EU Law: Direct and Indirect Effect
European Union law is mostly “applied and enforced in a decentralised fashion by national authorities” in the Member States (Reinisch 2012, 58). In this regard, the Court of the European Union (CJEU) has enhanced the effectiveness of EU law by expanding the concept of direct effect to primary sources such as Treaty provisions and to secondary origins of EU law such as regulations and, in exceptions, to directives (Reinisch 2012, 58). Further, the concept of indirect effect is crucial as according to Drake, since the concept creation by the CJEU in the case of Von Colson in 1986, “the Court's case law clearly illustrates that ‘indirect effect’ has played a key role in protecting citizens' rights, particularly in the absence of the horizontal direct effect of Directives” (2005, 1). While I agree that the concept of indirect effect is important for safeguarding individual’s rights due to its several beneficial characteristics, recent case law indicates that the principle of horizontal direct effect becomes significantly more important.
The essay starts by focusing on the direct effect of primary EU law, particularly Treaty Articles, before discussing the principle regarding secondary sources, especially directives. After that, strategies developed by the CJEU to neutralise the impact of the rule that directives do not have horizontal direct effect are debated, leading to the conclusion that indirect effect becomes less important.
Although fifty years have passed since its introduction, the doctrine of direct effect is still seen as an “unwritten principle() of law” as it is neither codified in EU treaties nor in the constitutions of the Member States (Witte 2011, 347). However, it is accepted everywhere with only few exceptions (Witte 2011, 361).
The CJEU defined direct effect as the “creation of rights for individuals” that national courts must protect” (Witte 2011, 330). This is the narrower and “’subjective’” definition of the term (Craig and de Búrca 2015, 186). However, there is a second definition since while many norms of EU law that do not have the creation of rights for individuals as a goal, they are still a useful tool for supervising the actions of Member States (Witte 2011, 330). Therefore, nowadays, according to the broader and “’objective’” definition, direct effect signifies that binding provisions of EU law which are “sufficiently clear, precise, and unconditional to be considered justiciable can be invoked and relied on by individuals before national courts” (Craig and de Búrca 2015, 184-86).
Two main reasons for developing direct effect were the securing effectiveness of EU law within Member States, and the consistent application of Union law (Dougan 2011, 409). Furthermore, by giving individuals the possibility of challenging state actions for violating EU law through the concept of direct effect, allowing the private enforcement of EU law, individuals became part of the legal order of the EU (Craig and de Búrca 2015, 185). Therefore, due to the judicial creation of direct effect by the CJEU in the 1963, a ‘new legal order of international law’ has been established that puts the individual and the protection of citizen’s rights in the centre (Witte 2011, 358), permitting the domestic enforcement of international law by citizens (Craig and de Búrca 2015, 185). The creation reflects the CJEU’s “vision of the kind of legal community that the Treaties seemed designed to create”, namely a Community of peoples with individuals at the centre of the system who could obtain rights from the EEC Treaty (Craig and de Búrca 2015, 189). Consequently, the concept of direct effect is the result of the teleological interpretation of the Treaty, where, as opposed to a literal interpretation, the text is interpreted in the meaning of the goal of the Treaty, namely the establishment of a community as described above (Craig and de Búrca 2015, 189).
Regarding the application of the principle of direct effect, the doctrine pertains generally to “all binding EU law including the Treaties, the Charter of the Fundamental Rights, general principles, secondary legislation, and international agreements” (Craig and de Búrca 2015, 184). In terms of primary sources of EU law, namely the EU Treaties and the Charter, this paper focuses on the first one. The reason for this is that in 1963 in the famous Van Gen den Loos Case, Case 26/62 NV Algemene Transporten Expeditie Onderneming van Gend en Loos v Nederlandse Administratie der Belastingen (1963) ECR 1, the CJEU expressed the doctrine of direct effect for the first time by stating that Treaty Article 12 of the EEC Treaty is directly effective, constituting the “most famous of all its rulings” (Craig and de Búrca 2015, 187). The case was about a Dutch company that imported chemicals from Germany into the Netherlands and stated that Dutch tax authorities applied supposedly increased custom duties on its products contrary to Art. 12 of the EEC Treaty (now Art. 30 TFEU) (Craig and de Búrca 2015, 187). This case is an example of vertical direct effect as Van Gend en Loos as an individual challenged a public authority of the Dutch state. The Court laid down the principle of direct effect by stating that the EEC establishes a “new legal order of international law” that has as its subjects not only the Member States but also individuals, not only imposing obligations but also conferring rights upon individuals “which become part of their legal heritage” (European Union a). These utterances imply that direct effect of EU law is an “inherent characteristic” of Community law (Reinisch 2012, 59). This is supported by the fact that the formulation of the doctrine is not only addressed at the Dutch tax authority but at all courts in all EU Member States (Witte 2011, 326). And in this specific case, the Court ruled that because it contains a “clear and unconditional prohibition”, Art. 12 “is ideally adapted to produce direct effects in the legal relationship between Member States and their subjects” (European Union a), confirming that the Article is directly effective in a vertical case. The CJEU concluded that due to the “spirit, the general scheme and the wording of the Treaty, Article 12 must be interpreted as producing direct effects and creating individual rights which national courts must protect” (European Union a).
