State Liability for Integration and Legal Harmony

Discuss and evaluate doctrines of direct effect, indirect effect, and state liability developed by the CJEU.

The doctrines of direct effect, indirect effect, and state liability are developed by the CJEU and are based on the premise that the EU law is superior to the domestic law and that the domestic courts are to further implement the jurisprudence of the CJEU. The CJEU is also said to have narrowed the boundaries between public and private law in the developing of these doctrines. The development of the doctrine of direct effect is considered to be an important phenomenon in the evolution of the EU law because through the development of this doctrine, the CJEU enabled the integration of the EU law. The development of the doctrines of indirect effect and state liability further aided the integration process. This essay evaluates the doctrines developed by the CJEU.

The doctrines of direct effect, indirect effect and state liability are related to giving effect to the EU law. The Treaty on Functioning of the European Union (TFEU), Article 4(3) provides that the law of the European Union (EU) shall be fully implemented. This refers to the supremacy of the EU law and the obligation of the states to implement the law fully within the domestic jurisdiction. Furthermore, TFEU, Article 288 provides that “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.” These provisions of the EU law make it clear that the law made by the EU and its institutions are to have a binding effect on the member states. The doctrines developed by the CJEU relate to this binding effect.


The case of Van Gend en Loos v Nederlandse Administratie der Belastingen is the seminal CJEU case in which the court laid down the doctrine of direct effect as the capacity of a provision of the EU law to be invoked before the national courts. The broader scope of the doctrine of direct effect was defined in Van Gend en Loos, wherein the CJEU held that direct effect is the capacity of EU law to be invoked directly before national courts. The CJEU itself has widened the scope of doctrine of direct effect to apply to regulations and EU courts’ jurisprudence. The doctrine of direct effect is applied in a vertical sense, meaning that doctrine of direct effect is applicable to states and could not be used against individuals. In Defrenne v Sabena, the CJEU held that direct effect could be vertical or horizontal, based on the party against whom the right was enforced. Vertical effect refers to EU measures that confer rights on individuals against the State so that individuals may rely on the EU law in actions against the state. Horizontal direct effect is applicable to obligations of other persons or companies with respect to rights of individuals under the EU law.

The principle that directives of the EU can have only vertical direct effect has been diluted over a period of time. In Marshall, the CJEU held that Directives had direct effect only against the state and not private individuals. Nevertheless, over a period of time the CJEU has adopted different methods by which it can circumvent the Marshall doctrine while also maintaining allegiance to the doctrine. For instance, in Foster v British Gas the CJEU adopted a liberal and instrumentalist conception of 'the Member State' against which Directives can be directly effective by holding that a body made responsible for providing some public service under State control and enjoying special powers in that regard shall be subject to obligations under an unimplemented Directive. Thus, the court allowed the application of direct effect even against bodies that are not state, but enjoy some special powers with regard to the public functions. In CIA Securities v Signalson, the CJEU allowed application of Directive in a way that would also affect the position of the individual in a litigation. Thus, while the Marshall doctrine does not allow the application of the direct effect doctrine to private parties, the CJEU has diluted the doctrine to some extent so that such application may be allowed under certain cases.

The domestic courts in the UK have supported the direct effect of the EU law through their decisions. In Benkharbouche v Sudanese Embassy, claims brought by foreign domestic workers in London embassies for racial discrimination and breaches of the Working Time Regulations 1998. The Court of Appeal disapplied Section 16(1)(a) of the State Immunity Act 1972 and allowed horizontal direct effect of the EU law. In Vidal-Hall v Google Inc, three Claimants sued Google for damages for acute distress suffered when they realised that their personal information might be revealed to those who saw targeted advertising on their screens. The Court of Appeal disapplied section 13(2) of the Data Protection Act 1998 (which expressly limits damages for ‘pure’ distress to certain (non-applicable) circumstances) and gave horizontal direct effect to Articles 7 and 8 of the Charter (right to private and family life and right to protection of data).

The application of direct effect is said to have made the EU law better enforceable. Although all EU law was not meant to have direct effect, the decision on what is directly effective is left primarily to the CJEU. Since the decision in Van Gend, the CJEU has tended to take primacy in determining the domestic position of EU law, which has generally been accepted by the domestic courts. For instance, the UK enacted the European Communities Act 1972, Section 2(4) of which lays down the principle of direct effectiveness of EU law. Where the domestic courts themselves may be in doubt regarding the interpretation of the EU law, as in Factortame, the court may refer the matter to the CJEU. Thus, not only are national states to give effect to the EU law, they are to defer to the CJEU in the instance of doubt as to the effectiveness of a particular EU law provision.

