirect Effect is an obligation placed on a national court, to interpret their national law compatibly with EU law.

• The precise interpretative obligation: ‘national courts are required to interpret their national law in the light of the wording and purpose of the Directive in order to achieve the result [envisaged by the Directive] ... ‘ MSs are obligated, under the treaty, to achieve the results envisaged by Directives.

• NB the difference from Direct effect: in direct effect you rely on the provision of EU law itself; if relying on indirect effect, you have to get national court to interpret national law in a way that is compatible.

• It’s an interpretative obligation, not about amending national law. So there’s a limit to how far you can push the interpretation. It is for the national court to interpret and apply the legislation adopted for the implementation of the Directive ‘In so far as it is given discretion to do so under national law’.

• Rationale given: national court is part of the MS, so is under same obligation as the state. MS must:

  • (1) Art 5 EEC, now Art 4(3) TEU, requires MSs to ‘take all appropriate measures’ to ensure that their obligations under EU law are fulfilled.

    • National courts are part of the state, and Article 5 is binding on ‘all authorities of Member States’. So national courts under same obligation as the State, since are part of MSs.

  • (2) Art 189, now Art 288 TFEU

    • One of the obligations of MSs under EU law is that a directive is binding ‘as to the result to achieved’ (Art 189(3) EEC, now Art 288(3) TFEU). Necessary to achieve the result envisaged by Directive (Directive is binding as to result).

  • So, national courts, as part of the state, are required to interpret domestic laws implementing a directive in conformity with the wording and purpose of the directive, ‘in so far as’ is given discretion to do so under national law.

• Three resulting questions:

  • (1) Von Colson was vertical indirect effect, can be used against the state. Can indirect effect apply horizontally between private parties?

  • (2) Does indirect effect apply where the national law was not enacted to implement an EU measure? [[in Von Colson, national law had been enacted to implement the Directive]].

  • (3) What is the precise scope of ‘in so far as it is given discretion to do so under national law’? Is it just saying that a national court has to imply its ordinary rules of statutory interpretation? Or does it require something more robust?

• (1). Can Indirect Effect apply horizontally? YES (Harz).

  • Harz v Deutsche Tradax Indirect effect available against a private party. Judgement handed down same day as Von Colson.

  • This gives it a huge advantage over direct effect: a Directive cannot have direct effect against a private party; but can have indirect effect against a private party.

• (2) Can you rely on indirect effect where national law not enacted to implement an EU measure (can indirect effect apply to non-implementing laws, and particularly those passed before the EU made a rule in that area?) YES, Marleasing, (1) provisions of an unimplemented directive have indirect effect on interpretations of national law; (2) applies whether the provisions national law made before or after the directive:

  • Case: Marleasing SA v La Comercial (background facts not that important). Spanish case, regarding Spanish Civil Code. Re EU Company Law Directive 68/151 vs Spanish Civil Code. Spain had no implemented the Directive, deadline passed. Marleasing challenges validity of a company, La Commercial. Arguing that the company was created without cause (grounds provided by the Spanish Civil Code). La Commercial has a defence, the Directive, which gives an exhaustive list of all the circumstances under which a company can be invalid, and ‘lack of cause’ was not one of them.

  • Case concerning two private parties and a Directive, so cannot rely on direct effect. Depends on indirect effect.

  • ECJ decides that indirect effect is available irrespective of when the national law was made, even if it was made before the relevant EU Law, indirect effect is still applicable. (‘in applying national law, whether the provisions in question were adopted before or after the directive, the national court called upon to interpret it is required to do so, as far as possible, in the light of the wording and the purpose of the directive in order to achieve the result pursued by the latter’).

  • That resolves our question: it means that indirect effect is applicable even if national law is not enacted to implement EU provision, and if was passed before the relevant EU provision.

  • Pfeiffer v Deutsches Rotes Kreuz: the obligation to interpret national law in conformity with EU law requires the national court to consider national law as a whole.

• (3) Scope of ‘so far as ... ‘. Switch from ‘so far as’ (Vol Colson) to ‘as far as possible’ (Marleasing).. Limits of how far you can push the interpretation, ‘as far as possible’.

  • Marleasing abandoned language of ‘so far as’ in Von Colson, and instead said ‘as far as possible’. So new question: how far is ‘as far as possible’.

• Subsequent rulings confirming limits to how far the interpretative obligation can be pushed to give indirect effect to EU law:

  • (1) Wagner Miret—no IE where national law expressly contradicts EU law.

  • Facts: Wagner Miret, case from Spain. Concerns Directive 80/987. Designed to deal with situations where companies have gone insolvent, and thus can’t afford to pay wages and other money owed to employees. State is supposed to set up a guarantee institution to pay the money owed. Spain already has a law that does the same thing. But crucial difference: the Spanish law does not apply to senior managers of the company that goes insolvent. The EU Directive makes no such exclusion.

  • Court confirmed, following Marleasing, that national courts were required ‘as far as possible’ to interpret national law in conformity with with a directive.

  • ECJ held that, as a result, it was not possible to interpret the Spanish law in a way that was compatible with the Directive, as the Spanish law explicitly excluded senior managers, whilst the Directive included them.

  • So the principle: not possible to interpret national law compatibly where it expressly contradicts EU law. So there’s a limit to how far you can push the interpretation.

  • [incidentally Wagner Miret failed on grounds of indirect effect, but succeeded on grounds of state liability]].

  • (2) Pupino—‘contra legem’: no requirement to interpret national law contra legem (i.e. against the clear meaning of its words, in a way that contradicts its terms).

• Two other limitations to indirect effect (as well as how far you can push interpretation):

  • (1), Adeneler: Available only once the implementation deadline has passed (Directives). So the event which gave rise to the legal action must have occurred after the deadline for implementing the Directive.

  • (2). Kolpinghuis Nijmengen.

  • Facts: Kolpinghuis is a café in Netherlands. Café selling sparkling mineral water—but it’s actually carbonated tap water. Under Dutch law, that was not a criminal offence. However, there was a criminal offence of...