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Published: Fri, 02 Feb 2018
European Court of Justice over national governments
The original architecture of the European Community was specifically constructed to include institutions with supranational capabilities. This gave two institutions in particular, the Commission and the European Court of Justice, the right to exercise power in prescribed circumstances over national governments. In the case of the former these powers included the initiation of European legislation, oversight of the adherence of Member States to their treaty obligations, and the ability to pass secondary legislation in the form of directives, regulations, decisions and recommendations. Of these only the last is not legally binding on the governments of Member states. The decisions of the European Court of Justice are equally binding on governments and all courts below it. In addition its ruling also set precedent and are therefore case law. The supranational relations between the EU and the Member States are further guided by the principle of subsidiarity. Davies describes this principle by stating, “A federalist principle that has proved important to the EC is that of subsidiarity. The principle which was given formal recognition by the TEU can now be found in Art 5 EC. It provides that decisions relating to areas where the Community and the Member States have joint competence to act should be taken at the most appropriate level, as close to the citizen as possible, providing there is no loss of effectiveness.” (Davies 2003: 17) The aim is therefore to ensure that decision-making power is devolved to the lowest possible level, and only moves up to the higher level if it cannot adequately be carried out by the lower levels. When applied to the EU its clear aim is to protect national sovereignty by ensuring that the EU only deals with issues that cannot be effectively dealt with at a national level.
It can therefore be argued that one possible reason for directives having vertical effect is to protect national judicial authority by ensuring that only breaches of a directive between the individual and the Member State are adjudicated by the Court. Horizontal breaches between private individuals or institutions are then compelled to be resolved in national courts. It is quite notable that the Member States did not include the principle of the supremacy of European law in the founding treaties. It was left to the court to develop this principle through the case law. The case of Van Gend en Loos v Nederlandse Administratie der Belastingen Case 26/62  ECR 1;  CMLR 105. Represents one of the earliest rulings establishing the principle of supremacy. This case involved the incompatibility of a Dutch law to obligations imposed on Member States in an EC Treaty Article. “The Court specifically addressed the question of whether or not the Treaty created rights which individuals could enforce, and which national courts were obliged to protect.”  (Storey and Turner 2010: 147) In its ruling, the Court stated, “The Community constitutes a new legal order in international law for whose benefits the states have limited their sovereign rights, albeit within certain fields.”  (Fairhurst 2010: 282) The importance of this case revolved around the fact that it established in law the precedent that membership of the Community meant the pooling of some sovereignty by Member states and therefore membership involved a tacit agreement to be bound by the decisions and rulings of the Community’s supranational institutions.
The case of Grad v Finanzamt Traunstein (case 9/70) was the next case of relevance to this essay as it established the precedent that directives have direct effect. This essentially means that they confer rights on citizens of the Community which could be accessed and enforced in national courts. Then came the case of Van Duyn v Home Office (Case 41/74). This case was based on a decision by the UK immigration authorities to refuse entry to a member from the Church of Scientology from entering the UK on the grounds that their presence was potentially disrupting to society. The member’s subsequent appeal based on an infringement on her right to freedom of movement. In ruling in her favour, the court relied on rights contained in Article 3(1) of Council Directive No 64/221 of 25 February 1964, which grants to members of the Community rights which they can enforce in a national court of the Member state. (Weatherill 2007: 111)
Directives are usually delivered with certain common yet important features. The first is that it usually comes with an implementation deadline by which time the contents of the directive should be transposed into national law. The direct effect, in terms of the right to exercise the directive’s rights in a national court is consequently not available during the implementation period. (Cuthbert 2006: 25) The other feature that is of special relevance to this essay is that unimplemented directives only have vertical direct effect. This means that they can only be enforced by an individual against a Member state. They cannot be enforced horizontally between individuals and other private individuals or institutions. The definition of a Member state has been expanded in the case of Pubblico Ministero v Ratti (Case 148/78)  ECR 1629 to include institutions termed ‘emanations of the state,’ which refers to any public body that is under the control of the state.” (Storey and Turner 2010: 66)
The non applicability of horizontal direct effect to directives was established in the case of Marshall v Southampton Area Health Authority (Case 152/84) in which the Court ruled that, “directives are only binding on the Member State to whom they are addressed and that, therefore, … a directive may not of itself, impose obligations on an individual… and may not be relied upon as such against such a person.”  (Horspool and Humphreys 2008: 172) The claimant’s action was based on Directive 76/207 dealing with gender based discrimination in retirement ages she had suffered within her workplace. As the directive had not been implemented by the UK government, the case was referred to the Court. In its deliberations the Court found that the circumstances of the case met the criteria for determining that Southampton Area Health Authority was an emanation of the state. The Court consequently ruled in the claimant’s favour. However inconsistent rulings have caused uncertainty about eligibility to claim. An example can be found in the virtually identical case of Doughty v Rolls Royce plc  CMLR 1045. Although at the time Rolls Royce was owned by the UK government, it failed to pass the legal criteria for being classified an emanation of the state. Consequently the Equal Treatment Directive could not be applied. These and similar contradictory rulings have established the problem of different individuals, under similar circumstances, having unequal access to the enforcement of Community directives based on the different applications of vertical and horizontal direct effect.
