Part I
Constitutional Foundations

5. European Law I: Nature—Direct Effect  

Introduction

Classic international law holds that each State can choose the relationship between its domestic law and international law. Two – constitutional – theories thereby exist: monism and dualism. Monist States make international law part of their domestic legal order. International law will here directly apply as if it were domestic law. By contrast, dualist States consider international law separate from domestic law. International law is viewed as the law between States; national law is the law within a State. While international treaties are thus binding – externally – ‘on’ States, they cannot be binding ‘in’ States. International law needs to be ‘transposed’ or ‘incorporated’ into domestic law and may, at most, have indirect effects through the medium of national law. The dualist theory is based on a basic division of labour: international institutions apply international law, while national institutions apply national law. For an illustration of the two theories, see Figure 3.1.

Did the European Union leave the choice between monism and dualism to its Member States? For dualist States, all European law would need to be ‘incorporated’ into national law before it could have domestic effects. Here, there is no direct applicability of European law, as all European norms are mediated through national law and individuals will consequently never come into direct contact with European law. Where a Member State violates European law, this breach can only be established and remedied at the European level. The European Treaties indeed contained such an ‘international’ remedial machinery against recalcitrant Member States in the form of enforcement actions before the Court of Justice. Another Member State or the Commission – but not individuals – could here bring an action to enforce their rights.

Did this not signal that the European Treaties were international treaties that tolerated the dualist approach? Not necessarily, for the Treaties also contained strong signals against the ‘ordinary’ international law reading. Not only was the Union entitled to adopt legal acts that were to be ‘directly applicable in all Member States’; from the very beginning, the Treaties also contained a judicial mechanism that envisaged the direct application of European law by the national courts. But regardless of the intention of the founding Member States, the European Court discarded any dualist reading of Union law in the most important case of European law: Van Gend en Loos. The Court here cut the umbilical cord with classic international law by insisting that the European legal order was a ‘new legal order’. In the famous words of the Court:
The objective of the E[U] Treaty, which is to establish a common market, the functioning of which is of direct concern to interested parties in the [Union], implies that this Treaty is more than an agreement which merely creates mutual obligations between the contracting States. This view is confirmed by the preamble to the Treaty which refers not only to the governments but to peoples. It is also confirmed more specifically by the establishment of institutions endowed with sovereign rights, the exercise of which affects Member States and also their citizens. Furthermore, it must be noted that the nations of the States brought together in the [Union] are called upon to cooperate in the functioning of this [Union] through the intermediary of the European Parliament and the Economic and Social Committee. In addition the task assigned to the Court of Justice under Article [267 TFEU], the object of which is to secure uniform interpretation of the Treaty by national courts and tribunals, confirms that the States have acknowledged that [European] law has an authority which can be invoked by their nationals before those courts and tribunals. The conclusion to be drawn from this is that the [Union] constitutes a new legal order of international law for the benefit of which the States have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only Member States but also their nationals. Independently of the legislation of Member States, [European] law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage.All judicial arguments here marshalled to justify a monistic reading of European law are debatable. But with a stroke of the pen, the Court confirmed the independence of the European legal order from classic international law. Unlike ordinary international law, the European Treaties were more than agreements creating mutual obligations between States. European law was to be enforced in national courts – despite the parallel existence of an international enforcement machinery. Individuals were subjects of European law and individual rights and obligations could consequently derive directly from European law.

Importantly, all European law is directly applicable law, and the European Union would therefore be able to itself determine the effect and nature of all European law within the national legal orders. The direct applicability of European law indeed allowed the Union centrally to develop two foundational doctrines of the European legal order: the doctrine of direct effect and the doctrine of supremacy. The present chapter deals with the doctrine of direct effect; Chapter 4 deals with the doctrine of supremacy.

