Core Analysis: Rethinking Direct Effect and its Evolution- Article by Daniele Gallo

Abstract

This article explores the principle of direct effect in EU law, offering solutions for its better understanding and enforcement. It goes beyond the traditional interpretation stemming from the Van Gend & Loos judgement, presenting five key arguments:

Two Facets of Direct Effect: Direct effect manifests in two forms:
- Subjective-Substitutive: Confers individual rights and replaces domestic law.
- Objective-Oppositive: Leads to the disapplication of national law that conflicts with EU law, even without immediately granting individual rights or substituting the domestic norm.
Primacy and Direct Effect: The obligation to disapply national law arises from the combination of primacy and direct effect, not from primacy alone. Relying solely on primacy to justify disapplication could undermine the balance between the EU legal system and domestic legal systems.
Legitimate Derogations: Derogations from the obligation to immediately disapply conflicting domestic provisions are permissible under specific conditions set by the CJEU. These conditions include potential harm to individual rights or conflicts with the national identity clause as defined in Article 4(2) TEU (Treaty on European Union).
Revisiting the Test for Direct Effect: The traditional test of clarity, precision, and unconditionality for assessing direct effect is outdated. Unconditionality is the key element. Direct effect and direct applicability are equivalent concepts, as unconditionality (the sine qua non of direct effect) coincides with direct applicability.
Advantage for the Individual: A crucial aspect of direct effect is the creation of an advantage resulting from the application of EU law and the subsequent disapplication of national law. Direct effect should not be in malam partem (detrimental to the individual); disapplication should not occur without an advantage for the individual.

The article concludes that the CJEU must refine the doctrine of direct effect to guide national authorities. The CJEU should reassert its constitutional role and reinforce the core principles of the EU system.

Keywords: EU constitutional law; direct effect; Van Gend & Loos; CJEU; primacy; disapplication

Introduction

Critics of the EU often highlight the fragilities and inconsistencies of the EU legal system and integration process. However, they overlook the unique strengths and legal innovations that arose from the founding of the European (Economic) Communities. These peculiarities and innovations form the basis for the integration process and its ongoing evolution. The principles governing the interaction between EU law and domestic legal orders are of utmost importance, including effectiveness, primacy, effective judicial protection, direct effect, and consistent interpretation. These principles are reinforced by the preliminary ruling procedure outlined in Article 267 TFEU, a tool for judicial cooperation between Member States and the EU.

This paper examines the implications for individuals stemming from the relationship between national legal orders and EU law, focusing on the doctrine of direct effect. Since its conceptualization in Van Gend & Loos, direct effect has significantly shaped EU law. This principle, in conjunction with the primacy principle established in Costa, has allowed the EU legal system to become an integral part of the legal systems of the Member States. Direct effect enables individuals and legal entities to invoke EU law to challenge conflicting domestic laws before national administrations and jurisdictions. It places these individuals and entities at the center of the Treaties, defining the autonomy and originality of EU law.

Direct effect challenges the international law norm where individuals lack legal personality. In Van Gend & Loos, the Court's decision was driven by a vision of Europe, conferring rights on individuals as a counterpart to obligations imposed on Member States–a political choice reflecting the values guiding European integration.

Despite its central role, the doctrine of direct effect is not always clearly framed in the case law of the CJEU. Clarifying if, when, and how direct effect arises is critical for individuals invoking EU law. This article aims to reconstruct and revisit the doctrine, addressing its problematic features, particularly concerning primacy and disapplication.

This contribution focuses on the relationship between EU law and national law, not the application of international law within the EU. It will address, but not deeply investigate, the incidental effect of directives nor the horizontality of the Charter of Fundamental Rights.

The article will:

Explain why direct effect is an evolving notion beyond the Van Gend & Loos judgement.
Demonstrate that direct effect does not always confer immediate rights or replace conflicting national provisions.
Examine the relationship between direct effect, primacy, and disapplication, identifying permissible derogations. It argues that justifying disapplication based solely on primacy undermines the relationship between EU law and domestic legal systems and also the cooperation between EU and national authorities.
Examine the limits of the test on precision, clarity, and unconditionality, exploring the interplay between direct effect and direct applicability, as well as the importance of unconditionality.
Identify the true conditions of direct effect, arguing that unconditionality and the creation of an advantage resulting from the application of EU law are key. An EU provision should not be purely detrimental to the individual.
Conclude with considerations on the future of direct effect and the role of the CJEU in its reconstruction and enforcement.