The key case that would act as a precursor to the main case of this essay was Case C 144/04 Werner Mangold v Rudiger Helm. This case involved the enactment by the German government of discriminatory legislation in 2002 regarding fixed contract workers 52 years and over. The ECJ found in favour of Mangold on the grounds that the German legislation was contrary to the Equality Directive 2000/78. This ruling was made despite the fact that the time period of 2006 given for national governments to implement the directive had not yet lapsed. In giving its ruling, the Court stated, “It is the responsibility of the national court to guarantee the full effectiveness of the general principle of non-discrimination in respect of age, setting aside any provision of national law which may conflict with Community law, even where the period prescribed for transposition of that directive has not yet expired.” (Case C-144/04 Mangold v Werner) The precedent set in this ruling lead to a similar case in the UK where a clerical worker in the NHS whose job was terminated the day before new age discrimination directive came into force, won her case before an employment tribunal based on the Mangold ruling. Her lawyer said at the end of the case, “Another radical aspect of the Mangold case was that it overturned a previous understanding that employees could only attempt to bring claims against public sector employers in an individual country that had not yet formally adopted the rules. Following the employment tribunal’s ruling, private sector workers who feel they had been discriminated against because of their age could now attempt to bring cases against their employers, opening a potential new set of age discrimination claims.” (Herman 2007) This statement clearly articulates the legal view that the Mangold ruling opened the door for directives to have direct horizontal effect between private parties within society.
The case of Seda Kücükdeveci v. Swedex Case C-555/07 however appears to be a reversal of the Marshall ruling. In this case the claimant Ms Kücükdeveci was dismissed from her job after ten years service. However she was given notice of only one month which was calculated on the basis of a three year period of employment with the company. Her claim was based on the fact that the period of notice should have been four months, in line with her ten year period of employment with the company. The Court eventually ruled that, “it is for the national court, hearing proceedings between individuals, to ensure that the principle of non-discrimination on grounds of age, as given expression in Directive 2000/78, is complied with, disapplying if need be any contrary provision of national legislation, independently of whether it makes use of its entitlement, in the cases referred to in the second paragraph of Article 267 TFEU, to ask the Court for a preliminary ruling on the interpretation of that principle.” (Europa, Case C-555/07 Seda Kücükdeveci v. Swedex)
As bland as this ruling sounds on the surface, it potentially has far reaching consequences for the process of integration in the EU. The key areas are the forthright requirements for national courts, when dealing with principle of non discrimination on the grounds of age, to disapply any provision of national legislation. Finck elaborates on this ruling’s importance by stating, “These words have the potential for reinforcing the primacy of European law over national law… Primacy is the criterion that requires that any national measure, which encroaches upon the field within which the Community exercises its legislative power or which are otherwise incompatible with the provisions of Community law, cannot have “any legal effect.. This judgment is therefore an important building block in the construction of a genuine integrated legal order.” (Finck 2010: 5) The other important point is that in finding for the claimant, the court has established that directives can have horizontal direct effect. In this particular case, although the German government had transposed the directive into national law, it had done so incorrectly, which would have virtually invalidated the implementation process. Consequently by ruling in favour of the claimant the Court effectively established that a directive dealing with non discrimination based on age can be applied to two private parties, thereby giving the directive direct horizontal effect. This ruling is summed up concisely by Llorens who states, “The Kücükdeveci ruling shows that Mangold is very much alive. It follows that it is irrelevant that the deadline for implementation of a directive has not expired, that the directive has not been implemented on time or that it has not been implemented correctly. The principle of non-discrimination on grounds of age given expression by an EU directive can still apply in actions between private parties to preclude conflicting national legislation.” (Llorens 2010: 3) Llorens goes on to make the natural assumption that this ruling will trigger similar rulings in other types of cases. This ruling raises two areas of confusion and uncertainty. Firstly it is at odds with the substantial body of European case law establishing and confirming the non applicability of direct horizontal effect where directives are concerned. Secondly it completely contradicts important rulings such as the Marshall case. Finally it has important ramifications for the principle of subsidiarity which will be considered later in the essay.
