Principles of Direct Effect & Indirect Effect of EU Law

Case 26/62 Van Gend en Loos [1963] confirmed the independence of the European legal order from classical international law

Held that the Treaty created legal rights which could be imposed by both Member States and their NATIONALS (individuals)

The case is authority for the proposition that articles of the EC treaty are directly effective (as distinct from directly applicable) in their application against the state.

The case illustrates the creative jurisprudence of the European Court of Justice. The concept of direct effect is not mentioned in the treaty. The court held that such a doctrine was necessary to ensure the compliance of member states with their obligations under the Treaty of Rome.

The case illustrates a procedure of enforcement of EC law at the national level—direct effect does not require the Commission to bring an action against the state. This is significant because it provides a more effective distributed enforcement mechanism.

Vertical direct effect

Individual can go to national court and enforce that EU right against the state

Horiztontal direct effect

Individual can enforce EU right against another individual/company (not MS)

Treaties, once ratified become binding on the MS but also on individuals. So individuals can enforce this. 

Treaty provisions (individual parts) have Vertical Direct Effect (Van Gend en Loos)

The EU law provision must be clear, precise and unconditional (no discretion or judgment of another body whether / how to implement) for it to have direct effect. 

Treaty provisions also have Horiztonal Direct Effect (enforceable against another individual / business (not MS)  (Case Defrenne v SABENA)

Regulations (Art 288 TFEU) have 'Direct Applicability' meaning they are automatically law in all the MS's but they do not necessarily have 'Direct Effect'.

If a specific provision in a Regulation is clear, precise and unconditional, it can have:

-Vertical Direct Effect (Leonesio v Italian Ministry of Agriculture)

-Horizontal Direct Effect (Variola v Amministrazione delle Finanze and Munoz Cia SA v Frumar)

CAN ONLY have vertical direct effect (Case Marshall v Southhampton Area Health Authority) but NO horizontal direct effect

Directives are not addressed to individuals, so are not binding on them - Directives cannot have horizontal direct effect 

Member States are bound by Directives and must achieve Directives objectives, so Directives might have Vertical DE against the MS (and MS bodies)

Vertical Direct Effect if a specific provision:
-Satisfies the Van Gend en Loos criteria = clear, precise and unconditional (Case Van Duyn v Home Office) and...
-Implementation date must have passed (until that point in time, the right is conditional) (Case Publico Ministero v Ratti)

BUT in advance of the deadline for implementation, MSs must refrain from adopting measures that might compromise the result prescribed in the Directive (Case Inter-Environment Wallonie SBL v Region Wallone). 
Rights given by Directives to individuals can only be enforced in national courts (via DE) against a MS or MS body ('emanation' of the 'State')

BUT by (the ECJ) widening the scope of MS by widening the meaning of "emanation of the State" helps increase the parties bound by a Directive's rights, and so helps ensure the widest possible application of the rights created/intended by the Directive ... and so helps to achieve Treaty objectives.
Case Marshall v Southhampton Area Health Authority

Foster v British Gas
Body will be an 'emanation of the state' if:
(a) the body is made responsible by the MS for providing a public service
(b) the service is under the control of the MS;
(c) the body has special powers to provide that service

Farrell v Minister for Environment, Ireland & Motor Insurance Bureau of Ireland (clarification of Foster) - Body can be 'emanation' if condition (a) (MS makes body responsible for providing public service) and either (b) (body subject to MS control) or (c) (body has special power to provide the service) are satisfied. 
CJEU has clarified uncertainty as to scope of Foster test, and made the scope of 'emanation' broader than if the body had to satisfy all 3 conditions - winder scope of VDE of Directives (helping to achieve EU and Directives' objectives).

