The direct effect of European Union law

SUMMARY OF:

Judgment of the Court of Justice of the European Union, Van Gend en Loos v Netherlands Inland Revenue Administration – the fundamental principle of direct effect

WHAT DOES THE JUDGMENT ESTABLISH?

In its judgment, the Court of Justice of the European Union (the Court) enshrines the direct effect of European Union (EU) law.
The judgment states that EU law not only engenders obligations for EU Member States, but also rights for individuals. Individuals may therefore take advantage of these rights and directly invoke EU law before national and European courts, independently of whether the national law test exists (that is, where there is no judicial remedy under national law).

KEY POINTS

Horizontal and vertical direct effect

There are two aspects to direct effect: a vertical aspect and a horizontal aspect.

Vertical direct effect is of consequence in relations between individuals and the country. This means that individuals can invoke a provision of EU law in relation to the state.
Horizontal direct effect is of consequence in relations between individuals. This means that an individual can invoke a provision of EU law in relation to another individual.
According to the type of act concerned, the Court has accepted either a full direct effect (i.e. a horizontal direct effect and a vertical direct effect) or a partial direct effect (confined to a vertical direct effect).

Direct effect and primary law

As far as primary law is concerned, the Court established the principle of direct effect in the Van Gend en Loos judgment. However, it laid down the condition that the obligations must be precise, clear and unconditional and that they must not call for additional measures, either national or European.
In the Becker judgment, the Court rejected direct effect where the countries have a margin of discretion, however minimal, regarding the implementation of the provision in question. In Kaefer and Procacci v French State, the Court affirmed that the provision in question was unconditional because it left no discretion to the Member States and therefore had direct effect.

Direct effect and secondary law

The principle of direct effect also relates to acts from secondary law, that is acts adopted by the EU institutions, such as regulations, directives and decisions, which are derived from the principles and objectives set out in the treaties. However, the application of direct effect depends on the type of act.

Regulations are directly applicable in the Member States, as specified in Article 288 of the Treaty on the Functioning of the European Union , and have therefore direct effect. However, in line with the general principles, this applies only under the condition that the rules are sufficiently clear, precise and relevant to the situation of the individual litigant (direct effect as clarified by the Politi v Ministero delle finanze Court judgement).
Directives are acts addressed to Member States which must be transposed into national law. However, in certain cases, the Court recognises the direct effect of directives in order to protect the rights of individuals. Therefore, the Court laid down in its Van Duyn v Home Office judgment that a directive has direct effect when its provisions are unconditional and sufficiently clear and precise and when the Member State has not transposed the directive by the deadline. However, it can only have direct vertical effect – Member States are obliged to implement directives but directives may not be cited by a Member State against an individual (see Ratti judgment).
Decisions may have direct effect when they refer to a Member State as the addressee. The Court therefore recognises only a direct vertical effect (Hansa Fleisch v Landrat des Kreises Schleswig-Flensburg judgment).
International agreements. In its Demirel v Stadt Schwäbisch Gmünd judgment, the Court recognised the direct effect of certain agreements in accordance with the same criteria identified in the Van Gend en Loos case.
Opinions and recommendations do not have legal binding force. Consequently, they do not have direct effect.

BACKGROUND

Along with the primacy of EU law (also known as precedence), direct effect is a fundamental principle of EU law.

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