After all that we have learnt about the structure of the EU and its legal set-up, it is not easy to assign Union law its rightful place in the legal order as a whole and define the boundaries between it and other legal orders. Two possible approaches to classifying it must be rejected from the outset. Union law must not be conceived of as a mere collection of international agreements, nor can it be viewed as a part of, or an appendage to, national legal systems.

By establishing the Union, the Member States have limited their legislative sovereignty and in so doing have created a self-sufficient body of law that is binding on them, their citizens and their courts.

One of the best-known cases heard in the Court of Justice was Costa v ENEL in 1964, in which Mr Costa filed an action against the nationalisation of electricity generation and distribution, and the consequent vesting of the business of the former electricity companies in ENEL, the new public corporation.

The autonomy of the EU legal order is of fundamental significance for the nature of the EU, for it is the only guarantee that Union law will not be watered down by interaction with national law, and that it will apply uniformly throughout the Union. This is why the concepts of Union law are interpreted in the light of the aims of the EU legal order and of the Union in general. This Union-specific interpretation is indispensable, since particular rights are secured by Union law and without it they would be endangered, for each Member State could then, by interpreting provisions in different ways, decide individually on the substance of the freedoms that Union law is supposed to guarantee. An example is the concept of a ‘worker’, on which the scope of the concept of freedom of movement is based. The specific Union concept of the worker is quite capable of deviating from the concepts that are known and applied in the legal orders of the Member States. Furthermore, the only standard by which Union legal instruments are measured is Union law itself, and not national legislation or constitutional law.

Against the backdrop of this concept of the autonomy of the EU legal order, what is the relationship between Union law and national law?

Even if Union law constitutes a legal order that is self-sufficient in relation to the legal orders of the Member States, this situation must not be regarded as one in which the EU legal order and the legal systems of the Member States are superimposed on one another like layers of bedrock. The fact that they are applicable to the same people, who thus simultaneously become citizens of a national State and of the EU, negates such a rigid demarcation of these legal orders. Secondly, such an approach disregards the fact that Union law can become operational only if it forms part of the legal orders of the Member States. The truth is that the EU legal order and the national legal orders are interlocked and interdependent.

This aspect of the relationship between Union law and national law covers those areas where the two systems complement each other. Article 4(3) of the TEU is clear enough:

This general principle of sincere cooperation was inspired by an awareness that the EU legal order on its own is not able to fully achieve the objectives pursued by the establishment of the EU. Unlike a national legal order, the EU legal order is not a self-contained system but relies on the support of the national systems for its operation. All three branches of government — legislature, executive and judiciary — therefore need to acknowledge that the EU legal order is not a ‘foreign’ system and that the Member States and the Union institutions have established indissoluble links between themselves so as to achieve their common objectives. The EU is not just a community of interests; it is a community based on solidarity. It follows that national authorities are required not only to observe the Union Treaties and secondary legislation; they must also implement them and bring them to life. The interaction between the two systems is so multifaceted that a few examples are called for.

The first illustration of how the EU and national legal orders mesh with and complement each other is the directive, already considered in the chapter on legislation. All the directive itself fixes in binding terms is the result to be achieved by the Member State; it is for national authorities, via domestic law, to decide how and by what means the result is actually brought about. In the judicial field, the two systems mesh through the preliminary ruling procedure referred to in Article 267 of the TFEU, whereby national courts may, or sometimes must, refer questions on the interpretation and validity of Union law to the Court of Justice, whose ruling may well be decisive in settling the dispute before them. Two things are clear: firstly, the courts in the Member States are required to observe and apply Union law; and secondly, the interpretation of Union law and declarations as to its validity are the sole preserve of the Court of Justice. The interdependence of EU and national law is further illustrated by what happens when gaps in EU law need to be filled: Union law refers back to existing rules of national law to complete the rules it itself determines. This principle applies to the full range of obligations under Union law unless the latter has laid down rules for its own enforcement. In any such case, national authorities enforce Union law by the provisions of their own legal systems. But the principle is subject to one proviso: the uniform application of Union law must be preserved, for it would be wholly unacceptable for citizens and undertakings to be judged by different criteria — and therefore be treated unjustly.

