The Fundamental Doctrines of EC Law

Using The Relevant Case Law, Analytically And Critically Discuss The Relationship Between The Supremacy And The Direct Effect Of EC Law.

In the making and promulgation of Community law, the European Court of Justice (ECJ) plays a crucial role. Many of the fundamental doctrines of EC law are not to be found in the Treaties, or secondary EC legislation, but in the case law of the European Court.

No provision of the Treaty on European Union (TEU) contains an express term regulating the issue of the supremacy between the Community and the various national laws of the Member States. The only implied reference to the issue of supremacy is Article 10 of the TEU which imposes a duty on all Member States to adopt appropriate measures to ensure that the obligations of the Treaty are observed, together with an additional duty to abstain from all acts which might jeopardise the achievement of the objectives of the Treaty.

Article 10 states that:

“Member States shall take all appropriate measures, whether general or particular, to ensure fulfillment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the achievement of the Community’s tasks.

They shall abstain from any measure which could jeopardise the attainment of the objectives of this Treaty.”

Thus, the principle of the supremacy of Community law over national law was first established by the European Court of Justice whose role is explicitly stated in Article 220 of the TEU:

“The Court of Justice shall ensure that in the interpretation and application of this Treaty the law is observed.”

The ECJ, as the guardian of legality and instrument of cohesion within the Community, has, from the start been in a strong position to define the status of Community law and to give it precedence when in conflict with the national legal systems of the various Member States.

The first case where the Court made a statement on the nature of European law is the famous case of Van Gend en Loos v. Netherlands (1963) dealing with the principle of direct effect of EC Treaty provisions and the degree to which individuals can rely on such terms to challenge measures of national law.

In that case, the ECJ stated that:

“The objective of the EEC Treaty, which is to establish a Common Market, the functioning of which is of direct concern to interested parties in the Community, implies that this Treaty is more than an agreement which merely creates mutual obligations between the contracting states…

The approach of the Court was based on the Court’s vision of the kind of Community which those Treaties had set out to create, and the kind of legal system which the effective creation of such a Community would necessitate.

It was in a second important case, two years later, however, that the ECJ expanded on its constitutional theory of the Community, declaring again that the states had created a sovereign Community by limiting their own sovereign rights.

The case was Costa v. ENEL (1964)

The ECJ ruled that interim relief must be available and that this obligation overrode conflicting domestic principles. The domestic court was required to set aside national law, if that would have prevented the grant of interim relief giving effect to EC law.

This was required to enable effective enforcement of Community law:

“…..the full effectiveness of Community law would be just as much impaired if a rule of national law could prevent a court……granting interim relief in order to ensure the full effectiveness of…Community law”.

According to Lord Bridge of the House of Lords,

“If the supremacy within the European Community of Community law over the national law of Member States were not always inherent in the EEC Treaty, it was certainly well established in the jurisprudence of the ECJ”.

Thus, in so far as the Court was concerned, by 1990, the principle of supremacy of Community law and its practical effectiveness amongst Member States were established beyond question.

In the United Kingdom, the acceptance of the supremacy of Community law has certainly not been unproblematic. Since the British Constitution is largely unwritten, it is difficult to speak of “amending” it. The central obstacle to acceptance by the U.K. of supremacy of EC law is the fundamental constitutional principle of the sovereignty of Parliament. According to this principle, Parliament has the power to do anything other than to bind itself for the future. According to Dicey,

“Parliament has, under the English Constitution, the right to make or unmake any law whatever and no person or body….has the right to override or set aside the legislation of Parliament”.

Furthermore, the doctrine of implied repeal means that no Parliament can bind its successor, and no Parliament can be bound by its predecessor. Any Act is thus vulnerable to change by a future Parliament.

With those problems in mind, it was nevertheless decided to give internal legal effect to Community law by means of an Act of Parliament (dualist state): the European Communities Act, 1972.

Section 2(1) establishes a legal basis within domestic law for directly applicable EC laws

“as in accordance with the Treaties and without further legal enactment to be given legal effect or use in the U.K… and… shall be recognised and available in law”.

The section aims to make the concept of direct effect a part of the U.K. legal system. It states that law which under the EC Treaties is to be given immediate legal effect, is to be directly enforceable in the UK.

Section 2(4) accords existing and future priority to EC laws.

“Any enactment passed or to be passed….shall be construed and shall have effect subject to the foregoing provisions of this section”.

Furthermore, section 3 states that:

“For the purposes of all legal proceedings any question as to the meaning or effect of any of the Treaties, or as to the validity, meaning or effect any Community instrument, shall be treated as a question of law and, if not referred to the European Court, be for determination as such in accordance with the principles laid down by and any relevant decision of the European Court or any Court attached thereto”.

It is therefore apparent that the supremacy of EC law is recognised in the U.K. by virtue of domestic legal processes and legal theory.

However The European Community has a distinctive legal system which operates alongside the laws of Member States. EC law has direct effect within the legal systems of its Member States, and overrides national law in many areas, especially in areas covered by the Single Market.

Direct effect is a principle of European Community law according to which certain pieces of European legislation are enforceable before the courts of European Union member states.

