EU Law and National Law: Supremacy, Direct Effect, Indirect Effect and State Liability

Question 1

What are EU Treaties?

Answer 1

EU Treaties represent international agreements made by a number of European states to cooperate in certain (primarily economic) areas.

Question 2

What does Article 258 TFEU provide?

Answer 2

Article 258 TFEU provides that the Commission may being a case to the CJ against a Member State for not fulfilling its Treaty obligations.

Question 3

What Artciles provides that a MemberState may bring a case to the CJ against another Member State for not fulfilling its Treaty obligations?

Answer 3

Article 259 TFEU.

Question 4

What year was the decision in Van Gend en Loos made?

Answer 4

1963

Question 5

What happened in Van Gend en Loos?

Answer 5

Van Gend en Loos imported formaldehyde from West Germany in 1960. Because of changes to the classification of this product by the Dutch authorities the duty payable on it had been increased from 3% to 8%. However, Article 12 EEC (now Article 30 TFEU) provided at the time that ‘Member States shall refrain from introducing between themselves any new custom duties on imports or exports or any charge having equivalent effect, and from increasing those which they already apply in their trade with each other’. Van Gend en Loos argued before the Dutch authorities that Article 12 (now Article 30 TFEU) gave rise to rights which could be claimed by individuals and protected in the courts of Member States and that the company has an enforceable claim because the increased duty was contrary to Article 12.
On a reference to the CJ from the Dutch Customs Court, the CJ held that ‘Article 12 must be interpreted as producing direct effects and creating individual rights which national courts must protect’.

Question 6

Why is the decision in Van Gend en Loos so important?

Answer 6

Because the CJ recognised that Union Law created rights and obligations which not only had a direct impact on Member States, but also upon the citizens of those states.

Question 7

Why has the CJ been criticised for ‘judicial activism’ after the decision in Van Gend en Loos?

Answer 7

Van Gend en Loos is an illustration of the CJ filling the gaps left in the ‘framework treaty’ that was the EC Treaty. The detail has in many respects been provided by th eSJ through the kind of purposive interpretation of the Treaty that characterised its judgment in Van Gend en Loos.

Question 8

What happens if a provision of EU law comes into conflict with domestic law?

Answer 8

The CJ found the solution to this conundrum in the doctrine of supremacy. The new legal order identified in Van Gend en Loos required not only that EU law be capable of direct effect, but that it was also supreme over the domestic law of Member States. Thereforem where a provision of EU law comes into conflict with the national law of Member States, EU law prevails.

Question 9

What is the doctrine of supremacy?

Answer 9

The new legal order identified in Van Gend en Loos required not only that EU law be capable of direct effect, but that it was also supreme over the domestic law of Member States. Thereforem where a provision of EU law comes into conflict with the national law of Member States, EU law prevails.

Question 10

Which case highlights the supremacy of EU law as a necessary concomitant to direct effect and the new legal order created by the EC Treaty?

Answer 10

Costa v ENEL

Question 11

What happened in Costa v ENEL?

Answer 11

Costa was a shareholder in an electricity company that was nationalised by the Italian government. He subsequently refused to pay his electricity account, which was for the sum of about £1. When sued for this amount, he argued the nationalisation legislation was contrary to Community law. On reference to the CJ, the Italian government argued that the case was ‘inadmissible’ because its national courts were obliged to apply the law nationalising the electricity industry as the latest expression of the will of the Italian Parliament. The CJ did not agree. Its conclusion was that ‘The integration into the laws of each Member State of provisions which derive from the Community, and more generally the terms and spirit of the Treaty, make it impossible for the States, as a corollary, to accord precedence to a unilateral and subsequent measure over a legal system accepted by them on the basis of reciprocity’.

Question 12

What case confirmed the decision in Costa v ENEL of the supremacy of EU law?

Answer 12

Amministrazione delle Dinanze dello Stato v Simmenthal SpA (Simmenthal).

Question 13

What is Article 288 TFEU?

Answer 13

Article 288 TFEU specified the forms of secondary legislation that the institutions of the Community must use to fulfil the objects of the Treaty.

