EU Law

In Case 152/84 Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching) [1986] ECR 723, the Court of Justice created an artificial and arbitrary barrier to the horizontal enforcement of directives.

Critically discuss with reference to decided cases and academic opinion.

When a State joins the EU, all community law becomes part of national law and automatically binding without further enactment; this is known as directly applicable. Article 249 states that regulations are directly applicable and of general application. They are automatically incorporated into the national legal order. Similarly, Treaty provisions are directly applicable. Their national validity was established through ratification of the Treaty. By contrast, directives are not directly applicable since they require implementation into national law.

The ECJ has developed a principle of direct effect whereby a provision of community law may be enforced by individuals in the national court of their Member State. Direct effect is especially important where a member state has failed to meet its obligation to implement a community measure or where the implementation is partial or defective. This relates, in particular, to directives not being implemented. Indirect effect was later brought to fill in the gaps of direct effect of directives where it left people that are employed by private companies at a disadvantage as the direct effect of directives was only vertically applicable, and for cases where the Van Gend en Looos criteria wasn’t satisfied.

The principle of direct effect was established by the ECJ in the case of Van Gend en Loos, which concerned Article 25, Here the ECJ implemented that Art 25 (ex 12) of the EC Treaty, creates rights that individuals can rely on against a Member state, which has failed its obligation to implement the Article. The judgement stated that, if certain criteria were satisfied, the provisions in question would give rise to rights or obligations on which individuals may rely on before their national courts; meaning they would be directly effective. The criteria set out in of Van Gend en Loos stated that the provision must be clear and unambiguous, it must be unconditional and it must take effect without further action by the EU or member state.

As the action was against the state in the case of Van Gend en Loos, it did not deal with the issue of whether or not a citizen could rely on the principle of direct effect to enforce a provision against another citizen therefore the case only confirmed that this was possible to do against the state. This was one of the questions for the court in Defrenne v Sabena 1976 , which involved a claim for equal pay made against an employer under Article 141. The ECJ rejected the argument that direct effect was a means only of enforcing substantive EC laws against the member states. The court identified that there were two types of direct effect, vertical direct effect and horizontal direct effect.

Vertical direct effect concerns the relationship between EC Law and national law, however horizontal direct effect, is concerned with the relationship between individuals and other individuals, this may include any private body including companies. Where a measure is horizontally directly effective it creates rights between citizens and is therefore enforceable by them in national courts.

Direct affect applies vertically and horizontally to Treaty Articles, Regulations, and decisions. As well as direct affect being applied vertically and horizontally they are also directly applicable. However the position in relation to directives is more complex and highly controversial. Under Article 249 directives “bind any member state as to the result to be achieved while leaving domestic agencies competence as to form and means.”

They come in the form of instructions to Member States to bring national law in line with the provisions of the directive with a specific date provided by which implementation must be assured. Therefore unlike regulations and most treaty provisions, directives do not come into force immediately but require incorporation into national law in order to come into effect. They ensure harmonization of laws in different Member States and are considered more flexible as they provide states with discretion and some scope for national differences. Although eventual implementation need not be uniform in every member state, the actual aim must be properly secured and where it is not, this may constitute a breach leading to a liability and damages must be paid accordingly with the guidelines set out in State liability as a remedy for citizens that have been a victim of a state’s failure.

Directives can only ever by vertically directly effective. It could never be horizontally directly affective. This means that an unimplemented or improperly implemented directive can only be relied upon and enforced against the state which, according to reasoning in Van Duyn (1974), is prevented from its own failure to implement to avoid the obligation owed under the directive. In the case of Marshall v Southampton and South West Hampshire AHA a reference was made under Article 234 on the issue of whether different retirement ages for men and women in the UK amounted to discrimination under Directive 76/207, the ‘Equal Access Directive’; the ECJ confirmed that it was. It also identified that the applicant was able to use the directive against her employer but only because her employer was in fact the Health Service, an organ of the state. The ECJ later indentified that the national courts should decide what bodies a Directive could be enforced using vertical direct effect. It was later explained that vertical direct effect may also affect bodies that could be described as an ‘emanation of the state’

Vertical direct effect principles were illustrated inFoster v British Gas Corporation.There was a claim against British Gas in respect of the different retirement ages for men and women based on the Equal Treatment Directive 76/207. The English Court of Appeal held that British Gas was not a public body against which the directive could be enforced. On appeal, the House of Lords sought clarification from the ECJ, who replied with “A Directive may be invoked against “a body, whatever its legal form, which has been made responsible…for providing a public service under the state and has for that purpose special powers beyond those which result in from the normal rules applicable in relations between individuals.” On this interpretation a nationalised undertaking such as British Gas would be a public body against which a directive may be enforced, as the House of Lords decided. A number of cases have considered and applied the Foster (1990) criteria.