However, the relationship between Union law and national law is also characterised by an occasional ‘clash’ or conflict between the Union legal order and the national legal orders. Such a situation always arises when a provision of Union law confers rights and imposes obligations directly upon Union citizens while its content conflicts with a rule of national law. Concealed behind this apparently simple problem area are two fundamental questions underlying the construction of the EU, the answers to which were destined to become the acid test for the existence of the EU legal order, namely the direct applicability of Union law and the primacy of Union law over conflicting national law.

Firstly, the direct applicability principle simply means that Union law confers rights and imposes obligations directly not only on the Union institutions and the Member States but also on the Union’s citizens.

One of the outstanding achievements of the Court of Justice is that it has enforced the direct applicability of Union law despite the initial resistance of certain Member States, and has thus guaranteed the existence of the EU legal order. Its case-law on this point started with a case already mentioned, namely that of the Dutch transport firm Van Gend & Loos. The firm brought an action in a Dutch court against the Dutch customs authorities, which had charged increased customs duties on a chemical product imported from the Federal Republic of Germany. In the final analysis, the outcome of these proceedings depended on the question of whether individuals too may invoke Article 12 of the EEC Treaty, which specifically prohibits the introduction by the Member States of new customs duties and the increase of existing duties in the common market. Despite the advice of numerous governments and its Advocate General, the Court ruled that, in view of the nature and objective of the Union, the provisions of Union law were in all cases directly applicable. In the grounds for its judgment, the Court stated that:

That bald statement does not, however, get us very far, since the question remains as to which provisions of Union law are directly applicable. The Court first of all looked at this question in relation to primary Union legislation and declared that individuals may be directly subject to all the provisions of the Union Treaties which (i) set out absolute conditions, (ii) are complete in themselves and self-contained in legal terms and therefore (iii) do not require any further action on the part of the Member States or the Union institutions in order to be complied with or acquire legal effect.

The Court ruled that the former Article 12 EEC met these criteria, and that the firm Van Gend & Loos could therefore also derive rights from it which the court in the Netherlands was obliged to safeguard, as a consequence of which the Dutch court invalidated the customs duties levied in contravention of the Treaty. Subsequently, the Court continued to apply this reasoning in regard to other provisions of the EEC Treaty that are of far greater importance to citizens of the Union than Article 12. The judgments that are especially noteworthy here concern the direct applicability of provisions on freedom of movement (Article 45 TFEU), freedom of establishment (Article 49 TFEU) and freedom to provide services (Article 56 TFEU).

With regard to the guarantees concerning freedom of movement, the Court of Justice delivered a judgment declaring them directly applicable in the Van Duyn case. The facts of this case were as follows: Miss van Duyn, a Dutch national, was in May 1973 refused permission to enter the United Kingdom in order to take up employment as a secretary with the Church of Scientology, an organisation considered by the Home Office to be ‘socially harmful’. Invoking the Union rules on freedom of movement for workers, Miss van Duyn brought an action before the High Court, seeking a ruling that she was entitled to stay in the United Kingdom for the purpose of employment and be given leave to enter the United Kingdom. In answer to a question referred by the High Court, the Court of Justice held that Article 48 of the EEC Treaty (Article 45 TFEU) was directly applicable and hence conferred on individuals rights that are enforceable before the courts of a Member State.

The Court of Justice was asked by the Belgian Conseil d’État to give a ruling on the direct applicability of provisions guaranteeing freedom of establishment. The Conseil d’État had to decide on an action brought by a Dutch lawyer, J. Reyners, who wished to assert his rights arising out of Article 52 of the EEC Treaty (Article 49 TFEU). Mr Reyners felt obliged to bring the action after he had been denied admission to the legal profession in Belgium because of his foreign nationality, despite the fact that he had passed the necessary Belgian examinations. In its judgment of 21 July 1974, the Court held that unequal treatment of nationals and foreigners as regards establishment could no longer be maintained, as Article 52 of the EEC Treaty had been directly applicable since the end of the transitional period and hence entitled Union citizens to take up and pursue gainful employment in another Member State in the same way as a national of that State. As a result of this judgment Mr Reyners had to be admitted to the legal profession in Belgium.

