Eu Law Essay Direct Effect Theory

Homewood: EU Law Concentrate 4e

Essay question

Trace the development of the principles of direct effect, indirect effect, and state liability by the Court of Justice, evaluating their significance for individual claimants.

Your answer should address direct effect, indirect effect, and state liability in turn, ensuring relevant analysis and evaluation as you go along. As all three doctrines were created by the Court of Justice, the case law will feature strongly, as the question itself indicates. You should begin by reference to the doctrine of supremacy, which forms the basis of the three principles.

Supremacy of EU law

  • Sovereignty of the European Union (previously Community) legal order: 'The Community constitutes a new legal order in international law, for whose benefits the states have limited their sovereign rights, albeit within limited fields . . .' (Van Gend) '. . . the EEC Treaty has created its own legal system which became an integral part of the legal systems of the Member States . . .' (CostavENEL).
  • The corollary of EU sovereignty is the supremacy of EU law: EU law takes precedence over national law (Costa vENEL, Internationale Handelsgesellschaft, Simmenthal, Factortame II).

Direct effect

  • Meaning of 'direct effect: set out a definition – if a provision of EU law is directly effective, it can be invoked by individuals in the national court.
  • The principle is not contained in the Treaty. Trace its development by the Court of Justice, discussing Treaty articles, regulations, directives.

Treaty articles

  • Van Gend: Creation of the principle. Treaty articles capable of direct effect. The Treaty is not only an agreement creating obligations between Member States. EU law imposes obligations upon individuals and confers on them legal rights.
  • Direct effect of Treaty articles: subject to the conditions first formulated in Van Gend (measure must be sufficiently clear, precise, and unconditional and its implementation must not be dependent upon any implementing measure), then subsequently reworked and loosened, for instance in Defrenne (the measure must be sufficiently clear, precise, and unconditional).
  • Van Gend: Treaty articles capable of vertical direct effect (explain) but the question of their horizontal direct effect (explain) was left unresolved.
  • Defrenne: Treaty articles can be invoked horizontally.
  • Since Van Gend and Defrenne: numerous Treaty articles held to be vertically and horizontally directly effective, including the internal market provisions.
  • Significance for individuals: ability to invoke, in the national court, Treaty rights against the state and other individuals.


  • Regulations: capable of vertical and horizontal direct effect, subject to the same conditions as are applied to Treaty articles (Politi, Leonesio).


  • Article 288 TFEU: directives must be implemented into national law.
  • Originally not thought to be capable of direct effect: not intended to operate as law within national systems, since that is the role envisaged for the relevant national implementing measures; addressed to Member States and do not appear to affect individuals directly; seen as giving Member States a broad discretion in implementation, being binding only as to the result to be achieved, and therefore considered to be insufficiently precise to fulfil the Van Gend criteria.
  • Van Duyn: directives can be directly effective, provided clear, precise, and unconditional.
  • Ratti: additionally, the implementation deadline must have passed. Rationale: it would be unfair to permit a directive to be invoked against a Member State until its obligation to implement had become absolute. By the same token, it would be unfair to allow a Member State to rely on its failure to implement a directive to escape obligations arising under it.
  • Van Duyn did not address the possible horizontal direct effect of directives.
  • Marshall: directives can only be invoked vertically against the state or a public authority, but not horizontally. Reiterated in Faccini Dori.
  • Court of Justice's refusal to permit directives to be invoked horizontally frequently criticized as anomalous and unfair. In the employment context, for instance, individuals employed by the state or a public body can invoke rights under a directive against their employer, whilst those working for private employers cannot.
  • In response, Court of Justice refers to the Community (now EU) legal order: rights under directives must be enshrined in national implementing measures, upon which claimants can rely in national courts. Only Member States, not individuals, should be held accountable for a state's failure to implement directives.
  • Mitigation of this approach: indirect effect and state liability and broad interpretation of 'public body'.
  • Public body: Foster '. . . a body, whatever its legal form, which has been made responsible, pursuant to a measure adopted by the State, for providing a public service under the control of the state and has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals'.
  • Application of Foster test (Becker, Fratelli Costanzo, Johnston).
  • Doctrines of direct effect and supremacy immensely significant. Require national courts to apply EU law at the suit of individuals in priority over any conflicting provisions of national law. National courts must disapply national measures that conflict with directly effective provisions of EU law.
  • Direct effect is especially important where a Member State has failed to meet its obligation to implement EU law or where implementation is partial or defective. Direct effect provides a mechanism for the enforcement of individuals' EU rights but also an additional means of supervision of Member States' compliance with EU obligations.

