Class Four – 1/27/09

European Court of Justice Remedies &

Enforcement (Daemen)

Effects Doctrine

Effects Doctrine OverviewRecall competencies / supremacy class and Van Gend en Loos case

Direct applicability vs. direct effects

Direct Applicability•Limited to manner in which EU law is valid in Member States•See, e.g., Art. 249’s reference to Regulations•Premise: Member States need not specifically transform EU law into national legislation

Direct Effects

•Limited to judicial doctrine upholding enforcement of rights under EU law•See, e.g., treaty articles authorizing EU-level activity•Premise: EU law should give rise to individually enforceable rights

Direct Effect: How and When (1)Recall Van Gend en Loos case

Individual argued that Dutch customs tariff increase violated Art. 12/25Member States and AG opposed individual actionECJ concluded that EU law is capable of conferring individually-enforceable rights

Criteria Originally in Van Gend en Loos, but developed further in subsequent casesDirect effects can occur when the relevant law:

Is clear and preciseIs unconditionalDoes not require implementing measures Does not provide Member States or institutions with discretion

Direct Effect: How and When (2)Illustration of direct effects doctrine

Vertical Direct Effects

State

Individual

Horizontal Direct Effects

Individual Individual

Example: Van GendExample: Defrenne v. Sabena

Direct Effect: Examples (1)Regulations

Directly applicable per Art. 249However, can also be directly effective if meet criteria

DirectivesUncertainty and broad Member State implementation discretion means it is difficult for Directives to meet criteriaBut it does happen (vertical)

Ratti (148/78)(product labeling)Verbond (51/76)(noting that individual remedies are vital to ensuring the effectiveness of EU law)

But does it happen (horizontal)?Case discussion: Marshall (152/84)(Sara Campbell, Steve Johnson)Why not? Blur treaty-based distinction between Regulations and Directives

Direct Effect: Examples (2)Decisions

Can be directly effective if meet criteria (Grad, 9/70)

International agreementsCan be directly effective if meet criteriaBut note significant variations depending on subtleties of international agreement at issue

E.g., GATT possibly directly effective (Germany, 280/93)E.g., WTO rules are not directly effective (Portugal, 149/96)

Horizontal DE and Directives (1)Reminders

What is a Directive? (slide 22) What is horizontal DE? (slide 68) Marshall case and split between public/private employers

Resulting key issue/question for the ECJHow can the ECJ best deal with the lack of horizontal DE for directives and resolve the resulting unfairness (and troubling public policy consequences) of its rulings?

Horizontal DE and Directives (2)Options

Expand definition of “state” (Foster, 188/89)(referring to “emanations” of the state)

ProblemsSplit remainsNo uniformity given divergent pan-European approach to public/private sector operations

Create “Indirect Effects”Von Colson, 14/83 / Harz, 79/93Compensation claims against public and private employers, respectivelyECJ ruling

Avoids discussing public/private split, and focus instead on Member State obligations to comply with EU regimeSince national courts are extensions of the state, they should interpret laws to ensure EU law compliance

ProblemsEntirely reliant on willingness of national courtsConfusion when no national law (Marleasing, 68/151) or directly conflicting national law (Arcaro, 168/95)

Horizontal DE and Directives (3)

Options (continued)Create Incidental Horizontal Effects

Although ECJ avoids specific creation of horizontal DE for Directives, some cases appear to blur the distinction and effectively create incidental horizontal effects

CIA Security Int’l, 194/94 (ECJ recognizes ability of individual to essentially rely on a directive in standards context)Unilever, 443/98 (ECJ rules that national law should not apply in case between two individuals)

HoweverECJ rulings explicitly state that they are not establishing horizontal DE for Directives Cases are very fact-specific and difficult to harmonize

Direct Effect: Conclusion/ImpactDE arise from many treaty provisions

Individuals empowered to enforce EU law in a wide range of contextsECJ – though technically without power to review validity of national law – can through DE doctrine declare national law incompatible with EU regimeArguably the start of common-law style private regulatory enforcement in the EU, an enforcement mechanism that continues to expandECJ recognizes that cases involving individuals may be impacted by Member State failure to comply with EU law, and thus has created a regime to hold the state liable

State Liabilty

State Liability: OverviewIf Member States fail to follow EU law:

The Commission can take actionOther Member States can respondIndividuals can sue under Direct Effects doctrine

But what if Direct Effects is not available (e.g., not meet Van Gend criteria, not vertical, etc.)?

