Thursday, 7 August 2014

CJEU's rookie error- rejecting the direct effect of directives


Dear Readers,
My apologies for not posting recently, I have been snowed under with mini-pupillage applications. However I have some very interesting articles ready for publication which I will be releasing over the coming weeks.
Warning- the following article is very legally dense however it is written for someone with little or no legal knowledge so do not be put off if you are not educated in the law.
In this article I am going to consider the problem the CJEU faces in rejecting the horizontal direct effect of directives, why they made this decision and why it has been criticized. I will analyse the concepts of harmonious interpretation and widening the notion of the state as solutions to the problem that rejecting horizontal direct effect of directives raised and argue that neither are effective solutions. Finally I will conclude that both harmonious interpretation and widening the notion of the ‘state’ should be abolished as they are ineffective and create more problems than they solve.

The rejection of horizontal direct effect of directives, the rationale behind it and why it has been criticized

Horizontal direct effect is when EU law provisions are allowed to be enforced against an individual. In the Marshall case the ECJ ruled that directives are not horizontally directly effective because ‘according to article 189 of the ECC treaty the binding nature of a directive constitutes the basis of the possibility of relying on the directive before a national court exists only in relation to ‘each member state to which it is addressed’[1]

There are a few possible rationales for this decision, Advocate General Slynn argued in the Marshall[2] case that because directives were not required to be published until after the Maastricht treaty[3] all the previous directives were not easily accessible and so the transparency of EU law was reduced. However this problem has since been reduced by the introduction of article 29 TFEU[4] which requires the publication of directives.

There is also the argument that allowing horizontal direct effect of directives would have given rise to problems of legal certainty.[5] Perchal explains that it would be particularly problematic in criminal cases due to the possible consequences of an unjust decision namely imprisonment. [6]Finally it has been argued that horizontal direct effect of directives would erode the distinction between directives and regulations. [7]

The Marshall [8]reasoning has been criticized by academics, who explain article 288,[9] says nothing one way or the other about imposing individual obligations so surely it could include individual obligations[10]. Also it seems logical that given the decision in Defrenne[11] which said that treaties could be horizontally directly effective because of their aims and character then it follows that directives should be horizontally direct effect too. However, this is not necessarily true, Craig agrees with Advocate General Slynn and argues that had the ECJ used this logic they would have ‘blurred the distinction between directives and regulations’[12] and therefore many academics support the ECJ’s decision.

Harmonious interpretation- does it  solve the EU law effectiveness problem?

The requirement that national courts interpret national law in the light of objectives of relevant directives could make EU law more effective. This is known as harmonious interpretation and it was first proposed by the ECJ in the case of Von Colson[13]

Harmonious interpretation creates a more uniform application of law across the member states therefore making EU law more effective. This also creates more legal uniformity and so certainty across each members states individual legal systems. It has been criticized because there must be room for interpretation ‘as far as possible’[14] and the law must be interpreted ‘in so far as it has the discretion to do so under national law’[15]

Although the aim of harmonious interpretation is to create uniformity across member states it is unlikely that it will achieve this. It is inevitable that across the great number of member states, which indulge in a great variety of cultures, the EU directives will be interpreted very differently by every court in every member state.  Hall suggests that it could even lead to different courts implementing the same directive and getting a wide range effectiveness in their results[16]. This issue could be improved if every member state that struggles with an interpretation issue simply submits a question to the ECJ under the preliminary ruling procedure set out in article 267 TFEU. [17] However, if this happens the ECJ’s workload will increase further and statistics show that the ECJ is already under an increased workload. [18]This could lead to less effective EU law because the quality of the ECJ’s judgements will logically decrease as its judges are stretched to cover more cases and work longer hours. Therefore this is an impractical solution and does not solve the inevitable issue that member states interpret the same EU directives differently.

Another argument for harmonious interpretation is that this kind of interpretation technique already works in UK law. The interpretation under section 3 of the HRA[19] has a similar requirement and this is effective UK law. Kavanagh argues that whilst this is a current requirement for UK law it has caused a lot of concern regarding because it places a restraint on parliamentary sovereignty[20]

To evaluate, most of the criticism for harmonious interpretation comes from the fact it is arbitrary in nature and this may lead to a less federal Europe and bigger inconsistencies in the laws of the member states because each member state will inevitably interpret the law slightly differently. Whilst this problem could be solved using article 267 of the TFEU[21].  This would dramatically increase the workload for the ECJ and statistics show they are already seeing an increase in cases[22]. A similar interpretation technique is already being used under section 3 of the HRA[23] but due to the speculation of a repeal of the HRA[24] it would be an unwise move to continue to use harmonious interpretation in EU law. Our experience with section 3 of the HRA[25] supports the thesis that we should abolish harmonious interpretation.
               
