"The doctrine of direct effect, indirect effect and State responsibility have been as much about further community competence as about protecting individual rights"
Discuss.
1 - Birth : 1963, Van Gend en Loos
2 - Loosening of the eligibility criteria : 1974 Reyners,
1976 De Frenne
3 - extension of its scope to secondary legislation :
1970 Grad, 1972 Leonesio, 1974
Van Duyn
4 - No Horizontal direct effect of Directives : 1986
Marshall
1 - The enforcement system of EC Law upon States : weak
and centralised
2 - The enforcement system of EC Law upon private
undertakings: weak and centralised
3 - Direct effect as a mean to enforce EC law more
effectively upon States and Individuals
4 - Individual rights as a mean to further Community
competence
1 - The Von Colson
Principle, 1986 : indirect effect of Directives
2 - Expansion of indirect effect : 1990, Marleasing v La Commercial
1 - The need for a new instrument, to give a new momentum
to the enforcement system,
after Marshall
2 - Indirect effect as horizontal direct effect of
directives
3 - A problem of legal certainty
4 -Compromise : indirect effect does not require contra legem interpretation of national
law
1 - The establishment of State responsibility : Francovitch v. Italian State (1991)
2 - The conditions of Liability : joint cases Brasserie du Pêcheur and Factortame (1996)
4 - Towards a doctrine of private liability
1 - A practical increase in protection of individuals'
rights
2 - A new right-based reasoning ?
3 - There has been no turn in the underlying philosophy
A - These 1 : liability was primarily created as a
sanction : liability as a sanction
C - These 3 : That is why the ECJ moves towards a rights
based liability
In the 60s and in the 70s, the ECJ has significantly modified the nature and the scope of the EC legal system by developing a complex and interacting system of three doctrines, sometimes overlapping, known as direct effect, indirect effect and state responsibility.
What has this process been about ? Such a question entails a twofold interrogation, firstly upon the original meaning of and rationale for it, and secondly upon the practical consequences it has prove to have. The first outlook commends us to look at the ECJ's motivations and reasoning, meanwhile the second outlook, not less important, supposes that we consider other actors' reaction to this doctrines.
In order to do so, we shall first of all give a brief account of the legal development of these doctrines, before trying to understand their rationale from the point of view of the ECJ. Finally, we shall move on to other actors' point of view, in order to find out the practical significance of these doctrines.
The doctrine of direct effect gives individuals the right to invoke provisions of EC law before a national court
As it is well known, the judgement held by the Court in 1963, in Van Gend en Loos, laid down the basis of Direct Effect. Van Gend en Loos had imported a chemical from Germany into the Netherlands, which increased the amount of import duty payable. It argued it was in breach of Article 12 EC, which prohibited inter alia, increases in customs duties between Member States. The Dutch Tax court asked the ECJ whether Article 12 EC has direct application, in other words whether nationals can on the basis of the article lay claim to individual rights. The Court said 'yes', establishing by the same token the doctrine of direct effect of treaty provisions.
However Article 12 EC was only found to give rise to individuals because it satisfied a number of narrow criteria : that is was clear, unconditional, negative prohibition which was not dependent upon any further implementing measures.
In 1974, the requirement that provision contain a negative prohibition was dropped in Reyners.
In 1976 the requirement that provision must be sufficiently precise and unconditional was dropped in its turn, in De Frenne. This latter case involved Article 119 EC ('equal pay for equal work') which seemed to be neither sufficiently clear or unconditional, as true implementation would require elaboration of further criteria - for instance for recognising discrimination
In the mid 70s, Direct Effect was therefore established as a powerful doctrine, enforcing Treaty provisions. However the bulk of EC law is not contained in the EC Treaty but in secondary legislation.
In 1970, , Decisions are granted direct effect following the judgement in Grad.
In 1972 Regulations were held to be capable of direct effect, following the case Leonesio v Italian Ministry of Agriculture.
In 1974 direct effect was then extended to Directives in Van Duyn.
Ms. Van Duyn was refused leave to enter the UK in order to take up a job offer at the Church of Scientology, on the ground that UK government had imposed a ban on foreign Scientologists entering the kingdom. She therefore challenged the ban on the ground that it breaches a 1964 Directive which requires that any ban must be based upon the personal conduct of the individual.
