Essays On Direct And Indirect Effect Eu Law Lecture

Homewood: EU Law Concentrate 5e

Problem question

Fred is a laboratory technician employed by the Home Office in London. He has encountered problems at work and is considering bringing proceedings against his employer.

(Fictitious) Directive 2003/555 ('the Directive') provides that all overtime worked by laboratory technicians must be paid at no less than three times the normal hourly rate. The Directive also provides that laboratory technicians must receive health and safety training. An annex to the Directive sets out the details of the required training, which must include sessions covering all new handling techniques relating to toxic substances. The deadline for implementation of the Directive was 31 December 2005.

The (fictitious) Laboratory Technicians Act 1950 ('the Act') provides that all overtime worked by laboratory technicians must be paid at no less than twice the normal hourly rate. The Act also provides that all laboratory technicians must receive health and safety training but does not specify the content of the training.

Fred occasionally works overtime and, under his contract of employment, receives twice his normal hourly rate of pay. He is dissatisfied with this but when he complained, his employer pointed out that this overtime rate complies with the Act.

Last month, Fred came into contact with a toxic substance at work and, as a result, suffered respiratory problems. Whilst Fred has received health and safety training, he has not received training in recently developed handling techniques for toxic substances. He believes that, had he received such training, he would not have been exposed to the associated health risk.

(a) Advise Fred as to whether he has any cause of action against his employer under EU law.

(b) How would your answer differ (if at all) if Fred was employed not by the Home Office but by Fyso (UK) plc ('Fyso')?

[For the purposes of this question, you are NOT required to consider any possible action for damages against the UK government.]

(a) The nature of Fred's complaint and compliance with the Act

  • Begin by setting out Fred's two complaints: his overtime pay and his inadequate health and safety training
  • His employer, the Home Office, appears to have complied with its obligations under the Act: overtime pay at twice the normal hourly rate and health and safety training
  • Fred should therefore be advised to consider seeking to invoke the Directive in the national court, since its provisions give him better rights than the Act: overtime pay at three times the normal rate and training in recently developed handling techniques for toxic substances.

Reliance on the Directive in the national court: direct effect

  • The principle of direct effect was established by the Court of Justice in Van Gend. If a provision of Union law is directly effective, it gives rise to rights that can be invoked by individuals in the national court. Directives are capable of direct effect (Van Duyn). Thus, Fred will be able to rely on the Directive, provided it is directly effective.
  • The conditions attached to direct effect: the measure must be sufficiently clear and precise and unconditional (Van Gend, Defrenne). Further, in relation to directives, the implementation deadline must have passed (Ratti) and the claim must be vertical, against the state, or a 'public authority' (Marshall).
  • Your answer should now apply the conditions for direct effect to the facts.
  • Consider first whether the Directive is clear, precise, and unconditional. These conditions appear to be satisfied, as the Directive sets out precise minimum overtime rates, its annex gives details of the required training, and there is no mention of any conditions attached to the rights.
  • The implementation deadline was 31 December 2005 and that date has now passed. (always work with today’s date unless the question states otherwise).
  • Fred's claim is against the Home Office, which is clearly an organ of the state. This is not affected by the fact that the Home Office acts in the capacity of an employer (Marshall). Fred's claim is therefore vertical.
  • Fred will be able to invoke the Directive against his employer in the national court, which must apply the provisions of the Directive and disapply the provisions of the Act.

(b) Fyso as the employer: direct effect?

  • Fred wishes to bring his claim against his employer, Fyso
  • Consider whether the Directive is directly effective in these circumstances.
  • The conditions relating to clarity, precision, unconditionality, and the implementation deadline are satisfied (refer to the relevant parts of your answer to (a))
  • However, the status of Fyso must be explored, as a directive can only be directly effective vertically, against the state, or a 'public authority' (Marshall) or 'public body' (Foster).
  • Fyso is clearly not the state, but is it a public body? Apply the Foster test: a 'public body' includes a body made responsible by the state for providing a public service; under state control; and with special powers for that purpose, beyond those normally applicable between individuals. The question provides no information giving guidance on any of these elements. However, as a private company, Fyso is very unlikely to satisfy the Foster test and to comprise a public body.
  • Assuming that Fyso is not a public body, Fred's claim is horizontal and he cannot therefore rely directly on the Directive.

