1) Direct effect allows EU law to confer rights on individuals that can be enforced in national courts. This was established in the 1963 case Van Gend en Loos, where the ECJ found that article 30 of the Treaty of Rome had direct effect. 2) For a provision to have direct effect, it must be clear and unconditional, conferring identifiable rights. Directives only have vertical direct effect against member states, while regulations can have both vertical and horizontal direct effect. 3) Indirect effect means that national law must be interpreted in line with EU law. This allows individuals to rely on unimplemented directives in national courts through purposive interpretation. 4) Member states can be liable to compensate individuals

1. DIRECT EFFECT
European Union Law; Study notes.

2. WHAT IS DIRECT EFFECT?
• Defines the relationship between the citizens of member states
and the EU.
• Supranational nature of EU (Concept ties in with supremacy)
• Creation of the European Court of Justice
• Enforceability of EU law in national courts
• Monitoring the incorporation and the carrying out of treaties
obligations.
• Evolvement allowing cohesion to be better achieved.

3. VAN GEND EN LOOS!
Dutch government reclassified import duties, standstill article of EU
said that wasn’t allowed. Producer went to court relying on the EU
article 30 stating that the raised costs he was experiencing were
unfair.
Dutch court made an article 267 reference seeking an
interpretation of the article. (standstill article, they did breach it.
Dualist view= do the treaties give enforceable rights to citizens?
Did article 30 do this?
HELD: initial literal approach, article 258 proceedings. Considered
irrelevant. Clear that it was intended to affect individuals as well
as member states. Clear, unconditional provision=direct effect.
More effective way of ensuring citizens rights are met.

4. THE CRITERIA NEEDED FOR DIRECT
EFFECT.
• 1: Defrenne v Sabena
Equal pay for men and
women. A measure need not
be clear as long as it is
understandable.
• 2: It should not depend on
the intervention of another
body to implement it.
• 3:Provision must obviously
relate to citizens some how.
Van
Gend en
Loos
Criteria
Provision must be
sufficiently clear
and precise
Provision must be
unconditional/non
dependent.
There must be an
identifiable right
granted by the
treaty.

5. TWO DIFFERENT FORMS OF DIRECT EFFECT
• Defrenne v SABENA: Claim
for equal pay was made
under article 157.
• Argument raised by
defence that direct effect
only applies when it is citizen
v state.
• Rejected argument, held
that there were two forms of
direct effect- Defrenne
entitled to be paid the
same.
•Actions against the state.
Citizen v State. Measures of
EU law creates obligations on
state to ensure rights are
given to citizens correctly.
•Relationship between EU law
and national law.
Vertical
direct
effect
•Concerns the relationships
between citizens and citizens.
Private corporations.
•Applies to primary and
secondary EU law. Rights are
still created for the citizens.
Horizontal
Direct
Effect

6. Some cases:
Vertical
Direct Effect
Van Duyn: Directives are not
considered to have direct
effect but state discretion does
not mean a measure will not
be directly effective. Uk could
make use of derogations.
Directives can only be
vertically directly effective.
Foster v British Gas:
Emanation of the state=direct
effect vertically. Organisation
or body who provides a public
service, is controlled by the
state & has special powers is
an emanation of the state.
Direct effect applied.
Horizontal
Direct Effect
Gloszczuk: Relaxed provisions
for direct effect. Court assumes
responsibility for effective
integration of EU law. Criteria to
only be generally met. Denied
only when serious political
consequence. POLICY.
Marshall v Southampton:
The binding nature of a
directive only exists in relation
to states it is addressed to. A
directive itself may not impose
obligations on an indivicual.
NO HORIZONTAL DIRECT
EFFECT.
Vaneetveld:
Even wider
interpretation of
state.
(Inconsistentcy
of Foster test!)

7. DIRECT EFFECT & REGULATIONS
• Regulations have general applicability
• & are directly applicable.
• Create obligations with no need for
further implementation.
• Satisfy Van Gend en Loos criteria
>>>Direct effect.
• Never conditional, recognizable right?
The only test required is if it is sufficiently
clear & precise.
• If too vague… NO direct effect.
ERIDANA:
Case was considered to involve an article that was
considered too vague
Held to give no direct effect because of this. (HAS TO
BE SUFFICIENTLY CLEAR AND PRECISE… GOD.]
“By reason of their nature & their function in the system of
the sources of the community law, regulations have direct
effect and as such as capable of creating individual rights
which national courts have to protect.”