The Court recognised the right of Ms Van Duyn to rely on a Directive (even though it eventually turned her down, by considering that her association with the church of met the requirement of the Directive). The doctrine of direct effect was therefore extended to Directives. Mancini, a former judge at the Court, has admitted that 'this judgement goes beyond the letter of Article 189 EC'. The ruling provoke a strong counter reaction from both French and German courts.
In the 70s, therefore, the strength and scope of direct effect grew steadily. The consequences. However in the 80s, the Court felt the need to limit its scope in some crucial respects.
Both articles of the Treaty and regulations have been held by the ECJ as being capable of both vertical and horizontal effect. Vertical direct effect means that the provision can be invoked against a Member State before a national court. Horizontal direct effect means that it can be invoke by an individual against another individual.
It was made clear in the Marshall Judgement (1986) that there was no question of a directive having horizontal direct effect. It can only have vertical direct effect. Rights derived from Directives can only be enforced against the state itself ; Directives cannot impose obligations on private parties.
Mrs Marshall was employed by the Southampton Area Health Authority when she was forced to retire at an earlier age that her male counterparts. She invoked the Equal Treatment 1976 Directive. Mrs Marshall succeeded in her action as the Health Authority was an 'emanation of the State'. The principle is thus, that unless the individual is able to show that there is some relationship with the State, the principle of direct effect will not apply to a directive.
Marshall was an attempt to assuage some of the criticism levelled at the Court since Van Duyn, by limiting the power of Directives. However, it also created a problem of its own : the concept of 'emanation of the State' had to be defined.
As CURTIN observed, in The Province of Government : Delimiting the Direct Effect of Directive in the Common Law Context, such a task is virtually impossible. Firstly because a multitude of different legal structures exist, so that pubic and private sectors are part of a continuum. Secondly because the legal status of economic bodies is often du more to historical contingency that to a thought out strategy.
The Court has proclaimed a Community constitutional order, initially maintaining the supremacy of Community law over national law trough the technique of direct effect.
Direct effect is not an end in itself. It is a means to enforce Community law.
The imperative of Article 5 EC, whereby all obligations arising from this Treaty must be fulfilled, has been utilised to develop indirect effects, and state liability - other techniques to ensure the effectiveness of Community law.
The first and foremost meaning of the development of direct effect has been to strengthen the effectiveness of the enforcement system of EC law. Indeed the latter was both weak and centralised.
Prior to the doctrine of direct effect, if there was a breach of a Community obligation by a MS the Treaty provided for action to be taken by the Commission under Article 169 EEC, or by another MS under article 170 EEC.
These procedures have the advantage for the Member State that they take a long time to come before the ECJ and, until the Maastricht Treaty, did not carry out real sanctions.
In a market economy, many EC legal obligations, most notably in the field of competition, consumer, social and environmental law, can only be applied by private parties.
Both the Commission an the ECB have been given limited enforcement powers against private undertakings, in a limited number of fields :
- in the field of Competition, the Commission has the power to fine undertakings
- in the field of external trade, the Comm can impose duties on third country undertakings which are engaged in unfair trade practice.
- The ECB has the power to fine undertakings which do not comply with regulations or decisions (e.g. minimum reserves of banks).
The doctrine of direct effect was therefore a way 1) to strengthen the actual enforcement of EC law by the States, by mean of increasing the number of potential litigants suing the Member States 2) to strengthen the actual enforcement of EC law by private actors, by imposing upon them new duties directly flowing from the Treaty, the Regulations, the Decisions.
Direct effect secured both requirements by decentralising the enforcement system, by giving new rights and duties to individuals, as well as to national courts.
Direct effect is primarily about increasing the Community competence. However, the granting of protected rights to individual and the increase in Community competence went hand in hand, as far as direct effect is concerned.
It is very likely that the Court's decision in Van Gend en Loos (1963) was chiefly motivated by its willingness to increase EC law effectiveness and therefore EC competence. This argument is sustained by the constitutionalisation of the Treaty, triggered by this case.
Individuals' rights can hardly be said to have been a top priority of the ECJ. One has only to consider its reluctance in granting them with Fundamental Rights. As we know, it has only done so to offset the threat of a challenge to its authority, threat which originally came from the German and Italian Constitutional Courts.
