Skip to content

Vertical Direct Effect Essay Thesis

Direct effect is a principle of EU law. It enables individuals to immediately invoke a European provision before a national or European court. This principle relates only to certain European acts. Furthermore, it is subject to several conditions. It can apply in relation to regulations, directives, treaty provisions and decisions.

The term ‘direct effect’ was first used by the Court of Justice of the European Union (CJEU) in a judgement on 5 February 1963 when it attributed, to specific treaty articles, the legal quality of direct effect in the case of NV Algemene Transporten Expeditie Onderneming van Gend en Loos v. Nederlandse Administratie der Belastingen (Case 26/62). In this case, the CJEU identified three situations necessary to establish the direct effect of primary EU law. These are that:

  • the provision must be sufficiently clear and precisely stated;
  • it must be unconditional and not dependent on any other legal provision;
  • it must confer a specific right upon which a citizen can base a claim.

If these conditions are met, the provisions of the treaties can be given the same legal effect as regulations under Article 288 of the Treaty on the Functioning of the European Union (TFEU). However, there is little legislation on employment and industrial relations to be found other than in primary law and in the regulations on the free movement of workers.

By virtue of the doctrine of the supremacy of EU law, provisions of Community law with direct effect take precedence over domestic laws (Flaminio Costa v. ENEL, Case 6/64). EU labour law rules take precedence over national labour law rules.

Taken together, the principles of direct effect and supremacy mean that treaty provisions may be used to make claims before domestic courts and override domestic law. Probably the best-known example is Defrenne v. Sabena (Case 43/75), where the CJEU decided that:

The principle that women and men should receive equal pay, which is laid down by Article [141 EC now 157 TFEU], may be relied on before the national courts. These courts have a duty to ensure the protection of the rights, which that provision vests in individuals.

In the Viking case (Case C-438/05), Article 43 of the Treaty of the European Union (now Article 49 TFEU) is interpreted as capable of conferring rights on a private undertaking that may be relied on against a trade union or an association of trade unions. In the Laval Case (Case C-341/05), Article 49 of the Treaty of the European Union (now Article 56 TFEU) was held to have direct effect, so that Member States must amend national laws that restrict any freedom incompatible with the Treaty’s principles.

Most EU law on employment and industrial relations takes the form of directives. According to Article 288 TFEU, ‘a directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods’. Therefore, the CJEU’s decision to extend the principle of direct effect to directives was crucial.

The rationale for attributing direct effect to directives was to secure the ‘useful effect’ of EU legislation. Since EU law was a new transnational legal order capable of conferring rights on individuals, an interpretation of Article 249 of the Treaty of the European Union (now Article 288 TFEU) was developed, which emphasised the binding result to be achieved by directives, rather than, as stated by Article 288 TFEU, leaving ‘to the national authorities the choice of form and methods’.

Direct effect can apply both horizontally and vertically, with the distinction based on against whom the right is being enforced, and the nature of the right itself.

Vertical direct effect

Where rights conferred by a directive are violated by the State or by emanations of the State, a citizen can exercise vertical direct effect. Vertical direct effect concerns the relationship between EU law and national law, and the State’s obligation to ensure its legislation is compatible with EU law. Citizens can apply it in claims against the State (or against an emanation of the State) as defined in Foster v. British Gas (Case C-18/89). Following this case, the criteria laid down to define the emanations of the State could include privatised industries or services that formerly provided public services. Employees in these industries and services may rely directly on provisions in EU directives, so that a large proportion of the national workforce can directly enforce rights contained in the directives.

The impact of the concept of vertical direct effect is substantial in certain areas, such as the provision on equal pay between women and men in Article 157 TFEU. Moreover, when the CJEU held that the doctrine of vertical direct effect applied also to the substantial body of EU legal measures in the form of directives (Van Duyn v. Home Office, Case 41/74), the implications were much greater for the field of employment and industrial relations. Employment rights contained in directives now became capable of direct enforcement against the State before national courts.

Horizontal direct effect

Horizontal direct effect is a legal doctrine developed by the CJEU whereby individuals can rely on the direct effect of provisions in the treaties, which confer individual rights, in order to make claims against other private individuals before national courts.

By virtue of the doctrine of the direct effect of treaty provisions, individuals can rely directly on EU law before their national courts. There is no need for the implementation of EU law by Member States through national law. The CJEU’s creation of the doctrine was driven by Member States’ failure to comply with EU law.

The initial rationale of direct effect was partially changed when the question arose of the direct effect of directives. The CJEU held that the doctrine of direct effect did apply to directives. However, directives had only vertical direct effect (see above). Therefore, individuals could claim only the rights conferred by directives against the State or emanations of the State. This, more limited, version of the doctrine prevented individuals claiming rights under the directive as against other private players (‘horizontal’ direct effect).

However, the State may appear in a number of emanations of public authority. The scope of the ‘different emanations of the State’ depends on the criteria developed by the CJEU to define them. Nonetheless, the rule of horizontal direct effect remains that directives do not have direct effect against private individuals. A number of Opinions by Advocates-General have attempted to overturn the limitation in the doctrine of horizontal direct effect, extending the effect of directives to private persons, but without success (Dori v. Recreb srl, Case C-91/92). The CJEU’s doctrine of indirect effect (see below) achieves, partially, the result obtainable through the rule of direct effect; however, this is only insofar as the national law is not wholly inconsistent with EU law.

