Supremacy, Direct Effect, Indirect Effect and State Liability
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1 European Union Case List Supremacy, Direct Effect, Indirect Effect and State Liability Direct and Indirect Effect and Supremacy Van Gend en Loos - This case recognised that EU could be directly effective. Van Gend en Loos imported urea formaldehyde from West Germany in Because of changes to the classification of this product by the Dutch authorities, the duty payable on it had been increased from 3% to 8%. Van Gend en Loos argued before the Dutch authorities that Article 12 (now Article 30 TFEU) gave rise to rights which could be claimed by individuals and protected in the courts of Member States and that the company had an enforceable claim because the increased duty was contrary to Article 12. Costa v ENEL ECJ asserted that EU law was supreme over national law. Costa was a shareholder in an electricity company that was nationalised by the Italian government. He subsequently refused to pay his electricity account, which was for the sum of about 1. When sued for this amount, he argued the nationalisation legislation was contrary to Community law. On a reference to the Court of Justice, the Italian government argued that the case was inadmissible because its national courts were obliged to apply the law nationalising the electricity industry as the latest expression of the will of the Italian Parliament. The Court of Justice did not agree. Its conclusion was that: The integration into the laws of each Member State of provisions which derive from the Community, and more generally the terms and spirit of the Treaty, make it impossible for the States, as a corollary, to accord precedence to a unilateral and subsequent measure over a legal system accepted by them on the basis of reciprocity Amministrazione delle Finanze dello Stato v Simmethal SPA Confirmed the doctrine of supremacy. The ECJ stated: Any recognition that national legislative measures which encroach upon the field within which the Community exercises its legislative power or which are otherwise incompatible with the provisions of Community law had any legal effect would amount to a corresponding denial of the effectiveness of obligations undertaken unconditionally and irrevocably by Member States pursuant to the Treaty and would thus imperil the very foundations of the Community
2 every national court must, in a case within its jurisdiction, apply Community law in its entirety and protect rights which the latter confers on individuals and must accordingly set aside any provision of national law which may conflict with it, whether prior or subsequent to the Community rule Cooperative Agricola Zootecnia Defined the provisions for direct effect set out in Van Gend En Loos: A Community provision is unconditional where it sets forth an obligation which is not qualified by any condition, or subject, in its implementation or effects, to the taking of any measure either by the Community institutions or by the Member States A provision is sufficiently precise to be relied on by an individual and applied by a national court where it sets out an obligation in unequivocal terms Defrenne v SABENA (No 2) This case concerned an action between an air hostess, Defrenne, and her employer, the Belgian airline SABENA. Defrenne claimed she had suffered sex discrimination as a female worker in terms of pay as compared with male cabin stewards who did the same work. Both parties to the action accepted that there had been discrimination, but whether Defrenne had any legal right to be protected against such discrimination under EU law was another question. A reference was made to the Court of Justice to determine whether Article 119 EC (now Article 157 TFEU), which enshrines the principle that men and women should receive equal pay for equal work, gave rise to directly effective rights upon which Defrenne could rely in her national court. The Court held that Article 119 (now Article 157 TFEU) could give rise to rights which protected against direct discrimination where a person by virtue of their gender received less pay than a person of the other gender for the same work, as had occurred in Defrenne s case. The Treaty article was sufficiently clear and precise and unconditional to ground such a right. However, the Court also made clear that Article 119 (now Article 157 TFEU) could not extend so far as to provide directly effective protection against indirect discrimination. Indirect discrimination arises where a working system or practice, while ostensibly neutral between genders, does as matter of fact favour one sex over the other. Article 119 (now Article 157 TFEU) was not sufficiently clear and precise to ground protection against indirect
