Saturday, April 9, 2016

EU Law implementation, a Critical Study By Abdul Rehman Yasin

After World War 2, what set out as an economic barrier to future conflict in the shape of the Treaty establishing the European Coal and Steel Community (1951)[1], as history stands to witness, evolved into one of the world’s most powerful and influential supra transnational legal system; the European Union (EU). The development of this legal system may seem a plodding one, but the original treaty establishing the European Communities, Treaty of Rome (1957)[2] itself did not contain any provision which established legal supremacy or legal implementation within its member states. The European Court of Justice (ECJ) in its landmark case law later laid down these rules of constitutional importance.
Traditionally, in international law, a treaty signed between states can only be part of a signatory states legal system if they enact some law to endorse that treaty; through either adoption or transformation. Adoption implies where treaty provisions, once signed, become directly applicable into domestic law, this phenomenon is common in states following Monist approach to international law. However, states that follow a dualist approach need transformation, where further enabling laws need to be enacted in order for the treaty to be relied upon in domestic courts. In either case, individuals within these member states could not directly rely upon treaty provisions as remedy in their national court; unless the treaty has been introduced into the member states domestic legal system.[3]
Joseph H. H. Weiler, the President of the European University Institute in FLORENCE, writes that “Van Gend en Loos (1963)[4] did not only shape the legal order; it constituted that order.” He further states that it would emasculate the powerful influence of the ECJ’s decision in Van Gren en Loos if we were to assume that it just established the doctrine of Direct Effect for the EU legal system. Rather, what this doctrine did do on a broader socio political stage was to change the way European individuals perceived their citizenship, as suddenly they became European citizens as well as their respective member state nationalities. Second, most importantly, it opened the gates toward the reciprocal relationship between the domestic courts of the member states and the ECJ, for the operation of the direct effect and Supremacy of EU law convergence.[5]
The ECJ in Van Gren en Loos, stated that the Treaty of Rome was a ‘framework’ treaty which was anticipated to be interpreted and occupied by secondary legislation and the case law of the ECJ. The ECJ took upon itself to apply the principle of effectiveness “Effet Utile” and emphasized on the necessity to ensure uniform application of community law in all the member states.

Thus, the court came to the opinion that Article 12 EC[6] did not just provide a negative prohibition on member states, in areas of EU law competence; but the nature of the obligation owed by the member states required direct effect of EU law to confer right to individuals. Furthermore, they said that the ‘spirit, the general scheme and the wording of those provisions’ allowed the treaty provisions to have direct effect because the treaty was not just a set of reciprocal commitments but its essence was to establish a “Common Market”, which would logically concern individuals. The court said that the treaty structured a Community, which established a new legal entity, and “… the subjects of which comprise not only member states but also their nationals.”

The ECJ declared that the Doctrine of Direct Effect would supersedes the requirement of adoption or the need for transformation; and that subject to certain conditions, EU law creates rights and obligations which individuals could rely on and enforce in their domestic courts. As long as the Treaty article was clear and precise, was unconditional and its operation did not require a legislative implementation measure on the part of the state; European citizens for the first time could rely on EU law a remedy in domestic legal system.
Koch[7] recognized that by providing European citizens with the possibility of enforcing EU rights in domestic Courts; the result automatically served as an effective method to oblige member states into compliance with community law, in a far more pragmatic fashion. The ECJ in Van Gren en Loos predicted this very fact and said, “The vigilance of individuals interested in protecting their rights creates an effective control … to the diligence of the Commission and the member states”[8].
Nevertheless, that was then, it has been suggested that even the remaining conditions have been sculpted away by the ECJ, as this case gave direct effect of treaty provisions, the status of a norm rather the exception. In Defrenne v. SABENA (1976)[9], the court stated that whenever a treaty article or some other measure includes a time limit and that time limit expires without any implementation that measure would have direct effect. Thus, the requirement that a measure must not be dependent on a further action did not seem to be any limitation. Furthermore, Article 234 EC Preliminary Reference Procedure[10] has served to affirm this notion, by providing domestic courts access to the interpretation of the ECJ, thus in the process providing clarity and ensuring direct effect of treaty provisions, becomes the norm.
It is only provisions, which are conditional, that they confer a discretionary power on a third party, member state or commission, would sensibly excluded from having direct effect, because domestic courts could not logically usurp that discretion.
A year later, after Van Gred en Loos, the ECJ in Costa V. ENEL (1964)[11] complimented the doctrine of direct effect with the doctrine of Supremacy, which AG Toth considers as the second pillar of the “… essential foundations of Community law as a supranational legal system”[12]. In Van Gred, the ECJ explicitly made mention, although obiter, that "the Community constitutes a new legal order in international law, for whose benefit the states have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only the member states but also their nationals.”[13]

The ECJ, in Costa, vindicated that by creating a Community of unlimited duration, with its own legal personality, institutions & legal capacity; and power derived from either limited or transferred sovereignty of the member states, in Community matters; the resulting body of laws (EU) would bind member states and their citizens alike. The Court appreciated the fact that Supremacy of Community law was a necessary paradigm, to the establishment of a Common Market, thus the agenda was ‘independence, uniformity and efficacy' of Community law. Subsequently, the court realized that for the doctrine of direct effect to attain any real results in member states domestic courts, it needed to establish a Universal principle of Supremacy for all requisite EU laws; as conflict between the two legal regimes was unavoidable.