Direct Effect Beyond Van Gend & Loos: A Concept in Flux

The CJEU considers the Van Gend & Loos judgement a source and framework for the constitutional structure of the EU. The ruling examined whether Article 12 TEEC (Treaty establishing the European Economic Community) contained a 'clear and unconditional obligation' with 'internal immediate efficacy'. The Court clarified that Article 12 TEEC 'produces direct effect and creates individual rights which national courts must protect’. It defined the Community as 'a new legal order of international law' where states have limited their sovereign rights, and whose subjects include both Member States and their nationals.

The Van Gend & Loos judgement is not just a historical ruling but a doctrine guiding the CJEU, complementing other core principles of EU law. Academics largely agree on direct effect's role as an integration tool for completing and refining European integration. However, there are divergent views on the present and future; disagreements exist on the CJEU's interpretation and application of the doctrine, its potential role in EU-domestic law relationships, and its limits or outdatedness.

The variety of doctrinal approaches demonstrates that the concept of direct effect is ever-changing and diluted, considered a 'chameleon concept' and a multi-faceted juridical category, not 'carved in stone.' It has undergone a progressive 'diversification et gradation' of its effects, lacking clarity and precision in its scope, boundaries, and objectives. There is a risk of misinterpreting the CJEU's choice of words in defining a directly effective EU provision. This uncertainty can transform direct effect from a legal cornerstone into a 'virus' capable of 'infecting' theoretical elaborations regarding the interaction between EU law and Member States' legal systems. Doctrinal disagreements stem from asymmetries between national legal traditions. For example, there exist a variety of interpretations given to the concept of 'individual right'.

Even though it is 'a Community concept par excellence', direct effect has different facets. In conclusion, direct effect is dynamic in that the legal categories of jurisprudential origin frame ever-developing social phenomena. There is no reason to limit direct effect to the Van Gend & Loos judgement and doctrine. Rather, it has developed into a broader legal category. The CJEU should voice and systematize this change, as the Van Gend & Loos doctrine 'seems to grasp only a thin fragment of EU law enforcement issues' and 'no longer gives an accurate idea of the ways through which EU law penetrates Member States through its enforcement in national courts'. Even though several constitutive and recurring elements have consolidated, an originalist understanding of the Van Gend & Loos doctrine is misleading because it neglects the transformation that occurred and the fulfilment of direct effect’s content and scope, as well as its partial reshaping.

Five matters warrant in-depth analysis:

The role of rights within the realm of direct effect.
The relation between direct effect, primacy and disapplication.
The test employed by the CJEU for assessing the directly effective nature of EU norms.
The identification of direct effect’s true core elements.
The reasons for its useful effect still today.

The Objective-Oppositive Facet of Direct Effect

The Decoupling Between Direct Effect and the Conferral of Rights with Substitutive Effects in the EU Case Law

The Van Gend & Loos ruling considers the conferral of a right a core element of (hence the subjective dimension of) direct effect. EU directly effective provisions invoked by individuals that attribute actionable rights can replace domestic norms, producing substitutive effects, when it comes to governing a case under the scrutiny of a national court. Disapplication presupposes the existence of a right created by EU law and entails the application of an EU norm instead of a domestic provision. However, this understanding cannot be generalized. Direct effect does not necessarily mean that rights are directly attributed to individuals, nor does it always entail substitutive effects, whereby a norm of EU law always replaces a provision of national law.

Direct effect can also serve as a parameter of legality of national law, with exclusionary effects, regardless of the creation of a right stemming directly from the EU legal order. It is the so-called invocabilité d’exclusion, ie, the objective-oppositive manifestation of direct effect. Individuals may invoke an EU norm to review the legality of a national provision, an administrative measure, or a judicial decision. Individuals seek to vindicate an advantage/interest through disapplication, which may lead to the disapplication of domestic rules, administrative actions, or judgements/orders, should there be a conflict with EU law. The advantage entailed by disapplication shall be intended as an interest or a ‘privilege’, borrowing from Hohfeld’s conceptualisation of ‘subjective legal situations’.

The EU case law is not straightforward, and the boundaries between the different forms of direct effect (subjective, objective, substitutive, oppositive) have not been explicitly dealt with by the CJEU to this day. There is, therefore, great uncertainty on the matter.