Indirect effect

  • Especially significant: overcoming the shortcomings of direct effect in 'horizontal' situations or where a provision is not sufficiently clear.
  • Von Colson: the principle established. Set out the definition of indirect effect.
  • Applies to pre-dating and post-dating legislation – Marleasing, Webb v EMO Air Cargo
  • Marleasing: all national law must be interpreted in line with Union law, but only 'so far as possible'. It may not always be possible (Wagner Miret) so the principle has its limitations.

State liability in damages

  • A means to overcome the limitations of direct and indirect effect.
  • Francovich: damages for loss incurred as a result of a state's failure to implement a directive. Conditions for liability: the directive entails the grant of rights to individuals; it is possible to identify the content of those rights; a causal link between the state's failure and the loss.
  • Factortame III: damages for other kinds of breach. Set out the conditions.
  • ‘Sufficiently serious breach’ - ‘Manifest and grave disregard of the limits on its discretion’ – factors to be considered (see Para 56 of Factortame III) – clarity, excusable etc.
  • Application of Factortame III: legislation infringing EU law (Factortame III); incorrect implementation of a directive (BT); administrative breaches (Hedley Lomas); incorrect interpretation of EU law by a national court of last instance (Köbler).


Direct effect, indirect effect and state liability all play a crucially important role in the protection of individuals' EU law rights in national courts.

QUESTION:‘Recent case law has left the doctrine of direct effect with uncertain boundaries and dubious justifications with regards to where those boundaries should lie. The European Court of Justice has failed to establish a principled means to determine when and why Directives may exert an impact on the position of private parties in litigation before national courts.’ Discuss.



A key feature of the European Integration project is the perceived remoteness and aloofness of the EU institutions by the European citizenry. This alleged democratic deficit of the EU is caused by a few factors include the wholly appointed and largely unaccountable nature of the officials making decisions and the absurdity of some of the publicized EU decisions in the past.

However, the development of the doctrine of Direct Effect was an early endearing position for the EU project. Direct Effect simply put; means the capacity of any EU citizen to enforce rights conferred on him/her by a provision of European Law. This doctrine was substantively developed from the 1963 Van Gend en Loos decision, (Case 26/62); although the issues surrounding the concept have been flagged since 1956 relating to the ECSC Treaty. In the Van Gend case, the court held that:

The wording of Article 12 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 states which would make its implementation conditional upon a positive legislation measure enacted under national law. They are very nature of this prohibition makes it ideally adapted to produce direct effects in the legal relationship between Member States and their subjects.

The main contention in this case was whether Article 12 of EC Treaty was directly effective. There are two types of Direct effects. First is the Vertical Direct Effect, which relates to relationship between a citizen and an EU member state (or agents of the state). That is; an EU law is vertically effective, if it is enforceable against the state. Secondly there is the Horizontal Direct Effect with relates to EU laws that are enforceable against private individuals (corporations and individuals).

The direct effects doctrine hinges on the principle of the supremacy of EU law over national law. As such; this principle will make no sense unless citizens can enforce EU laws in national courts. This enforceability of EU legal rights in national law is the basis of the doctrine of Direct effect.

In Van Gend en Loos, the European Court of Justice (ECJ), held that Van Gend could enforce Article 30 (formerly Article 12, then 25)  against the Dutch government based on three main criteria:

  • That the Article was a clear and unconditional
  • That it imposes duty on the EU State without discretion or exception given
  • That it produced direct effects between citizens and EU member States.

However, UE laws come in four main instruments. These are:

  • Treaty Articles – These can be both vertically and horizontally effective.
  • Regulations – These can be both vertically and horizontally effective.
  • Directives and – These are vertically directive only.
  • Decisions –  These are addressed to particular parties, so they are enforceable against those to home it is addressed.

A large part of EU laws comes in form of Directives. Directives are instructions to a EU state to introduce a law nationally. Hence why they are only vertically effective. The European Court of Justice (ECJ) in Van Gend case held that Directives have only vertical effects. This position many believed was due to the ECJ taking account of potential reaction from the EU Member states; who were not keen on the direct effects doctrine in the first place. But as years go by, it became unsustainable to maintain this position where the largest legal instrument the EU has (Directives), cannot be enforced against private individuals or companies. Hence the ECJ began expanding the original narrow scope of the direct effects application.

Over the years after the Van Gend case, the ECJ has through cases adjudicated upon clarified the key requirements for a Directive to become directly effective.  In Case 43/75 Defrenne v Sabena (No. 2), the ECJ posited that Directives must give Clear and Identifiable rights to individual EU citizens. Then, in Case 148/78, Ratti. the ECJ stated that the time limit for an EU State to implement a Directive must have passed, before it can become directly effective. And finally the ECJ decided that Directives can be enforced only against the State and not individuals in Case 152/84 Marshall.