3 sex discrimination in terms of pay because it did not clearly set out the scope of any such right or the circumstances in which it might be engaged. Establishing such a right was necessarily conditional on further action by the Union and/or Member States. The distinction between direct and indirect discrimination is covered in more details in the chapters concerning free movement of goods and people. Also established that Treaty Articles are capable of being both horizontally and vertically directly effective. Von Colson & Kamann v Land Nordhein-Westflen - Two women had failed in their applications to be social workers in a state prison for male offenders on grounds relating to their sex. The West German Labour Court held that they had been discriminated against but found that, under West German law, it was only able to award them their travel expenses in compensation. The court made a preliminary reference to the Court of Justice asking whether it was required by the Equal Treatment Directive to order the prison to employ the women or, if not, what other sanction was to be applied. Article 6 of the Equal Treatment Directive stated that: Member States shall introduce into their national legal systems such measures as are necessary to enable all persons who consider themselves wronged by the failure to apply to them the principle of equal treatment within the meaning of Articles 3, 4 and 5 to pursue their claims by judicial process after possible recourse to other competent authorities The ECJ held that the directive did not include an unconditional and sufficiently clear and precise obligation to provide a specific sanction for discrimination Francovich & Bonifaci v Italian Republic - The court had to consider Directive 80/987 which sought to ensure that in the event of bankruptcy of a company its employees would be able to claim their outstanding wages from a guarantee institution established by the Member States. Italy had not implemented the Directive and as there was no national law under which Francovich and the other claimants could claim their lost wages, they sought to rely on the terms of the unimplemented Directive to enforce their claim. One of the questions for the court was whether the directive had direct effect. The court concluded that the identity of the persons entitled to the guarantee provided by the Directive and the content of that guarantee were both sufficiently clear and precise from the
4 provisions of the Directive but the identity of the person liable to provide the guarantee was not. It was not clear from the provisions whether this should be a public or a private body. The Directive did not have direct effect. Alfons Lutticke - It was held that Treaty articles which impose a positive obligation are capable of direct effect once the deadline for their implementation has passed Franz Grad - The ECJ noted that regulations are directly applicable and therefore by their nature capable of producing direct effects The ECJ also noted that it would be incompatible with the binding effect attributed to decisions by Article 288 to exclude in principle the possibility that persons affected may invoke the obligation imposed by a decision Antonio Munoz - Confirmed that regulations are by their nature capable of producing direct effects Grimaldi v Fonds - Recommendations and opinions are not binding forms of EU law and as such cannot be directly effective Van Duyn v Home Office - Established the principle that directives can be directly effective if the conditions for direct effect are satisfied. This case concerned a Dutch scientologist offered work as a secretary at the Church of Scientology HQ in London. She was refused entry into the UK. Article 45 TFEU provides for the free movement of workers, subject to derogations justified on the grounds of public policy, security or health. Directive 64/221 fleshes out in detail the scope of the measures which may betaken by Member States to derogate from Article 45. Article 3 of the Directive provides that any such measures shall be based exclusively on the personal conduct of the individual concerned. Van Duyn sought to rely on this provision in her claim against the Home Office and the Court of Justice agreed she could, though she was ultimately unsuccessful on the facts of the case. Marshall v Southampton (Teaching No1) Directives are only vertically directly effective NOT horizontally directly effective. This
5 case concerned a female dietician, who was dismissed on the ground that she had passed the compulsory retiring age applicable to women. Female employees were required to retire at 60, whereas male employees could continue to work until they were 65. Marshall, who was then 62, complained that her dismissal violated Directive 76/207, the Equal Treatment Directive, which prohibited discrimination in working conditions on the grounds of sex. The Court of Justice held that the Directive was directly effective against the state and that Marshall could rely upon it in her claim against Southampton Health Authority. The health authority was an organ of the state (what is now referred to as an emanation of the state ) and so a part of the state. The fact that the authority was acting in its capacity as an employer rather than a public authority made no difference. An individual relying on a directive against the state may do so whatever capacity it is acting in. As to the rules on compulsory retirement, they were discriminatory and in breach of the Directive. As to the horizontal effect of directives, the Court rejected the idea in no uncertain terms With regard to the argument that a directive may not be relied upon against an individual, it must be emphasised that according to Article 189 of the EEC Treaty, the binding nature of a directive, which constitutes the basis for the possibility of relying on the directive before a national court, exists only in relation to each Member State to which it is addressed. It follows that a directive may not of itself impose obligations on an individual and that a a provision of a directive may not be relied upon as such against such a person. Dorf Faccini Confirmed that Directives are only vertically directly effective NOT horizontally directly effective Pubblico Ministero v Ratti Held that Directives can only have direct effect once the date for implementation has passed. Ratti had complied with the requirements of Directive 73/173 in packaging and labelling the solvent products his company produced. Italian law provided for different standards than the Directive and included penalties for noncompliance. The Italian authorities sought to prosecute Ratti under the domestic law. Ratti sought to protect himself by relying on the Directive. Italy had failed to implement Directive 73/173 by the time the deadline for implementation had passed. The Court found in Ratti s favour concluding that:
6 a Member State which has not adopted the implementing measures required by the directive in the prescribed periods may not rely, as against individuals, on its own failure to perform the obligations the directive entails Ratti also prepared another product, varnish, in accordance with the requirements of another directive, Directive 77/228, dealing with varnishes, but he failed in his attempt to rely on it in the face of prosecution by the Italian authorities. The implementation date had not yet passed for this Directive and, as the Court said, before the deadline for implementation has passed, the Member States remain free in that field. Verbond (VNO) v Inspecteur The ECJ held that the rule in Ratti applies where a member state has only partially or incorrectly implemented a directive Marks and Spencer v Customs & Excise ECJ held that even where a directive has been completely and correctly implemented into national law by the Member State an individual may continue to rely upon direct effect where it is being improperly applied Emanation of the State Foster v British Gas - The action in Foster had been brought by six women who had been forced to retire the age of 60 in accordance with the policy of British Gas. This was five years earlier than their male counterparts were requirement to retire. The applicants sought to rely on Directive 76/207 (the Equal Treatment Directive). At the time of their dismissal, British Gas was a nationalised industry, although it had subsequently been privatised. The House of Lords sought a preliminary ruling from the Court of Justice on whether, at the time of their dismissal, British Gas was a body of such a type that the applicants are entitled to rely directly upon Directive 76/207 in English courts and tribunals. The ECJ identified two tests to determine whether a body is an emanation of the state: The bipartite test and the tripartite test. Foster v British Gas (No 2) The tripartite test was used by the House of Lords to declare that British Gas was an emanation of the State. Under the Gas Act 1972, British Gas provided a public service by supplying gas to citizens of the state generally. It did so under the control of the state as the Secretary of State could dictate its
7 policies and the State retained its surplus revenue. British Gas also had a special monopoly power under which it could to prevent anyone else from supplying gas in the United Kingdom without its consent Doughty v Rolls Royce The ECJ held that that Rolls Royce was not an emanation of the state despite all of its shares being owned by the Government and its nominees. It operated as a commercial undertaking which traded with the government on an arm s length commercial basis. It was not providing a public service and it did not have any special powers. Griffin v South West Water Services Ltd The ECJ held that held that a privatised water company satisfied all three elements of the tripartite test. It had been made responsible, pursuant to a measure adopted by the State, for providing a public service by acting as a water and sewage undertaker under statute. The Secretary of State had appointed it as the water and sewage undertaker for the South West and exercised wide ranging powers of control over it. It also had a range of special powers such as to impose hosepipe bans, to make by-laws, to enter land and to lay pipes. Doughty - Lord Musthill opined that whilst the tripartite test should be applied in a general case of the same type as Foster, the words included in any event meant that it was not be applied in every case St Mary s Church of England School ECJ held that the Board of Governors of a Church of England School which had voluntarily accepted state aid and entered the state education system was an emanation of the state Kampelmann. The case involved claims against a regional authority responsible for, amongst other things, the construction, maintenance and management of highways; and against two public undertakings each of which were responsible for the supply of energy to a town. In reaching its decision, the ECJ did not refer to the tripartite test at all. Instead, in accordance with the bipartite test from Foster, it held the Directive could be relied upon against organisations or bodies which are subject to the authority or control of the State or have special powers beyond those which result from the normal rules applicable to relations between individuals. In a reflection of the bodies which were at issuein the case, it also cited the following as examples of bodies which would satisfy that test: local or regional authorities or other bodies which, irrespective of their legal form, have been given responsibility, by the public authorities and under their supervision, for providing a public
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