Finally we should note that direct effect give as many duties as rights to individuals. Direct effect did not therefore came about to 'protect individual rights' but to secure effective enforcement of EC Law by a larger number of actors.
The development of direct until Marshall, shows a single concern : to increase the scope of the doctrine. After Van Gend en Loos (1963), the Court first loosened the narrow criteria enabling a provision to be subject to direct effect (Reyners 1974, De Frenne 1976). Then it extended the doctrine to Decisions (Grad, 1970), Regulations (Leonesio, 197é) and partially to Directives (Van Duyn, 1974).
The Court in Marshall (1976) did not want to
extend direct effect to Directives. Why ?
CRAIGGGGGGGGGGGG
au secourrrrr !!!!!!!!!!
Two female applicant had been refused posts as social workers on ground of their sex. By way of a remedy they asked to be appointed to the relevant posts or six months salary. Under German law they could only claim a reliance loss (in this case the reimbursement of travelling expenses). A reference was made to the Court to ask if the 1976 Equal Treatment Directive had direct effect.
The Court did not restrict itself to the question whether there was horizontal or vertical direct effect. Instead it used Article 5 EC which requires all binding authorities of the MS to take all appropriate measures to ensure the fulfilment of their Community obligations".
In the case of national courts this means that, even if the principle of direct effect does not apply, they are required to interpret national legislation in the "light of the wording and the purpose of the directive in order to achieve the result pursued by it".
It is important to note that as indirect effect is formulated as no more than a rule of interpretation, the individual's rights still stem formally from national law. This is a huge difference as compared with direct effect. The basis for indirect effect is the duty of co-operation set out in Article 5 EC, which is binding on all authorities including the courts.
Originally the doctrine only applied 1) in circumstances where the national legislation was ambiguous 2) to national legislation which was considered to be implementing a provision of EC law.
In 1990, in Marsealing v La Commerciale indirect effect has been expanded by ECJ's requiring all national legislation to be interpreted in the light of all EC Law, irrespective of whether it is implementing legislation or not.
In addition the interpretative duty has been strengthened. As DOCKSEY and FITZPATRICK observed, in The Duty of National Courts to Interpret Provisions of National Law in accordance with Community law :
"it is no longer sufficient for national courts to
turn to Community obligation only if the national provision is 'ambiguous'. Its
first priority must be to establish the meaning of the Community obligation".
With the cul-de-sac it found itself in over the horizontal direct effect of directives, the Court increasingly looked to other instrument to expand the juridical effect of EC law. The first of these was the doctrine of indirect effect, which requires national courts to interpret and apply national legislation in conformity with EC law.
Indirect
effect came primarily from the willingness of the Court to pursue the extension
of Community competence in ruling interactions between private actors, in spite
of Marshall.
The strength of the duty of interpretation was ambiguous. At its widest it would require national judges to read national law as giving effect to EC law, almost irrespective of the wording of national law.
Such an interpretation would have been tantamount to granting directives horizontal direct effect in all circumstances, except when there was no national legislation to interpret.
Such a strong interpretative obligation was considered, however to pose considerable problems for legal certainty.
DE BURCA, in Giving effect to European Community Directives (1995), draws our attention upon this potential conflict between indirect effect and the legitimate expectation principle, and legal certainty.
DE BURCA finds that, to be realistically met, the requirement of legal certainty requires individuals to be as much aware of the provision of EC Directives as they are of regulations. This is somewhat in contradiction with the doctrine of direct effect, by virtue of which only Regulation and Treaty Articles are enforceable against individuals.
In order to assuage this concern over legal certainty, Advocate General VAN GERVEN argued in a number of cases that indirect effect should not require contra legem interpretation of national law (i.e. interpretation that contradicts the ordinary meaning of national provisions). The court accepted this advice in 1993 in Wagner-Miret.
The development of both direct effect and indirect effect are primarily concerned with the strengthening of the enforcement system of EC law. The incessant and implicit bargain and power relationship between the ECJ and Member States shows it quite clearly.
The ECJ, we believe, was therefore not primarily concerned with the protection of individual rights for their own sake, but rather with the universal enforcement of EC law. It is no secret that the ECJ has been a key activist actor in the European Integration. Individuals interest it only insofar as they can increase the MS' compliance with EC law, or the enforcement of the latter when private undertakings and actors are involved.
