A directive is an act of European Union law to be transposed into memberstate law to achieve a certain aim, however the member state itself is not limitedto using only certain means of achieving this result1.
Unlike regulations, EU directives can have only vertical direct effect, and nothorizontal. While directives are preferred to regulations, due to the freedomthey give to Member States, as it means they are free to determine how totranspose them, disparities within the law have arisen as this meansindividuals cannot enforce their rights and take action against otherindividuals even where the aim of the directive is for these individuals to beprotected. As Directives can only have vertical direct effect, a person seekingto rely on this can only take proceedings against the State or an emanation ofthe state2.This is unfair and unjust particularly in the employment sector, as where aperson is employed in the public service, they can bring action against theiremployer based on the direct effect of a directive as this will be seen as anemanation of the state3,whereas even if the conditions for direct effect are met, an individual cannotrely on this to take action against their employer in the private sector. This isevident in Marshall I4,where the claimant succeeded in her equal pay claim against a public healthauthority based on Directive 76/207/EEC, contrasted with Duke v GEC Reliance Ltd5,where the claimant lost in a comparable claim against a private company.
Notonly this, but where a directive has failed to be transposed properly by themember state, and this directive would mean that an individual would havecertain protections, the individual would struggle to hold their privateemployer accountable for not providing these protections. In order to overcomethe consequences of this and rectify these complications, the European Court ofJustice (ECJ) has developed some remedial mechanisms; namely the principles ofstate liability and indirect effect, among others. But whether these devicescan harmonize the law, in such a way as to compensate for the issues created bythe fact that directives cannot have horizontal direct effect, is a question muchdebated among legal scholars and academics. The idea of indirect effect, and how this provides a solution to theproblems caused by directives not having horizontal direct effect, is mosteffectively explained through the example of a case. In Seda Kucukdeveci v Swedex GmbH & Co6,a young employee who began working at a private German company was dismissedafter 10 years. The company calculated that she had given 3 years of service,given the fact that German legislation provided that employers should only takeinto account employment after the employee reaches 25 years of age. MsKucukdeveci brought action against her employer in the German courts statingthis was discriminatory based on her age and thus went against Directive2000/78. The court then referred to the ECJ, asking whether this was illegaldiscrimination, contrary to EU law and the directive, and if so, whether thenational court should disapply the national law in the dispute concerning twoprivate parties.
The ECJ referred to Mangoldv Helm7,stating that this case provides that the directive in question does not itselflay down the principle of non-discrimination and equal treatment, but that thisdirective implements a framework for combatting inequality. The ECJ thereforeheld that the principles do apply. Then, it was to be decided whether the caseat hand fell within the scope of EU law.
The ECJ recalled the general rule thata directive cannot impose obligations on an individual and therefore cannot berelied on against another individual8,and therefore pointed out that usually this would not come within the remit ofEuropean Union law. However, the court went on to recall that Member Stateshave an obligation arising from a directive to achieve the result envisaged bythat directive and their duty to take all measures, whether general orparticular, to ensure the fulfilment of that obligation9.The ECJ therefore held that when it applies national law, the national courtmust ensure that the result pursued by the directive in question is achieved inlight of the wording and purpose of the directive, and therefore therequirement for national law to be interpreted in conformity with EU lawpermits the national court to ensure the full effectiveness of said directive10.This is the principle of indirect effect, whereby even where a directive doesnot have horizontal direct effect, the national court should seek to achievethe same result as if it did have such an effect when the directive givesexpression to a general principle of EU law. The question remains however as to whether this is a practical solutionto the lack of horizontal direct effect of directives.
Since this decision,English courts have shown willingness to abide by this judgment, and also thatof Mangold v Helm11,as seen in X v Mid Sussex Citizens AdviceBureau12,which concerned disability discrimination. The ECJ has shown and reiteratedthat Directives are not capable of having horizontal direct effect, however atthe same time have granted this through ‘the back door’ under the disguise ofenforcing general principles of EU law. Although the ECJ never actually ruledthat national courts should apply Directives directly against employers, onlythat they should not apply provisions of national law that conflict with Unionlaw, the effect and end result is the same. These judgments have created legaluncertainty as there are certain criteria to be met for national law to bedisapplied, for example, where the national legislation must have been adoptedafter the expiry of the deadline for the transposition of the directive inquestion, and where the national legislation in issue is unambiguous and cannotbe interpreted in such a way as to comply with EU law. This creates an issue aseach analysis will have to take place on a case-by-case basis due to allnational law being different, which is extremely time-consuming for the courts.
The concept of state liability was first established in Francovich v Italian Republic13,where the ECJ set out that a Member State will be liable in damages toindividuals who have suffered a loss as a result of that Member State’sinfringement of EU Law, including their failure to properly transpose an EUdirective into national law. This was further clarified in Brasserie du Pecheur SA v Federal Republic of Germany and R v Secretary of State for Transport, exparte Factortame Ltd14,where the conditions for liability of a Member State were set out. Thisrequired that the rule of law which has been breached must be one which isintended to confer rights on individuals, this breach must be sufficientlyserious15,and there must be a direct causal link between the Member State’s default andthe loss suffered by the individual.
Critically, in Dillenkofer v Federal Republic of Germany16,the ECJ held that non-implementation of a directive within the prescribed timelimit will constitute a serious breach of EU law. Article 153(3) TFEU outlinesthat Member States remain responsible even where they have entrusted’management and labour, at their joint request, with the implementation ofdirectives adopted’. Thus, Member States must ensure that ‘management andlabour have introduced the necessary measures by agreement’ and must take ‘anymeasure enabling it at any time to be in a position to guarantee the resultsimposed by that directive’17. State liability has seemingly wide implications forcertain areas of the law, particularly employment law. Ifa private individual has a definable interest protected by a directive, and anindividual suffers damage because the state fails to act to protect thatinterest, this individual could claim compensation through the principle ofstate liability.