8. DIRECT EFFECT & DECISIONS.
• A decision is binding in its
entirety on the party to whom
it is addressed.
• Often addressed to parties in
breach of EU obligations…
• There is a clear need for
citizens to be able to rely on
these decisions.
• All of the Van Gend en Loos
criteria need to be present.
• Direct applicability a non issue.
• Private party issues???
Case
•Involved a challenge by a German company in regards of a tax that was
imposed on it.
•This tax was not in cohesion to a directive in regards of national VAT Laws.
ARGUMENT
•Company argued that the new tax was in breach of the directive and also a
previous decision that gave a time limit for the implementation of the directive
etc. (Remember nature of continental civil law & precedence)
•Were the company entitled to rely upon this decision????
HELD
•That it could and would be;
•“incompatible with the binding nature of decisions… to exclude the possibility
that persons affected may invoke the obligation imposed by a decision, the
effectiveness of such a measure would be weakened if national courts could
not invoke it & disregard it.”
Grad v Finanzamt Traustein 1970

9. DIRECT EFFECT & DECISIONS:
• Directives are binding but need to
be implemented
• More of an order to do something
rather than creating an
enforceable “right.”
• Not directly applicable & are
conditional.
• VERTICAL DIRECT EFFECT ONLY!!!
• An unimplemented directive can
be relied upon & enforced against
a member state if
• the member state is prevented
from its OWN failure to implement
the provision correctly or in order
to try avoid the obligation.
Faccini Dori v Recreb:
Directives do not have horizontal
direct effect & the courts should
interpret their own national law in
line with the EU law.
Mangold: A directive can
be relied upon horizontally
if it can be considered as
fundamental to the
fulfilment of an essential
key obligation of EU
law.(Founding principles.)
REMEMBER!
Marshall v
Southampton also! As
well as Van Duyn
cases both essential!

10. INDIRECT EFFECT:
Vol Colson worked for the state in the
prison service.
Both cases involved the improper implementation of
a directive relating to provide compensation to
workers after insolvency proceedings.
Von
Colson
Harz
• Creation of the ECJ to avoid the strict
limitations of direct effect & Directives.
• Article 4(3) of the TFEU >>>
• All appropriate measures should be
taken by member states to ensure
fulfillment of the treaty obligations.
• Should interpret their national law in line
with EU law.
• Applies to EU law in general.
Harz however
worked for a
private
company.
Von Colson had vertical direct
effect, allowing him a remedy via EU
law, however Harz did not meaning no
remedy.
Held that under article 4(3) both parties
had the right to have the law interpreted in
a manner that complied with EU law. Both
were entitled to compensation.

11. • Indirect effect initially lacking
in definition.
• Has been applied
inconsistently also:
Marleasing.
Question from Spanish
courts in regards to their
failure to implement a
directive was whether an
applicant could rely on the
directive regarding
company harmonisation
despite it being an
unimplemented directive
with conflicting provisions in
national law.
“In applying national law, whether the
provisions concerned pre date or post date
the directive the national court asked to
interpret the national law is bound to do so in
every way possible in the light of the text &
the aims of the directive to achieve this.”
Lister v Forth Dock:
Purposive interpretation of legislation was used in
order to implement the directive in question in
regards of the case
H
o
w
e
v
e
r
Duke v GEC Reliance: Sex discrimination Act of
1965 had not come into force yet implementing
the equality directive relating to retirement.
Marshall case ignored, held that British statute
cannot be distorted to enforce a community
directive that had no direct effect.

12. STATE LIABILTY FOR BREACH OF EU LAW
• Third process of avoiding
problems of direct effect &
directives.
• If the reason a citizen lack a
remedy & suffers loss or
damage is the failure of the
states implementation the
member state will be liable
for damage suffered.
Francovich 1991
• Italy failed to set up a scheme to
provide minimum compensation for
workers after insolvency.
• Unemployed claimants were unable
to recover wages.
• Italy was in breach of its obligations;
were liable to compensate the
workers for the loss it had caused
them.

13. THREE CONDITIONS REQUIRED FOR STATE
LIABILITY:
Directive must confer
rights onto
individuals.
Contents of said
rights must be
identifiable in the
wording of the
directive.
There must be a
causal link between
the damage and
the states failure.

14. FACTORTAME:
• Involved quotas under the
merchant shipping act 1988.
• The action involved was a
breach of Article 49 & a
decision.
• Reference made to the ECJ
was for clarification of the
conditions for & the scope of
state liability.
• HELD: It was irrelevant that the
breaches involved directly
effective treaties and also
irrelevant what organs of the
state were responsible for the
breach,
~
The rule of EU law
infringed must be
intended to confer
rights to individuals.
~
The breach must be
sufficiently serious
enough to justify
imposing state
liability
~
There must be a
direct causal link
between the
breach & the
damage suffered.
Definition of state widened & scope of liability widened..

15. DISCRETION OF THE STATES.
• Directives give wide
discretion to member states
in regards of how to act.
• If action is different from
directive, it could be
excused on grounds that
the directives phrasing was
questionable (not precise or
clear enough.)
•Uk government incorrectly implemented a
directive on public procurement of water.
•BT suffered loss due to this.
•Directive failed van gend en loos criteria.
•Breach not sufficiently serious enough
(Factortame conditions)
British
Telecommunications
•Failure to implement
directive by due
date is a breach
•This justifies state
liability.
Dillenkopfer
•Act of government rather than legislation.
•UK government refused to grant licenses for the export of
Spanish cattle.
•Export before slaughter was a breach.
•Refusal to grant this was a clear breach>>>
•No clear justifiable exemption; state liability applicable.
Hedley Lomas