The CJEU’s case law, notably the cases regarding directives, will be interpreted in the sense of favoring a broad interpretation of direct effect that is inclusive of objective-oppositive direct effect. The starting point in the process of objectification of direct effect is the Becker judgement, regarding Article 13, part B, letter d), No. 1, of the Sixth Directive 77/388/EEC on the harmonisation of Member States’ law in relation to the turnover tax. Paragraph 25 states that, wherever the provisions of a directive appear to be unconditional and sufficiently precise, those provisions may 'be relied upon as against any national provision which is incompatible with the directive or in so far as the provisions define rights which individuals are able to assert against the State'.

In the EU case law, there are two types of cases from which the existence of a dichotomy between subjective-substitutive direct effect and objective-oppositive direct effect can be inferred:

The national legal order comprises a derogation, ie, a provision that deviates from a rule enshrined in the domestic legal order, causing a breach of EU law.
The national legal order comprises trade-related technical rules amending the domestic technical rules already in force, which were not notified by the State to the Commission, in contrast with EU obligations, and are thus unenforceable in judicial proceedings.

In both situations, the individual relies on EU law and seeks the disapplication of national provisions. There is neither the direct conferral of a right stemming from an EU provision nor the replacement of national law by EU law. The case at hand is governed by domestic provisions which remain applicable since they are not affected by the remedy of disapplication. EU law 'immunizes' the individual from a provision or an action of the State and, in doing so, serves as a 'shield' rather than a 'sword'.

In Johnston, regarding the interpretation of Directive 76/207/EEC on equal treatment of men and women, the CJ indicated the court must first interpret national law in conformity with EU law. Subsequently, the individuals could demand, vis-à-vis a State authority, the application of the principle of equal treatment between men and women as enshrined in Article 2, paragraph 1 of Directive 76/207, to the conditions of access to work and access to professional and further training, 'in order to have a derogation from that principle under national legislation set aside'. The effect, in the case, is direct because the application of EU law entails the disapplication of national law. Direct effect is objective in nature since the EU provision does not explicitly confer a right upon the individual and is 'simply' oppositive (rather than substitutive) since it is national law that finally applies, in conformity with EU law, although the latter is implemented at the level of a derogation enshrined therein.

The second ruling is Bernàldez, on Directive 72/166/EEC concerning insurance against civil liability in respect of the use of motor vehicles. The CJ urged the referring national judge to interpret the Directive as disapplying the Spanish provision whereby the insurer is not liable for damage to property and personal injuries caused to third parties if the driver of the insured vehicle is intoxicated.

Examples of the second strand of rulings are well-known cases.

CIA Security International, concerning Directive 83/189/EEC on the provision of information in the field of technical standards and regulations. The CJ observed that Articles 8 and 9 of the Directive – according to which Member States are required to notify to the Commission any draft of technical regulations falling under the sphere of application of the Directive – were sufficiently precise and unconditional to be invoked by the individuals before a national judge 'which must decline to apply a national technical regulation which has not been notified in accordance with the directive'. The Directive contains provisions of a procedural character that individuals can rely on to halt domestic technical rules, and do not directly confer any individual right because they 'simply' entail oppositive effects. There is no substitutive effect since EU law does not replace domestic legislation.

In the Unilever judgement, in which neither direct effect nor its conditions are mentioned, the Court’s assertion that Directive 83/189 'creates neither rights nor obligations for individuals' can be interpreted in the sense of denying the direct effect of the provisions enshrined in the Directive. This denial only holds true if direct effect is always linked to the creation of a right. If there can be direct effect otherwise, the reasoning in the Unilever case is not of any surprise. The invocation of Directive 83/189/EEC by the Unilever SpA company and its subsequent enforcement by Italian courts triggered the disapplication of domestic technical regulations in relation to the labeling of foodstuffs, thereby causing a disadvantage for the Central Food company and, simultaneously, an advantage for Unilever. The effect entailed by the application of unconditional EU provisions is direct because it imposed upon national authorities the duty to apply 'old' domestic technical standards rather than 'new' technical rules in force at the time in Italy – which had not been notified to the European Commission, as they should have been, by Italian authorities. It is direct, yet it neither generated substitutive effects nor conferred immediate individual rights.