Even though ECJ's rhetoric always refers to both the effectiveness of Community competence and the protection and full realisation of individuals' rights, it is clear that it acts much more as a strategic and political body increasing its power, than a pure moral and ethical body enforcing and protecting rights.
As we shall see now, it is the same story with State Liability.
In Francovitch v. Italian State(1991), the ECJ extended the impact of the law regarding Directives.
Francovitch was owed LIT 6.000.000 by his employer. Italy had not complied with a 1980 Directive protecting employees in case of insolvency, by requiring the setting up of guarantee funds. The Italian courts asked whether the Italian State was liable to pay him the sum owed. The judgement ran :
"The full effectiveness of Community rules would be impaired and the protection of the rights which they grant would be weakened, if individuals were unable to obtain redress when their rights are infringed [by a] MS"
Before Francovitch it was assumed that the charge of the ECJ was solely Community liability. The novelty of Francovitch is that it concerns the liability of Members States for non implementation of directives.
In Francovitch the preconditions for liability were said to be that
1. the directive in question must be intended to confer rights on individuals
2. the content of the rights must clearly be spelled out
3. there must be a causal link between the failure to implement the directive and the loss suffered.
For several years after Francovitch, there was a golden silence. The decision was very controversial. Finally in Brasserie du Pêcheur, and Factortame the ECJ chose 1) decisively to reaffirm the controversial Francovitch principle of State Liability 2) but under limited conditions.
Brasserie du Pêcheur, a French Firm had been forced to discontinue exports of beer to Germany in 1981. This was due to a German Purity Law which did not allow marketing of beer which contained additives. This law was declared illegal in 1987 on the ground that it contravened Article 30 EC. Brasserie du Pêcheur sought compensation of DM 1.800.000 for the loss of sales between 1981 and 1987.
Factortame is a similar case whereby Spanish fishermen claimed damages against the British Government which wrongfully imposed an illegal system of registration.
The Court held that there were three conditions necessary for liability to apply:
- the provision infringed must be intended to confer rights on individuals
- the breach must be sufficiently serious (the illegal at must be a serious breach of EC law
- there must be a direct causal link between the breach by the MS and the damage sustained by the injured parties
Whilst the extent of the duty of the reparation is a matte for national jurisdiction, this discretion is limited by a provision 1) that the reparation be commensurable to the loss 2) that the national regime on remedies not make it impossible or excessively difficult for the applicant to obtain reparation.
The doctrine of State responsibility is not a static doctrine. There is uncertainty about the dynamics of its development. The first question is whether t will lead to a form of private liability.
Advocate General VAN GEREN in 1994 delivered an opinion strongly in favour of private liability especially in the field of competition. In this field hi states two arguments : 1) recognition of such a right to obtain reparation constitutes the logical conclusion of the horizontal direct effect of the rules concerned 2) such a rule one reparation makes the Community rules of the competition more operational.
So far the Court has not followed his opinion.
At a practical level, Francovitch was incontestably significant as securing greater individual protection in a number of ways :
- It would prevent breaches of EC law by providing incentive for MS to comply.
SCHUCK in Suing Governments (1983) argues that awards of damages put indirect pressure on senior administrators to eliminate wrong-doing lower in order to relieve pressure on their budgets.
- It would provide reinforce the enforcement system by providing financial incentive for individuals to bring more actions to court
- Finally it would narrow the lacuna in judicial protection which arose out of the limit of direct and indirect effect.
COPPEL, in 'Rights, Duties and the End of Marshall' (1994). Prior to Francovitch individual rights created by Directives arose as a consequence of duties imposed upon Member States (either as a result of their failure to implement, or as a result of the duties imposed national courts in Article 5).
In Francovitch however, the starting point for state responsibility is that it arises as a consequence of the individual rights set out in the Directives.
This suggested a new style of reasoning whereby direct effect, indirect effect and state responsibility could be seen as a manifestation of a more general principle which required individual rights to be judicially protected.
CARENTA in 'Judicial Protection against Member States : a New Jus Commune Takes Shape', emphasises this idea.(1995)
TESORO in 'The effectiveness of Judicial Protection and the co-operation between the ECJ and National Courts'(1993). Advocate General TESORO characterise 'rights-based liability as civilised' and as an inevitable consequence of the rule of law.