In following cases the ECJ, affirmatively endeavored to preserve the supremacy of EU law over member states national legal regimes and even their national constitutions. In Internationale Handelsgesellschaft (1970)[14], conflict arose between an EU law regulation and fundamental rights enshrined in the German constitution. The court, although recognized the importance of fundamental rights, held that the legality of a Community law measure could not be judged in light of domestic law of a member state

Similarly, in Simmenthal SPA (1978)[15], the court held national courts, even at first instance, need not wait for national law to be amended in lieu, instead they have a duty to amend any national rule immediately; both past and future legislations, if they conflicted with a Community provision. From ECJ’s perspective, Community law needed to become “an integral part of ... the legal order applicable in the territory of each of the Member States”.
The area of concern arises with the implementation of the secondary legislations of the EU, namely Regulations, Directives and decisions of the ECJ. As far as the Treaty provisions were concerned, the Van Gred criteria is in place for their direct effect in member states domestic courts; and the court affirmed in Defrenna v. Sabena that treaty articles would have direct effect in both vertical and horizontal relationships. Horizontal direct effect allows individuals to use EU law in cases against other private individuals; on the other hand, vertical direct effect makes possible for EU citizens to rely on EU law in cases against their respective states. Article 249 EC[16] hold that Regulations are directly applicable in all member states, however they must satisfy the Van Gred criteria. Furthermore, the Article states that decision of the ECJ are binding upon those whom they are addressed; Grad v. Finanzamt Traunstein (1970)[17] it was held that a citizen of a member state to whom a decision had been addressed, could invoke that decision in their national courts.
The real problem arises with the Directives, implemented by member state’s national legislations within a certain period. Therefore, to say that a Directive confers rights on individuals would be to blur the distinction between directives and regulations; as it could never fulfill the Van Gend conditions, because of the requirement of a further implementation measure. In Van Duyn v. Home Office (1974)[18], the question arose that could a directive have direct effect; the court decided that it could, where a member state is at fault; because, it failed to transpose the directive into national law or it did so but inaccurately.  With Directives, however there exists a further problem, whether they create vertical or horizontal direct effect or both. In the case of Marshall[19], the ECJ provided that directives were only capable of vertical direct effect. This is because an individual could not possibly be blamed for its non-implementation and thus could only be used to bring actions against the State or “emanations of the state”; a expansion of the meaning of a “state”, by the ECJ in Foster v. British Gas (1990)[20].
Conversely, in situations where the time limit of a directive has not expired yet; Pubblico Ministero v. Ratti (1979)[21], and where an individual wants to enforce a directive against another private party; gaps in EU law execution remained. In Van Colson, the ECJ answer the call and gave us the doctrine of indirect effect which imposed a positive duty upon the domestic court of member states to “interpret their national law in the light of the wording and purpose of the Directive” once the implementation time had ended. As far as the issue of horizontal indirect effect is concerned, the leading authority is Marleasing[22], where the court held that indirect effect could be invoked in cases amid private parties. However, this doctrine of harmonious interpretation, has a logical limitation that it could not possible be used in situations where the domestic law is unambiguously in contrast with EU law. Because of this unfairness, the principle of state liability was created, based on the obligations in Article 10 EC[23] and Article 4 (3) TFEU[24]. The idea was that where an individual had suffered losses because of non-implementation of a directive by the state; that individual would be entitled to remuneration for their losses from the state. Although, the concept of compensation was alien in the treaties, it was deductively implied by the court.
The ECJ established two tests for determining state liability; firstly, in Francovich[25], the court stated that where there is a complete failure by a member states to implement a Directive; the following three conditions must be satisfied in order for the individual to claim for suffered losses. They must prove that the provision in question conferred rights on individuals, those rights were clearly defined and there must be a causal link between the non-implementation by the member state and the losses suffered by the individual. The purpose of this test was to bridge the gap, where there is no direct effect available, however in subsequent cases the doctrine was further extended. In Factortame III[26], the ECJ affirmed that the principle of state liability was available for all community law provisions, whether or not they had “direct effect” and in absence of a particular justification, the condition for the liability of the state would be the same as for the community institutions under Article 288 EC. However, there must subsist a “sufficiently serious” breach for the state to be held liable for damages; and the test for sufficiently serious was laid down by the HOL in Factortame 4[27]; as where member states had “manifestly and gravely ignored the limits on their discretion.” Furthermore, the case Courage Ltd explicitly shows that this concept of State Liability could be applied in circumstances involving two private parties.
So, in way, we may correctly argue that the doctrine of state liability has successfully countered the injustices created by the lack of horizontal direct effect; as individuals could effectively seek compensation for losses. The justification is that because it is the fault of the State for not enforcing these EU rights, inversely the State should be liable for any damages suffered.
Although the application of direct effect and its compliments, the doctrine of indirect effect and State liability are in sorts; in a cluttered commotion; but Koch[28] correctly recognizes that “Had the European Court of Justice not created this doctrine, the European Community would most likely have remained an organization consisting of European states similar to other international alliances.” What she means by this is that direct effect essentially cemented the path towards European integration and harmonization of legal systems. This apprehension is imperative, because if we think that the establishment of the doctrine of direct effect was a mistake, we assume ably undermine its accomplishment; as it clearly demonstrates to be a pillar upon which Community legal system is built upon.
Yes, from our analysis we can optimistically conclude that a consolidated EU Constitutional treaty might shed more light into the area of EU legal implementation and Supremacy, as it would offer more clarity. Some suggest the Lisbon treaty achieves that to a certain degree, as Articles 288[29], in a way, consolidates the exercise the Union's competences in the area of regulations, directives, decisions, recommendations and opinions.
However, we must admittedly disagree that there is an easy solution to all these problems, as for member states the concept of independence and sovereignty are enshrined principles, which cannot be easily set aside. On the other hand, the EU wishes all subjects within its boundaries to abide by its laws. The point of contention is that the member states have to seize legislative control over any area of law that the EU law governs; for instance, government of the member states cannot enact conflicting laws once a measure has been made into EU law. This measure in theory is applicable all over the EU, but in practice, the EU needs the member state to execute the laws, so that the citizens of EU are uniformly covered. This need-based relationship issue cannot be expected to be resolved easily in the face of the concept of member states sovereignty.