Furthermore, Treaty Articles are also horizontally effective, meaning that an individual can use them to challenge a private party (Craig and de Búrca 2015, 192). Case 43/75 Defrenne v Sabena (1956) ECR 455 plays a major role in this development (Mol 2011, 114). The case centred on the former Article 19 EC, now Art. 157 TFEU, as the argument of Defrenne against her private employer regarding discrimination of payment, in comparison with male employee, was based on this Treaty Article (Mol 2011, 114). The CJEU ruled that the “principle that men and women should receive equal pay, which is laid down in Article 119, is one of the foundations of the Community”, that one may rely on it before a national court, and that all courts have the duty to protect the rights that individuals attain through that provision (European Union b). Paragraph 10 and 12 of the CJEU’s judgement stress that the provision forms a “social objective of the community”, serving both an economic and social aim (European Union b), confirming that this case is an “outstanding example of teleological interpretation guided by the effet utile of Union law” (Reinisch 2012, 62). The CJEU ruled that as the equal pay principle is mandatory, the prohibition on discrimination is not only applicable to public authorities but also “extends to (…) contracts between individuals” and that courts must protect the rights that the principle of equal pay, contained in Art. 12, grants, also “in cases in which men and women receive unequal pay for equal work which is carried out in the same establishment or service, whether private or public” (European Union b). This shows that Treaty Articles have horizontal direct effect.
Besides the general conditions of direct effect, the “formal source of law in which the EU law norm is contained” also plays a role regarding whether a provision is directly effective (Witte 2011, 333). In Art. 288 TFEU, the EU laid down the secondary sources of EU law, namely regulations, directives, decisions, recommendations and opinions (Mittwoch 2013, 13). While regulations and decisions have direct effect, the matter is different regarding directives (Craig and de Búrca 2015, 200). This becomes clear looking at the definition of directives: They are addressed at Member States, they are “binding as to the end to be achieved” and, they leave the method of achieving the aim to the Member States (Craig and de Búrca 2015, 108). Moreover, a directive must be correctly implemented by the EU states within the prescribed time limit (Dougan 2011, 413). Although directives therefore may not always fulfil the three conditions for direct effect (clarity, precision, and unconditionality), the CJEU still decided that directives can be directly effective (Craig and de Búrca 2015, 201). However, as will be shown later, the case law of the CJEU regarding directives faces a tension between two goals: The aim of ensuring the effectiveness of EU law and its uniform application among Member States, and upholding the “specific identity of Directives as a form of indirect legislation” (Dashwood 2006/07, 82).
The reasons for the direct effect of directives were outlined in Case 41/74 Van Duyn v Home Office (1973) ECR 1337, and in Case 148/78 Pubblico Ministero v Tullio Ratti (1979) ECR 1629 (Craig and de Búrca 2015, 201). In the first case, concerning a Dutch woman who was not allowed to enter the UK as she planned to work for the Church of Scientology that was seen as “‘socially harmful’” (Reinisch 2012, 65), the Court stated that “ where the Community authorities have, by directives, imposed on Member States the obligation to pursue a particular course of conduct, the useful effect of such an act would be weakened it individuals were prevented from relying on it before national courts and if the latter were prevented from taking it into consideration as an element of Community law” (European Union c). Therefore, the first reason concerns the enhanced effectiveness of EU law through private enforcement (Craig and de Búrca 2015, 201). The second cause for direct effect of directives is based on Art. 177, now Art. 267 TFEU, which allows the referral of questions from national courts to the EU, implying that such acts have direct effect (Craig and de Búrca 2015, 201). Especially the first argument shows that the goal of effectiveness of EU law is uppermost in this argumentation (Dashwood 2006/07, 85).
The “‘specific identity objective’” was supplied by the Court’s judgement in the Ratti case (Dashwood 2006/07, 85). In this case, the direct effect of directives worked as a “’shield’” as an Italian national used the labelling provisions of two directives which had not been implemented within the time limit in Italy against his prosecution under the stricter Italian law (Reinisch 2012, 65). The CJEU ruled 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 which the directive entails” (European Union d). This is the estoppel argument (Dashwood 2006/07, 86). This judgement combines two rationales: Ensuring the effectiveness of the directive and “preventing the Member State concerned from gaining a legal advantage through its own default” (Dashwood 2006/07, 86).
However, it is essential to note that the cases above are examples of vertical direct effect because in the Marshall Case of 1986, the CJEU has determined that directives are not horizontally effective (Craig and de Búrca 2015, 204). In Case 152/84 Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching) (1986) ECR 723, Helen Marshall got laid off by a health authority after 14 years’ employment as she had passed 60 and the policies of the health authority required female workers to retire at 60, while the age for male employees was 65 (Craig and de Búrca 2015, 204). Consequently, Marshall proceeded against her dismissal by stating that it violated the 1976 Equal Treatment Directive (Craig and de Búrca 2015, 204). However, answering the question whether Marshall could rely on this directive, the Court stated that “the binding nature of a directive (…) exists only in relation to ‘each Member State to which it is addressed’” and “that a provision of a directive may not be relied upon as such against such a person” (European Union e). Horizontal direct effect of directives is therefore enunciated.
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- Carolina Gerwin (Author), 2019, EU Law. Direct and Indirect Effect, Munich, GRIN Verlag, https://www.grin.com/document/510893