INTERPRETATION, SCOPE AND REACH OF COMMUNITY LAW
1. DEVELOPMENT OF COMMUNITY AND UNION COMPETENCES
The European Economic Community (EEC) was established by the Treaty of Rome in 1957 for the purpose of creating a union of European States, bound together by common economic goals. By creating a “common market” the Member States sought together to achieve the harmonious development of economic activities, continuous economic expansion and a faster rise in the standard of living. With this in mind, the Treaty of Rome identified certain activities for the Community, including:
• the elimination of customs duties between the Member States;
• the creation of a common commercial policy towards third countries;
• the creation of common policies in a number of specific sectors, such as agriculture (the CAP) and transport;
• the removal of obstacles to the free movement of persons, services and capital throughout the Community .
The Community’s (now EC) competence has extended considerably (by successive amendment of the EC Treaty – Single European Act, Maastricht, Amsterdam Nice) and now includes a much wider range of subjects (such as consumer protection and public health) and, significantly, is not limited to “economic” matters. See, for example, the common visa policy and measures relating to asylum.[1] The Community also has competence in matter of civil judicial co-operation. The Union’s competence extends to include foreign policy (CFSP) and police and judicial co-operation in criminal law (the Third pillar).
2. A NEW LEGAL ORDER
The EC Treaty is not like the vast majority of other international treaties, conventions and agreements, which are framed in terms of obligations accepted and enforceable between States as a matter of international law and whose incorporation into national legal regimes and effectiveness may be dependent on the taking of domestic measures. The European Court of Justice (ECJ) has stated on a number of occasions that the Community Treaties established a “new legal order”. One does not find this in the Treaty – it is the creation of the Court, adopting a progressive and teleological/purposive construction of, and approach to, the Treaty. As the ECJ explained in the famous Van Gend en Loos case,[2] the essential characteristics of this legal order are twofold. More recently, in Opinion 1/91 (Draft Treaty on a European Economic Area), the ECJ summarised the position as follows:
“the EEC Treaty, albeit concluded in the form of an international agreement, nonetheless constitutes the constitutional charter of a Community based on law. As the Court of Justice has consistently held, the Community treaties established a new legal order for the benefit of which the States have limited their sovereign rights, in ever wider fields, and the subjects of which comprise not only Member States but also their nationals… The essential characteristics of the Community legal order which has thus been established are in particular its primacy over the law of the Member States and the direct effect of a whole series of provisions which are applicable to their nationals and to the Member States themselves” (emphasis added).[3]
3. SUPREMACY OF COMMUNITY LAW
It is well established that, in the event of a conflict between Community law and national law, Community law is supreme and has primacy over national law, irrespective of the source, status or date of that law. The leading case is Costa v ENEL.[4] It is also clear from the jurisprudence of the ECJ that the primacy of Community law applies irrespective of the status of the national law or the organ of the Member State involved. This can be seen most clearly from the Court’s judgment in the Simmenthal case:
“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.
Accordingly any provision of a national legal system and any legislative, administrative or judicial practice which might impair the effectiveness of Community law by withholding from the national court having jurisdiction to apply such law the power to do everything necessary at the moment of its application to set aside the national legislative provisions which might prevent Community rules from having full force and effect are incompatible with those requirements which are the essence of Community law”.[5]
The view of supremacy adopted by the ECJ has not always accorded fully with that of national supreme and constitutional courts in the Member States. The so -called Solange litigation[6] before the German Bundesverfassungsgericht demonstrates the tension. Doubts over the extent of the primacy of EC law have even found expression in the English courts.[7]
If the authorities of a Member State seek, whether by administrative action, legislation or court ruling, to override the requirements of Community law, the Member State may be in breach of its Community obligations. This will render the Member State liable to infringement proceedings (Article 226 TEC) at the instigation of the Commission (or conceivably, another Member State – Article 227) leading to a ruling that the Member State has failed to fulfil its obligations under the Treaty. If the Member State persists in the breach, the Commission can make a further application to the Court under Article 228 TEC, seeking the imposition of a penalty on the Member State. Furthermore, if the Community law infringed is intended to confer rights on individuals and the breach is sufficiently serious, individuals may be able to recover damages for any loss they suffered by taking action against the Member State in its own courts.[8]
Further, the ECJ has consistently held that in the absence of Community rules on the subject it is for the domestic legal system to determine the procedural conditions governing actions at law intended to ensure the protection of the rights which individuals derive from the direct effect of Community law.[9] Those conditions must not be less favourable than those relating to similar actions of a domestic nature, nor framed so as to render virtually impossible the exercise of rights conferred by Community law. In principle, therefore, the proceedings will be governed by national procedural rules. But, as the Factortame litigation demonstrates, Community law may require national courts to give remedies not available in a domestic context where the full effectiveness of Community law may be jeopardised without such remedy.[10]
The principle of the primacy of Union law would have been stated in an Article in the Constitutional Treaty but is not included in the Lisbon Treaty. However a Declaration (No 17) will draw attention to this “cornerstone principle” and the existing case-law of the ECJ.