The Decoupling Between Direct Effect and Conferral of Rights with Substitutive Effects in the Literature

Broad vs narrow definition of direct effect

As several authors have adjusted their approach over time, Timmermans and de Búrca, for example, have abandoned the strict view of direct effect which inspired some of their writings, refraining from any reference to the existence of a structural link between direct effect and attribution of rights. Waelbroeck identified two categories of direct effect: ‘effet direct positif ou immédiateté’ and the ‘effet direct simple ou négatif’. Bleckmann anticipated that the CJEU would argue in Becker that there is a broader form of direct effect not necessarily linked to the conferral of an individual right. Bleckmann stated that 'la création de droits est un simple cas d’application de cette notion plus large’. Prechal observed that the definition of direct effect 'in terms of the creation of individual or subjective rights as understood in national law will often be, if not impossible, then rather artificial and, moreover, unnecessary'. Ruffert noticed that CJEU built 'objective direct effect as a new form of direct effect' that contrasts with the ordinary ‘subjective’ direct effect that 'should remain conditional upon the existence of an individual right'. Edward said it could be useful 'to adopt the German distinction between objective and subjective direct effect'. Van Gerven referred to the trend of objectification characterising the EU case law and observed that the provision of a directive could be invoked to seek the disapplication of national provisions which are incompatible with the said directive ‘in themselves, meaning, objectively without reference to any specific right granted to the claimant under the directive’. Bobek has explicitly argued in favor of ‘objective justiciability’.

The arguments against decoupling: objective-oppositive effect is not direct effect

A narrow concept of direct effect, limited to its subjective-substitutive dimension, is found in the works by Winter, who affirmed that 'the direct effects and the creation of individual rights seem to be inseparable and to stand to each other in a Yin-Yang relationship'. Dumon wrote that 'sont des dispositions directement applicables celles qui, dans l’ordre interne, déterminent la position juridique des sujets de droit'. Lenaerts and Corthaut state direct effect must be considered as ‘the technique which allows individuals to enforce a subjective right’. Von Danwitz claimed that the ‘conséquence juridique réelle de l’effet direct’ is the creation ‘d’un droit dans la personne du citoyen de l’Union’ invoking EU law.

There are some recurring arguments in this literature against a broad definition of direct effect.

When EU law confers a right to the individual which he/she may then exercise before the national authorities, the provision can be considered directly effective. Wathelet stated only the invocabilité de substitution would integrate a true hypothesis of direct effect.
In the case of the oppositive effect, the EU provision would create ‘limited effects’ which are dissociated from the ‘claimable rights’ and, would not be suitable ‘à completer directement le patrimoine juridique de particuliers de droits subjectifs et/ou d’obligations’.
An EU provision generating oppositive effects could not be applied directly by the national authorities. The oppositive effect should fall within the concept of indirect effect.
The disapplication is limited to cases involving directives concerned with public law duties of a technical or procedural kind.

The counterarguments in favour of decoupling: objective-oppositive effect is a form of direct effect

The arguments against decoupling are not conclusive. There are four reasons why direct effect should be intended in a broad sense as comprising an objective-oppositive dimension and why this form of direct effect could not be rejected per se.

Justiciability, in its oppositive facet, is not uncommon in domestic legal systems.
Relevant legal effects for individuals can also be entailed by EU provisions that do not directly attribute rights to natural and legal persons. The legal subjective effects stemming from an EU provision are not only the result of a right created by EU law as any right is directly and immediately attributed. Hohfeld stated such there lie other concepts, such as ‘privilege’, ‘power’, and ‘immunity’, which are part of the broader notion of interest. Direct effective provisions may produce direct effects/unconditional provisions. Furthermore, Isaac wrote that direct effect is ‘la capacité à être une source de la légalité en vigeur dans l’ordre juridique national’. And Bobek stated that direct effect’s conditions for “granting of individual rights” ‘is not seen as being “in itself” ‘one of the general conditions for direct effect’.
An EU provision generating oppositive effects could not be applied directly by the national authorities through, it is incorrect for, domestic provisions can be applied and govern the case at hand autonomously where a right upon the individual is inferred and apt to replace a domestic provision rarely fully takes the place of the national law. An EU provision is rarely perfectly autonomous, making additional clarifications, at the level of national law, normally necessary. Also, an EU law provision does not generally produce identical effects throughout the legal orders of the Member States. Hence, it is impossible to mark a stark boundary between subjective and objective direct effect.
An oppositive effect, combined with the disapplication of national law, would come into play only regarding directives containing provisions of a technical nature. Oppositive effects have also been recognized in relation to EU legal acts deprived of such technical character.