The doctrine of direct effect allows individuals to seek remedies from national courts by relying on the EU law. While the doctrine of direct effect refers to the capacity of the EU law to confer rights that can be enforced in national courts, the expansion of the doctrine and the wide interpretation of the doctrine by the CJEU has meant that individuals can enforce EU provisions even in the absence of harmonisation of the EU laws. With respect to directives, the CJEU has persisted in applying the direct effect doctrine so as to exclude inconsistent national laws. In Van Duyn v Home Office, the CJEU allowed the EU Directive to be enforced against the UK. In Pubblico Ministero v Ratti, the CJEU held that individuals can invoke directives in their domestic courts if the state has not given effect to the directives even after the time for implementation has lapsed. As per this decision, if the time limit given for the implementation of the directive has not expired, direct effect cannot be given to it and that directives are directly effective only if the prescribed date for implementation is over. Thus, in the application of the doctrine of direct effect, the national courts have enforced EU law and even the jurisprudence of the CJEU at the behest of individuals. For instance, in Defrenne v Sabena, the court allowed enforcement of the obligation of the employer towards the employee under the EU law so that if certain obligations arise under the EU law, the employer is bound to give effect to them and the employee has the right to seek enforcement through the national courts.

The doctrine of indirect effect is another principle of interpretation developed by the CJEU by which the domestic courts are required to interpret national laws as far as possible in a manner that is consistent with the provisions of EU law even in the absence of direct effect of such provisions. The doctrine is related to the harmonious interpretation between national laws and EU Directives. In Von Colson v Land Nordrhein-Westfalen, CJEU holds national courts responsible for ensuring the fulfilment of Community obligations. As the TFEU, Article 4(3) provides that the EU law shall be fully implemented, this is interpreted to mean that even where direct effect of the provisions is not applicable, national courts shall as far as possible harmoniously interpret national law with the EU law. This responsibility to implement EU law leads to indirect effect of the EU law. In Pfeiffer, the CJEU has held that the national courts have a responsibility in particular to provide the legal protection which individuals derive from the rules of Community law. The principle is that when the EU law provides certain protections to individuals, the domestic courts are in the position to implement the protections through harmonious interpretation of the domestic law, then such interpretation is the obligation of the domestic courts.

The doctrine of state liability is the further expansion of the scheme of allowing individuals remedies under EU law. State liability works to allow individuals to enforce an EU directive even if horizontal direct effect is not allowed so that the individual can claim damages against the state for not applying the EU directive. The Francovich test applies if the following conditions are satisfied: there should be a directive that grants rights to individuals; the contents of those rights must be identified on the basis of the EU directive; and there should be a causal link between the breach of the State's obligation and the loss and damage suffered by the injured parties.

The Factortame II and Factortame III decisions have further clarified the situations where the courts would be required to harmoniously construct the domestic legislation with the EU law. In Factortame II, the court held that while it is for the member states to determine the conditions which must be fulfilled in order for a vessel to be registered, in exercising that power the state must comply with the rules of Community law. In Factortame III, the question before the CJEU was related to the conditions under which a member state may incur liability for damage caused to individuals by breaches of Community law attributable to that state. The CJEU decided that the right of reparation existed irrespective of whether the Community law had direct effect or not. Expanding on the scope of this principle, the court held that it applies to any case where a member state breaches Community law, irrespective of which organ of the state was responsible for the breach and if there is a rule of law that intends to confer rights on individuals and such law is infringed in a breach that is sufficiently serious, and there is a direct causal link between the breach and the damage sustained by the injured party then the state is liable.

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One of the effects of the doctrines, particularly the doctrine of direct effect is that it has led to national courts making referrals to the CJEU when in doubt about the interpretation of the EU law. Courts in the UK can use this as an interim relief as in Factortame. Moreover, the CJEU exercises oversight over national courts to see whether the courts are considering the directly effective EU law and applying the direct or indirect effect doctrine if applicable. In a way this means that the national courts are agents of the EU. The structure of direct effect, indirect effect, and state liability is said to provide a ‘magic triangle’ which allows the CJEU to maintain the notion of its superiority over the domestic courts. Added to that, the acceptance by the state courts of the expansionist reading of the EU law by the CJEU has led to what is called as a quiet revolution. Therefore, to conclude this essay, the three doctrines have had an effect of integration as well as ensuring the rights of the individuals under the EU law are protected by the domestic courts.


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Working papers

Vauchez A, Embedded Law. Political Sociology of the European Community of Law: Elements of a Renewed Research Agenda (EUI Working Paper 2007/23 2007).

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