‘Neither indirecteffect nor state liability provide an adequate solution to the problems arisingfrom the inability from the of European Union directives to have horizontaldirect effect’. Discuss When discussing on the issues of indirect effect, we mustdefine what is meant by direct effect. Direct effect stems from EU law where itallows citizens from members of state to call on a European provision beforetheir own national courts. However, this can only be applied in regard toregulations, directives, treaty provisions and decisions. Direct effect wasfirst applied in the case of van Gend enLoos1 where the Court of Justice of theEuropean Union (CJEU) specified three elements that must be satisfied in orderto establish direct effect of primary EU law.
The three elements are that theprovision must be clear and unambiguous, sufficiently precise andunconditional. In relation to directives, Article 288TFEU states that a directive ‘shall be binding as to the result to be achieved uponeach Member State (MS) to which it was addressed, but shall leave to thenational authorities the choice of form and methods.”2 This means that when a union enact adirective, it is binding on MS as a result for it to be achieved, but it isleft to the MS to decide on how the result is achieved as the end result isalready prescribed but the method on how is not defined. The case of Becker3highlighted that if a directive has not been transposed or transposedaccordingly by the MS by the prescribed timeframe, the provision in thatdirective which are ‘unconditional and sufficiently precise’4that satisfies the criteria of the direct effect can create rights for theindividual. Furthermore, the Van Duyn5 case allowed directives to have directeffect. This case concerns a EU national who was trying to enter into UK towork for the Church of Scientology, but was refused entry by the Home Officeand because of this, she relied on a provision of Directive 64/221 where Art 3of the directive states that any decisions by MS on whether or not another EUnational should be allowed in to the state had to be based exclusively on thepersonal conduct of the individual concerned. Van Duyn argued that the decisionto deny her entry had not been based exclusively on her personal conduct, buthad been based on the fact that she was associated with the Church ofScientology.
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The courts confirmed that the UK was entitled to deny her entry asthe UK was entitled to take into account that she was associated withScientology, where the UK government saw as ‘socially harmful’, even though itwas not seen as unlawful. However, it has been highlighted by the court a fewyears after the decision of the Van Duyn6 case that a MS are not allowed to denysomeone entry for belonging to a group that is not illegal in their owncountry. Ultimately, the key point established from this case is thatdirectives can have direct effect. Provision in the directive, which satisfiesthe criteria of direct effect creates individual rights, as shown in the Van Duyn7 case, which national courts mustrespect.
The case of Ratti8 highlighted the rationale fordirectives to have direct effect. In order for a directive to have directeffect, the transposition deadline must have expired as in principle, there canbe no direct effect if the directive has not been implemented yet, therefore,MS cannot be in default. (Cite the case/para) Furthermore, the court also statedthat directives are intended to be binding on MS albeit as to the prescribedresult to be achieved. If direct effect was prohibited from directives, orprevent provisions in directives to confer enforceable rights on individuals,which national courts must uphold, it would weaken the useful effect of adirective. In addition, the case of FacciniDori9highlighted that directive can only have vertical direct effect (VDE),where it is only addressed to the state or public bodies of MS. This washighlighted in the Faccini Dori10case where the courts confirmed that they could not rely on direct effectto establish a right of cancellation as she was seeking to rely on directive asagainst another private party. This is known as horizontal direct effect (HDE).
The court went on to say if this directive inquestion allowed HDE, it would have been blurring the distinction created inthe treaty between regulation and directives, therefore refusing to givehorizontal direct effect to their provisions.11 When discussing on the issues on indirect effect and stateliability, we must define what is meant by this. Indirect effect is theinterpretation of national law in national courts alongside an unimplementedlegislative act of the EU. This was shown in the Silhouette12case where A-G Jacob highlighted the doctrine of indirect effect where hestated that ‘the national courts are under a duty toensure, wherever possible, that the result prescribed by the directive isattained.