(2498 Words)










Bibliography


1.     “European Union law” eighth edition, by Horspool, M. and M. Humphreys 

2.     “EU law text, cases and materials” fifth edition, by Craig, P. and G. de Búrca

3.     “THE DIRECT EFFECT OF SECONDARY LEGISLATION IN EUROPEAN COMMUNITY LAW” by Simon Fisher

4.     “The Doctrine of Supremacy of European Community Law as a Condition Precedent for the Doctrine of Direct Effect” by Cornelia Koch

5.     “Revisiting Van Gend en Loos: Subjectifying and Objectifying the Individual” by Joseph H. H. Weiler; President, European University Institute, FLOREN CE

6.     “Direct Effect: Convergence or Divergence?  A Comparative Perspective” by prof. dr. Jan H. Jans & Jolande M. Prinssen, LL.M

7.     “50TH ANNIVERSARY OF THE JUDGMENT IN VAN GEND EN LOOS 1963 – 2013” by COURT OF JUSTICE OF THE EUROPEAN UNION.


[1]Treaty establishing the European Coal and Steel Community, ECSC Treaty(1951) - http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:xy0022

[2]Treaty establishing the European Economic Community, EEC Treaty (1957) - http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=URISERV:xy0023

[3]JA Winter, ‘Direct applicability and direct effect, two distinct and different concepts in Community law’ (1972) 9 CMLRev 425 at PG.426–27

[4] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend en Loos v Netherlands Inland Revenue Administration, [1963] ECR 1

[5] “Revisiting Van Gend en Loos: Subjectifying and Objectifying the Individual” by Joseph H. H. Weiler, President of the European University Institute, FLORENCE.

[7] “The Doctrine of Supremacy of European Community Law as a Condition Precedent for the Doctrine of Direct Effect” by Cornelia Koch

[8] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1 at Pg.13.

[12] Toth AG, note two at Pg.168.

[13] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1 at Pg.12.

[19] M. H. Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching) (1986) -  http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:61984CJ0152

[25] Andrea Francovich v Italian Republic(1995) - http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:61993CJ0479
 
[27] Reg. v. Secretary of State for Transport, Ex parte Factortame Ltd. (No. 4) (Cases C-46 and 48/93) [1996] - http://www.publications.parliament.uk/pa/ld199899/ldjudgmt/jd991028/factor-1.htm

[28] “The Doctrine of Supremacy of European Community Law as a Condition Precedent for the Doctrine of Direct Effect” by Cornelia Koch

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