EU Law: Principles of Supremacy & Direct Effect

Principles in EU Law

• The principles of supremacy, direct effect, and state liability are fundamental to EU law.
• These principles were created by the EU Court.
• There are no treaty articles for any of the principles.
• All principles are at the core of the EU's legal system.
• The principles come from CJEU caselaw.

Principle of Supremacy/Primacy in EU Law

• The CJEU re-classified the EC/EU legal order's fundamental nature.
• The relationship between EC/EU law and national law has been fundamentally altered.
• Case 6/64, Costa v ENEL [1964] ECR 585, involved a dispute over a £1 electricity bill for Mr. Costa, a shareholder in an electricity company nationalized by the Italian State.
• The Italian government argued that the national court should apply Italian law instead of referring a question of EC law to the ECJ in the Italian court.
• The Italian Court referred the case/dispute to the ECJ under Article 267 TFEU for a preliminary ruling, where the ECJ only answers questions of interpretation of EU Law without resolving the dispute.
• The ECJ determined that EEC law could/should be applied to the Costa dispute.
• EEC law would take precedence over conflicting Italian law.
• The ECJ created the principle of primacy/supremacy of EEC (EU) law over conflicting MS law.
• In Costa, it was reasoned that member states have restricted their sovereign rights in certain areas and transferred them to the EEC.
• If EC law were not supreme, it would vary from member state to member state, contrary to its character as a uniform system of law.
• If EC law were not supreme, regulations could lose their directly applicable character.
• In Case 11/70, Internationale Handelsgesellschaft [1970] ECR, EC law takes precedence over national constitutional law.
• In Case 106/77, Simmenthal [1978] ECR, it was decided that if there is a conflict between EC/national law, national law is "inapplicable" and must be set aside without waiting for repeal of the law, regardless of whether national law is earlier or later than EC law.
• EU law takes precedence over all provisions of national law, even those enacted subsequently to the EC measure per Simmenthal.
• Simmenthal took the supremacy principle to the extreme by requiring all national courts faced with a conflict between national law and EC/EU law to set aside the national law/provision.
• In Case C-213/89, Factortame [1990] ECR, the national courts must grant interim relief to a party suffering potential loss caused by an alleged breach of European Community law even before the ECJ has ruled on the matter in case of potential conflict between EC law/national law.
• EU law requires national courts/judges to exercise powers and jurisdiction beyond those under national law.
• Judges in Member States have powers and duties beyond national procedures due to the supremacy of EU law.
• In 2003, the CJEU decided that Member State liability in damages extends to courts within Member States, as per Case C-224/01, Köbler v Austria.
• The Köbler cases ally with the Supremacy principle, elevating national court duties and responsibilities, including the obligation to refer under Article 267.

Member States' Responses to Supremacy

• UK, Germany, and Poland exhibit varying responses to the supremacy/primacy principle.

