Vertical Effect, Indirect Effect, State Liability and Horizontal Direct Effect (HDI) through General Principles - EU law - Lecture 5

What is the distinction between EU primary law, and secondary law?

Primary law within the EU is regarding the member states as signatories of the EU treaty come together, the EU is the legislature and they are legislating.

Secondary law is otherwise known as the EU's directives and regulations.

Which case emphasised the direct effect of TREATY PROVISIONS? And what does this case mean about EU law distinctions with international law?

Direct Effect of Treaty Provisions is emphasised in Van Gend en Loos.

Van Gend en Loos outlined the following -

• Treaties are more than an agreement, EU law is more than an inter-state contract and goes beyond international law in this regard.

• It is more than inter-state agreement in regards to the compliance of individuals, them benefitting and complying - EU law involves not only inter-state entites but individuals and confers rights upon you, which pushes it beyond the framework of international law.

What is ‘direct effect’ in relation to EU law?

These rights which are conferred to individuals make it distinct from inter-state contracts (which involves member states compliance), as it involves individuals.

This creates a concept of direct effect, this means that citizens of member states can directly invoke EU rights before national courts and don’t need to ask for permission of member states.

In summary, direct effect is where the EU citizen can directly invoke a right under primary law/treaties before a national court in order to argue that a national measure (such as legislative, judicial from domestic courts) has infringed their EU rights.

Which case emphasised the PRIMACY of EU law? And what does this case mean about EU law distinctions with international law - 4 ways? And the consequence of this?

Primacy of EU Law is emphasised in Costa v ENEL.

Consequence → Though this ECJ ruling has now brought problems with member states and EU Law, greater push-back especially when intervening within domestic law and domestic court

Costa v ENEL outlined the following (distinctions between EU law and international law) →

• It creates the notion of primacy of EU law over national law, which contrasts from international law - The treaty of Rome has created its own legal system, which the domestic courts are bound to apply, aligning with the notion of 'direct effect’

• EU pushes beyond mere international law approaches as outlined earlier, reinforcing the involvement of not only member states but also individuals

• Member states cannot rely on national law to trump and prevail over EU law, EU law will prevail over domestic law - member states accept the prevailing and existence of EU law and its primacy of EU law over domestic law on the basis of 'reciprocity' (member states agree with the EU law on the basis of others agreeing with it too - so the violation of EU law would be harming this notion of reciprocity)

• EU law would have primacy over the most important constitutional laws of the member states - plus this idea is not stated within the treaties, none of the member states have implemented the primacy of EU law within the treaties, but the ECJ had determined the primacy of EU law based on reciprocity of member states

What are the TWO conditions for ‘direct effect’ within EU law?

1. The provision must be (clear and unambiguous) sufficiently precise;

2. It must be unconditional; its operation must not depend upon further action or discretion by national or EU authorities

Defrenne case as an illustration of Verticle Direct Effect (VDE) of the treaties, what is the context, issue, outcome, reasoning behind this outcome and controversy behind this case/why is philosophy of the CJEU mentioned?

Context → She was a air hostess and wished to challenge a Belgian domestic measure under Belgian law that denied women equal pay, hence refusing to pay men and women equally. The 'direct effect' and 'primacy' means D can directly rely on EU law for her equal pay and the court agreed to this.

Issue → This was about a provision renamed (today being Article 157 TFEU) regarding 'equal pay for male and female workers for equal work or work of equal value is applied.'

Outcome → The CJEU got involved as per Art 267 since the Belgian court was unsure how to interpret the Art 157 TFEU. There is a vertical relationship between employees and the EU - vericuality means the state and individual. The CJEU outlined that Art 157 TFEU is capable of being invoked in the domestic legal order irrespective of it being EU law, and it will have primacy over domestic law.