What is the doctrine of direct effect? It is vital to understand that the Court’s decision in favour of a monistic relationship between the European and the national legal orders did not mean that all European law would be directly effective, that is: enforceable by national courts or the national executive (see Figure 3.2). To be enforceable, a norm must be ‘justiciable’, that is: it must be capable of being applied by a public authority in a specific case.  But not all legal norms have this quality. For example, where a European norm requires Member States to establish a public fund to guarantee unpaid wages for insolvent private companies, yet leaves a wide margin of discretion to the Member States on how to achieve that end, this norm is not intended to have direct effects in a specific situation. While it binds the national legislator, the norm is not self-executing. The concept of direct applicability is thus wider than the concept of direct effect. Whereas the former refers to the internal effect of a European norm withinnational legal orders, the latter refers to the individual effect of a norm in specific cases. Direct effect requires direct applicability, but not the other way around. However, the direct applicability of a norm only makes its direct effect possible.

After all these terminological preliminaries, when will European law have direct effect? And are there different types of direct effect? This chapter explores the doctrine of direct effect across the various sources of European law. It will start with the direct effect of the European Treaties in section 1. The European Treaties, as primarily law, also envisage the adoption of European secondary law. This secondary law may take various forms. These forms are defined in Article 288 TFEU, which defines the Union’s legal instruments and states:
[1] To exercise the Union’s competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions.
[2] A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.
[3] 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.
[4] A decision shall be binding in its entirety. A decision which specifies those to whom it is addressed shall be binding only on them.
[5] Recommendations and opinions shall have no binding force.The provision acknowledges three binding legal instruments – regulations, directives and decisions – and two non-binding instruments. Why was there a need for three distinct binding instruments? The answer seems to lie in their specific – direct and indirect – effects in the national legal orders. While regulations and decisions were considered Union acts that directly establish legal norms (section 2), directives appeared to be designed as indirect forms of legislation (section 3). Sadly, Article 288 TFEU is incomplete, for it only mentions the Union’s internal instruments. A fourth binding instrument indeed needs to be ‘read into’ the list: international agreements. Union agreements are not only binding upon the institutions of the Union, but also ‘on its Member States’. Did this mean that international agreements were an indirect form of external legislation, or could they be binding ‘in’ the Member States? Section 4 will analyse the doctrine of direct effects for international agreements.

The extent to which the Union uses these various legal instruments can be seen in Table 3.1. It shows that – from a comparative point of view – regulations and decisions are the clearly dominating instruments of the Union. Directives, by contrast, represent a tiny fraction of the legal output of the Union today – an output that is even overshadowed by the number of international agreements yearly concluded by the Union with third States.

Primary Union Law: The Effect of the Treaties

  1. Direct Effect: From Strict to Lenient Test
  2. Dimensions: Vertical and Horizontal Direct Effect

Direct Union Law: Regulations and Decisions

  1. Regulations: The ‘Legislative’ Instrument
    1. General Application in All Member States
    2. Direct Application and Direct Effect
  2. Decisions: The Executive Instrument
    1. Specifically Addressed Decisions
    2. Non-addressed Decisions

Indirect Union Law: Directives

  1. Direct Effect and Directives: Conditions and Limits
    1. The No-horizontal-direct-effect Rule
    2. The Limitation to the Rule: The Wide Definition of State (Actions)
    3. The Exception to the Rule: Incidental Horizontal Direct Effect
  2. Indirect Effects through National and (Primary) European Law
    1. The Doctrine of Consistent Interpretation of National Law
    2. Indirect Effects through the Medium European Law