The UK and Supremacy

• The UK has faced controversy, disputes, and acceptance regarding EU supremacy.
• Its constitutional situation involves an unwritten constitution and parliamentary sovereignty.
• The European Communities Act 1972, section 2(1), ensures all EC obligations and restrictions are fully effective.
• The Factortame case raised questions about the modification or curtailment of the doctrine of Parliamentary Sovereignty.
• C-213/89, R v Secretary of State for Transport ex parte Factortame concerned the Merchant Shipping Act 1988, which limited fishing rights in British waters and was challenged by Spanish fishermen seeking interim relief.
• The UK's national constitutional principle of no interlocutory relief against an Act of Parliament was challenged.
• Preliminary ruling Art 267 TFEU came from the House of Lords to the ECJ
• The ECJ and then Lords determined that the 1988 Act breached EC law and had to be set aside, even in an interlocutory/interim context.
• EC law's supremacy overrides Parliamentary Sovereignty.
• A case study in supremacy, the Factortame saga reinforced the principle of supremacy with specific consequences for UK constitutional law.
• It provided a substantive statement of the illegality of UK law (1988 Act), including the enforcement of EC law by the Commission.
• Also included was application of the remedy of damages for the Spanish fishermen from the UK state for breaches of EC law (Francovich (1991)).
• The HS2 case in 2014 involved a judicial review of the UK government's decision to promote the high-speed rail link from London, known as HS2, based on questions of UK compliance with two EU Directives.
• The directives included A) Directive 2001/42/EC (“the SEA Directive") and B) Directive 2011/92/EU (“the EIA Directive").
• The UK Supreme Court issued judgments on the SEA and the EIA, with the latter raising EU and constitutional law issues.
• The HS2 Judgment appeal was unanimously dismissed.
• The UKSC stated it was unnecessary to refer to the CJEU under Art 267 TFEU.
• Lord Reed stated that the doctrine developed by the Court of Justice on the supremacy of EU law cannot be resolved simply by applying that since its application depends on the 1972 Act.
• Any conflict between a constitutional principle, embodied in article 9 of the Bill of Rights, and EU law must be resolved by the UK courts.
• Lord Reed stated that a Court of Justice decision should not be read to question the identity of the national constitutional order and that there was no obligation to make a preliminary reference to the Court of Justice, as it had already given a clear account of the relevant principles.
• The relationship between EU law and national law is a matter for UK constitutional law, to be determined by the UK courts per the HS2 analysis/overview.
• Mark Elliott, "Some will see HS2 as a judgment that puts EU law in its proper constitutional place ... the implications of HS2 may have more profound implications.”
• Strict reading of Costa, Kobler, and A267 raises questions re HS2.

Germany and Supremacy

• Germany operates under a conditional acceptance of EU supremacy.
• The German Constitutional Court accepted the supremacy of EC law in Internationale Handelsgesellschaft [1974], except where it conflicts with fundamental rights under the German Constitution.
• The German Constitutional Court will accept the supremacy of EC law as long as EC maintains human rights protection equivalent to the German constitution, per Wunsche Handelsgellschaft [1987], also known as the 'So lange' case.
• In Brunner v EU Treaty [1993], the German Constitutional Court addressed a challenge to German ratification of 1992 Maastricht Treaty upholding it subject to express powers within treaties.

Poland and Supremacy

• Poland presents a disputed acceptance of EU supremacy.
• The 2005 Polish Constitutional Court case addressed the legality of Poland's EU membership.
• The EU is merely an international treaty-based entity according to the Polish court, with Member States retaining their sovereignty.
• Polish Constitution has primacy over EU law.
• In case of conflict, the Polish nation/people must decide whether to alter the Constitution or withdraw from the EU.

2004 Constitution and Lisbon Treaty

• Article 1-6 of the 2004 Constitution states that "The Constitution and law adopted by to the institutions of the Union, it shall have primacy over the law of the Member States."
• Primacy/Supremacy is not referred to in the main body of the Lisbon Treaty.
• Declaration No 17 was attached to the Treaty but is not legally binding, and an Opinion of the Council Legal Service was also attached.
• There is no explicit reference to EU supremacy in Treaties, even with ratification of Lisbon, with questions of potential influence on Brexit.

The Principle of Direct Effect in EU Law

• Direct effect is a fundamental principle of EU law, developed solely by CJEU case law.
• 26/62Van Gend en Loos (1963): Individuals can rely on/use EU Treaty provisions in Member State national courts.
• Direct effect transformed the EEC from an international law system to a new type of legal order.
• Conditions are attached to the operation of direct effect and the application of the principle to the various sources/categories of EU law.
• Court of Justice cases regarding directives have created a distinction between the horizontal and vertical direct effect of directives and the principle of Indirect Effect.

