Laws of the European Union. Direct Effect, Indirect Effect and State Liability

Essay, 2020

17 Pages










Citing Reinisch (2012), Gerwin (2019) helps us to understand that “the European Union law is mostly “applied and enforced in a decentralised fashion by national authorities” in the Member States”

The aim of this paper is to explain the development of the various ways through EU laws are interpreted and the significance they hold, particularly for the individual claimant.


The Court of Justice of the European Union (CJEU) whose composition and functions were enunciated in Section 5 of the Treaty on the Functioning of the European Union (TFEU) 2008, was established in 1952, with the aim of interpreting the Laws of the European Union, making sure that the application of these laws are uniform and consistent in all EU countries. The CJEU also “settles legal disputes between national governments and EU institutions.” The CJEU is divided into two courts, namely:

- “Court of Justice - deals with requests for preliminary rulings from national courts, certain actions for annulment and appeals.
- General Court - rules on actions for annulment brought by individuals, companies and, in some cases, EU governments. In practice, this means that this court deals mainly with competition law, State aid, trade, agriculture, trademarks.

Each judge and advocate general is appointed for a renewable 6-year term, jointly by national governments. In each Court, the judges select a President who serves a renewable term of 3 years.

It can also, in certain circumstances, be used by individuals, companies or organisations to take action against an EU institution, if they feel it has somehow infringed their rights.” (European Union, 2020)

The CJEU gives rulings on cases brought before it and in doing so, it is required to give preliminary rulings in its capacity to interpret the laws (among other capacities) “to ensure EU law is properly applied, but courts in different countries might interpret it differently. If a national court is in doubt about the interpretation or validity of an EU law, it can ask the Court for clarification. The same mechanism can be used to determine whether a national law or practice is compatible with EU law.”


According to the European Union (2020) a private individual as used by the CJEU refers to both natural persons and legal persons (companies) and if one, whether as “a private individual or as a company has suffered damage as a result of action or inaction by an EU institution, authorities of the EU member state or its staff, that person can take action against them in the Court, in one of 2 ways:

- indirectly through national courts (which may decide to refer the case to the Court of Justice)
- directly before the General Court - if a decision by an EU institution has affected you directly and individually.”


According to the European Commission (EC), “every action taken by the EU is founded on the treaties. These binding agreements between EU member countries set out EU objectives, rules for EU institutions, how decisions are made and the relationship between the EU and its members.”

In the estimation of the EC, EU Laws are broken into Primary Law and Secondary Law. “Treaties are the starting point for EU law and are known in the EU as primary law. The body of law that comes from the principles and objectives of the treaties is known as secondary law; and includes regulations, directives, decisions, recommendations and opinions.”

As mentioned earlier, private individuals can also bring their applications for redress to the CJEU and the national courts can also refer matters involving private individuals to the CJEU. In the delivery of this responsibility, the CJEU developed principles which will enable it cater to the needs of private individuals who come before it with prayers.


Although the doctrine of ‘direct effect’ applies in principle to all binding EU law including the Treaties (known as Primary law), secondary legislation, and international agreements, “the most problematic issues concern directives and international agreements”, which fall under secondary law. (Craig and De Burca, 2011)

Reinisch (2009) suggests that “a norm of international or supranational law is said to have ‘direct effect’ if it is sufficiently clear, precise and unconditional to be invoked before national courts or administrative agencies.” Craig and De Burca (2011), agree with this notion espoused by Reinisch (2009) when they share that broadly speaking, direct effect “means that provisions of binding EU law which are sufficiently clear, precise, and unconditional to be considered justiciable can be invoked and relied on by individuals before national courts.

Direct effect according to Cuyvers (2017), means that individuals and companies can rely on EU law before all national courts and public bodies, just as they can on national law.

The principle of direct effect was developed by the CJEU in the case of Van Gend en Loos v. Nederlandse Administratie der Belastingen (1963), where it ruled inter alia that “independently of the legislation of Member States, Community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage.”

According to Witte (2011) direct effect which can be provisionally defined as the capacity of a norm of Union law to be applied in domestic court proceedings, were not considered to be indispensible features of the EU Law before the CJEU courts judgments in the Van Gend en Loos case of 1963 and the case of Flaminio Costa v ENEL (1964) where as we have seen, it was established as a principle.

The CJEU had defined direct effect as the creation of rights for individuals which the national courts must protect, but it is now more seen from the angle of what the French call “invocabilité”, referring to the capacity of the norm to be invoked by individuals in national courts which are bound to apply them.” (Witte, 2011) The reason for this shift according to Witte (2011) was that it was gradually realized that these norms of community law, especially those which make up directives, though not directly referring to individuals, may very well serve as the parameter for measuring the legal propriety or otherwise of Member state actions, particularly when individuals can show interest in the outcome of the review of those actions. See Aannemersbedrijf P.K. Kraaij eveld BV and others v Gedeputeerde Staten van Zuid-Holland (1996), where the CJEU held that individuals can invoke the obligation to make an environmental impact assessment under Directive 85/337, even though the directive purely set out procedural obligations for member state, in order to oppose measures taken by the state to oppose that obligation.