Question 14

Is a regulation directly effective or directly applicable?

Answer 14

A regulation is described as being of ‘general application…binding in its entirety and directly applicable in all Member States’.

Question 15

What does the direct applicability of a regulation mean?

Answer 15

Once a regulation is made by the Community it does not need to be transposed into the domestic law of Member States; it automatically because part of their domestic law.

Question 16

Are directives directly applicable?

Answer 16

Directives are not directly applicable. Article 288 describes directives as binding only ‘as to the result to be achieved’, leaving to Members States the ‘form and method’ of their achievement. Consequently, directives require Member States to take national measures to transpose the terms of a directive into their domestic law.

Question 17

What is the difference between direct effect and directly applicable?

Answer 17

Direct applicability applies to regulations and meant that it does not need to be transposed into the domestic law of Member States; it automatically becomes part of domestic law. Direct effect, on the other hand, refers to the fact that provisions of EU law may, even without transposition by a Member State, give rise to rights which can be enforced by individuals within the national legal systems of Member States. Such rights arise where the conditions for direct effect are satisfied.

Question 18

Are Treaties directly applicable in the UK?

Answer 18

No. In the UK the Treaties themselves are not directly applicable as they need Parliamentary ratification, e.g. the European Communities Act 1972.

Question 19

Which case sets out the criteria that must be satisfied in order for a provision of EU law to be directly effective?

Answer 19

Van Gend en Loos.

Question 20

What are the two criteria that must be satisfied in order for a provision of Community law to be directly effective?

Answer 20

1. The provision must be sufficiently clear and precise to give rise to an identifiable individual right (or rights).
2. It must be unconditional.

Question 21

Which case defines the two requirements for a provision of Community law to be directly effective?

Answer 21

Cooperative Agricola Zootecnica S. Antonio and Others v Amministrazione delle finanze dello Stato.

Question 22

When is a community provision unconditional? What case defined this requirement?

Answer 22

Paragraph 18 - ‘A community provision is unconditional where it sets forth an obligation which is not qualified by any condition, or subject, in its implementation or effects, to the taking of any measurable either by the Community institutions or by the Member States…’
Cooperative Agricola Zootecnica S. Antonio and Others v Amministrazione delle finanze dello Stato.

Question 23

When is a community provision clear and precise? What case defined this requirement?

Answer 23

Paragraph 19 - ‘…a provision is sufficiently precise to be relied on by an individual and applied by a national court where it sets out an obligation in unequivocal terms’.
Cooperative Agricola Zootecnica S. Antonio and Others v Amministrazione delle finanze dello Stato.

Question 24

Which case says that a provision which satisfied the Van Gend en Loos criteria is ‘legally complete and consequently capable of producing direct effects’?

Answer 24

Costa v ENEL

Question 25

Direct effect will generally not be precluded by the mere fact that the provision raises questions of interpretation which can be resolved by a court. Which case is the authority for this?

Answer 25

Van Duyn v Home Office

Question 26

Direct effect will generally not be precluded by the existence of derogations which are subject to judicial control. Which case is the authority for this?

Answer 26

Van Duyn v Home Office

Question 27

Direct effect will generally not be precluded by conditions which are intended to ensure that the right is correctly applied without abuse and which do not affect the definition of the right itself. Which case is the authority for this?

Answer 27

Becker v Finanzamt Munster-Innenstadt.

Question 28

Direct effect will generally not be precluded just because the Member State is able to choose among several possible means of achieving the result required by the Directive. Which case is the authority for this?

Answer 28

Francovich v Italian Republic.

Question 29

With regards to direct effect, what happened in Defrenne v SABENA (No 2)?

