The Legal Acts of the EU and their Legal Effects (focus on direct effect)

Learning outcomes

(i) Identify the main sources of EU law

(ii) Describe the function and legal effects of the main sources of EU law as prima facie transpiring from the wording of the Treaties

(iii) Identify the legal effects of, mainly, EU directives as defined by the European Court of Justice

Traditional distinction:

Primary (treaties) vs Secondary sources (instruments created using the procedures in the treaties)

Legal sources in the EC pillar

Article 249 ECT

‘In order to carry out their task and in accordance with the provisions of this Treaty, the European Parliament acting jointly with the Council, the Council and the Commission shall make regulations and issue directives, take decisions, make recommendations or deliver opinions’.

(i.e. these are the main legal sources)

• New A 288(1) – ‘To exercise the Union’s competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions’.

Regulations

‘a regulation shall have general application. It shall be binding in its entirety and directly applicable in all member states’.

Main features:

• ‘general applicability’,

• ‘applicability in its entirety’

• ‘direct applicability’ (no implementation needed, see Case 34/73 Variola)

• Used to create uniformity across MSs legal systems

• Accounts for 31% of all legislation

Directives

‘A directive shall be binding as to the result to be achieved, upon each Member State to which it is addressed, but shall leave the national authorities the choice of form and method’

Main features:

• Addressed to MSs (and not necessarily to all MSs)

• Binding as to the results

• Leave MSs choice on means of implementation (contain deadline for implementation)

• Used to harmonize laws across EU. Some legal bases (e.g. freedom of establishment, social policy) only allow for use of Directives.

• Less intrusive into national sovereignty compared to regulations

Decisions

‘A decision shall be binding in its entirety upon those to whom it is addressed’

Main features:

• must be notified to addressee to take effect (legal or natural persons typically)

• Only affect addressees

• Used in particular in competition law and in the context of state aid rules, but also to produce new policy areas (Socrates) or for establishing general procedures (e.g. ‘Comitology’ Decisions 99/468)

• Mind the label! ECJ ultimately decides if form matches substance. (i.e. they may mislabel to get away with certain things)

Recommendations and Opinions

• ‘Recommendations and opinions shall have no binding force’ (typically seen as the soft law instruments EU institutions can use to pursue regulatory aims in member states)

• But national court can refer matters pertaining to validity or interpretation of these soft law instruments if they have been used to clarify issues of EC law (see Grimaldi)

• Typically cannot be referred to ECJ other than exceptional matters (e.g. above)

• Soft law v Hard Law

(Old) second and third pillar sources (CFSP and PJCC)

Article 12 TEU

‘The Union shall pursue the objectives set out in Article 11 by:

• deciding on common strategies,

• adopting joint actions,

• adopting common positions,

Article 34(2) TEU

‘acting unanimously on the initiative of any Member State or of the Commission, the Council may:

• (a) adopt common positions...;

• (b) adopt framework decisions...

• (c) adopt decisions ...

• (d) establish conventions…’

Other sources

• The Treaties and other International Agreements as sources of law

• Court decisions and General principles of Law

• Includes principles as diverse as legitimate expectations and the protection of a fundamental right to property or the concept of proportionality

(iii) The legal effects of EU law as defined by the European Court of Justice – Direct Effect

Key questions

A. is EU law automatically effective in Member States, or does it have to be implemented/re-enacted by each State? Is it any different from international law?

I. It will depend on whether a legal system is a dualist or monist system of IL. But typically, when a country signs up for an international treaty, it’s first of all the state that is the subject of the international treaty and not its international citizens

II. States are subjects of IL not circumstances (though these days there are exceptions)

III. And then it’s up to states to incorporate them into domestic law

B. Is EU law enforceable only by States, or can it be enforced by individuals?

I. Individuals can draw rights from EY law directly w/o the medium of the member state in some circumstances

C. can EU law be enforced between two individuals [ = the horizontal application of rights; compare with the Human Rights Act 1998]

I. are they enforceable vertically (me and state) or horizontally against a private employer (say the right not to be discriminated against on the grounds of nationality)

The Effects of Treaty Provisions – The Van Gend ‘revolution’