Reason for the outcome → Equal pay is a social right, hence there are some questions as to why the EU is promoting social rights, when it is focused on economic freedom and rights. The common market was a means towards an end to a deeper union of Europe and it would be a huge disencinitive for female workers to work and travel around Europe if there is no equal pay for female workers across Europe in comparison to their male counterparts.

Philosophy being mentioned, what does this mean? → Primacy is not easily acceptable member states - hence the court attempts to use philosophy to justify equal pay as it is entrenched in the member states' own legal philosophies and traditions common to the member states - hence it is the philosophy of the CJEU, hence the principle is already accepted by the member states, legitimising direct effect and its jurispurdence rooted in their own member state involvement.

What does Article 288 TFEU outline in regards to directives, regulations, decisions and recommendations+opinions?

A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.

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.

A decision shall be binding in its entirety upon those to whom it is addressed.

Recommendations and opinions shall have no binding force.

What level of discretion do member states have in relation to regulation and directives as per Article 288 TFEU? Can they amend them, or not?

Regulations are an order and top down instrument, which are binding on member states, therefore they cannot be altered, but directives are equally binding but can be altered.

Directives are translated and transposed into national law by national legislatures - the EU merely directs the member states to implement legislations of following topics.

In relation to directives, the member states legislatures can better tailor legislations based on -

1. contextual knowledge on what is going on in their country

2. each member states have their own domestic law and methods

3. mediates tensions between EU law and domestic law/courts, by ensuring a democratic sovereign, the legislature transposes directly on certain areas, it is sufficient to strengthen certain legislations, however it is left to the national authorities on the choice of forms and methods

Why does the EU in Article 288 TFEU allow member states discretion in relation to directives?

Directives are translated and transposed into national law by national legislatures - the EU merely directs the member states to implement legislations of following topics.

They engage the democratic involvement of member states by

1. accomodating diversity and

2. democratic sovereignty

Can EU citizens rely on a directive in the same way as primary law (treaties) of EU when it comes to VDE/vertical direct effect? And what if a member state fails to transpose the directive on time, does the EU citizen have a claim then?

EU citizens cannot rely on EU directives in the exact same way as primary law (Treaties) or regulations, as directives are not inherently directly applicable and require national transposition. They only gain direct effect if the implementation deadline has passed, and the provisions are clear, precise, and unconditional.

Primary law (Treaties) has direct effect, creating immediate rights for individuals. Directives require Member States to pass domestic legislation to achieve specific goals, meaning they are initially binding only on the state, not directly on citizens.

• Direct Effect Criteria: If a Member State fails to implement a directive by the deadline, individuals can rely on it in national courts to challenge the government ("vertical direct effect").

What is known as VDE/vertical direct effect and how does this work in relation to directives specifically? And what do the cases of Van Duyn v Home Office, and Pubblico Ministero v Ratti state in relation to VDE and directives?

Vertical Direct Effect is a relationship between the individual and state is what is meant by the vertical direct effect.

Van Duyn v Home Office outlined that once the transposition period has finished and the member state hasnt acted, and if the conditions of the precision and unconditionality are met, citizens can rely on the directive in a vertical direct relationship.

Pubblico Ministero v Ratti outlined that the transposition period must continue running or otherwise the citizen cannot rely on the directive - once the transposition period has expired, there is vertical direct effect of directives and the normative idea is that member states by being lazy/not transposing directives cannot jeaporidise the useful effect of EU law.

Why might member states be reluctant with transposing directives? (3 reasons)

1. Though member states have agreed, they may have second thoughts as the idea might fit the member states' political agenda

2. Due to free-riding, allowing other member states to implement the directive in attempt to not implement the directive themselves

3. EU relies on individuals to impose their vertical direct effect of directives to prevent free-riding and for citizens to identify the member states' non-compliance as the citizens' rights are impacted and therefore, they can impose it

What is horizontal direct effect? And can directives have a HDE/horizontal direct effect (like regulations and treaties) or not? Which TWO cases outline that HDE/horizontal direct effect for directives is impossible?

