When discussing on the issues of indirect effect, we must
define what is meant by direct effect. Direct effect refers to which European
Union (EU) law confers enforceable rights and obligations which can form the
basis of legal proceedings in the national courts of the Member States (MS).1 Direct
effect was first applied in the case of van
Gend en Loos2 where the Court of Justice of the
European Union (CJEU) specified three elements that must be satisfied in order
to establish direct effect of primary EU law. The three elements are that the
provision must be clear and unambiguous, sufficiently precise and
unconditional. In relation to
directives, Article 288 Treaty on the Functioning of the EU (TFEU) states that
a directive ‘shall be binding as to the result to be achieved upon each Member
State (MS) to which it was addressed, but shall leave to the national
authorities the choice of form and methods.”3
Meaning that when a union enact a directive, it is binding on MS as a result
for it to be achieved, but it is left to the MS to decide on how the result is
achieved as the end result is already prescribed but the method on how is not
The case of Becker4
highlighted that if a directive has not been transposed or transposed
accordingly by the MS by the prescribed timeframe, the provision in that
directive, which are ‘unconditional and sufficiently precise’5
that satisfies the criteria of the direct effect can create rights for the
individual. Furthermore, the Van Duyn6 case allowed directives to have direct
effect. This case concerns a EU national who was trying to enter into UK to
work for the Church of Scientology, but was refused entry by the Home Office
and because of this, she relied on a provision of Directive 64/221 where Art 3
of the directive states that any decisions by MS on whether or not another EU
national should be allowed in to the state had to be based exclusively on the
personal conduct of the individual concerned. Van Duyn argued that the decision
to deny her entry had not been based exclusively on her personal conduct, but
had been based on the fact that she was associated with the Church of
Scientology. The courts confirmed that the UK was entitled to deny her entry as
the UK was entitled to take into account that she was associated with
Scientology, where the UK government saw as ‘socially harmful’, even though it
was not seen as unlawful. However, it has been highlighted by the court a few
years after the decision of the Van Duyn7 case that a MS are not allowed to deny
someone entry for belonging to a group that is not illegal in their own
country. Ultimately, the key point established from this case is that
directives can have direct effect. Provision in the directive, which satisfies
the criteria of direct effect creates individual rights, as shown in the Van Duyn8 case, which national courts must
The case of Ratti9 highlighted the rationale for
directives to have direct effect. In order for a directive to have direct
effect, ‘it is only at the end of the prescribed period and in the event of the
MS’s default that the Directive will be able to have the effect’.10
Furthermore, the court also stated that directives are intended to be binding
on MS albeit as to the prescribed result to be achieved. If direct effect was
prohibited from directives, or prevent provisions in directives to confer enforceable
rights on individuals, which national courts must uphold, it would weaken the
useful effect of a directive. In addition, the case of Faccini Dori11
highlighted that directive can only have vertical direct effect (VDE),
where it is only addressed to the state or public bodies of MS. This was
highlighted in the Faccini Dori12
case where the courts confirmed that they could not rely on direct effect
to establish a right of cancellation as she was seeking to rely on directive as
against another private party. This is known as horizontal direct effect (HDE).
The court went on to say if this directive in question allowed HDE, it would
have been blurring the distinction created in the treaty between regulation and
directives, therefore refusing to give HDE to their provisions.
When discussing on the issues on indirect effect we must
define what is meant by this. Indirect effect is the interpretation of national
law in national courts alongside an unimplemented legislative act of the EU.
This was shown in the Silhouette13
case where A-G Jacob highlighted the doctrine of indirect effect where he
stated that ‘the national courts
are under a duty to ensure, wherever possible, that the result prescribed by
the directive is attained.’14
This was illustrated in the Von Colson15
case where it is for the national court to interpret and apply the
legislation adopted for implementation of the directives in conformity with the
requirements of union law, in so far it has discretion to do so under domestic
law. This means that the court has a duty of consistent interpretation, so that
when a national court is interpreting and applying national law, it has a duty
so far as possible to interpret that national law consistently with the relevant
directives. This was also mentioned in the Dominguez16
case where the Court of Justice stated that there is an obligation to
interpret national law in conformity with EU law as it was built within the
system of the Treaty on the functioning of the European union to ensure that
within their jurisdiction, MS must ensure that there is full effectiveness of
EU law when handling and determining disputes before them.17
case was also very important when
discussing indirect effect as it furthered the doctrine of indirect effect to
where the directive has not been implemented at all. The court held that the
doctrine of indirect effect applies to national legislation that was not
adopted to give effect to a directive, plus even national law adopted prior it
had been enacted prior to the adoption of the directive. Adding to this, this
case involves the litigation of two private parties, making it a horizontal
litigation, there was still a duty on the national court so far as possible to
interpret Spanish law consistently with the relevant directive.