Answer 29

Defrenne v SABENA (No 2) provides a good example of how the Van Gend en Loos criteria for direct effect work in practice.
Defrenne (No 2) concerned an action between an air hostess, Defrenna, and her employer, the Belgian airline SABENA. Defrenne claimed she had suffered sex discrimination as a female worker in terms of pay as compared with male ‘cabin stewards’ who did the same work. Both parties to the action accepted that there had been discrimination, but whether Defrenne had any legal right to be protected against such discrimination under EU law was another question. A reference was made to the CJ to determine whether Article 119 EC (now Article 157 TFEU), which enshrines the principle that men and women should receive equal pay for equal work, gave rise to directly effective rights upon which Defrenne could rely in her national court.
The Court held that Article 119 (now Article 157 TFEU) could give rise to rights which protected against direct discrimination where a person by virtue of their gender received less pay than a person of the other gender for the same work. The Treaty Article was sufficiently clear and precise and unconditional to ground such a right.

Question 30

What happened in Von Colson & Kamann v Land Nordhein-Westflen?

Answer 30

In Von Colson & Kamann v Land Nordhein-Westflen, two women had failed in their applications to be social workers in a state prison for male offenders on grounds relating to their sex. The West German Labour Court held that they had been discriminated against but found that, under West German law, it was only able to award them their travel expenses in compensation. The court made a preliminary reference to the CJ asking whether it was required by the Equal Treatment Directive to order the prison to employ the women or it not, what other sanction was to be applied.
The CJ held that the directive did not include an unconditional and sufficiently clear and precise obligation to provide a specific sanction for discrimination.

Question 31

What happened in Francovich & Bonifaci v Italian Republic?

Answer 31

The Court had to consider Directive 80/987 which sought to ensure that in the event of bankruptcy of a company its employees would be able to claim their outstanding wages from a guarantee institution established by the Member States. Italy had not implemented the Directive and as there was no national law under which Francovich and the other claimants would claim their lost wages, they sought to rely on the terms of the unimplemented Directive to enforce their claim.
One of the questions for the court was whether the directive had direct effect. The court concluded that the identity of the persons entitled to the guarantee provided by the Directive and the content of that guarantee were both sufficiently clear and precise from the provisions of the Directive by the identity of the person liable to provide the guarantee was not. It was not clear from the provisions whether this should be a public or private body. The Directive did not have direct effect.

Question 32

Van Gend en Loos concerned a Treaty article which imposed a negative obligation on Member States; what does this mean?

Answer 32

It restrained Member States from introducing new customs duties or increasing existing ones; it did not impose a duty on them to take further action. Treaty articles which impose negative obligations are sometimes referred to as ‘standstill’ articles, as all they requires is that Member States refrain from making certain changes to the national law.

Question 33

What are positive obligations imposed by Treaty articles?

Answer 33

A positive obligation appears on its face to be necessarily conditional, as it requires Member States to do something to give effect to the protected principle.

Question 34

Which case provides the answer to the question of whether Treaty articles which imposed a positive obligation could be directly effective, unanswered by Van Gend en Loos?
What happened in this case?

Answer 34

Alfons Lutticke GmbH v Hauptzollamt Saarlouis.
This case concerned the scope of Article 95 (now Article 110 TFEU). Article 100 includes a prohibition on Member States introducing internal taxation measures which discriminate against the goods of other Member States. However, at the time the Treaty was first agreed to, it also imposed a positive obligation on Member States to removed, by 1 January 1962, any existing measures which had such discriminatory effect.
The CJ held that there was no discretion left to Member States to give effect to the positive obligation regarding removal of discriminatory internal taxes once the 1 January 1962 deadline had passed. At this point the provision became directly effective.

Question 35

What is vertical direct effect? Can Treaty articles be vertically directly effective?

Answer 35

Vertical direct effect refers to cases where an individual relies on rights arising from directly effective provisions of EU law against the state or an organ of the state. In Van Gend en Loos, the CJ established that Treaty articles could be vertically directly effective if the conditions for direct effect are satisfied.

Question 36

What is horizontal direct effect? Can Treaty articles be horizontally directly effective?

Answer 36

Horizontal direct effect refers to claims made by individuals against other individuals on the basis of rights arising from directly effective provisions of EU law. In Defrenne (No 2) the CJ made absolutely clear that Article 119 (now 157 TFEU), which enshrines the principle of equal pay for equal work between men and women, was directly effective across both the vertical and horizontal spheres.