Horizontal means the state is not involved, a relationship between such as a private employee and private employer. This allows a private party to invoke EU law before a national court against another private party. Provisions of EU Treaties can have horizontal direct effect if they are sufficiently clear, precise, and unconditional.

Unlike Regulations or Treaties, directives generally cannot be used by a citizen against another private individual or company ("horizontal direct effect").

The two cases which outline that HDE for directives is impossible -

• Marshall v Southampton and SW Hants A.H.A

• Faccini Dori v Recreb

Marshall v Southampton and SW Hants A.H.A on the impossibility of establishing horizontal direct effect/HDE for DIRECTIVES, what is stated in this case?

• “With regard to the argument that a Directive may not be relied upon against an individual […] exists only in relation to `each member state to which it is addressed’. It follows that a directive may not of itself impose obligations on an individual and that a provision of a directive may not be relied upon as such against a person."

• Directives are defined according to Art 288 TFEU and is only binding 'each member state it is addressed - directives are addressed to member states and not individuals, hence there is no horizontal direct effect and it is impossible, as you cannot impose an obligation on an individual - 'no' means never, so there is never a horizontal direct effect between two individuals

Faccini Dori v Recreb on the impossibility of establishing horizontal direct effect/HDE for DIRECTIVES, what is stated in this case?

“whereas it has competence to do so only where it is empowered to adopt regulations”

• If we accepted horziontal direct effect, therefore the distinctions between regulations and directives would collapse - hence we refuse the notion of horiziontal direct effect for directives and we cannot have it.

Which following TWO cases undermine/contradict the orthodox approach that Horizontal Direct Effect/HDE is impossible with directives, and what THREE criticisms arose from these TWO cases?

Cases which contradict the HDE approach

1. Mangold v Rüdiger Seifert

2. Seda Kücükdeveci v Swedex

Criticisms -

• Circumventing "No Horizontal Direct Effect" Rule: It is settled EU law (Marshall) that directives cannot have horizontal direct effect (i.e., they cannot impose obligations directly on a private individual). The Mangold ruling was seen as "horizontal direct effect of directives through the back door" by using a "general principle" to achieve the same result.

• Critics, including the German Federal Constitutional Court in its Honeywell decision, described the reasoning as "opaque" and "methodologically flawed". The German court suggested it was an ultra vires act (acting beyond its powers), though it ultimately did not void it.

• Violation of Legal Certainty: By allowing the principle to apply before the directive's implementation period expired (in the case of Mangold), the Court disregarded the principles of legitimate expectations and contractual freedom.

Seda Kücükdeveci v Swedex on Horizontal Direct Effect and contradicting the orthodox approach of HDE being impossible for directives (stated in Marshall), what is the context, outcome and how the court in Seda Kücükdeveci v Swedex rationalise the departure from the orthodox view in Marshall?

Context of the case → She was working at a young age, so it was regarding young age discrimination and was regarding notice periods, the longer you have worked for an employer, the longer is your notice period. As per the German law, it only started from the age of 25, and she was 26 and she had worked there for 10 years beforehand, it was outlined that therefore her 10 years of prior working did not count.

The Court’s justification and reason for altering/departing from the orthodox approach? → Unlike directives themselves, which typically do not have horizontal direct effect, a directive that gives concrete expression to a general principle of EU law can be used between private parties. The ruling cemented that prohibitions on discrimination (specifically age) are fundamental principles of EU law. This case affirmed and clarified the controversial Mangold, further cementing the horizontal direct effect of EU fundamental principles.