Answer: state liability

Case discussion: Francovich (9/90)(Natalia Sanoja, Alicia Feichtmeir)

Key conclusion: individuals now have a remedy for Member State breach of EU law

State Liability: CriteriaGeneral Criteria

Serious breach……of a superior rule designed to protect individuals

“Seriousness” factorsRule clarityAvailable discretionExistence of excusable errorEU contribution to the errorMaintenance of incompatible national law

Criteria and factors continue to evolve

State Liability: ExpansionFrancovich was just the start

See, e.g.:

Courage (453/99)(expanding Francovich to claims between individual litigants on the grounds that damage awards are a vital precondition to the effective enforcement of EU law)Traghetti (173/03)(explaining that national courts could be subject to damage awards for “manifest” errors in interpreting EU law)

Conclusion: show me the money

State Liability: The Role of National Procedural Law (1)

The effectiveness of Direct Effects and private regulatory enforcement depends on national procedural law because:

Such cases are generally litigated before national courts; and,Procedural law has not been harmonized at EU level.

Are national courts and procedures up to the task?Answer: it depends heavily on when the case was brought before the ECJ

State Liability: The Role of National Procedural Law (2)

1960s - 1970sECJ generally ruled that national courts could apply national procedural rules as long as national and EU rights equally protectedSee, e.g., Rewe, 33/76.

1980s – early 1990sIncreasingly activist ECJ rejected numerous national regimes that did not discriminate against EU rights, but failed to provide adequate remediesSee, e.g., Von Colson, 14/83 (damage award insufficient); Emmott, 208/90 (time limit precluded sufficient damage award); Marshall II, 271/91 (rejecting statutory damages cap).

State Liability: The Role of National Procedural Law (3)

PresentECJ increasingly comfortable with national procedural limitations (e.g., damage caps and time limits)See, e.g., Steenhorst, 339/91 (ECJ upholds retroactive claims to one year).

Future?Probably more of the same due to disparate national rules and limited interest in EU-level harmonization

Enforcement Against Member States

Enforcement OverviewEU founders understood the critical importance of enforcement against Member States (the alternative is a “talk shop”)

Article 226

•Empowers the European Commission to pursue enforcement actions against Member States

Article 227

•Enables Member States to pursue enforcement actions against other Member States

Article 228

•Requires Member States to comply with ECJ mandates

Commission EnforcementSee Art. 226 block quote on p. 187

Three step process:

Find a breach by

an appropriate defendant

Start administrative inquiry (if necessary)

Start judicial inquiry (if

necessary)

Step 1: Find Breach by an Appropriate Defendant

What is a breach?Includes mis/mal/nonfeasance……involving all aspects of EU law (e.g., treaties, agreements, ECJ rulings, etc.)Case discussion: Commission v. France (265/95)(Angela Wishaar, Kyoung Soo Chang)See wide-ranging surveys and detailed reports prepared by Commission and consultancies

Step 1: Find Breach by an Appropriate Defendant (2)

How does the Commission find breaches?

Independent investigations, reports by other countries, complaints by individuals or companiesNote: individual complainants have no rights

Who is an appropriate defendant?

Any state component (e.g., legislative, executive and judicial branches are all fair game, including non-federal authorities)

Step 2: Administrative Process

• Not prepared for every inquiry• Puts Member State on notice and starts Art. 226 process

Initial Notice

Step 3: Judicial ProcessCommission files after issuing “reasoned opinion”ECJ can proceed even if Member State ultimately complies with the EU mandate As we have seen in other classes, most defenses rejected

Force majeure: Commission v. Belgium, 77/69Reciprocity: Commission v. Belgium, 91/63Conflicting national law: Commission v. France, 167/73

Injunctions and interim measures20 month delay in judicial process has led to expanded use of injunctions and interim measures

Request must be specific, detailed, and limited to exigent circumstancesInjunctions and monetary fines available

Member State EnforcementSee Art. 227 block quote on p. 196Three step process:

Advise the Commissio

n

Wait for Commission Response

Start Judicial Inquiry

Relatively infrequentCommission will attempt to resolve the situation once it is put on noticeMember State v. Member State cases are highly charged and very political

Individual EnforcementDon’t forget class 3 and first two parts of this class!

E.g., effects doctrine, Member State liability, etc.

Impact of ECJ RulingsArticle 228 obliges Member States to follow ECJ rulingsHistorically limited enforcement powers, which led to Member States “gaming the system” with endless delaysFollowing reforms, ECJ can now issue penalties

Injunctions and interim measures (detailed above) Fines / monetary sanctions

Commission v. France, 304/02 (€57.76M fine every six months, plus €20M lump sum)