The directives on equal treatment of the sexes, health andsafety at work and directives regarding workers, are a fertile field forexploration of the scope of state liability18. Many scholars have debated the issue of whether state liability is anactual alternative to horizontal direct effect. For example, Ross has statedthat Francovich should not be seen ascreating a true alternative, but “as a safety net to provide individualremedies where there has been a breakdown in securing them in the originallydesignated national manner”19.While state liability does provide a means for individuals to be protectedunder directives through holding member states accountable for their implementation,issues with this remain. For example, the requirement that the breach of themember state must be ‘sufficiently serious’ has provided discrepancies withinthe law in the past.
The test for whether a breach is sufficiently serious iswhether the state has ‘manifestly and gravely’20disregarded its obligations. It has long been regarded by the ECJ that failureto transpose a directive would amount to a sufficiently serious breach21,however this was challenged in TabakfabrikenGmbH v Shatteministeriet22,where it was held that if a domestic administrative authority had attempted tocomply with the provisions of the relevant directive, then thenon-transposition would not automatically mean a sufficiently serious breachhad taken place. This therefore further reduces the clarity of this principleand creates issues for individuals within different member states withdiffering institutions23.Without the recognition that non-implementation of a directive willautomatically lead to a sufficiently serious breach, workers who have beenaggrieved will have more difficulty in proving to the courts that this is asufficiently serious breach.
However, the main reason that state liability islimited is for the glaringly obvious drawback of who it holds accountable – theState24.When the Working Time Directive25was implemented, it meant that individual private employers had to give effectto the Working Time Regulations 1998, and provide workers with the rightsprovided therein. A worker who would want to enforce these rights if theirprivate employer was not adhering to the transposing legislation would have tobring action against the State, and while the State holds responsibility forthe transposition of directives26,this does seem unfair.
It means that the employer could continue to denyworkers of such rights until the State decides to take some action, which seemswholly absurd. For this reason, many public lawyers have argued that stateliability is no substitute for horizontal direct effect, and it is argued thatif individuals are provided with rights under EU law, they should be able toenforce these rights through simpler means if they have been denied themunjustly. An effective remedy for the inability of directives to havehorizontal direct effect is needed, but this is not it. Overall, it seems evident that the principle of indirect effect proposesa greater solution to the problems created by EU directives not havinghorizontal direct effect than the principle of State liability. It can beargued that while indirect effect sufficiently provides a solution for thediscrepancies in the law created by the incapability of directives to havedirect effect, state liability does not sufficiently cover the other issueswhich are created, and therefore, problems still remain. While indirect effectpartially achieves the result obtainable through the rule of direct effect, anddoes provide more protection for individuals than state liability, this is onlyinsofar as the national law is not wholly inconsistent with EU law27,therefore it is evident that this area of the law can still lead tounreasonable or arbitrary outcomes. The argument that horizontal direct effectcould be the answer itself has long been regarded by many Advocate Generals28for years as a deficit in the pursuit of effective remedies.
Advocate GeneralVan Gerven has proposed that denying horizontal direct effect of directives hascaused the ECJ to suffer, stating that it has led to ‘distortions andinconsistencies in the law which were to the detriment of a progressive methodof extending the law’29.Essentially, horizontal direct effect would allow individuals to hold theirdomestic institutions accountable by disallowing them to withhold theirEuropean Law rights through unclear or inaccessible enforcement processes – andthis, is what the ECJ should aim to achieve. 1 Art 288 Treaty on theFunctioning of the European Union2 Case C-152/84 Marshall v Southampton and South-WestHampshire Area Health Authority 1986 ECR 7233 Case C-188/89 Foster v British Gas plc 1990 2 AC 3064 (n 2)5 1988 1 All ER6266 Case C-555/07 2010 IRLR 3467 Case C-144/04 2005 All ER (EC) 3838 (n 2)9 Case C-14/83 Von Colson v Land Nordrhein-Westfalen 1984 ECR 189110 Case C-397/01-403/01 Pfeiffer v Deutsches Rotes Kreuz,Kreisverband Waldshut eV (2005) IRLR 13711 (n 7)12 2012UKSC 59, 2013 1 All ER 103813 Joined Cases C-6/90 and 9/901995 ICR 72214 Joined Cases C-46/93 andC-48/93 1996 QB 40415 (n 13)16 Joined Cases C-178,179 and188-190/94) 1997 QB 25917 ibid18 Marson, J.
2004 ‘Holes inthe safety net? State liability and the need for private law enforcement’Liverpool Law Review 2519 Ross, M. 1993 “BeyondFrancovich” The Modern Law Review 55-7320 Joined Cases C-83 and 94/76and 4, 15 and 40/77 Bayerische HNLVermehrungsbetriebe GmbH & Co. K.G. v. Council and Commission of theEuropean Communities 1978 ECR 120921 (n 16)22 Case C-319/96 1998ECR I-5255 23 (n 18) 24 ibid25 Directive 93/104/EC concerningaspects of the organization of working time 199326 Article 153(3) Treaty on the Functioning ofthe European Union27 (n 6)28 Van Gerven, W.
1993 ‘TheHorizontal Effect of Directive Provisions Revisited – The Reality ofCatchwords’ Institute of European Law Public Lecture Series29 (n 18)