Outcome of the case → The national court is required to decline to apply this specific version of German law that the notice period starts after 25, so the national court must refuse to apply this specific type of provision. The court sided with K, stating there were two aspects that had to be fulfilled which K did fulfil

• Is there discrimination based on age? There was discrimination based on age, though Germany tried to argue that there wasnt as young people are less vulnerable since they have no mortgage, families and etc that rely on them and the court denied this stating it was blatant age discrimination, not everyone is in the same position as starting work in their mid-20s and she never studied, never went to university so it was unjust and discrimination on the basis of age

• Can K rely on this directive? - this was a horizontal relationship, how can K mobilise this right when this was private employment, you cannot read german national law in the directive as it is a horizontal relationship and state liability would not help you. K cannot rely on the directive itself, but can rely on the general principle that UNDERLIES of the directive of equal treatment that it should prevail regardless of any consideration.

Mangold v Rüdiger Seifert on Horizontal Direct Effect and contradicting the orthodox approach of HDE being impossible for directives (stated in Marshall), what is the context, outcome and how the court in Mangold v Rüdiger Seifert rationalised the departure from the orthodox view in Marshall?

Context of the case → Mangold was a 56-year-old German man employed on a fixed term contract in a permanent full-time job. The German government introduced the so-called Employment Promotion Act 1996 which allowed fixed term contracts for a two-year maximum, and otherwise were unlawful unless they could be objectively justified. But even this protection was removed (apparently to "promote employment") if the employee was over 60. Further amendments then changed the age to 52. Mr Mangold claimed that the lack of protection, over age 52, was unjustified age discrimination. You can have shorter contracts rather than permanent contracts with the intention to strengthen the economy. The question of the appeallants was whether it was compatible with EU law, as the appeallant was older, arguing age discrimination and being denied a permanent contract in contrast to someone younger.

The Court’s justification and reason for altering/departing from the orthodox approach? → The controversy stems from the Court of Justice of the European Union (CJEU) allowing an individual to invoke a general principle of EU law (non-discrimination on grounds of age) to disapply national law in a dispute between private parties, even before the deadline for the directive's transposition had expired.

Outcome of the case → The CJEU held that the German law contravened Directive 2000/78, the purpose of which, according to Art. 1, is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment', even though the Directive did not have to be implemented until the end of 2006, that is, although the transposition period was still running.

• SINCE the transposition period was still running, this meant that the state liability could not be initiated as state liability is dependent on the state FAILING to transpose the directive within the set time they have.

Honeywell case as orthodox departure of the Horizontal Direct Effect approach in Mangold and Kücükdeveci, what was the Honeywell case critical of? And what is the context and outcome of Honeywell?

Context → The Honeywell decision (2010) by the German FCC addressed whether the CJEU's interpretation of EU law, specifically allowing private individuals to invoke general principles (like age discrimination) against other private parties, surpassed the powers conferred by Member States.

Outcome → The German Federal Constitutional Court in its Honeywell decision, described the reasoning as "opaque" and "methodologically flawed". The German court suggested it was an ultra vires act (acting beyond its powers), though it ultimately did not void it. The FCC did not classify the Mangold ruling (which enabled this type of horizontal effect) as ultra vires, signaling a cautious acceptance of the CJEU's, approach while maintaining oversight on EU competence.

As per the orthodox approach, there is no HDE/horizontal direct effect for directives (HDE only for treaties and regulations), how does the CJEU mitigate the harshness of no HDE? (one way)

This is done through 'indirect effect of directives’.

National courts are invited to interpret national law in light of the directive and the situation is where the transposition period had expired and the member state has not solved the issue, so domestic courts are required to interpret their national law in light of the directive.

What 3 cases are examples of ‘indirect effect of directives’ in summary?

1. Von Coulson v Land Nordhein-Westfalen

2. Marleasing SA v La Comercial International de Alimentacion

3. Pfeiffer v Deutsches Rotes Kreuz

Von Coulson v Land Nordhein-Westfalen as an example of ‘indirect effect of directives’, what is the outcome of the case? (way of mitigating the harshness of NO HDE for private claimants against private parties)

Outcome of the case → National courts are required to interpret their national law in light of the directive and EU law as per Art 288 TFEU - after the transposition period has expired and member states have not acted, all member state courts have to do is interpret national law of the incoming directive. This is a way to solve the non-horizontal effect of directives.