With pressure mounting on the ECJ to change its position on the non-horizontal direct effectiveness of Directives, more cases emerged that showed the court trimming on the edges of its agreed position. For instance to increase the scope of the effects of Directives; the ECJ  expanded the definition of what a “State” is. Originally State simply mean an EU Member government. But in Case 188/89 Foster v British Gas [1990] ECR I-3313; the ECJ said a body will be classed as a State if:

  • It is subject to the control of the State
  • It has special powers given to it by the State.

Later in the case NUT v Governing Body of St Mary’s Church of England (Aided) Junior School [1997] 3 CMLR 630; the court held that the definition of “the State” should be a “Broad one”; thus extending the direct effects to schools and educational establishments. Spectacularly, in Case 14/83, Von Colson and Kaman; the court also decided that national courts are part of the “State”; hence they are under obligation to interpret national law in line  with EU law.  This could mean that individuals could enforce through national courts EU Directives against other individuals.

This development appears to resolve the difficulty created by the earlier limits of direct effects of Directives; hence this is known as the doctrine of Indirect effects. It is however important that national law exists that National courts can interpret in the first place; as noted by the court in  Case 106/89 Marleasing. The UK court affirmed this position in Litster v Forth Dry Dock [1989] 2 WLR 634.

It is also now possible for  a State to be sued for non implementation of a EU Directive or law. This principle of State Liability was established firmly in Case C-6&9/90 Francovich v Italy [1991] ECR I-5357. As customary, the ECJ again imposed three conditions that must be met for state liability to be established.  These are that:

  • A Directive gives rights to individual citizens
  • These rights are clearly stated in the words of the Directive
  • A causal link is established between the state’s failure to implement a Directive and the damage for which a redress is sought.

This principle has now been applied to all forms of EU law in sufficiently serious cases as noted in Case C-46/93 Brasserie du Pecheur v Germany. Several difficulties have arisen in the past when States have failed to implement Directives, causing individuals not being able to get remedies. This incongruity is the reason why the split created by the court between public and private sectors on the vertical effects of Directives look unfair. This is due to the fact that those in the public sector can claim to be suing “an emanation” of the State as established by the Foster v British Gas case; but those who may want to enforce Directives against the private sector cannot do so. In post Lisbon, the European Commission can push for a fine to be imposed the first time a State is brought to the ECJ for non-compliance with EU Law.

So from the foregoing; it is clear that the ECJ has failed to establish a principled means for Directives to have Horizontal effects. There are several ways the court have tried to mitigate the effect of this anomaly; either through Indirect effects or State Liability principles. These make the EU legal framework unnecessarily complex and unfair in this area. There are many that believe some of the above scenario stems from the ECJ unwillingness to reverse itself after the Van Gend case. Regardless, I am hopeful that clarity and certainty will be put in place in the near future.



  1. Case 26/62 Van Gend en Loos.
  2. Case 11/70 Internationale Handelsgesellschaft GmbH.
  3. Case 106/77 Simmenthal SpA.
  4. Case 27/67 Firma Fink-Frucht GmbH.
  5. Case 148/78, Ratti.
  6. Case 152/84, Marshal.
  7. Case 14/83, Von Colson and Kaman.
  8. Case C-106/89, Marleasing.
  9. CRAIG, Paul & DE BÚRCA, Gráinne, EU LAW. Text, Cases, and materials. Oxford University Press, 2003, Third Edition
  10. HARTLEY, Trevor C., The Foundations of European Community Law, Oxford University Press, 1998, Fourth Fdition
  11. ARNULL, Anthony, The European Union and Its Court of Justice, Oxford University EC Law Library, 2006, Second Edition
  12. PRECHAL, S., Does Direct Effect Still Matter?, 37 CML Rev. 1047-1069, 2000
  13. WINTER, Direct Applicability and Direct Effect-Two Distinct and Different Concepts in Community Law, (1972), CMLR 425
  14. CRAIG, Paul, Directives: Direct Effect, Indirect Effect and the Construction of National Legislation, 22 EUR. L. REV. 519, 519 (1997)
  15. CURTIN, Directives: the Effectiveness of Judicial Protection of Individual Rights, (1990), 27 CMLR,
  16. OJANEN,t.,  The Changing Concept of Direct Effect of European Community Law, ERPL/REDP, vol.12, no.4, winter/hiver 2000


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