#15567 - Supremacy Direct Effect - GDL EU Law

EU Law: Supremacy & Direct Effect

• EEC Treaty (1957): Treaty Establishing the European Economic Community

• Now two primary treaties of the EU:

  • TFEU (2007): Treaty on the Functioning of the European Union.

  • TEU (2007): Treaty on European Union.

A new legal order

• Primary mechanisms in EEC Treaty for enforcing the obligations of Member States: Articles 169 and 170 EEC.

  • Article 169 EEC: empowered Commission to bring a case to Court of Justice against a MS for not fulfilling Treaty obligations.

  • Article 170 EEC: MS may bring case against another MS.

  • These now provided by Articles 258 and 269 TFEU.

• Article 177 EEC (now Article 267 TFEU): national courts can refer to CofJustice questions on interpretation of EEC Treaty.

• No reference in EEC treaty to obligations under EEC law being directly enforceable I national courts. Remains same under TFEU and TEU.

Van Gend en Loos (1963) and principle of direct effect

• ECJ established a new legal order.

• Facts: Van Gend en Loos imported urea formaldehyde from West Germany in 1960; Dutch authorities raised the tariff from 3% to 8%. Van Gend en Loos argued that Article 12 EEC (against increasing custom duties) gave rights to individuals which could be protected in courts of MSs.

• ECJ ruled that the EEC Treaty was something more than a regular international agreement creating obligations between States. That the Community constitutes a ‘new legal order of international law’ for the benefit of which states have limited their sovereign rights; and the subjects of which compromise not only MSs but also their nationals. EU law imposes not only obligations on individuals but also rights. Article 12 EEC imposed such a right.

• Ruled that Article 12 EEC conferred a right on individuals which could be upheld in national courts. Had direct effect in national legal systems of MSs.

• Principle of Direct Effect: So established that treaty articles can have effect directly within the national legal systems of MSs, by conferring individual rights which national courts are required to protect.

Supremacy of EU Law

• Van Gend en Loos paved way for a second central principle of EU law.

• Costa v ENEL (1964). Costa argued that the nationalisation by the Italian state of an Italian electricity company was contrary to Community law.

• ECJ ruled that the Treaty had established a new legal order which limited their sovereign rights—

• Principle of supremacy of EU law: takes precedent over national law.

• Also established in Internationale Handelsgesellchaft (1970): EU law precedence even over the national constitutional law of a MS including fundamental rights granted by that constitution.

• Simmenthal (1978): a national court must not wait for a national measure which conflicted with EU law to be set aside by a national authority.

  • Nationals courts must disapply incompatible national laws.

  • Irrespective of whether the national laws were introduced before or after the EU measure.

• ECJ has never used the word ‘supremacy’. Rather ‘precedence’/’priority’. Recently, ‘primacy of EU law’—formally recognised in Declaration 17 of Lisbon Treaty 2007.

Direct effect vs directly applicable

• ‘Directly applicable’: in Article 288 TFEU, which specifies forms of secondary legislation—a regulation is ‘directly applicable’ in all MSs (i.e. doesn’t need to be implemented into domestic law of MSs). Unlike directives, which leave MSs to decide ‘form and method’.

• ‘Direct effect’ = provisions of EU law may, even without transposition by MSs, give rise to immediate rights which can be enforced by individuals within national legal systems of MSs.

Van Gend en Loos criteria for direct effect

• Criteria:

  • (1) Provision must be sufficiently clear and precise to give rise to an identifiable individual right. Cooperativa Agricola (1996): ‘precise = sets out an obligation in unequivocal terms’.

  • (2) It must be unconditional. As defined in Cooperativa Agricola (1996): ‘unconditional= sets forth an obligation which is (a) not qualified by any condition, or (b) subject, in its implementation or effects, to the taking of any measure either by the Community institutions or by the Member States ... ‘

• ECJ flexible in interpreting these criteria.

• Defrenne v SABENA (1976): ECJ ruled that Article 199 EEC was sufficiently clear and precise and could be enforced in national courts regarding direct discrimination (eg equal pay), but not more indirect and disguised forms of discrimination, for which more explicit measures would be necessary for direct effect to apply.

• Other egs (no direct effect of directives, didn’t fulfil criteria):

  • Von Colson: (two women, state prison] the directive was not unconditional and sufficiently clear & precise obligation re providing a specific sanction for discrimination.