Marleasing SA v La Comercial International de Alimentacion as an example of ‘indirect effect of directives’, what is the outcome of the case? (way of mitigating the harshness of NO HDE for private claimants against private parties)

Relevant passage → “the national court called upon to interpret it is required to do so, as far as possible, in the light of the wording and the purpose of the directive in order to achieve the result pursued by the latter...”

Pfeiffer v Deutsches Rotes Kreuz as an example of ‘indirect effect of directives’, what is the outcome of the case? (way of mitigating the harshness of NO HDE for private claimants against private parties)

Relevant passage → “Those provisions but requires the national court to consider national law as a whole in order to assess to what extent it may be applied”

Outcome of the case → The entirety of national law and legislation must be interpreted in light of the incoming directive

What are the two limitations on ‘indirect effect of directives’ or interpretative obligations?

1. non-retroactivity → Luciano Arcaro case

2. non contra-legem (against the law interpretations) → Wagner Miret

Luciano Arcaro case outlines that non-retroactivity is a limitation on intepretative obligation, what does it say overall?

As per Luciano Arcaro, where the passage outlines “where it has the effect of determining or aggravating, on the basis of the directive…the liability in criminal law of persons.”

Wagner Miret case outlines that non contra-legem (against the law interpretations) is a limitation on intepretative obligation, what does it say overall?

Wagner Miret outlines in it’s passage that “the national provisions cannot be interpreted in a way […] make good the loss and damage sustained as a result of the failure to implement the directive in their respect.”

As per the orthodox approach, there is no HDE/horizontal direct effect for directives (only treaties and regulations), how does the CJEU mitigate the harshness of no HDE? (second way) And how does Article 340 TFEU outline?

State liability is a way to solve and mitigate the denial of horiziontal direct effect/HDE between private individual and private entities - after you lose your case with your employer, and state liability in the EU arises when a Member State fails to transpose a directive within the deadline, causing loss to individuals.

There is no treaties or provisions on state liability - but there is union liability as per Art 340 TFEU.

Article 340 outlines “The contractual liability of the Union shall be governed by the law applicable to the contract in question.”

In what 6 instances can state liability arise (as an alternative to help mitigate no HDE between private entities and private individuals and instead action taken against member states)?

1. Failure to transpose a directive

2. Legislative action in breach of treaty provisions

3. Non-Implementation of directives

4. Incorrect implementation of directives

5. Executive state action in breach of treaty provisions

6. Judicial failure by domestic apex (Supreme courts) to comply with community obligations

What principle or rules does the Francovich case establish in regards to state liability (as an alternative to help mitigate no HDE between private entities and private individuals)?

Established in the Francovich case, this principle allows individuals to claim damages in national courts when a directive grants rights, those rights are identifiable, and a causal link exists between non-transposition and the damage.

Francovich, Bonifaci & others v Italian Republic on State Liability (in relation to Failure to implement a Directive), what is the context, outcome and importance of this case?

Context of the case → Italy failed to transpose a directive, hence this case created the precedence of state liability, where the citizen could invoke EU law on the basis of Italy failing to tranpose directive of providing people with financial support once their employers company became bankrupt.

Outcome of the case → if there is a breach of EU law caused by a member state and if that breach causes the citizen a damage, there is state liability and you can require a member state to make damage under EU law

• Passage in the case → “The protection of the rights which they grant would be weakened if individuals were unable to obtain compensation when their rights are infringed by a breach of Community law for which a Member State can be held responsible.”

What are the 3 requirements that must be fulfilled in order for state liability for legislative action to occur in breach of Treaty Provisions?

The Community law right in such circumstances depends on three ‘necessary and sufficient’ conditions:

1. The rule of law infringed must be intended to confer rights on individuals.

2. The breach must be sufficiently serious - the decisive test is whether there has been a manifest and a grave disregard of the limits of the discretion.