The Court of Justice was given an opportunity in the Van Binsbergen case to specifically establish the direct applicability of provisions relating to the freedom to provide services. These proceedings involved, among other things, the question of whether a Dutch legal provision to the effect that only persons habitually resident in the Netherlands could act as legal representatives before an appeal court was compatible with the Union rules on freedom to provide services. The Court ruled that it was not compatible on the grounds that all restrictions to which Union citizens might be subject by reason of their nationality or place of residence infringe Article 59 of the EEC Treaty (Article 56 TFEU) and are therefore void.

Also of considerable importance in practical terms is the recognition of the direct applicability of provisions on the free movement of goods (Article 41 TFEU), the principle of equal pay for men and women (Article 157 TFEU), the general prohibition of discrimination (Article 25 TFEU) and freedom of competition (Article 101 TFEU). As regards secondary legislation, the question of direct applicability only arises in relation to directives and decisions addressed to the Member States, given that regulations and decisions addressed to individuals already derive their direct applicability from the Union Treaties (Article 288(2) and (4) TFEU). Since 1970 the Court has extended its principles concerning direct applicability to provisions in directives and in decisions addressed to the Member States.

The practical importance of the direct effect of Union law in the form in which it has been developed and brought to fruition by the Court of Justice can scarcely be overemphasised. It improves the position of the individual by turning the freedoms of the common market into rights that may be enforced in a national court of law. The direct effect of Union law is therefore one of the pillars, as it were, of the EU legal order.

The direct applicability of a provision of Union law leads to a second, equally fundamental question: what happens if a provision of Union law gives rise to direct rights and obligations for the Union citizen and thereby conflicts with a rule of national law?

Such a conflict between Union law and national law can be settled only if one gives way to the other. Union legislation contains no express provision on the question. None of the Union Treaties contains a provision stating, for example, that Union law overrides or is subordinate to national law. Nevertheless, the only way of settling conflicts between Union law and national law is to grant Union law primacy and allow it to supersede all national provisions that diverge from a Union rule and take their place in the national legal orders. After all, precious little would remain of the EU legal order if it were to be subordinated to national law. Union rules could be set aside by any national law. There would no longer be any question of the uniform and equal application of Union law in all Member States. Nor would the EU be able to perform the tasks entrusted to it by the Member States. The Union’s ability to function would be jeopardised, and the construction of a united Europe on which so many hopes rest would never be achieved.

No such problem exists as regards the relationship between international law and national law. Given that international law does not become part of a country’s own legal order until it is absorbed by means of an act of incorporation or transposition, the issue of primacy is decided on the basis of national law alone. Depending on the order of precedence ascribed to international law by a national legal system, it may take precedence over constitutional law, be ranked between constitutional law and ordinary statutory law, or merely have the same status as statutory law. The relationship between incorporated or transposed international law and national law is determined by applying the rule under which the most recently enacted legal provisions prevail against those previously in place (lex posterior derogat legi priori). These national rules on conflict of laws do not, however, apply to the relationship between Union law and national law, because Union law does not form part of any national legal order. Any conflict between Union law and national law may only be settled on the basis of the EU legal order.

Once again it fell to the Court of Justice, in view of these implications, to establish — despite opposition from several Member States — the principle of the primacy of Union law that is essential to the existence of the EU legal order. In so doing, it erected the second pillar of the EU legal order alongside direct applicability, which was to turn that legal order into a solid edifice at last.

In Costa v ENEL, the Court made two important observations regarding the relationship between Union law and national law.

It follows from this that Union law, which was enacted in accordance with the powers laid down in the Treaties, has primacy over any conflicting law of the Member States. Not only is it stronger than earlier national law, but it also has a limiting effect on laws adopted subsequently.

Ultimately, the Court did not in its judgment call into question the nationalisation of the Italian electricity industry, but it quite emphatically established the primacy of Union law over national law.