Question 37

Are regulations and decisions, forms of binding EU law under Article 288 TFEU, capable of being directly effective?

Answer 37

Yes, the CJ has found that both regulations and decisions are capable of being directly effective if the conditions for direct effect are satisfied, i.e. that they are sufficiently clear, precise and unconditional.

Question 38

Name two cases which provide authority that regulations are capable of being directly effective?

Answer 38

Franz Grad v Finanzmant Traunstein.

Antonio Munoz y Cia SA v Frumer Ltd.

Question 39

Are recommendations and opinions capable of being directly effective? What is the authority for this?

Answer 39

Recommendations and opinions are not binding forms of EU law and, as such, cannot be directly effective. The authority for this is Grimaldi v Fonds des Maladies Professionnelles.

Question 40

Are directives capable of being directly effective? What is the authority for this?

Answer 40

Directives are a binding form of EU law and are capable of giving rise to directly effective rights, but only up to a point. The suthority for this is Van Duyn v Home Office.

Question 41

What happened in the case of Van Duyn v Home Office?

Answer 41

This case concerned a Dutch scientologist offered work as a secretary at the Church of Scientology HQ in London. She was refused entry into the UK. Article 45 TFEU provides for the free movement of workers, subject to derogations justified on the grounds of public policy, security or health. Directive 64/221 fleshes out in detail the scope of the measure which may be taken by Member States to derogate from Article 45. Article 3 of the Directive provides that any such measures ‘shall be based exclusively on the personal conduct of the individual concerned’. Van Duyn sought to rely on this provision in her claim against the Home Office and the CJ agreed she could, though she was ultimately unsuccessful on the fact of the case.
Van Duyn’s claim was a vertical claim against the state, the Home Office. It is this distinction between state and non-state bodies that the limits of the direct effect of directives becomes apparent.

Question 42

Are Directives horizontally directly effective?
What is the authority of this?
Name a second case which confirms this authority?

Answer 42

No. The CJ has consistently held that directives cannot be horizontally directly effective. A person cannot rely on rights conferred directly by a directive against another individual, but only against the state.
The case of Marshall v Southampton and South West Area Health Authority (Teaching) (No 1) provides authority that directives can be only vertically directly effective.
This was confirmed in Dori (Faccini) v Recreb Sri.

Question 43

To whom is the obligation under a directive addressed to?

Answer 43

The obligation under a directive is addressed only to Member States and it is only in a claim against the state that a person can rely on any directly effective right established under a directive.

Question 44

What did Advocate General Lenz argue in Dori (Faccini) v Recreb Sri?

Answer 44

Advocate General Lenz argues strongly to the Court that it should take a different view and find that directives are capable of being horizontally directly effective (paragraphs 43-73).

Question 45

When must a directive be implemented?

What Article outlines this?

Answer 45

A directive must be implemented by the date specified in the directive or, if the directive is silent, within 20 days of publication of the directive in the Official Journal (Article 297 TFEU).

Question 46

With regards to directives, what does the case of Pubblico Ministero v Ratti provide authority for?

Answer 46

In this case, the CJ held that it is only once the deadline for implementation of a directive has passed, and not before, that the provisions of a directive, which otherwise satisfy the conditions for direct effect, can have direct effect.

Question 47

What happened in the case of Pubblico Ministero v Ratti?

Answer 47

Ratti had complied with the requirements of Directive 73/173 in packaging and labelling the solvent products his company produced. Italian law provided for different standards than the Directive and included penalties for non-compliance. The Italian authorities sought to prosecute Ratti under the domestic law. Ratti sought to protect himself by relying on the Directive. Italy has failed to implement Directive 73/173 by the time the deadline for implementation has passed. The Court found in Ratti’s favour concluding that ‘… a Member State which has not adopted the implementing measures required by the directive in the prescribed periods may not rely, as against individuals, on its own failure to perform the obligations the directive entails’.
What this means in practice is that any discretion a Member State has to implement a directive is removed once the deadline for implementation has passed.