Furthermore, Reinisch (2009) suggests that the direct effect does not only enhance the effectiveness and uniform application of EC laws (such that both member states and the nationals of the member states are subject to this new legal order), but also creates the enabling environment for national courts to refer matters involving the validity and interpretation of EC Laws to the CJEU, thereby presupposing “the direct relevance of EC law in private party suits before national courts” See Article 234 TFEU, particularly, paragraph b.

Direct effect helps to decentralise law enforcements and ensures treaty compliance by member states. See Articles 226 and 227 of TFEU. Article 227 states that “any citizen of the Union, and any natural or legal person residing or having its registered office in a Member State, shall have the right to address, individually or in association with other citizens or persons, a petition to the European Parliament on a matter which comes within the Union's fields of activity and which affects him, her or it directly”

It is important to note that even though it has been over fifty years since its introduction, the principle of direct effect is still viewed as an unwritten principle of EU law by virtue of the fact that “it is neither codified in EU treaties nor in the constitutions of the Member States,” even though it is accepted universally with very few exceptions. (Gerwin, 2019)


Direct effect has been looked at from two main two perspectives, namely the Vertical direct effect and the Horizontal direct effect. The vertical direct effect refers to situations where individuals can invoke provisions of European Law address the actions of member states of the EU, while the horizontal direct effect refers to situations where individuals can invoke provisions of European Law against the actions of other individuals. (Europa, 2015)

According to Craig and De Burca (2011) “while directives can be enforced directly by individuals against the state after the time limit for their implementation has expired (vertical direct effect), resulting where necessary in the disapplication of conflicting domestic law, the ECJ has ruled that they cannot of themselves impose obligations on individuals (no horizontal direct effect). The rationale for this limitation on direct effect of directives is however contestable.”

Europa (2015) suggests that depending on the type of act in issue, the Court of Justice has approved either a full direct effect, that is, the horizontal direct effect and the vertical direct effect, or a partial direct effect, which is confined to the vertical direct effect. However, Gerwin (2019) citing the case of Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching) (1986), opines that the CJEU has determined that directives are not horizontally effective. In this case the CJEU stated that “with regard to the argument that a directive may not be relied upon against an individual, it must be emphasized that according to Article 189 of the EEC Treaty (now Article 288 TFEU), 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.

On the Marshal case, Craig and De Burca (2011) opine that there is nothing in Article 288 of the TFEU which prohibits the invocation of the Horizontal direct effect. Further holding that the decision in Matrshall’s case was debatable, the writers cited the case of Defrenne v Sabena (1976), where it was held that that “since ‘Article 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’.64 The same reasoning has been applied to other Treaty Articles. See Angonese v Cassa di Risparmio di Bologna (2000)


One of the ways through which the CJEU settled the issue of the denial of the horizontal direct effect, was through the principle of Indirect Effect, which demands that the interpretation of national law is in accordance with directives. (Gerwin, 2019) This principle also known as the “principle of harmonious interpretation” permits for the equivalent of the horizontal direct effect of a Directive to be achieved; such that domestic law is interpreted in a way that makes it possible for the Directive to be applied indirectly against the State or a private party. (Tillotson and Foster, 2003)

This principle was developed by the CJEU in the case of Von Colson and Kamann v Land Nordrhein-Westfalen (1984), as a solution to the question it was confronted with, on “how to ensure that the plaintiffs “derived the full benefit of their substantive right to equal treatment notwithstanding the absence of direct effect” of the relevant provisions of the directive.”

The principle in the Von Colson case holds that “EU states were obliged to provide a legal remedy in order to give effect to the principle of equal treatment in accordance with the Equal Treatment Directive. This is the important principle of indirect effect.” By this the EU member states are required to interpret their existing national laws in a way that will give effect to the directives of the EU. (Gorry, 2019)

Gerwin (2019) citing Craig and De Burca (2015) opined that the rational behind indirect rule is not only with regards to improving the efficacy of EU law, but will also in terms of strengthening the commitment provided for in Article 4(3) TFEU, which states that “in the areas of research, technological development and space, the Union shall have competence to carry out activities, in particular to define and implement programmes; however, the exercise of that competence shall not result in Member States being prevented from exercising theirs.”

One of the most significant values that the indirect effect principle is that fact that it applies in Horizontal situations. See the case of Konstantinos Adeneler and Others v Ellinikos Organismos Galaktos (ELOG) (2006), where the CJEU while highlighting in paragraph 113 of its judgements, the fact that there is the lack of horizontal direct effect of directives, indicated that Member States have an commitment to interpret national law in conformity with EU law, “which is per definition indirect effect”, especially in situations where a directive does not have a direct effect because it concerns a horizontal dispute. (Gerwin, 2019). See also Marleasing SA v La Comercial Internationale de Alimentacion SA (1990), where the CJEU “confirmed that an unimplemented directive could be relied on to influence the interpretation of national law in a case between individuals.” (Craig and De Burca, 2011)


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Laws of the European Union. Direct Effect, Indirect Effect and State Liability
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Law, International Law, European Law, EU, European Union, Court of Justice of the European Union
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Ogochukwu C. Nweke (Author), 2020, Laws of the European Union. Direct Effect, Indirect Effect and State Liability, Munich, GRIN Verlag,


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