Widening the notion of the ‘state’ - does it solve the EU law effectiveness problem?

The notion of the ‘state’ was widened in the Foster[26] case, the ECJ set out a non- exhaustive list of criteria which enable an institution or authority to become an ‘organ of the state’. Whilst this is a clear list of criteria there is still an issue of justice because you do not have to meet all of the requirements. Consequently a party may only meet one requirement and still have the same liability as a party that meets them all, this is unjust and also creates a legal certainty issue.

By widening the notion of the ‘state’ the ECJ enabled more effective application of EU law because the notion is broad and more inclusive. However this gives rise to the same problems as horizontal direct effect because some national authorities and businesses will be subject to the EU directive and others will not. This will create issues of competition within member states and will give private organizations an advantage over those organizations that are considered to be an ‘organ of the state’.

Foster in his book ‘Foster on EU law’[27]argued that widening the notion of the state does not get to the heart of the problem because it results in public sector employees getting more rights than those who work in the private sector. Consequently there is no longer uniformity between all the citizens of the EU and the system becomes biased to public sector workers as they get protected by EU directives. Also because the different member states all have different systems the rights vary between states too. This is a very strong argument and shows clearly how the idea of a wide notion of the ‘state’ is flawed, unjust and does not promote equality.

To evaluate, it is a strong criticism that the ECJ’s widening of the notion of the state makes the law too flexible because it will be different in member states. It gives rise to legal uncertainty and makes the law unfair because it favours some organizations over others and gives competitive advantage to those that are not organs of the state. Also organizations that are conform to the EU directives to the same extent as organizations that have only the most tenuous link to the state by perhaps meeting only one of the Foster[28] criteria.  

Conclusion

To conclude, the criticisms of harmonious interpretation and the wide notion of the state are justified. They create issues of legal certainty, transparency and EU law effectiveness. In this sense both ‘solutions’ to the problem created by not allowing horizontal direct effect of directives actually create more problems than they solve.



[1] Case 152/84, Marshall v. South-West Area Health Authority [1986] ECR 723 para 48
[2] Ibid
[3] Treaty on European Union (Maastricht Treaty).
[4] Treaty on European Union (Maastricht Treaty), Art 29
[5]  Case C-201/02 The Queen, on the application of Delena Wells v Secretary of State for Transport, Local Government and Regions [2004] ECR1-723 para 56
[6]  Prechal, 'Direct Effect, Indirect Effect, Supremacy and the Evolving Constitution of the European Union' in Catherine Barnard (ed), The Fundamentals of EU Revisited: Assessing the Impact of the Constitutional Debate (Oxford: Oxford University Press, 2007).p 48
[7] Paul Craig, Grainne De Burca,  EU law: Texts, cases and materials (fifth edition published 2011, Oxford University Press)  p 196
[8] Case 152/84, Marshall v. South-West Area Health Authority [1986] ECR 723
[9] Treaty on European Union (Maastricht Treaty), Art 288
[10] Paul Craig, Grainne De Burca,  EU law: Texts, cases and materials (fifth edition published 2011, Oxford University Press)  p 195
[11] Case 43/75, Defrenne v. SABENA [1976] ECR 455
[12] Paul Craig, Grainne De Burca,  EU law: Texts, cases and materials (fifth edition published 2011, Oxford University Press)  p 196
[13] Case 14/83, Von Colson [1984] ECR 1891
[14] Ibid
[15]Case C-106/89, Marleasing v. La Comercial [1990] ECR I-4135
[16] Melanie Hall QC, The obligation of Harmonious Interpretation, Tolley’s 2nd Annual VAT and EU Law Conference
[17] The Functioning of the European Union article 267
[19] Human Rights Act [1998] s3
[20] A. Kavanagh, ‘Unlocking the Human Rights Act: The "Radical" Approach to Section3(1) Revisited’ (2005) European Human Rights Law Review 259
[21] Treaty on European Union (Maastricht Treaty) Art 267
[22]http://curia.europa.eu/jcms/upload/docs/application/pdf/2012-03/ra2011_stat_cour_provisoire_en.pdf accessed on 15/10/13 at 15:43
[23] Human Rights Act [1998] s 3
[25] Human Rights Act [2998] s3
[26] Foster v British Gas [1990] 27 CMLRev 859
[27] Foster, Foster on EU law (First Published 2006, Oxford University Press) p180
[28] Foster v British Gas [1990] 27 CMLRev 859
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