Direct Effect: Elaboration

• Developed in case 26/62 Van Gend en Loos, the EU Court of Justice established the principle of Direct Effect.
• Community law provisions, if appropriately framed, can confer rights and impose obligations on individuals, which national courts must recognize and enforce
• The ability of individual EU citizens to rely directly on EU Law provisions before national/Member State courts facilitates this principle.
• EU Law ensures rights and obligations directly not only for EU institutions and member states but also EU citizens.
• The principle was first developed within the context of EC/EU Treaty provisions.
• Van Gend - Art 30 TFEU (Art 12 EEC) dealt with Customs duties on goods from Germany to the Netherlands through a preliminary ruling referral from the Dutch Tax court.
• Case 26/62 Van Gend en Loos stated that Treaty provisions allow individuals to rely directly on them, also stating that "The Objective of the EEC Treaty is to establish the Common Market, implying the Treaty is more than an agreement that does not merely create mutual rights between the contracting states.
• The Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights, and the subjects of which comprise not only Member States but also their nationals.
• Independently of the legislation of Member States, Community law not only imposes obligations on individuals but intends to confer rights upon them which become part of their legal heritage.
• The EU operates a legal system of Direct Effect where individuals can invoke/use EU Law in their own Member State courts.
• CJEU reasoning is premised on a "vision" of the Treaties' goal of the kind of legal system they set out to create.
• Conditions for Direct Effect are applicable when EU Treaty provisions apply.
• Van Gend en Loos clarified that Article 12 EEC contains a clear and unconditional prohibition, with no requirement for national implementation.

Conditions for Direct Effect:

• EU Treaty Articles must be clear and unconditional, containing no reservation by the Member State and not dependent on any national implementing measure.
• In Case 43/75, Defrenne v Sabena, Article 157 TFEU (dealing with equal pay) was considered even though it created a negative obligation was Member States that was neither precise, nor clear.
• The negative obligation for a Member State was not legally precise enough.
• CJEU still found the provision directly effective due to political stagnation of the Community and sluggishness of the Member States to act as well as important social concerns about equal pay.
• Article 288 TFEU says Regulations are binding and directly applicable in all Member States.
• Regulations become an immediate part of Member State's domestic law, negating any transposition which allows individuals to challenge regulations directly in national courts.

Direct Effect of Directives

• Article 288 TFEU states that directives are only binding regarding the result to be achieved and require implementation to give effect to Member States.
• Problems arise on extending direct effect as they always require MS implementation, are addressed solely to Member States, and have very general provisions that are not clear and precise.
• But, without full implementation of Directives, individuals lack the ability to enforce rights or obligations set out in the Directives against other individuals.
• In Case 41/74, Van Duyn v Home Office, the CJEU granted direct effect to Directives specifically to the the free movement of persons law.
• In Case 148/78, Pubblico Ministero v Ratti, member states cannot rely on their failure to implement Directives.
• National courts must enforce the terms of the Directive against the State if the obligations are clear and precise and if the time for implementation has expired.
• Directives have Conditions of Direct Effect when the implementation date has expired along with provisions being precise, clear and unconditional.
• Directives can be considered as a punitive action against Member States to ensure timely and comprehensive implementation and part of EU law enforcement.
• In Case 152/84 Marschall (No. 1), retirement age was found to have differences in the UK in its treatment of males and females.
• A Directive cannot create obligations which an individual can rely against another individual.
• Article 288 sets out obligations addressed to Member States, clarifying that Directives do not create horizontal effects, do not have horizontal direct effect, and have vertical effect only being only applicable against the state.
• Therefore Directives only have "vertical direct effect” and individuals can only enforce terms of directives against the State, or an emanation of the State.
• If the necessary conditions are fulfilled, the obligation to implement the directive also falls on the State.
• In Case C-91/92 Faccini Dori v Recreb, CJEU re-stated vertical Direct Effect only rule selling of Encyclopaedia subscription at train station/right to rescind.
• Mitigating the limited consequences involves mitigating limited, vertical, and horizontal effects with mechanisms.

Direct Effect - Conclusion

• EEC/Treaty: is a type of "contract’" between MS only.
• The Treaty and EU Law originally had no rights for individuals.
• But EU Treaties create individual rights (van Gend en Loos).
• Direct effect enables the use of EU Law in MS Courts.
• There are complex conditions.
• Conditions are complex in case of EU Directives.
• EU Directives have limited Direct Effect (Vertical).
• The CJEU mitigated this.