In short, considering the twofold form of direct effect, both objective and subjective, Prechal defines direct effect as ‘the obligation of a court or another authority to apply the relevant provision of Community law, either as a norm which governs the case at hand or as a standard for legal review’. The common element between substitutive-subjective direct effect and objective-oppositive direct effect is the occurrence of the exclusion, ie, the disapplication of national law. Moreover, when engaging with a directly effective EU provision, national authorities, being bound by the obligation of disapplication, always settle the case by virtue of a different provision than the one that would have applied if, ab astracto, EU law had not been applicable: in the case of subjective-substitutive direct effect, the EU provision instead of the national one; in the case of objective-oppositive direct effect, a national norm different from the one originally envisaged to govern that specific case.

The fundamental divergence between substitutive-subjective direct effect and objective-oppositive direct effect, instead, is that while the exclusion is always present within subjective direct effect together with a substitutive effect because the EU provision directly creates a legal position governing the case at stake in place of the internal law provision, within objective direct effect the effect is ‘only’ oppositive since the dispute is governed by the internal law which outlives (and was not affected by) the disapplication.

Beyond the Objective-Oppositive/Subjective-Substitutive Dichotomy: at the Roots of Disapplication

Direct effect and primacy (not primacy alone) as a trigger of disapplication

In addition to the points raised in section 3 about the possible decoupling between direct effect and the creation of rights, among the arguments against and those in favor of objective- oppositive direct effect lie others concerning the relationship between direct effect, primacy and disapplication. The reflection upon a narrow or broad conception of direct effect, therefore, is an occasion to venture, in this section, into the role and scope of the remedy of disapplication, in its interplay with the principles of direct effect and primacy.

Several Advocates General and authors have argued that disapplication is not always the product of both primacy and direct effect and that the CJEU case law on objective- oppositive effect only the principle of primacy would apply and cause the disapplication of domestic provisions as that the oppositive effect would simply act as a 'corollary' of primacy. Advocate General Léger indicated where one of the parties did not aim to obtain recognition of an individual right, the matter of direct effect 'tends to be eclipsed by that of primacy' because the problem of integration of the EU provision in the national legal order would remain 'a confrontation between the different rules' while ignoring the rule regarding the application of the said norms to the subjects of rights. The result is a real disconnection between direct effect and primacy as far as disapplication is concerned this dissociation becomes possible as direct effect is deemed to be a sufficient condition 'pour entraîner le double effet d’exclusion et de substitution, mais que rien ne permet d’affirmer qu’il s’agit d’une condition nécessaire'. Moreover, it was affirmed that 'pour écarter une norme nationale contraire, point n’est besoin, pour le juge national, de lui reconnaitre un effet direct'. Only an outdated reading of the Simmenthal judgement can lead to denying the disapplication of domestic law in situations that are not 'covered' by EU provisions endowed with direct effect. The recognition of direct effect as a precondition for disapplication could dangerously restrict the effet utile of EU law, with the additional risk of improperly expanding the scope of the remedies of consistent interpretation and State liability, as well as the constitutional review mechanism for States.

Furthermore, several scholars and Advocates General have argued that tracing back the oppositive effect to direct effect would call into question the axiom of EU law recognized from the Faccini Dori ruling onwards, according to which directives, being addressed at States, could not be intended as prescribing obligations towards individuals and, consequently, could not be invoked against them by other private parties. Tracing back the objective-oppositive effect, and disapplication, to primacy alone, rather than to direct effect and primacy, would solve the problems arising from a number of cases, including the above-mentioned CIA Security International and Unilever judgements. In this case law, the disapplication entailed by EU directives affects, de facto and in incidental/indirect terms, the private individuals who had benefited from the Member State’s ‘guilty’ omission. The lack of directives’ horizontal direct effect would then be infringed because of oppositive direct effect. On the contrary, scholars have affirmed that the exclusion of oppositive effect from direct effect would make such infringement a priori impossible.

Advocate General Bot indicated 'disconnecting the horizontal direct effect of directives from the right to plead them to exclude contrary national law', would constitute a 'palliative' for the lack of direct effect, whereby the application of an EU directive would cause adverse effects for the individuals in the horizontal relationships.

The reasoning above raises criticism. Firstly, a comprehensive concept of direct effect is preferable to a strict one when it comes to the matter of directives’ internal effect in horizontal relationships, because the effect, in such sit- uations, is not properly horizontal. The State violating an obligation addressed to it, rather than simply the behavior of a private party is the individuals real problem. Direct effect should not be dismissed simply due this problem, the hope is that, in the future, the CJEU will change its attitude and recognize the right, for individuals, to enforce provisions contained in a Directive also in horizontal relationships.

Critics of the EU often highlight the fragilities and inconsistencies of the EU legal system and integration process.