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Homewood: EU Law Concentrate 4e

Essay question

Trace the development of the principles of direct effect, indirect effect, and state liability by the Court of Justice, evaluating their significance for individual claimants.

Your answer should address direct effect, indirect effect, and state liability in turn, ensuring relevant analysis and evaluation as you go along. As all three doctrines were created by the Court of Justice, the case law will feature strongly, as the question itself indicates. You should begin by reference to the doctrine of supremacy, which forms the basis of the three principles.

Supremacy of EU law

  • Sovereignty of the European Union (previously Community) legal order: 'The Community constitutes a new legal order in international law, for whose benefits the states have limited their sovereign rights, albeit within limited fields . . .' (Van Gend) '. . . the EEC Treaty has created its own legal system which became an integral part of the legal systems of the Member States . . .' (CostavENEL).
  • The corollary of EU sovereignty is the supremacy of EU law: EU law takes precedence over national law (Costa vENEL, Internationale Handelsgesellschaft, Simmenthal, Factortame II).

Direct effect

  • Meaning of 'direct effect: set out a definition – if a provision of EU law is directly effective, it can be invoked by individuals in the national court.
  • The principle is not contained in the Treaty. Trace its development by the Court of Justice, discussing Treaty articles, regulations, directives.

Treaty articles

  • Van Gend: Creation of the principle. Treaty articles capable of direct effect. The Treaty is not only an agreement creating obligations between Member States. EU law imposes obligations upon individuals and confers on them legal rights.
  • Direct effect of Treaty articles: subject to the conditions first formulated in Van Gend (measure must be sufficiently clear, precise, and unconditional and its implementation must not be dependent upon any implementing measure), then subsequently reworked and loosened, for instance in Defrenne (the measure must be sufficiently clear, precise, and unconditional).
  • Van Gend: Treaty articles capable of vertical direct effect (explain) but the question of their horizontal direct effect (explain) was left unresolved.
  • Defrenne: Treaty articles can be invoked horizontally.
  • Since Van Gend and Defrenne: numerous Treaty articles held to be vertically and horizontally directly effective, including the internal market provisions.
  • Significance for individuals: ability to invoke, in the national court, Treaty rights against the state and other individuals.

Regulations

  • Regulations: capable of vertical and horizontal direct effect, subject to the same conditions as are applied to Treaty articles (Politi, Leonesio).

Directives

  • Article 288 TFEU: directives must be implemented into national law.
  • Originally not thought to be capable of direct effect: not intended to operate as law within national systems, since that is the role envisaged for the relevant national implementing measures; addressed to Member States and do not appear to affect individuals directly; seen as giving Member States a broad discretion in implementation, being binding only as to the result to be achieved, and therefore considered to be insufficiently precise to fulfil the Van Gend criteria.
  • Van Duyn: directives can be directly effective, provided clear, precise, and unconditional.
  • Ratti: additionally, the implementation deadline must have passed. Rationale: it would be unfair to permit a directive to be invoked against a Member State until its obligation to implement had become absolute. By the same token, it would be unfair to allow a Member State to rely on its failure to implement a directive to escape obligations arising under it.
  • Van Duyn did not address the possible horizontal direct effect of directives.
  • Marshall: directives can only be invoked vertically against the state or a public authority, but not horizontally. Reiterated in Faccini Dori.
  • Court of Justice's refusal to permit directives to be invoked horizontally frequently criticized as anomalous and unfair. In the employment context, for instance, individuals employed by the state or a public body can invoke rights under a directive against their employer, whilst those working for private employers cannot.
  • In response, Court of Justice refers to the Community (now EU) legal order: rights under directives must be enshrined in national implementing measures, upon which claimants can rely in national courts. Only Member States, not individuals, should be held accountable for a state's failure to implement directives.
  • Mitigation of this approach: indirect effect and state liability and broad interpretation of 'public body'.
  • Public body: Foster '. . . 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'.
  • Application of Foster test (Becker, Fratelli Costanzo, Johnston).
  • Doctrines of direct effect and supremacy immensely significant. Require national courts to apply EU law at the suit of individuals in priority over any conflicting provisions of national law. National courts must disapply national measures that conflict with directly effective provisions of EU law.
  • Direct effect is especially important where a Member State has failed to meet its obligation to implement EU law or where implementation is partial or defective. Direct effect provides a mechanism for the enforcement of individuals' EU rights but also an additional means of supervision of Member States' compliance with EU obligations.

Indirect effect

  • Especially significant: overcoming the shortcomings of direct effect in 'horizontal' situations or where a provision is not sufficiently clear.
  • Von Colson: the principle established. Set out the definition of indirect effect.
  • Applies to pre-dating and post-dating legislation – Marleasing, Webb v EMO Air Cargo
  • Marleasing: all national law must be interpreted in line with Union law, but only 'so far as possible'. It may not always be possible (Wagner Miret) so the principle has its limitations.

State liability in damages

  • A means to overcome the limitations of direct and indirect effect.
  • Francovich: damages for loss incurred as a result of a state's failure to implement a directive. Conditions for liability: the directive entails the grant of rights to individuals; it is possible to identify the content of those rights; a causal link between the state's failure and the loss.
  • Factortame III: damages for other kinds of breach. Set out the conditions.
  • ‘Sufficiently serious breach’ - ‘Manifest and grave disregard of the limits on its discretion’ – factors to be considered (see Para 56 of Factortame III) – clarity, excusable etc.
  • Application of Factortame III: legislation infringing EU law (Factortame III); incorrect implementation of a directive (BT); administrative breaches (Hedley Lomas); incorrect interpretation of EU law by a national court of last instance (Köbler).

Conclusion

Direct effect, indirect effect and state liability all play a crucially important role in the protection of individuals' EU law rights in national courts.

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