- Case 26/62, van Gend & Loos (ECR [1963] 1) o ‘...this Treaty is more than an agreement which merely creates mutual obligations

between the contracting states …’o ‘…this view is confirmed by the preamble to the Treaty which refers not only to

governments but to peoples’ .

o '’it s also confirmed more specifically by the establishment of institutions endowed with sovereign rights, the exercise of which affects member states and also their citizens’ .

o ‘…a new legal order of international law for the benefit of which the states have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only member states but also their nationals’

Groundbreaking; used to establish that treaty articles under certain circumstances could confer rights directly to individuals even when it is member states that have breached them

Note (10 years before the UK joined) and he basically said when join the EU, forget your preconceptions about IL)

Conditions for Direct Effect

Treaty provision must be

• clear and precise

• unconditional or legally perfect, and

• must not depend on further implementation by Member States

note: the courts have sometimes shown to be generous with this criteria so in a sense it’s not that strict buy by and large, they apply

Treaty articles which satisfy the narrow conditions for direct effect become self-executing

So what are these principles? Art 119 is one of the first that we recognised as being directly applicable (one of the principles in it at least); the principle of equal pay

Horizontal Direct Effect of Treaty Provisions

• Case 43/75 Defrenne v Sabena (No.2) [1976] ECR 455

Defrenne was an air stewardess in the airline Sabena. She was asked to step down from her profession and that had a number of important implications in terms of pay, entitlement to pension rights etc... She was asked to step down at an age inferior to the age of male stewards. Basically, the court said it was discrimination on grounds of sex and basically said art 119 and art 141 was directly applicable. The important thing is that since Savena had already been privatised, it was a case between 2 private parties.

para 39 “since [Article 141, ex Art 119] is mandatory in nature, the prohibition on discrimination between men and women applies not only to the action of public authorities, but also extends to all agreements which are intended to regulate paid labour collectively, as well as to contracts between individuals”

Regulations

• Treaty provides that they are ‘directly applicable’

• But notice difference:

– direct applicability refers to the incorporation of Community rules into national law; rules which are directly applicable become automatically upon their enactment by the Community part of legal order of the Member States

• these rights get into the national legal system as soon as they are produced

– direct effect refers to the idea of a provision (a Treaty article, regulation, directive etc) giving rise to rights which an individual can rely on in a domestic court; rules which are directly effective confer rights and obligations on citizens

• You as an individual can use them in a court of law

Direct effect of decisions

• Case 9/70 Franz Grad [1970] ECR 825

Whenever a decision is communicated to one or more parties, it becomes directly effective for the parties affected.

Direct Effect of Directives

This has been the big question in terms of EU law for ages. The reason is so because in theory, directives are the flexible instruments; the one’s that should theoretically maintain the highest level of respect for national sovereignty and autonomy.

Bit by bit, the court decided directives should be empowered and should have direct effect to some extent.

• Case 41/74 Van Duyn [1974]

• A dutch scientologist (and at this time, scientology was looked down by nat authorites, particularly the police as a dangerous sect) wanted to enter the UK to become a secretary in a local scientology secy.

• There are a number of provisions on free movement but her lawyers decided to rely on the more detailed directives. The question is whether she could use this directive which had been poorly implemented in the UK to challenge the expulsion produced by the Home Office.

• She won; the court said unless we recognise direct effect in these situations, we’re going to deny European law from its effectiveness

– Rationale: Effectiveness of EU Law

• Supreme Courts’ malaise – the Cohn Bendit ‘affaire’ (more next week)

– This is when some national courts got a bit nervous; when you talk about chemical products and canned beef it’s one thing but when you tell nations they can’t expel undesirable foreigners, things get a bit dicey.

– So courts got nervous about hte path the ECJ was taking with direct effect specially with directives which form the bulk of the legislation

– Cohn Bendit was a franco german guy leading student protests in France. At this time (late 60s, early 70s).

– There is an author; Derrick Wyatt who suggests that that pushed the ECJ to become more cautious which could be why they had a slightly modified rationale in the Ratti case

• Case 148/78 Ratti

– Rationale 2: ‘estoppel’ argument

– Basically, if a directive is not implemented correctly in the member states, the national authorities should be estopped from drawing any benefits from the failure of their implementation. SO it wasn’t based on just the effectiveness of EU law.