CHALMERS. Such a reading of the judgement is not without its problems. It begs the question that if there is a new doctrine of effective judicial process, then why was this not articulates by the Court rather than its creating this convoluted system of three separate overlapping doctrines.
This argument also seemed to run counter to the developments in Wagner-Miret (1993) which limited the extent to which direct and indirect effect could be used to protect individual rights.
Most crucially, as HARLOW notes in 'Francovitch and the Problem of the Disobedient State'(1996), these rights-based theories 'lock courts into tragic choices (Calabresi's famous phrase) over the allocation resources'. Indeed this function, in western constitutional theory, is strictly reserved for executive and legislature. Therefore, they move the Court from an adjudicative to an administrative function.
SHOCKWEILER in La responsabilité de l'autorité nationale en cas de violation du droit communautaire, suggest that reparation to individuals is not the most important issue. What reparation is truly about is sanctioning the damage caused by a State upon the EC legal order itself.
HARLOW suggest that the first concern of the ECJ is enforcement of an effective legal order. The protection of individual rights is a mere strategy to attain this fundamental goal
The conclusion to be drawn from all this is that the development of these three doctrines has primarily to do with the enforcement of EC law. This is the true motivation of the Court.
However, practically speaking it is true that they are as much about increasing and ensuring the Community competence as about protecting individuals' rights.
As CAROL HARLOW puts it " it would be fair to summarise the ECJ's strategy for an effective legal order, initiated by the doctrine of direct effect, as centred on the development of rights under EC law justiciable in established national courts.
Francovitch
and the Problem of the Disobedient State
the theoretical underpinnings for state liability in EC law are weak.
· What Francovitch added to the Court's armoury was fundamentally the power of sanction
· CARENTA in Judicial Protection against MS : A new Jus Commune Takes shapes observed that the Court's reference to 'judicial protection' is to be used more to exact obedience from the MS that to protect citizens'.
· SOCKWEILER emphasises reparation to individuals is not the most important issue. What reparation is truly about is sanctioning the damage caused by a State upon the EC legal order itself.
· HARLOW notes the probable influence of French administrative law, in which liability contains a strong element of sanction.
· The Community is a liberal economic polity. Its legal order is necessarily based on a liberal economic philosophy. Reflects the ideology of property, liberty and the Rule of Law.
· Judge Mancini has famously talked of integrationism as a 'genetic code transmitted to the court by the founding fathers'.
· The ECJ has been accused of law making
· German Maastricht declaration on constitutional limits of an ever closer union
· shifting on to the high moral ground of rights - to sustain its argumentation.
· Passage from Francovitch :
" the full effectiveness of Community Rules would be impaired and the protection of the rights which they grant would be weakened if individuals were unable to obtain compensation when their rights are infringed by a breach of EC law ..."
· AG TESAURO in Brasserie characterised right-based liability as 'civilised'.
· Conclusion : there is undoubtedly a shift in the words of the ECJ from a rhetoric of the sanction, to a rhetoric of the individuals' rights. HARLOW suggests this is because
· The ECJ aspires to a private enforcement machinery. What Chalmers call a 'decentralised' enforcement system.
· SHOCKWEILER in La responsabilité de l'autorité nationale en cas de violation du droit communautaire, suggest that reparation to individuals is not the most important issue. What reparation is truly about is sanctioning the damage caused by a State upon the EC legal order itself.
· Threat to the balance between the Rule of Law Doctrine and principles of political and democratic supremacy
· The Rule of Law is a noble idea but one which, unrestrained, is capable of degenerating into an ideology of law courts, and blocking democratic evolution.
· We know that the ECJ judgement in Factortame provoked suits worth many millions of pounds. Is this the sort of society we want.
· The American approach leads to an avalanche of lawsuits involving great expenditure.
Erika SzySzcZak
· it is the Court's role to continue the development of a consistent and coherent system of Community law enforcement.
· must enable citizens to maximise their rights derived from community law;
·Szyszczak argues that the Court has developed a fundamental principle of effective judicial protection in Johnston v RUC.
· This makes possible to make Europe more relevant to its citizens ( foster the community identity?)