to whether indirect effect provides an adequate solution to the Union not
having HDE, through case law, the ECJ has developed loopholes in allowing
directives to have direct effect when the individual concerned is involved in a
dispute between two private parties, making indirect effect an additional
adequate solution to directives not being able to have HDE. An example of the
is incidental horizontal effect. This can be illustrated in the case of CIA Security19
where the case involved two private parties where the claimant accuses CIA of
marketing alarm systems that did not comply with the requirements of Belgian
law. CIA claimed that they had libelled it and that they are guilty of unfair trading
practices. The Belgian law that they accused CIA of breaching had not been
notified to the European Commission, as required in Art 8 of the Technical
Standards Directive as it was important that it was adopted by the Union to
help ensure the proper function of the internal market. The court said that if MS
could simply enact and apply their own technical standards, MS could
effectively be discriminating other companies in their favour of benefitting
their own manufacturers, resulting in unfair trading practices. Therefore, with
the failure to notify the Commission of the law that CIA have breached, it
rendered the claim against CIA groundless. Ultimately, gathering from this
case, it can be said that the courts finally shed light on directives having HDE
as the case involves two private parties where, incidentally, one benefitted
and the other lost. However, it has pointed out that the article concerning
this case was on the one hand, conferring rights on CIA, or, imposing
obligations on the claimant, meaning it is not an example of HDE, but
incidental horizontal effect. This was then later explained by the A-G Saggio
in Oceano Grupo20
where he introduced something that is similar to HDE known as the ‘exclusionary
effect’ where he states, ‘in order to be able to achieve its results, this ‘exclusionary’
effect must occur whenever the national rule comes into consideration for the purpose
of resolving a dispute, irrespective of the public or private status of the
This reinforces the point of how individuals disputing between two private
parties can somewhat rely on doctrines that are similar to HDE, such as
incidental horizontal effect, to resolve their issues.
limits to indirect effect which can leave to question whether it is an adequate
solution to directives not having HDE. One of the limits of indirect effect is
that there is duty to interpret national law consistently with union law, it presupposes
that there is national law to interpret. The second limitation of indirect
effect is that it is not an absolute duty to achieve consistency as it states
for the MS to interpret national law ‘so far as it is possible to do so’, which
means that it would be left to MS on whether they should read the domestic law
in light with EU law. However, some may argue that in the case of Marleasing,22
it has been said to have read national law ‘as far as possible’ meaning that
the directive should only be read if it is consistent with the national law. Some
may disagree that with the language used, it can be determined that the courts have
an absolute obligation to interpret, making Marleasing23
a questionable doctrine to follow. Another limitation of indirect effect is
that a directive cannot have indirect effect in a criminal context where if the
effect would be to make the accused guilty where he otherwise would be
acquitted, or aggravate the individual’s situation, then indirect effect is not
applicable. This was highlighted in the Arcaro24
case where the court states that MS who are in default cannot rely on that
default to prosecute that individual for breach of that very same directive, as
in the Arcaro25
case, the Italian authority seek to rely on a directive that has not been implemented,
to prosecute Arcaro, in which it should have been transposed. The final
limitation that I will be discussing relates to what has been said in the Pupino26
where ‘the principle of interpretation in conformity with EU law cannot serve
as the basis for an interpretation of national law, contra legem.’27
This means that if the national law is in conflict with the national law that
is being interpreted, therefore highlighting the fact that the court cannot
state liability, this was first established in the case of Francovich.28
This case concerns the Insolvency Fund Directive where under that directive, MS
are obliged to create a fund whereby employees, who became insolvent could be
paid. However, Italy had not transposed the Insolvency Fund Directive into Italian