’13 Inaddition to this, Article 4(3) of the TEU also states that national courts areunder a duty to interpret national law consistently with EU law, so far as itis possible to do so, whether or not the directive has direct effect. (Rephraseand reference actual Art) Thiswas illustrated in the Von Colson14case where it is for the national court to interpret and apply thelegislation adopted for implementation of the directives in conformity with therequirements of union law, in so far it has discretion to do so under domesticlaw. This means that the court has a duty of consistent interpretation, so thatwhen a national court is interpreting and applying national law, it has a dutyso far as possible to interpret that national law consistently with the relevantdirectives. This was also mentioned in the Dominguez15case where the Court of Justice stated that there is an obligation tointerpret national law in conformity with EU law as it was built within thesystem of the Treaty on the functioning of the European union to ensure thatwithin their jurisdiction, MS must ensure that there is full effectiveness ofEU law when handling and determining disputes before them.16The Marleasing17case was also very important whendiscussing indirect effect as it furthered the doctrine of indirect effect towhere the directive has not been implemented at all.
The court held that thedoctrine of indirect effect applies to national legislation that was notadopted to give effect to a directive, plus even national law adopted prior ithad been enacted prior to the adoption of the directive. Adding to this, thiscase involves the litigation of two private parties, making it a horizontallitigation, there was still a duty on the national court so far as possible tointerpret Spanish law consistently with the relevant directive. In relationto whether indirect effect provides an adequate solution to the Union nothaving horizontal effect, I believe that through case law, the ECJ hasdeveloped loopholes in allowing directives to have direct effect when theindividual concerned is involved in a dispute between two private parties,making indirect effect an additional adequate solution to directives not beingable to have horizontal direct effect. An example of the is incidentalhorizontal effect, which has proven to be as powerful as horizontal directeffect. This can be illustrated in the case of CIA Security18where the case involved two private parties where the claimant accuses CIA ofmarketing alarm systems that did not comply with the requirements of Belgianlaw.
CIA claimed that they had libelled it and that they are guilty of unfair tradingpractices. The Belgian law that they accused CIA of breaching had not beennotified to the European Commission, as required in Art 8 of the TechnicalStandards Directive as it was important that it was adopted by the Union tohelp ensure the proper function of the internal market. The court said that if MScould simply enact and apply their own technical standards, MS couldeffectively be discriminating other companies in their favour of benefittingtheir own manufacturers, resulting in unfair trading practices. Therefore, withthe failure to notify the Commission of the law that CIA have breached, itrendered the claim against CIA groundless. Ultimately, gathering from thiscase, it can be said that the courts finally shed light on directives havinghorizontal direct effect as the case involves two private parties where,incidentally, one benefitted and the other lost.
However, it has pointed outthat the article concerning this case was on the one hand, conferring rights onCIA, or, imposing obligations on the claimant, meaning it is not an example ofhorizontal direct effect, but incidental horizontal effect. This was then laterexplained by the AG Saggio in OceanoGrupo19where he introduced something that is similar to horizontal direct effectknown as the ‘exclusionary effect’ where he states, ‘in order to be able toachieve its results, this ‘exclusionary’ effect must occur whenever thenational rule comes into consideration for the purpose of resolving a dispute, irrespectiveof the public or private status of the parties concerned.’20This reinforces the point of how individuals disputing between two privateparties can somewhat rely on doctrines that are similar to horizontal direct effect,such as incidental horizontal effect, to resolve their issues. There arelimits to indirect effect which can leave to question whether it is an adequatesolution to directives not having horizontal direct effect.
One of the limits toindirect effect is that indirect effect is the duty to interpret national lawconsistently with union law, it presupposes that there is national law tointerpret. The second limitation of indirect effect is that it is not anabsolute duty to achieve consistency as it states for the MS to interpretnational law ‘so far as it is possible to do so,’21which means that to the extent that the national law allows the national courtto interpret the relevant consistency with EU law.1 2 3 4para 255 6 7 41/74Van Duyn v Home Office 1974 ECR 13378148/78 Pubblico Ministero v Ratti 1979 ECR 1629 9 10 11c-91/92 Faccini Dori, 1994 ECR I-0332512 13 14 15 16c-282/10 Dominguez, 2012, unreported (para 24)17 18c-194/94 CIA Security 1996 ECR I-220119c-240/98 Oceano Grup 2000 ECR I-449120 AGSaggio in Case C-240/98 Oceano Grupo 200 ECR I-449121Article 4(3) TEU