The impact of the doctrine of horizontal direct effect, when applied to provisions of the treaties, has been limited in the fields of employment and industrial relations, since relatively few treaty provisions confer individual rights in those areas. However, the Charter of Fundamental Rights of the European Union was incorporated into primary EU law by the Treaty of Lisbon, which came into force on 1 December 2009. The inclusion of fundamental rights concerning employment and industrial relations into primary EU law, as was the case with equal pay for women and men (Article 157 TFEU), could lead the CJEU to attribute binding direct effect – vertical and horizontal – to provisions of the Charter.

Indirect effect

The doctrine of indirect effect requires national courts, as organs of the Member State responsible for the fulfilment of EU obligations, to interpret domestic law consistently with directives. This doctrine achieves indirectly, through the technique of judicial interpretation of domestic law, the result obtainable through the doctrine of direct effect of directives.

Indirect effect can thus be seen both as an addition to, and as the corollary of, the doctrine of direct effect. In the case of provisions of directives having direct effect, national courts must disregard domestic law where there is a conflict between the directive and domestic law. In the case of a directive lacking direct effect, the national courts must make every effort to interpret domestic law consistently with the directive.

The doctrine of indirect effect is of vital importance to the enforcement of EU rights against private persons (horizontal direct effect). As directives have only vertical direct effect in claims based on directives against private persons, domestic law may be the only legal basis for a claim. The domestic court is obliged to exert itself to ensure that domestic law is interpreted consistently with the EU directive. However, this result is obtainable insofar as the national law is not wholly inconsistent with EU law.

See also: compensation; enforcement of EU law; Francovich principle; judicial enforcement of EU law; justiciability of EU law; national labour courts; remedies for infringements of EU law; sanctions; state liability.

Firstly, this essay will provide some general information regarding the development of the EU and particularly why the above-stated questions arose. In this context the concept of supremacy will briefly be overviewed, as it is closely related to the doctrine of direct effect. Subsequently, a definition of both direct effect and direct applicability will be administered. Furthermore, the relationship between direct effect and the various Community measures will be examined, focusing then on Directives for reasons which will be explained afterwards. Afterwards, the issues concerning vertical and horizontal direct effect in respect of Directives will be investigated. Finally, the essay will illustrate why and in which cases the doctrines of indirect effect and state liability become applicable. The paper will then conclude by answering the question, referring to the previous remarks, why the European Court of Justice (henceforth, ECJ) introduced the concept of direct effect.

The Treaty that established the European Economic Community (EEC) was the Treaty of Rome.[1] It became effective on the 1st of January 1958. This moment can be regarded as a milestone in the development of the European Union. The treaty had not only the objective to prevent the outbreak of a further war between France and Germany[2] but also to bring the Member States of western Europe together in a closer Union by extending the European integration to include general economic cooperation.[3] Over the years, the Member States joined various treaties creating the juridical and political framework, in order to make the Community capable of cooperating on a broad range of matters.[4] The EU organs – such as the Commission, Council, Parliament and the Court – were constituted. In different shape and occurrence, all of the above stated organs are entitled to announce measures (Regulations, Directives and Decisions) which would be targeted to the Member States.[5] In the aftermath of this development two main questions arose. Namely, by what tool would such a measure be exercised towards the Member State(s)? The second and closely linked question was which law would prevail in the not unlikely situation of a dispute between the national law of a Member State and the European rule?

The European Court of Justice, now renamed the Court of Justice of the European Union, formed the concept of ‘supremacy’ when it observed, “The Community constitutes a new legal order in international law for whose benefits the states have limited their sovereign rights, albeit within limited fields”.[6]

It is crucial to note that this is not a complete definition of the doctrine, as this case primarily dealt with direct effect. However, it is still relevant for the development of the doctrine of supremacy, as it was the very first time that the court stated that, by accepting entry in to the Community, the Member States were limiting their sovereign rights to legislate contrary to the requirements of EU law.

One year after the Van Gend en Loos case, the ECJ constituted a broader definition and provided an expanded comment in the Case of Costa v ENEL.[7]

The case therefore established that when a Member State joins the EU, it effectively agrees to be bound both by its primary and secondary laws.[8] This observation was followed by Case 11/70 Internationale Handelsgesellschaft v EVGF[9] which went farther than Costa v ENEL by stating that even secondary EU Law (in that case a Regulation) was a higher form of law than the constitution of a Member State.