Indirect effect

  • Fred may however be able to enforce the rights under the Directive by virtue of the principle of indirect effect.
  • This principle was created by the Court of Justice in Von Colson and requires that relevant national law be interpreted in accordance with EU law. This principle is particularly important in situations such as Fred's, where an individual cannot rely directly on a provision of EU law.
  • The Court held in Marleasing that the principle applies irrespective of whether the national provisions pre-date the EU provisions, so the fact that the Act pre-dates the Directive is irrelevant.
  • However, Marleasing made clear that the national court's duty of consistent interpretation applies only so far as possible. Harmonious interpretation will not always be possible (Wagner Miret) and, in particular, there is no duty to adopt a contra legem interpretation (Pupino).
  • Now consider whether the provisions of the Act can be interpreted in line with the Directive. To interpret 'no less than twice the rate of normal pay' to mean 'no less than three times the normal rate of pay' would entail a contra legem interpretation, and the national court would not be required to adopt such an interpretation. On the other hand, it would be likely that a national court would have no difficulty in interpreting 'health and safety training' to include a requirement for 'sessions covering all new handling techniques relating to toxic substances'.
  • In conclusion, Fred is likely to be able to rely on the indirect effect of the health and safety provisions of the Directive, but not its overtime pay provisions.

Direct effect is a principle of EU law. It enables individuals to immediately invoke a European provision before a national or European court. This principle relates only to certain European acts. Furthermore, it is subject to several conditions. It can apply in relation to regulations, directives, treaty provisions and decisions.

The term ‘direct effect’ was first used by the Court of Justice of the European Union (CJEU) in a judgement on 5 February 1963 when it attributed, to specific treaty articles, the legal quality of direct effect in the case of NV Algemene Transporten Expeditie Onderneming van Gend en Loos v. Nederlandse Administratie der Belastingen (Case 26/62). In this case, the CJEU identified three situations necessary to establish the direct effect of primary EU law. These are that:

  • the provision must be sufficiently clear and precisely stated;
  • it must be unconditional and not dependent on any other legal provision;
  • it must confer a specific right upon which a citizen can base a claim.

If these conditions are met, the provisions of the treaties can be given the same legal effect as regulations under Article 288 of the Treaty on the Functioning of the European Union (TFEU). However, there is little legislation on employment and industrial relations to be found other than in primary law and in the regulations on the free movement of workers.

By virtue of the doctrine of the supremacy of EU law, provisions of Community law with direct effect take precedence over domestic laws (Flaminio Costa v. ENEL, Case 6/64). EU labour law rules take precedence over national labour law rules.

Taken together, the principles of direct effect and supremacy mean that treaty provisions may be used to make claims before domestic courts and override domestic law. Probably the best-known example is Defrenne v. Sabena (Case 43/75), where the CJEU decided that:

The principle that women and men should receive equal pay, which is laid down by Article [141 EC now 157 TFEU], may be relied on before the national courts. These courts have a duty to ensure the protection of the rights, which that provision vests in individuals.

In the Viking case (Case C-438/05), Article 43 of the Treaty of the European Union (now Article 49 TFEU) is interpreted as capable of conferring rights on a private undertaking that may be relied on against a trade union or an association of trade unions. In the Laval Case (Case C-341/05), Article 49 of the Treaty of the European Union (now Article 56 TFEU) was held to have direct effect, so that Member States must amend national laws that restrict any freedom incompatible with the Treaty’s principles.

Most EU law on employment and industrial relations takes the form of directives. According to Article 288 TFEU, ‘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 form and methods’. Therefore, the CJEU’s decision to extend the principle of direct effect to directives was crucial.

The rationale for attributing direct effect to directives was to secure the ‘useful effect’ of EU legislation. Since EU law was a new transnational legal order capable of conferring rights on individuals, an interpretation of Article 249 of the Treaty of the European Union (now Article 288 TFEU) was developed, which emphasised the binding result to be achieved by directives, rather than, as stated by Article 288 TFEU, leaving ‘to the national authorities the choice of form and methods’.

Direct effect can apply both horizontally and vertically, with the distinction based on against whom the right is being enforced, and the nature of the right itself.