3. There must be a direct causal link between the breach and the damage sustained by the individual. It is for the national courts to determine whether there is such a direct causal link.

Where these ‘necessary and sufficient’ conditions are satisfied, the State must make reparation in accordance with national rules on liability. However, the conditions laid down by the applicable national laws must not be less favourable than those relating to similar domestic claims or framed in such a way as to make it impossible or excessively difficult in practice to obtain reparation.

Dillenkofer and Others on State Liability (in relation to non-implementation of directives), what is the context, outcome and importance of this case?

Context of the case → The claimants sued Germany for failing to transpose the Package Travel Directive in due time. While it should have been implemented by 31 December 1992, the corresponding German provisions did not enter into force before 1 July 1994. The claimants had in the meantime booked travel packages from organisers who had gone bankrupt without providing for the security as required by the Directive. The referring German court asked the ECJ for a preliminary ruling on a multitude of questions relating to the potential liability of Germany.

Outcome of the case → The test for ‘necessary and sufficient’ condiitons wasn’t fulfilled. Failing to transpose a directive in due time therefore ‘constitutes per se a serious breach of Community law’. The court was not impressed by Germany’s argument that the period foreseen by the Directive for implementation was too short since in addition to introducing new legislation adjustments in the economic sector and cooperation with stakeholders were also necessary. ‘That kind of circumstance cannot justify a failure to transpose a directive within the prescribed period’. If the period really had been too short, Germany should have taken appropriate initiatives on Community level to be granted an extension of the period.

R v HM Treasury ex parte British Telecommunications plc on State Liability (in relation to incorrect implementation of directives), what is the context, outcome and importance of this case?

Outcome of the case → The Court ruled that although the UK government had incorrectly transposed a Directive into national law, no manifest and serious breach had occurred, in that the Directive was unclear and thus capable of the interpretation given to it by the British authorities bona fide, and there was accordingly no requirement to compensate BT for any loss suffered as a result of that error committed by the State.

R v MAFF ex parte Hedley Lomas (Ireland) Ltd on State Liability (in relation to incorrect implementation of directives), what is the context, outcome and importance of this case?

Outcome of the case → In which the Ministry was found to have acted in an administrative sense in breach of a directly effective free movement of goods provision. What is important about this case is that the Court expressly recognised that the ‘serious breach’ requirement is more easily satisfied in cases of non-legislative actions; in other words, liability seems to be “stricter” in such cases.

Kӧbler v Republik Osterreich on State Liability (in relation to Judicial Failure by a DOMESTIC APEX COURT to comply with community obligations), what is the context, outcome and importance of this case?

This is the implementation of state liability in relation to the judiciary and the domestic apex court is the highest court within the member state.

Context of the case → Mr Kobler brought an action for damages before the referring court against the Republic of Austria for reparation of the loss which he allegedly suffered as a result of the non-payment to him of a special length-of-service increment.

Outcome of the case → Court ruled in favour of Mr Kobler

• Reason for the outcome →

  1. Argument 1 → Res judiciate is where legal remedies have exhausted and once you have reached the highest court, you must assume that justice has been done and completed, this would be a violation of res judiciate - 1st reason for going against state liability

     1. Court response to argument 1 → However, the court contradicted this as the res judiciate doesnt apply as the parties are different here - you can continue with the jurispurdence, but incur state liability for that and we cannot invalidate domestic rulings, but you can attach state liability to that - provides a strong incenitive for domestic courts to change their ways or otherwise cause state liability

  2. Argument 2 → state liability cannot be triggered by judges, but instead by legislature

     1. Court response to argument 2 → However, the court argued against this believing that this enhances the quality of the legal system - court counters the argument that

What do Mangold case, and Kukudevici case outline in relation to HDE for directives?

It is not the directive which gives the horziontal direct effect, but the general principles

What is another way of ECJ reducing the rigour of the rule of no HDE for directives?