Adherents to the conventional rule of directives having vertical direct effect usually base their arguments on the wording of the relevant treaty which states that directives are only binding on the specific member states addressed, and only binding as to the result to be achieved, with the choice of implementation left to the national government. The obligation imposed by the directive therefore only applies vertically between the individual and the state. Advocates of this argument also state that there is no need for the imposition of horizontal direct effect, as there are already avenues by which this might be achieved. For example the vehicle of state liability is one that can be used instead as a means to by-pass direct effect, as a means for dealing with horizontal obligations between individuals and/or institutions.
Those in favour of horizontal direct effect down play the strict literal interpretation of treaties by their opponents. They make the cogent argument that the Court does not usually use a strict observance of the wording of European treaties, as is evident from the original precedent of supremacy that was established in case law but not primary treaty based legislation. Instead the Court often relies on the spirit of European law which is interpreted as favouring a slow incremental approach to integration. Consequently we can see here a replay of the old legal dichotomy of statutory interpretation in English law of the literal, golden and mischief rules of interpretation. (Elliott and Quinn 2002: 31-33) Krzeminski argues that “the mere obligation for national authorities to implement a directive does not determine as such the prospective legal effects of its substantive provisions. It is argued that the allowance of horizontal direct effect of directives, will not in this regard alter anything of a Member State’s obligation to implement a directive.” (Krzeminski 2010: 34)
The functional encroachment of EU competence in areas of horizontal direct effect can be construed as a form of spillover in action. Spillover is a term used by the founding fathers of the European project to describe an incremental process of integration, whereby integration in one area will literally spill over into adjacent areas requiring further integration. For example the creation of a single market in Europe also unintentionally created the circumstances for the development of a single market in crime as well. This has lead to a spillover of integration from the economic field into the field of police and judicial cooperation to combat transnational crime in a borderless Europe. While this can be termed a macro example of spillover it can also occur at the micro level. It is the contention of this essay that the evolutionary development of directive based case law from vertical to horizontal direct effect is an example of spillover taking place at the micro level. The impact of this is that it has shifted the boundaries where subsidiarity is concerned. The conventional arrangement of directives only having vertical direct effect, allowed European law to be enforced vertically between individuals and the government, but left horizontally based domestic conflict to national courts. With the advent of directives potentially having horizontal direct effect, the door has been opened for a raft of contract based disputes to be settled horizontally under European rather than national law. This represents a potential shift in competence from the national to the supranational level. And controversially this shift has been engineered not by democratically elected officials in either the Council of Ministers or the European Parliament, but by unelected judges developing judicially instituted integration. Is the Kücükdeveci ruling a landmark piece of case law that heralds a new phase of integration and a re-defining of the boundaries of subsidiarity, or is it just an aberration? Only time and either firm political direction, or the development of a further substantial body of case law will tell.
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