In Doughty V Rolls Royce plc , a publicly owned manufacturing company was held not to be an emanation of the state since it failed the first and third criteria of the Foster Test. On the other hand in Griffin v South West Water the national court considered that a privatised water company was an emanation of the state, while the body itself was not as such under the control of the state, certain parts of the services it operated were.

The fact that directives can only be vertically effective inevitably creates major anomalies and injustices where an applicant’s case is against another individual or a private body. This can be seen in the contrasting decisions of the cases where the employers were found not to be an emanation of the state, this can be seen in the case of Duke v GEC Reliance; within this case the UK was at fault for failing to implement the Directive 76/207. The House of Lords held that it was not bound to apply the directive despite the case of Duke involving the identical point to that in Marshall, however the employer was not the state, but a private company.

In the Case 152/84 Marshall v Southampton and South-West Hampshire Area Health Authority, the Court of Justice created an artificial and arbitrary barrier to the horizontal enforcement of directives. This statement is said to contradict with the nature of directives as they are not seen to be directly applicable, this means that their provisions must be incorporated into national law. The article states that a directive shall ‘be binding as to the result to be achieved, upon each member state to which it is addressed, but shall leave to the national authorities the choice of forms and methods’. This therefore indicates that the article seems to suggest that directives are not intended to operate as law within national systems, since that is the role envisaged for the relevant national implementing measures.This therefore leads to the problem that directives are addressed to Member States and therefore individuals are not expected to be held liable for a state’s failure to implement or be held liable for something that is addressed to a Member State as a form of instructions.

The three limb test set out by the case of Foster , was also accompanied by the ECJ referring to previous decisions indicating that directives can also be invoked against tax authorities, this can be seen in the case Becker v Hauptzollamt Munster Innerstadt, local or regional authorities such as the case Fratelli Costanzo v commune de Milano, authorities responsible for the maintenance of public order and safety which is illustrated in the case of Johnston v RUC, and public health authorities. The wide scope of public Authorities was left to the national courts of Member states. As to how strictly they were to be applied was unclear. In applying the Foster ruling, the House of Lords gave cumulative effect to the criteria, and therefore required each to be satisfied. Neither the CJ nor the national courts have subsequently treated the criteria as perspective and they have generally been applied fairly loosely.

In the case of St. Marys Church of England School, the court of appeal concluded that satisfying the Foster test as if it was a ‘statutory definition’ wasn’t was wrong and that if two limbs of the test were satisfied, that would be enough. In a later case it was set that any one of the elements set out in in the case of Foster need only be satisfied for a body to be found to be an emanation of the state, rather than all three.

The fact that directives are set out to Member States as a form of instructions and the method of implementation is left to the discretion of member states it would be unfair to hold a private body liable under direct effect of directives and therefore the ‘Horizontal and arbitrary barrier’ set out in the case of Marshall v Southampton was purely to fill in the gaps of direct effect of directives and ensure citizens that worked for bodies that could be counted as ‘emanations of the state’ are held liable, as well as setting out  a rule which confirms that private employers cannot be held liable for a state’s failure to implement a directive.

In conclusion it could be said that the decision of Marshall v Southampton AHA was set out as a precedent to ensure no private bodies are held liable for a state’s failure to implement a directive and directives are only vertically directly effective with the exception of fulfilling one of the requirements set out by the case of Foster as being an ‘emanation of the state’. Many people who by virtue  of seeking to enforce a claim under a directive against another individual, will be denied rights which others, in an otherwise similar position, could successfully enforce against the state. The principle of Indirect Effect and State liability were later brought about by the cases of Von Colson and Francovich to fill in the gaps left by Direct effect and to ensure all citizens rights are protected regardless of whether they work for a public or private body or whether the claim was brought vertically or horizontally. State liability was implemented for the protection of citizens for an individual to recover compensation from a Member State where he or she has incurred loss as a result of the failure of that Member State to fulfil its obligations under EU Law.