  • Francovich: re guarantee for employees if company goes bankrupt. Directive—not sufficiently clear which body (whether private or public) should be liable to provide a guarantee in case of bankruptcy of company.

Direct effect of Treaty articles

Negative and positive obligations:

• Van Gen den Loos concerned a Treaty article which imposed a negative obligation on MSs (not to introduce new/increase customs duties). Negative obligations – ‘standstill’ articles.

• Van Gend en Loos specifically ruled regarding a ‘negative obligation’.

• Positive obligations also have direct effect--Alfons Lütticke [1966]: Concerned Article 110 TFEU, which imposed a Positive obligation to remove discriminatory (taxation) measures (on goods of other MSs) by 1 Jan 1962. ECJ

Vertical and horizontal direct effect

• Vertical direct effect (against the State)—established in Van Gen den Loos, which was against a customs office, part of the State.

• Horizontal direct effect (against private individuals/bodies): ECJ held horizontal direct effect in Defrenne v SABENA (No 2) [1976), in the case of a treaty article, re equal pay. Article 119 EEC capable of direct effect against private parties, even though the article itself only referred to MSs being under such an obligation. ECJ: since overwhelming majority of employment relationships are between private employers and employees, the principle of equal pay would be undermined unless applied to private parties. So article could be enforced in national courts by private parties.

Direct effect of regulations and decisions

• Regulations:

  • capable of direct effect. Politi [1971] and Franz Grad [1970].

  • Regulations can have direct effect vertically; and horizontally against private parties (Antonio Munoz [2002]).

  • But must fulfil Van Gend en Loos criteria (Azienda Agricola [2001]): (1) sufficiently clear and precise; (2) unconditional.

• Decisions: can have direct effect (Franz Grad [1970]), according to same 2 criteria. But only against the party to whom the decision was addressed—Carp Snc [2007].

Recommendations and opinions

• Do not have direct effect, as they are not binding forms of EU law (Grimaldi).

Direct effect of directives

• Since Directives (Article 288 TFEU) are only binding on MSs and always have to be implemented by MSs, seems to indicate they could not have direct effect as they were inherently conditional, thus failing Van Gend criteria.

• However, Van Duyn v Home Office [1974]: Directives can have direct effect if they satisfy Van Gend criteria. Rationale given: would be incompatible with the binding effect of directives to exclude direct effect.

• Decision badly received by certain national courts, France and Germany, rebellious—refused to give direct effect to directives.

• Ratti [1979], new rationale for direct effect of directives: a MS cannot rely against individuals on its own failure to perform the obligations that the Directive entails.

• Requirements for Directives to have direct effect

• The implementation date of Directive must have passed: in Ratti [1979]—hence ECJ reconciled direct effect of directives with requirement in Van Gend that they be unconditional. Directive must be implemented by date specified or, if directive is silent, within 20 days of publication.

• AND:

  • Not implemented at all (Ratti)

  • OR partially or incorrectly implemented (VNO [1977])

  • OR correctly implemented by national measures but not being applied by national authorities in a way that achieves the result sought by it (Marks & Spencer plc [2002], directive governing VAT had been properly implemented by UK. M&S overcharged VAT, procedural rule prevented them getting a rebate. ECJ held that M&S could rely on directive to get over procedural impediment, even though Directive itself had been correctly implemented by UK courts).

• Directives can have vertical direct effect but not horizontal direct effect:

  • Directives vertical direct effect against state (Van Duyn).

  • Directives only bind MSs, so only vertical direct effect. Directives don’t impose obligations on private parties.

  • No horizontal--Marshall v Southampton & S.W. Hampshire A.H.A. [1986): cannot have horizontal direct effect against a private entity. (re compulsory retiring age for women cf men). But a person could rely on a Directive against the State, whatever capacity the State was acting in (eg as an employer).

  • Confirmed in Dori [1994]: directives only vertical direct effect, ECJ turned down recommendation of Advocate General.

• What is the State? An emanation of the State-an expanding concept

  • Treated as organs/emanations of the state:

  • Health authority (Marshall);

  • Tax authorities (Becker);

  • police force (Johnston);

  • Local/regional authority (Fratelli).

  • Specific criteria for establishing an organ/emanation of the state, Foster v British Gas [1990]:

  • British Gas was...