No horizontal direct effect for Directives

So from that step, it was easier to suggest that directives had no horizontal direct effect.

Case 152/84 Marshall

• [48] … it must be emphasized that according to [Article 249, ex Art 189] of the EEC Treaty the binding nature of a directive, which constitutes the basis for the possibility of relying on the directive before a national court, exists only in relation to ‘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 such a person. It must therefore be examined whether, in this case, the respondent must be regarded as having acted as an individual’

Basically said if the rationale for vertical direct effect is the estoppel argument; i.e. you don’t want to allow member states to draw benefits from the poor implementation of community directives. The other side of the coin is that you cannot blame an individual for the non-implementation of the community directive. Which means if the directive has not been implemented properly at a domestic level, you can bring the case against the state but not an individual as that individual has no power in implementing it and therefore cannot share the blame.

The estoppel argument focused entirely on the state as opposed to the effectiveness argument. The moment you tie it totally to the state, individuals are off the hook.

In defence of the Court’s reasoning

• the textual argument from Art 249 EC: the obligations contained in directives are addressed only to Member States

• HDE for directives would destroy the distinction between regulations and directives

• HDE for directives would prejudice the rights of the private defendant and infringe the principles of legal certainty

• There are so many directives, can private individuals be expected to know all? (but on the other hand, this applies to any source of law. As long as it’s out there and published it’s generally valid)

Criticisms of the Court’s reasoning, e.g.

• undermines the effectiveness and uniformity of Community law

• anomalous distinction between citizens who happen to have been wronged by the state and those who have suffered a similar wrong from a private individual (e.g. someone employed by the state and someone involved by a private company)

Now however, they seem to be looking at ways to getting around the strict no HDE rule

Circumventing the Rule

i. Expanding the notion of the ‘State’

ii. Indirect effect/duty of interpretation

iii. Incidental effect (note that it exists but it’s not clear at all what its effects are)

Bending the Rule

iv. General principles enshrined in Directives (are capable of HDE)

• (Incidental effect?) (we will deal with in depth next year)

Mending the Rule

v. State Liability (which means you can’t sue the individual but maybe you can sue the state for damages. Again covered more next year)

Changing the Rule? (advocated by some critics)

Circumventing the Rule - Expanding the notion of the ‘State’

• A directive can be enforced vertically against the state or an ‘emanation of the state’, e.g.

• Case 152/84, Marshall [1986] ECR 723

• Here, Marshall was bring a case against a health authority and the court said a health authority may well fit into the notion of a state. SO here you can enjoy protection of a community directive in a vertical situation

• C-188/89 Foster v British Gas [1990] ECR I-3313

• Note: this was decided after the privatisation of British Gas. And the court introduced a 4-step test in deciding whether the company counts as an emanation of the state.

para 20 “a body, whatever its legal form, which has been made responsible, pursuant to a measure adopted by the State, for providing a public service under the control of the State and has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals is included in any event among the bodies against which the provisions of a directive capable of having direct effect may be relied upon”

note: At some point the court decided this was not a cumulative test (compulman case) and you need to only satisfy some of these (see handout)

Circumventing the Rule -‘Indirect effect’/the duty of interpretation

Article 10 EC

• Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the achievement of the Community's tasks.

• The court quickly read into this and in Case 14/83 Von Colson - the duty of interpretation / obligation of good faith in Article 10 EC also applies to national courts

• i.e. they have to apply national law in light of the community law whenever there is a mismatch of the 2. (we should be familiar with this as it is similar to s3. HRA 1988)

• C-106/89 Marleasing SA v CIA [1990] ECR I-4135

• Here, the court gave a broad nothing to the doctrine of direct effect (or is it indirect?)

• Anyway you can’t have an implied repeal of community law simply by passing a national act which is not in line with a community directive

[8]: 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 and thereby comply with the third paragraph of [Article 249, ex 189] of the Treaty

Note: there were debates in Marleasing; what does the phrase as far as possible mean?