4. DIRECT EFFECT
It is now a well established principle of Community law that provisions of the Treaty may produce direct effects and create individual rights which national courts must protect. In the famous Van Gend en Loos case, the Court of Justice spoke of Community law, independently of the legislation of the Member States, imposing obligations on individuals and also conferring rights upon them which become part of their legal heritage.[11] Though the Court has frequently referred to provisions of Community law being “directly applicable”, what is meant is that the provisions are capable of producing direct effects, that is, give rise to rights which individuals and firms can enforce in their national courts. The use of the term “directly applicable” is best restricted to describing the nature of regulations (and other instruments) which do not require to be reproduced in national law in order to be legally effective.
In Van Gend en Loos, the Court said that Article 25 TEC (which prohibits, as between Member States, customs duties on imports and exports and charges having equivalent effect):
“contains a clear and unconditional prohibition which is not a positive but a negative obligation. This obligation, moreover, is not qualified by any reservation on the part of the states which would make its implementation conditional upon a positive legislative measure enacted under national law. The very nature of this prohibition makes it ideally adapted to produce direct effects in the legal relationship between Member States and their subjects”.
A large number of Treaty Articles have been held to create direct effects. It may not matter that the Article expressly contemplates subordinate legislation to give effect to its provisions. The Defrenne case provides a good example.[12]
(i) Regulations and Decisions
It is clear that the doctrine of direct effects is not restricted to the Treaty and its Articles. It applies more widely in Community law. As mentioned above, one of the essential features of a regulation is that it “shall be binding in its entirety and directly applicable in all Member States” (Article 249 TEC ). The ECJ has had little hesitation in holding that they can be relied on by private parties in national courts. Decisions, though not being general measures (their scope may be restricted by reference to particular addressees), may also create direct effects. In Case 9/70,[13] the Court said:
“It would be incompatible with the binding effect attributed to decisions by Article [249] to exclude in principle the possibility that persons affected may invoke the obligation imposed by the decision. Particularly in cases where, for example, the Community authorities by means of a decision have imposed an obligation on a Member State or all the Member States to act in a certain way, the effectiveness (l’effet utile) of such a measure would be weakened if the nationals of that State could not invoke it in the courts and the national courts could not take it into consideration as part of Community law.”
The ECJ considered that, in this respect, there may be no difference between a provision in a decision and one in a regulation.
(ii) Directives
The ECJ has held that where a provision of a directive is unconditional and sufficiently clear and precise it may be relied upon by an individual against a Member State that has failed to transpose the directive into national law within the period specified in the directive. But such effects may only be asserted against the Member State or State bodies.[14] A directive may not of itself impose obligations on an individual and consequently a provision of a directive may not be relied upon as such against an individual. The Faccini Dori case shows this clearly.[15] In short, directives do not have horizontal direct effects.
But the absence of horizontal direct effects has been mitigated in two ways:
• First, the ECJ held in Von Colson that “national courts are required to interpret their national law in the light of the wording and purpose of the Directive”.[16] Further, as Marleasing indicates, the obligation on national courts to interpret national legislation in conformity with a directive (the duty of consistent interpretation) is not restricted to cases involving provisions of national law specifically intended to implement the directive. It applies to the interpretation of national law “whether the provisions in question were adopted before or after the directive”.[17] In that case, in the context of Spanish company law, a creditor was unable to invoke an express provision of that law (which would have enabled it to petition for the nullity of a Spanish company) because the ground for nullity being invoked was not one of those listed (exhaustively) in the First Company Law Directive which Spain should have implemented upon its accession to the Community. More recently,[18] the ECJ made clear that the national court must “do whatever lies within its jurisdiction, having regard to the whole body of rules of national law” to achieve an outcome consistent with the directive in question. However, the duty of consistent interpretation cannot, independently of national law, determine or aggravate liability in criminal law of persons acting in contravention of the directive.[19]
• Second, directives may produce incidental effects. There have been a number of cases where the Court has held that a private party may not benefit from the Member State’s failure to meet its obligations to implement or comply with the terms of a directive. See, for example, CIA Security v Signalson and Securitel,[20] where a party defending, in a libel action in the Belgian courts, its statement that an alarm system supplied by its competitor did not comply with domestic standards could not rely on the relevant Belgian technical requirements because they had not been duly notified to the Commission under Directive 83/189 and were, therefore, inapplicable.
A Member State cannot rely on the direct effect of Community law to escape responsibility for failure to implement its obligations, for example, to implement a directive on time. In Commission v Italy,[21] the ECJ observed that direct effect “is only a minimum guarantee and is not sufficient in itself to ensure the full and complete implementation of the Treaty”. Member States cannot, therefore, plead direct effect as a defence in infringement proceedings based on failure to implement a directive. Indeed, the Court has said that maintaining an inaccurate statute book may itself amount to an infringement of the Treaty.
(iii) International Agreements
Agreements concluded by the Community with Third States may also contain provisions having direct effects. Again, certain criteria have to be met. So, in Demirel, the ECJ held that a provision in an agreement concluded by the Community with a non-Member State must be regarded as “directly applicable” when “regard being had to its wording and the purpose and nature of the agreement itself, the provision contains a clear and precise obligation which is not subject, in its implementation or effects, to the adoption of any subsequent measure”.[22] At issue in that case was the rights of a Turkish national under the EC –Turkey Association Agreement to remain in Germany with her family. The Court has held that the GATT did not contain provisions giving rise to direct effects.[23]