Vertical direct effect

Where rights conferred by a directive are violated by the State or by emanations of the State, a citizen can exercise vertical direct effect. Vertical direct effect concerns the relationship between EU law and national law, and the State’s obligation to ensure its legislation is compatible with EU law. Citizens can apply it in claims against the State (or against an emanation of the State) as defined in Foster v. British Gas (Case C-18/89). Following this case, the criteria laid down to define the emanations of the State could include privatised industries or services that formerly provided public services. Employees in these industries and services may rely directly on provisions in EU directives, so that a large proportion of the national workforce can directly enforce rights contained in the directives.

The impact of the concept of vertical direct effect is substantial in certain areas, such as the provision on equal pay between women and men in Article 157 TFEU. Moreover, when the CJEU held that the doctrine of vertical direct effect applied also to the substantial body of EU legal measures in the form of directives (Van Duyn v. Home Office, Case 41/74), the implications were much greater for the field of employment and industrial relations. Employment rights contained in directives now became capable of direct enforcement against the State before national courts.

Horizontal direct effect

Horizontal direct effect is a legal doctrine developed by the CJEU whereby individuals can rely on the direct effect of provisions in the treaties, which confer individual rights, in order to make claims against other private individuals before national courts.

By virtue of the doctrine of the direct effect of treaty provisions, individuals can rely directly on EU law before their national courts. There is no need for the implementation of EU law by Member States through national law. The CJEU’s creation of the doctrine was driven by Member States’ failure to comply with EU law.

The initial rationale of direct effect was partially changed when the question arose of the direct effect of directives. The CJEU held that the doctrine of direct effect did apply to directives. However, directives had only vertical direct effect (see above). Therefore, individuals could claim only the rights conferred by directives against the State or emanations of the State. This, more limited, version of the doctrine prevented individuals claiming rights under the directive as against other private players (‘horizontal’ direct effect).

However, the State may appear in a number of emanations of public authority. The scope of the ‘different emanations of the State’ depends on the criteria developed by the CJEU to define them. Nonetheless, the rule of horizontal direct effect remains that directives do not have direct effect against private individuals. A number of Opinions by Advocates-General have attempted to overturn the limitation in the doctrine of horizontal direct effect, extending the effect of directives to private persons, but without success (Dori v. Recreb srl, Case C-91/92). The CJEU’s doctrine of indirect effect (see below) achieves, partially, the result obtainable through the rule of direct effect; however, this is only insofar as the national law is not wholly inconsistent with EU law.

The impact of the doctrine of horizontal direct effect, when applied to provisions of the treaties, has been limited in the fields of employment and industrial relations, since relatively few treaty provisions confer individual rights in those areas. However, the Charter of Fundamental Rights of the European Union was incorporated into primary EU law by the Treaty of Lisbon, which came into force on 1 December 2009. The inclusion of fundamental rights concerning employment and industrial relations into primary EU law, as was the case with equal pay for women and men (Article 157 TFEU), could lead the CJEU to attribute binding direct effect – vertical and horizontal – to provisions of the Charter.

Indirect effect

The doctrine of indirect effect requires national courts, as organs of the Member State responsible for the fulfilment of EU obligations, to interpret domestic law consistently with directives. This doctrine achieves indirectly, through the technique of judicial interpretation of domestic law, the result obtainable through the doctrine of direct effect of directives.

Indirect effect can thus be seen both as an addition to, and as the corollary of, the doctrine of direct effect. In the case of provisions of directives having direct effect, national courts must disregard domestic law where there is a conflict between the directive and domestic law. In the case of a directive lacking direct effect, the national courts must make every effort to interpret domestic law consistently with the directive.

The doctrine of indirect effect is of vital importance to the enforcement of EU rights against private persons (horizontal direct effect). As directives have only vertical direct effect in claims based on directives against private persons, domestic law may be the only legal basis for a claim. The domestic court is obliged to exert itself to ensure that domestic law is interpreted consistently with the EU directive. However, this result is obtainable insofar as the national law is not wholly inconsistent with EU law.

See also: compensation; enforcement of EU law; Francovich principle; judicial enforcement of EU law; justiciability of EU law; national labour courts; remedies for infringements of EU law; sanctions; state liability.

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