Direct Effect and State Liability

Direct Effect= "The capacity to create directly enforceable rights which may be relied upon by an individual in an action before the national courts. "

Legislative Sources:

1. Treaty Articles: The decision in the case of Van Gend en Loos c 26/62 created the concept of direct effect, namely the creation of rights for individuals under Community Law. Not all treaty articles are capable of direct effect, but the decision in Van Gend determined that Article 12 was ideally suited to create rights for individuals. Three conditions must be satisfied, known as the Van Gend Criteria:

a) Is the treaty article sufficiently clear and precise?

YES NO
b) Is it unconditional?

YES NO
c) Does it leave no room for the exercise of discretion as to implementation by the Member State?

YES NO

CAPABLE OF DIRECT EFFECT INCAPABLE OF
This may be either: DIRECT EFFECT

a) Horizontal: enforceable against a private individual or undertaking [Defrenne v Sabena No. 2 c 43/75] OR
b) Vertical: enforceable against the state [Van Gend en Loos]

2. Regulations: These are binding in their entirety and directly applicable, i.e. they do not need any implementation at national level to become part of the legal system of member states. They are capable of direct effect, if they meet the Van Gend criteria, as outlined above, but a regulation can be directly applicable without being directly effective if it is not intended to create rights for individuals.
Following the decision in c 93/71, Leonesio v Italian Ministry of Agriculture, Regulations are capable of both horizontal and vertical direct effect.

3. Directives: Following Article 249(3) EC a Directive is not directly applicable, as it requires implementation measures at a national level. Where a Member state has properly implemented a directive the individual should rely on national legislation. However significant failures by member states to fulfil their obligations led to the ECJ recognising direct effect where necessary to protect individual rights.

" Has the implementation date passed? [Pubblico Ministero v Ratti c 148/78] NO
YES

" Has the Directive been correctly implemented by the member State? YES
NO

" Are the Van Gend Criteria satisfied? NO
YES [Van Duyn v Home Office]

" Capable of Vertical Direct Effect Only:
Is it being enforced against a Member State? YES
NO

" Is it being enforced against an emanation of the state? [Foster v British Gas] YES / NO
a) Does the body provide a public service? OR
b) Is it under the control of the state? OR
c) Does it have special powers granted by state authority?
If one of these tests is satisfied then it may be an emanation of the state [Kampelmann c 253/96]
In the absence of direct effect consider:

Indirect Effect: Under Article 10 (5) EC the courts of member states "shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this treaty or resulting from actions taken by the institutions of the Community." This created a duty to try to interpret national law consistently with EC Law, whether or not is has direct effect. [Von Colson v Land Nordrhein-Westfalen]
" Legislation passed to enact a community obligation
[Litster v Forth Dry Dock [1989 2 CMLR 194]]
" Legislation passed prior to a community obligation
[Marleasing SA v La Commercial SA c 106/89]

" Is sympathetic interpretation possible under the principle of indirect effect? YES
NO

State Liability: A Member State may be liable as tortfeasor to compensate an individual, should the state fail to comply with its obligations under EC Law.

A) Has the Member State Failed to Implement the Directive? B) Has the Member State Implemented the Directive Incorrectly?

'Strict' Liability: Consider the Francovich criteria 'Fault Based Liability: Consider Factortame/Brasserie du Pecheur
criteria
Francovich Factortame

If the answer to all three questions is YES a claim may lie against the state [ex parte Hedley Lomas]

NB in certain circumstances the ECJ has been liberal in allowing state liability claims where an individual has failed to rely on the direct effect of a directive where the implementation date has passed e.g. Emmot v Minister for Social Welfare c208/90. It is submitted that where direct effect is possible this avenue should be preferred.

4. Decision: A decision is 'binding in its entirety on those to whom it is addressed' [Article 249(4) EC]. Accordingly it may be capable of vertical or horizontal direct effect as discussed above, depending on to whom the obligations it imposes are addressed.

Freedom of Establishment / Provision of Services

ESTABLISHMENT PROVISION OF SERVICES
(Setting up on a permanent basis, including as a self-employed (Temporary provision of services)
practitioner [Gebhard v Consiglio dell'ordine c55/94 outlines the
distinction between establishment and temporary provision]

NB under Article 48 Companies established in a Member State are to be treated in the same way as individuals in respect of Articles 43-8 and 49-55

Limitations and Derogations: A Common Approach

DISTINCTLY APPLICABLE INDISTINCTLY APPLICABLE
C 2/74 Reyners v Belgium (Article 43) C 70/95 Sodemare v Regione Lombardia (Article 43)
C 384/93 Alpine Investments (Article 49)
Exceptions contained in Treaty Articles:
Objective Justification: a Cassis style approach

QUALIFICATIONS

National Laws governing access to professions and trades, in particular those relating to qualifications may hinder free movement. These will almost inevitably be indistinctly applicable measures in law, but will in fact usually place nationals of other Member states at a disadvantage as they will be unlikely to be able to obtain the requisite qualifications. There have been legislative attempts to solve this problem:

The old approach
BIBLIOGRAPHY:

Tillotson: European Law, Text Cases and Materials 3rd Ed. 2000

Craig and de Burca: EU Law, Text Cases and Materials 3rd Ed. 2002

Butterworth's Statutes: EC Law, 3rd Edition

Westlaw UK
[Word Count, including bibliography, 2054]

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