The legal consequence of this rule of precedence is that, in the event of a conflict of laws, national law which is in contravention of Union law ceases to apply and no new national legislation may be introduced unless it is compatible with Union law.

The Court has since consistently upheld this finding and has, in fact, developed it further in one respect. Whereas the Costa judgment was concerned only with the question of the primacy of Union law over ordinary national laws, the Court confirmed the principle of primacy also with regard to the relationship between Union law and national constitutional law. After initial hesitation, national courts in principle accepted the interpretation of the Court of Justice. In the Netherlands, no difficulties could arise anyway, because the primacy of Treaty law over national statute law is expressly laid down in the constitution (Articles 65 to 67). In the other Member States, the principle of the primacy of Union law over national law has likewise been recognised by national courts. However, the constitutional courts of Germany and Italy initially refused to accept the primacy of Union law over national constitutional law, in particular regarding the guaranteed protection of fundamental rights. They withdrew their objections only after the protection of fundamental rights in the EU legal order had reached a standard that corresponded in essence to that of their national constitutions. However, Germany’s Federal Constitutional Court continues to entertain misgivings about further integration, as it has made quite clear in its judgments on the Treaty of Maastricht and, more recently, the Treaty of Lisbon.

To prevent conflict between Union law and national law arising from the application of the rule of precedence, all State bodies that specifically implement or rule on the law can draw on the interpretation of national law in line with Union law.

It took a fairly long time for the concept of interpretation in line with EU law to be recognised by the Court of Justice and incorporated into the Union legal order. After the Court of Justice had initially considered it to be appropriate to ensure that national laws were in harmony with a directive only when requested to do so by national courts, it established an obligation to interpret national law in accordance with the directives for the first time in 1984 in the case Von Colson and Kamann. This case ruled on the amount of compensation to be awarded for discrimination against women with regard to access to employment. Whereas the relevant German legal provisions provided only for compensation for ‘Vertrauensschaden’ (futile reliance on a legitimate expectation), Directive 76/207/EEC states that national law must provide for effective penalties to ensure that equal opportunities are provided with regard to access to employment. Since, however, the relevant penalties were not set out in more detail, the directive could not be considered directly applicable on this point, and there was a risk that the Court of Justice would have to rule that, although the national law failed to comply with Union law, there was no basis for the national courts to not take the national law into account. The Court of Justice therefore ruled that the national courts were obliged to interpret and apply national legislation in civil matters in such a way that there were effective penalties for discrimination on the basis of gender. A purely symbolic compensation would not meet the requirement of an effective application of the directive.

The Court of Justice attributes the legal basis for the interpretation of national law in line with Union law to the general principle of sincere cooperation (Article 4(3) TEU). Under this article, Member States must take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of the EU Treaty or resulting from action taken by the Union institutions. The national authorities are therefore also obliged to bring the interpretation and application of national law, which is secondary to Union law, into line with the wording and purpose of Union law (duty of cooperation). For the national courts, this is reflected in their role as European courts in the sense that they ensure the correct application and observance of Community law.

One particular form of interpretation of national law in accordance with Union law is that of interpretation in accordance with the directives, under which Member States are obliged to implement directives. Legal practitioners and courts must help their Member States to meet this obligation in full by applying the principle of interpretation in accordance with the directives. Interpretation of national law in accordance with the directives ensures that there is conformity with the directives at the level at which law is applied, and thus ensures that national implementing law is interpreted and applied uniformly in all Member States. This prevents matters from being differentiated at national level which have just been harmonised at Union level by means of the directive.

The limits of interpretation of national law in line with Community law are in the unambiguous wording of a national law which is not open to interpretation; even though there is an obligation under Community law to interpret national law in line with Union law, national law may not be interpreted ‘contra legem’. This also applies in cases where the national legislator explicitly refuses to transpose a directive into national law. A resulting conflict between Union law and national law can be resolved only by means of proceedings against the Member State concerned for failure to fulfil obligations under the Treaty (Articles 258 and 259 TFEU).