External Union Law: International Arrangements

  1. The Conditions of Direct Effect
  2. The Dimensions of Direct Effect
  1. See Art. VI, Clause 2 of the United States Constitution (emphasis added): ‘[A]ll Treaties made, or which shall be made, under the Authority of the United States, shall be the supremeLaw of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.’ ↩
  2. Under international law, the choice between monism and dualism is a ‘national’ choice. Thus, even where a State chooses the monist approach (like the United States), monism in this sense only means that international norms are constitutionally recognised as an autonomous legal source of domestic law. Dualism, by contrast, means that international norms will not automatically, that is: through a constitutional incorporation, become part of the national legal order. Each international treaty demands a separate legislative act  incorporating’ the international norm into domestic law. The difference between monism and dualism thus boils down to whether international law is incorporated via the constitution, as in the United States; or whether international treaties need to be validated by a  pecial parliamentary command, as in the United Kingdom. The idea that monism means that States have no choice but to apply international law is not accepted in international law. ↩
  3. For this dualist technique, see (amended) European Communities Act 1972 as well as the European Union Act 2011 – both discussed in the next chapter. ↩
  4. On this point, see Chapter 10, section 3(a). ↩
  5. Art. 288(2) TFEU. ↩
  6. Ibid., Art. 267. On the provision, see Chapter 10, section 4. ↩
  7. Case 26/62, Van Gend en Loos v. Netherlands Inland Revenue Administration [1963] ECR (English Special Edition) 1. ↩
  8. Ibid., 12 (emphasis added). ↩
  9. For a critical overview, see T. Arnull, The European Union and Its Court of Justice (Oxford University Press, 2006), 168ff. ↩
  10. Case 26/62, Van Gend en Loos, 13. On the ‘centralised’ (international) enforcement methods within the EU legal order generally, see Chapter 10. ↩
  11. The direct applicability of the European Treaties is, at first sight, harder to justify, as many legal orders seem to ‘transpose’ them into national law. However, from a European constitutional perspective, the national ratification of a new draft (!) EU Treaty is not transposing EU primary law into national law. Indeed, after Van Gend en Loos, a fundamental distinction must be made between the individual national decision to ratify the (amendment to the) EU Treaties, and their coming into effect once all (!) the Member States have ratified them. For it is, importantly, solely the collective decision of all the Member States to agree to Treaty (amendments) that establishes the validity of the EU Treaties. Not the individual (national) ratification act but the collectivity of the Member States ratifying the Treaties underpins the validity of EU primary law; and, once that primary law exists, it is directly applicable in all the national legal orders. With the Lisbon Treaty, the distinction between the validity of EU primary law and national ratification has indeed gained further strength by means of the introduction of the simplified revision procedures set out in Art. 48(7) TEU. According to the latter, the European Union may – admittedly, for a very small part of primary law – change its Treaties if backed up by the tacit consent of national parliaments. This route allows for constitutional change through parliamentary inaction. And the validity and direct applicability of primary Union law is here clearly independent of any national ratification or transposition. ↩
  12. On the application of the doctrine of direct effect to the national executive branch, see Conclusion below. ↩
  13. In this sense direct applicability is a ‘federal’ question as it relates to the effect of a ‘foreign’ norm in a domestic legal system, whereas direct effect is a ‘separation-of-powers’ question as it relates to the issue whether a norm is addressed to the legislature or the executive and judiciary. ↩
  14. The institutional practice of Union decision-making has created a number of ‘atypical’ acts. For a discussion of atypical acts, see J. Klabbers, ‘Informal Instruments before the European Court of Justice’ (1994) 31 CML Rev. 997. But see also now: Art. 296 TFEU – third indent:
    ‘When considering draft legislative acts, the European Parliament and the Council shall refrain from adopting acts not provided for by the relevant legislative procedure in the area in question.’ ↩
  15. Logic would dictate that non-binding acts are not binding. Yet, the European Court has accepted the possibility of their having some ‘indirect’ legal effect. In Case 322/88, Grimaldi v. Fonds des maladies professionelles [1989] ECR 4407, para. 18, the Court held that recommendations ‘cannot be regarded as having no legal effect’ as they ‘supplement binding [European] provisions’. ‘Non-binding’ Union acts may, therefore, have legal ‘side effects’. For an interesting overview, see L. Senden, Soft Law in European Community Law: Its Relationship to Legislation (Hart, 2004). ↩
  16. Art. 216(2) TFEU. ↩
  17. What this section will however not do is to explore the legal effects of decisions adopted by international organisations or bodies created by international agreements signed by the Union. The most prominent example here are so-called EEA decisions, that is: decisions adopted by the joint committee established by the EEA Agreement between the European Union and the EFTA States. For a brief analysis of the EEA arrangements, see (online) Chapter 18B, section 4(b/bb). ↩