The Principle of Member State Liability in EU Law

• The 'Francovich' principle is used alongside the Kobler' principle.
• In the 1990s, the CJEU developed enforcement tools and EU law remedies to allow actions for damages against member states before Member State courts, based on the principle of "effectiveness" with Article 4 TEU.
• Judicial action against MS is allowed in own courts if harm results from its breach of EU Law in accordance with "EU Delict Law".
• Article 4 TEU entails sincere cooperation, the Union, and the Member States shall, in full mutual respect, assist each other in carrying out tasks that flow from the Treaties.
• Member States must fulfill obligations arising out of Treaties (general or particular) and the Union's institutions by ensuring tasks facilitate Union, also avoiding undermining their goals.
• The Court of Justice elaborated this in Francovich v Italian State [1991] (C-6 & 9/90). Applied to EC/EU law generally clarified that if a case is applicable, the court can then bring forward the principle laid out by that case.
• Brasserie du Pêcheur v Germany and Factortame No 3[1996] (C-46/93, C-48/93) are examples of such cases.
• Francovich was concerned with the EC Directive regarding workers' rights in case of an insolvent employer.

Francovich: Elaboration

• Workers had no effective remedy/recourse.
• The CJEU stated that liability must fall to defaulting, disobedient Member States
• New Law remedies allowed for damages if rights were breached by a member state.
• Requirements for state liability is there must be a breach of EU obligation.
• Individuals must be able to claim rights from that EU law.
• Criteria: The EU law relied must confer rights on individuals, with the breach made must be sufficiently serious.
• There also must be causal link between the breach and the damage suffered.
• These criteria are in place for any state liability claims.
• HL in R v. Secretary of State ex p. Factortame No. 5[1999] 4 All ER 906 applied same criteria for losses of fisheries income.
• The CJEU justified this by saying that if Member States do not face consequences for breaches, individuals are not able to obtain redress and the law is not fully effective.

Sufficiently Serious Breach

• Factors to be taken into account in SSB include clarity and precision of rule breached, if there was any measure of discretion left by rule to MS, and if infringement was intentional and excusable.
• Whether an EU institution contributed to MS's error, or if there was adoption of measures contrary to EC is also a factor.
• Factors to be taken into account by the CJEU in determining where sufficiently serious.
• Breaches are sufficiently serious if it's continued despite ruling or if it is a clear breach.
• An example includes, Case C-392/93, R v HM Treasury ex p BT, in which a directive in the UK that wasn't fully implemented was not held to be SSB.
• It wasn't SSB because it wasn't clear what constituted a breach of the rule by implementation, so the Treasury was not held responsible for the mis-implementation.
• In Case C-5/94 R v MAFF ex p Hedley Lomas, the UK failed to license export of live sheep to Spanish slaughterhouses, with the ECJ finding SSB.
• Treaty provision that did find them to be responsible was one they disagreed would not comply with directive.

State Liability - Kobler

• The principle of State liability was extended to breaches by all organs of State, including courts of last instance (e.g., Supreme Courts of MS).
• Case C-224/01, Kobler v Austria [2003] involved the Failure of the highest administrative court in Austria to make a preliminary ruling reference under Art 234 (now 267 TFEU) re: the compatibility of university Pay with EC Law on free movement of workers.
• State Liability principle applies to damage/harm related to a decision/action by a Member State Court with three conditions.
• First EU Law must confer individual rights, next there must be a "manifest breach" by MS Court and last it must be casual link between the decision of the Court and the resultant Damage.
• In Köbler, the ECJ found no 'manifest breach’
• An example for national (Uk) can be found in Cooper v HM Attorney General [2010]
• The ECJ did not fault a court for a failure by law or court order.
• Here it did not reach a point for it to be a manifest failure that caused damage.

State Liability - Conclusion

• The Francovich principle ranks highly with other important principles.
• Part of a global framework to enforce EU law (A 258, A 267, direct, indirect, etc.)
• The Kobler - expanded the State Liability.
• To ensure and take responsibility for impact and role for national and EU courts.