law, meaning there was no fund or institution created for the claimant to pay him
when he became insolvent. The key principle that was declared by the court in
this case was that ‘it is a principle of Community law that the MS are obliged
to make good loss and damage caused to individuals by breach of Community law
for which they can be held responsible.’29
This stemmed from the loyalty clause set out in Art 4(3) TEU30
and the principle of effective judicial protection which sets out the doctrine
of state liability. In addition, there are three conditions that need to be met
for state liability to be applied. The first condition is that the rule of EU
law in question must be intended to confer rights on individuals, the breach of
that rule must be deemed as sufficiently serious and finally, there must be a
direct causal link between the MS’s breach and the individual’s loss or damage.31
In regard to
whether state liability is an effective solution to directives not HDE, I believe
that it provides an option that individuals can rely on when all other options
falls. For example, in the Association de
case, it was stated that both direct effect and indirect effect was not
applicable in this case as the dispute was between two private parties and that
the relevant provisions of French law could not be interpreted in conformity
with the Directive. However, if a party was injured as a result of national law
not being consistent with EU law, they can rely on state liability, established
to receive any compensation or remuneration for the loss caused by MS. This
illustrates how state liability can be an alternative solution for when direct
and indirect effect are not applicable. However, it can be argued that the
doctrine of state liability may bring on far-reaching implications for the
enforcement of EU labour law,34
as directives such as health and safety at work or equal treatment of women and
men can be seen as a fertile field to explore the scope of state liability.35
A conditions that must be satisfied to in order to seek state liability is that
there must be a sufficient serious breach where this requirement for this
serious violation ‘may leave many injured’36
for it to be a sufficient serious breach. With this in mind, courts could
possibly implement a directive incorrectly and yet will not be liable for state
liability as it would not be deemed as ‘grave’. This shows how narrow the
doctrine of state liability is as it does not give a wide discretion, only for
there to be a serious breach for it to be considered a state liability.
conclusion, I would say that both indirect effect and state liability, to an
extent, provides an adequate solution to Directives not having HDE as indirect
effect still has limitations that prevent those from succeeding and with state
liability, I feel as if it allows an individual to seek compensation from the
MS due to their failure to comply with the implementation of the directive. However,
looking at the case of Francovich,37
it can be said that the facts of the case can be very extreme to where present
cases may be distinguished. Furthermore, to establish state liability, there
are conditions that have to be met. This means that if the court cannot
determine that the breach was sufficiently serious, then those breaches may
still cause damage or injury to those affected by the breach. Therefore, I
believe both indirect effect and State Liability provides a solution to a
Eaton, ‘Direct Effect’, Insight (29th June 2015).
van Gend en Loos v Administratie Der Belastingen 1963 ECR 1.
288 TFEU 2007 OJ 1 C 326/1.
Becker 1982 ECR 53.
5 ibid, (para 25).
Van Duyn v Home Office 1974 ECR 1337.
Van Duyn v Home Office 1974 ECR 1337.
Pubblico Ministero v Ratti 1979 ECR 1629.
10 ibid, (para 43).
Faccini Dori, 1994 ECR I-03325.
Silhouette 1998 ECR I-4822.
Jacobs in C-355/96 Silhouette 1998 ECR I-4822 (para 68).
von Colson 1984 ECR 1891.
Dominguez 2012, unreported.
17 ibid, (para 24).
Marleasing 1990 ECR I-4135.
CIA Security 1996 ECR I-2201.
Oceano Grup 2000 ECR I-4491.
Saggio in C-240/98 Oceano Grupo 200 ECR I-4491.
Marleasing 1990 ECR I-4135.
Arcaro 1996 ECR I-4705.
Pupino 2005 ECR I-2585.
27 ibid, (para 47).
etc Francovich 1991 ECR I-05357.
29 ibid (para 37).
Article 4(3) TEU 2007 OJ C 326.
Faccini Dori, 1994 ECR I-03325 (para 27).
Association de mediation sociale v Union locale des syndicats CGT (2014).
etc Francovich 1991 ECR I-05357.
Liability’, EurWORK, 4th May 2011.
A Varner, The Effectiveness of European Community Law with Specific Regard to
Directives: The Critical Step Not Taken by the European Court of Justice, 2001,
University of Michigan Law School.
etc Francovich 1991 ECR I-05357.