• Case C-334/92 Wagner Miret, ‘only in so far as possible’

• There is no obligation and national courts should not go into interpretations that do violence to the words of national regulation when there’s a complete mismatch to the EU directive and the national statute

Circumventing the Rule – incidental effect

There are 2 sensible ways to deal with incidental effect; say everything about it or say nothing about it. Just remember that this year we don’t need to know much about it. It’s probably one of the most recent doctrines created by the ECJ to circumvent the no HDE rule.

• C-443/98 Unilever Italia SpA v. Central Food SpA

Here, the court has drawn a distinction between substitution effects of community directives and exclusionary effects of community directives. The court suggests that in some situations, comm. Directives can be used in order to ignore the effects of national leg or national law in horizontal situations. (so the directive will prevent a contract between 2 parties from having legal force. So here, directive 189 prevents certain thing in the contract from taking effect.) So some people argue that this is HDE by the back door. But courts maintain that it is not and all the directive is doing here is performing an exclusionary effect and it would be HDE if they substituted the directive provisions in the legal relationship between the 2 individuals.

That would be substitution of directive terms in a horizontal situation. But courts are just putting forward the exclusion effect.

Imagine a contract between A and B and the contract says that A will sell to B 300 bottles of oil and we sign this contract saying you’re going to pay me for 300 bottles of oil you will use in your restaurant. This is clearly a horizontal situation. There is a directive that says for my olive oil to be used in B’s restaurant, it has to comply with certain labelling requirements. This directive has not entered into force at the time we agree the contract. I’m selling bottles that already comply with the new directive. When you realise this; i.e. when you get the first shipment. You’re a bit annoyed as it’s something that complies with the new directive when it enters into force but not with existing legislation.

The directive in question basically says the contract b/w us is invalid however it does not substitute a particular term in the directive into our legal relationship. It just prevents me from relying on this contract which would otherwise be enforceable in national law. It has merely excluded the application of a number of terms in our contract.

[50] “Whilst it is true, as observed by the Italian and Danish Governments, that a directive cannot of itself impose obligations on an individual and cannot therefore be relied on as such against an individual (… Faccini Dori …), that case-law does not apply where non-compliance with Article 8 or Article 9 of Directive 83/189, which constitutes a substantial procedural defect, renders a technical regulation adopted in breach of either of those articles inapplicable.”

(more next year!)

Bending the Rule - General principles enshrined in Directives

• Case C-144/04, Mangold v Helm

• Case on discrimination about older workers. Courts said there’s no HDE but if it contains a general principle of community law (e.g. non-discrimination on grounds of age in directive number...) will apply

[75] The principle of non-discrimination on grounds of age must thus be regarded as a general principle of Community law. Where national rules fall within the scope of Community law, … and reference is made to the Court for a preliminary ruling, the Court must provide all the criteria of interpretation needed by the national court to determine whether those rules are compatible with such a principle.

• Case C-555/07, Kücükdeveci v Swedex GmbH & Co. KG

• German case; a young worker was being discriminated because of his age. Again, the courts based its reasoning on Mangold and said the directive contains a general principle of community law and you have to allow the principle to apply in horizontal situations even if you haven’t properly applied the community directive

Mending the Rule - State liability

• where a state has failed to implement a directive it will be obliged to compensate individuals for damage suffered as a result of its failure, if certain conditions are satisfied: 6/90 & 9/90 Francovich [1991] ECR I-5357

• conditions for the existence of state liability (clarified and re-defined in C-48/93 Factortame (No.3)/Brasserie de Pecheur [1996] ECR I-1029):

• the rule of law infringed must have been intended to confer rights on individuals

• the breach must be sufficiently serious

• the court uses the grave and manifest test. (member state has gravely and manisfestly disregarded this)

• there must be a direct causal link (there must be causation) between the obligation resting on the State and the damage sustained by the injured party

• first 2 are for the ECJ to ascertain and typically causation is for the national court to ascertain

Changing the Rule?

• Too many exceptions to the rule

• Lack of clarity

• Need for HDE?

• P. Craig, ‘The Legal Effects of Directives: policy, rules and exceptions’ (2009) ELRev, 349-377.

• On the flipside, it’d amount to them directly legislating with directives (sovereignty argument)