1. The first was by giving the widest possible definition to the “State”, otherwise known as ‘emanation of the state’ doctrine

Foster v British Gas Plc on ‘emanation of the state doctrine’ (ways to reduce rigour of no HDE for directives), what is the context, outcome and impact?

Context → The plaintiffs argued that British Gas’s retirement policy breached the Equal Treatment Directive.

Outcome → It established the Foster Test, which outlined that in order to be an emanation of the state, an organization must:

1. Be subject to the authority or control of the state.

2. Have special powers beyond those applicable to relationships between individuals.

3. Be responsible, pursuant to a measure adopted by the state, for providing a public service.

Impact → This widened the scope of the "state" beyond just government departments, allowing direct effect of directives against utilities, local authorities, and nationalized industries.

Kampelmann v Landschaftsverband on ‘emanation of the state doctrine’ (ways to reduce rigour of no HDE for directives), what is the context, outcome and impact?

Context → Mr Kampelmann worked for a German public sector employer in highway construction. He had been given written particulars of his job grade and job activity. When he applied for promotion he was turned down on the grounds that his job activity was in fact of a lower category than stated in his written particulars. The actual job on which he was engaged did not entitle him to the promotion he was seeking. Mr Kampelmann sought a declaration from the German court as to his promotion rights. The German court referred the matter to the ECJ as to the status of the written particulars.

Outcome → However, a private company (the Motor Insurance Bureau) was held not to be an emanation of the State for the purposes of direct effect, even though it was the party to an agreement with the government by which a directive was to be implemented.

Impact → An ’emanation of state’ was understood to be ‘organisations or bodies which are subject to the authority or control of the state or have special powers beyond those which result from the normal rules applicable to relations between individuals such as local or regional authorities or other bodies, which, irrespective of their legal form have been given responsibility, by the public authorities and under their supervision for providing a public service’.

Farrell v Whitty on ‘emanation of the state doctrine’ (ways to reduce rigour of no HDE for directives), what is the context, outcome and impact/importance?

Context → Farrell was the victim of a traffic accident on 26 January 1996 when she was a passenger in a van owned and driven by Mr Whitty and he lost control of the vehicle. At the time of the accident, Ms Farrell was seated on the floor in the rear of Mr Whitty’s vehicle, that vehicle being neither designed nor constructed to carry passengers in the rear. Since Mr Whitty was not insured for the personal injuries suffered by Ms Farrell, she sought compensation from the MIBI. The MIBI refused Ms Farrell’s request for compensation because liability for the personal injuries she had suffered was not a liability in respect of which insurance was required under Irish law.

Outcome of the case →

• On the basis of those considerations, the Court has held that provisions of a directive that are unconditional and sufficiently precise may be relied upon by individuals, not only against a Member State and all the organs of its administration, such as decentralised authorities but also, as was stated in the answer to the first question, against organisations or bodies which are subject to the authority or control of the State or which possess special powers beyond those which result from the normal rules applicable to relations between individuals.

• Such organisations or bodies can be distinguished from individuals and must be treated as comparable to the State, either because they are legal persons governed by public law that are part of the State in the broad sense, or because they are subject to the authority or control of a public body, or because they have been required, by such a body, to perform a task in the public interest and have been given, for that purpose, such special powers.

• a body or an organisation, even one governed by private law, to which a Member State has delegated the performance of a task in the public interest and which possesses for that purpose special powers beyond those which result from the normal rules applicable to relations between individuals is one against which the provisions of a directive that have direct effect may be relied upon.

Impact/importance → The CJEU clarified and refined the test for identifying an emanation of the state, introducing a two-limb approach. It held that an entity may qualify as an emanation of the state if it satisfies either of two circumstances:

• First, if the state has delegated to the entity special powers beyond those granted to private entities, specifically for performing public interest tasks.

• Second, if the entity is subject to significant state control and is entrusted with providing a public interest service on that basis.