The Court held in an opinion in December 1991 that the doctrines of direct effect and supremacy create together “the essential characteristics of the Community legal order”.[10] As the concept of supremacy, the doctrine of direct effect is a judicial development of the ECJ.[11] The main issue addressed by the Court, the fact that Community law overrides national law, is senseless unless a person can enforce those laws in a national court. So the ECJ constructed the doctrine of direct effect, which holds that in certain circumstances Community law is directly enforceable in national courts.[12] It is connected to, and very often confused with, direct applicability. The latter doctrine states that EU law is directly applicable if it is recognized as part of (for instance) UK law. Treaties and Regulations are “directly applicable”[13] because they become part of the UK law as a result of the European Communities Act 1972.[14] Not directly applicable are Directives, as they need an implementing piece of UK legislation to become law in the UK.[15]

The rule of direct effect was first raised, as mentioned above, in the Van Gend en Loos case. The case concerned Art. 30 TFEU (at that time Art. 12, then subsequently Art. 25 pre-Lisbon) which forbad new custom rules being imposed, or existing custom rules being increased.[16] Van Gend was trying to directly enforce the rule in Art. 30 against the Dutch government in the Dutch courts, claiming the rule enshrined a right not to be taxed in this way. Under Art. 267 TFEU[17] the question was referred to the ECJ which stated:

“Independently of the legislation of member states, community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage. These rights arise not only where they are expressly granted by the treaty, but also by reason of obligations which the treaty imposes (…) upon individuals as well as upon the member states and upon the institutions of the community.”[18]

The ECJ described in its ruling the test of when a Community law measure would be directly effective. Three main points, often referred to as the ‘ Van Gend en Loos-criteria ’, were established by the ECJ to figure out whether or not a provision of Union law is directly effective: The provision in question must be sufficiently clear and precise (I); it must be unconditional and without any exceptions (II); it does not require any further implementation by the Member State (III).[19] Although Art. 30 was a prohibition, the ECJ held that Van Gend could enforce it against the Dutch government, as the prohibition was unconditional, imposed a duty without any discretion given to the Member States and generated direct effects between Member states and citizens.[20] Therefore the national court enforced Art. 30 in favour of Van Gend.[21]

[...]



[1]The Treaty of Rome, March 1957, available: http://ec.europa.eu/archives/emu_history/documents/treaties/rometreaty2.pdf, (accessed 15 February 2015).

[2]Treaty constituting the European Coal and Steel Community, April 1951, available: http://www.cvce.eu/content/publication/1997/10/13/11a21305-941e-49d7-a171-ed5be548cd58/publishable_en.pdf (accessed 15 February 2015).

[3] Europa.eu, ‘ EU Treaties ’, available: http://europa.eu/eu-law/decision-making/treaties/index_en.htm , (accessed 15 February 2015).

[4] J. McCormick, ‘ Understanding the European Union: A Concise Introduction ‘, 2nd ed., Basingstoke, Palgrave, 2002, pp. 113,114.

[5] S. P. McGiffen, ‘ The European Union: A critical guide’, 1st ed., London, Pluto Press, 2001, pp. 26-28.

[6] Case 26/62 Algmene Transporten Expeditie Onderneming Van Gend en Loos v Nederlandse Administratie der Belastingen [1963] ECR 1.

[7] Case 6/64 Flaminio Costa v ENEL [1964] ECR 585: “By contrast with ordinary international treaties, the EC Treaty has created its own legal system, which, on the entry into force of the Treaty, became an integral part of the legal systems of the Member States and which their courts are bound to apply. By creating a Community of unlimited duration, having (…) powers stemming from a limitation of sovereignty, or a transfer of powers from the states to the Community, the Member States have limited their sovereign rights, (…), and have created a body of law which binds both their nationals and themselves.”

[8] E. Kirk, ‘ EU Law ‘, 3rd ed., Essex, Person Education Limited, 2013, p. 7.

[9] Case 11/70 Internationale Handelsgesellschaft mbH v Einfuhr - und Vorratsstelle für Getreide und Futtermittel [1970] ECR 1125.

[10] Opinion 1/91 Opinion of the Court regarding the European Economic Area Agreement [1991] ECR I-6079, available: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:61991CV0001 (accessed: 17 February 2015).

[11] N. Foster, ‘ Foster on EU Law ‘, 4th ed., Cardiff, Oxford University Press, 2013, p. 161.

[12] Kirk, p. 11.

[13]Treaty Establishing the European Economic Community (EEC), Art. 189, Post-Lisbon numbering: Art. 288 TFEU, available: http://ec.europa.eu/archives/emu_history/documents/treaties/rometreaty2.pdf (accessed: 21 February 2015).

[14]European Communities Act 1972, available: http://www.legislation.gov.uk/ukpga/1972/68/contents (accessed 17 February 2015).

[15] Kirk, p. 10.

[16]Treaty of the Functioning of the European Union, Art. 30, “Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.” Available: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12012E/TXT (accessed: 21 February 2015).

[17]Treaty of the Functioning of the European Union, Art. 267, “The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; (...), available: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E267:EN:HTML (accessed 21 February 2015).

[18] Case 26/62 Algmene Transporten Expeditie Onderneming Van Gend en Loos v Nederlandse Administratie der Belastingen [1963] ECR 1.

[19] Ibid.

[20] S. Robin-Oliver, ‘The evolution of direct effect in the EU: Stocktaking, problems, projections‘ in International Journal of Constitutional Law, Oxford University Press, 2014, p. 176.

[21] Kirk, p. 12.