The concept of direct effect is not contained within the Treaties. It was developed by the European Court of Justice in the case of Van Gend en Loos [1963] ECJ. The ECJ indicated that the concept of direct effect was essential to ensure that citizens of the Community could enforce Treaty obligations against Member States and thereby ensure that Community law was made effective in their national legal systems.

The reasoning in the case makes it clear that the European Court of Justice considered that effective remedies were paramount in this new legal order. The case of Van Gend en Loos was also important in establishing the criteria for defining when a particular provision should be directly effective. Such a provision should be

• Clear and precise
• Unconditional; and
• Capable of producing rights for individuals

There are two main aspects of direct effect: vertical and horizontal.

Van Gend en Loos also declared that a claim based on a treaty article, can be vertically effective.

Whereas in Defrenne v. Sabena [1976] the European Court of Justice decided that there were two aspects of direct effect: vertical direct effect and horizontal direct effect, the distinction drawn being based on against whom the right is to be enforced.

Vertical direct effect concerns the relationship between EC law and national law thereby enabling citizens to rely on it in actions against the state or against an “emanation of the state” as defined in Foster v. British Gas plc.

Horizontal direct effect concerns the relationship between individuals including companies. If a certain provision of EC law is horizontally directly effective, then citizens are able to rely on it in actions against each other.

Hence, the EC administration always takes the view that EC law takes precedence in case of a conflict between EC legislation and any other law in a member state. This was first expressed clearly in the Van Gend en Loos (1963) case. The ECJ held that creation of the Communities had created a new legal order. Member states had surrendered their sovereignty in return for the benefits of membership. In effect, not only did membership of the Communities create a power of the courts to decide on the basis of Community law, it created a duty to do so.

This was expressed even more starkly in Costa v ENEL (1964), to the dismay of the Italian government. While member states had begun to realize that courts should give priority to Community law, it was quite a blow to the government to realize that this was so even where there were express national provisions to the contrary.

It follows from all these observations that the law stemming from the treaty, an independent source of law, could not, because of its special and original nature, be overridden by domestic legal provisions, however framed, without being deprived of its character as community law and without the legal basis of the community itself being called into question

However, while Community law is accepted as taking precedence to the law of Member States, not all Member States share the analysis used by the European institutions about why EC law overrides national law, when a conflict appears.( Factortame Ltd. v Secretary of State for Transport (No. 2) [1991] 1 AC 603

Many countries’ highest courts have stated that Community law takes precedence provided that it continues to respect fundamental constitutional principles of the Member State, the ultimate judge of which will be the Member State (more exactly, the court of that Member State), rather than the European Union institutions themselves. see especially, Solange II (Re Wuensche Handelsgesellschaft, BVerfG decision of 22 October 1986 [1987] 3 CMLR 225,265)This reflects the idea that Member States remain the “Master of the Treaties”, and the basis for EC law’s effect. In other cases, countries write the precedence of Community law into their constitutions. For example, the Constitution of Ireland contains a clause that, ‘”No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are necessitated by the obligations of membership of the European Union or of the Communities…”

It was held in Politi v Ministry of Finance for Italian Republic that by reason of their nature and their function in the system of the sources of the Community Law, regulations have direct effect and are as such capable of creating individual rights which national courts must protect.

While Regulations are accepted as having horizontal effect, and creating directly enforceable rights and duties, does the same apply to directives? It is not entirely clear whether Directives have horizontal effect. It is widely assumed that they do not, at least once they have been implemented into UK law. After implementation, it is the relevant UK law that is at issue. This was accepted by the Court of Appeal in Marshall v Southampton and South West Hampshire Health Authority (1986).

However, in R v Employment Secretary ex parte Seymour-Smith (1999) the ECJ and the House of Lords side-stepped the issue, by ruling that a Directive was an `aid to construction’ after it had been implemented. That is, a UK court could look to the Directive to see what the UK law was supposed to accomplish. This gives the Directive a measure of horizontal effect. The principle that an action would lie against the state for failing to implement a Directive properly has led to the notion of `indirect horizontal effect’. Although Directives don’t create legal obligations between individuals, they do create an obligation on the courts to give effect to obligations between individuals.

What happens if the state fails to implement the directive, or implements it wrongly? It is generally accepted that any action will lie against the state; the ECJ decided in Frankovich v Italy (1995) that a member state had a duty to compensate its citizens who had suffered loss as a result of improper implementation.

To overcome this distinction of public/private body, the courts in Von Colson (1984) stated that a member state has a duty to “interpret their national law in the light of the wording and the purpose of the Directive in order to achieve the results”, even if such interpretation may distort national law. In Marleasing (1990) the ECJ clarified its position further by stating that the national court must interpret national legislation, whether they are adopted before or after the directive, as far as possible in the light of the wording and purpose of the directive

The other important case of this nature is Internationale Handelsgesellschaft (1970) where the ECJ held, in effect, that EC law took precedence even over the constitutions of member states.

The UK got its turn to be put in its place when the Factortame cases were heard by the ECJ (Factortame v Secretary of State for the Environment, Transport, and the Regions (1989), etc).