-Regional and local government (Fratelli Costanzo v Milano)

-Chief Constable of police (Johnston v Chief Constable of Royal Ulster Constabulary)

-Corporations under State control but with conditions attached (Doughty v Rolls Royce)

-School received State funding (NUT v St Mary's School)

Problem with no horizontal direct effect of Directive rights = it leads to discrimination against individuals who are claiming a right against another individual (i.e. not a MS and not an 'emanation' of the MS) - e.g.:

If employee employed by MS or emanation of the State - she can rely on Directive rights (if satisfies Van Gend en Loos criteria) ... but

If employee employed by anyone else - she cannot rely on such a Directive right

To bridge the gap between HDE and VDE

Although individual cannot rely on a Directive right if (1) it does not have Direct Effect and / or (2) she wants to enforce it against a non-emanation of MS.

Indirect Effect = duty of national courts to interpret and apply national law in a manner which is consistent with the wording and purpose of Directives (Case Von Colson and Kamman v Land Nordrhein-Westfalen)

-also applicable in disputes between individuals (horizontal); and
-also applicale if national law existed prior to the Directive / EU law (Marleasing SA v La Comercial Internacional de Alimentacion SA)

Litster (and others) v Forth Dry Dock [1989] UK HL

•              EU Acquired Rights Directive 1977 to preserve acquired employment rights when business sold to new owners: UK implemented ARD into UK law by Transfer of Undertaking (Protection of Employment) Regs 1981

•              TUPE stated: applied to employees employed “immediately before” transfer: L dismissed one hour before sale = not employed ‘immediately before’

•              HL = must interpret TUPE to give effect (indirectly) to ARD, so HL effectively added “or would have been so employed but for being dismissed before the transfer and because of the transfer”

•              TUPE Regs later amended to insert the extra words!

•              Interpretation cannot result in conflict with a general principle of EU law (Case 80/86 Kolpinghuis Nijmegen BV (Criminal Proceedings against Kolpinghuis Nijmegen BV [1987] ECR 3969)

•              National courts must consider the whole body of national rules and interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objectives of the directive (Cases C-397/01 to C-403/01 Pfeiffer [2004] ECR I-8835)

•              Indirect effect only after the Directive implementation deadline expires (Case C-212/04 Adeneler and Others v Ellinikos Organismos Galaktos (ELOG) [2006] ECR 1-6057)

•              No obligations on individuals if no proper implementation (Case C-456/98 Centrosteel Srl v Adipol GmbH [2000] ECR I-6007) especially if criminal liability involved (Case C-168/95 Arcaro [1996] ECR I-4705)

•              Interpretation only in so far as the court is given discretion to do so under national law (Case 14/83 Von Colson and Kamann v Land Nordrhein-Westfalen [1984] ECR 1891)

•              Interpretation can only go “so far as possible” (Case C-91/92, Paola Faccini Dori v Recreb Srl, [1994] ECR I-3325), i.e. national courts have to accept that there might be some conflict – cannot distort that law.

•              Disapplication of national law if impossible to interpret it in conformity with the directive (C-555/07 Kücükdeveci v Swedex GmbH and Co KG [2010] ECR I-365). Supremacy of EU law.

Framework decisions under pre-Lisbon Art 34(2) TEU

“The national court is required to take into consideration all the rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the Framework Decision.”

(Case C-105/03, Maria Pupino [2005] ECR I-5283)

General principles can be relied on vertically and horizontally – for example:

•              General principles of EU law have horizontal effect, reference to Art.21(1) of the Charter of Fundamental Rights (C-144/04, [2005] ECR I-9981) Mangold v Helm

•              Directive as an expression of the principle of non-discrimination on grounds of age (C-555/07 Kücükdeveci v Swedex GmbH and Co KG [2010] ECR I-365)

ECJ / CJEU has developed many principles to help achieve Treaty objectives, including:

•              EU law has ‘supremacy’ over MS national law

•              EU law may allow individuals to enforce EU legal rights in national courts via Direct Effect

•              National courts must interpret national law to give effect (indirectly) to EU law via Indirect Effect

•              National courts must give effective remedies in national law to give effect to EU rights

•              MSs may have ‘State Liability’ for failing to give individuals intended EU rights (e.g. non-implementation of Directive rights)