Direct effect

 

Author Definition

 

Definition

Direct effect is a concept, which is mainly used in the situations of parallel application of two or more legal systems: national and inter-/supranational or state and federal. Its rationale concerns the question of establishing legally binding and directly enforceable rights and obligations for the individuals vis-à-vis the states (vertical direct effect) and individuals vis-à-vis one another (horizontal direct effect). Usually, the principle is associated with the problems of the division of competences between the coexisting legal systems concerning the instances of a deeper and a more systematic application of the provisions of the upper legal system. The term is also relevant for the purely domestic situations. For example, when deciding upon enforceability of certain constitutional provisions, which are broad and allow different (and conflicting) interpretations.

 

Commentary

From the purely juristic point of view, the norm can only have direct effect if it is clear, complete, precise and does not contain clarificatory references to other norms (the element of executability or ratione materiae) and if it concerns a definable group of individuals (the element of determination or ratione personae). The narrower and the better articulated the norm is, the easier it is to assign to it a direct effect. In reality, the level of the precision may vary. The term ‘direct effect’ is sometimes confusingly used for defining the nature of EU legislative acts, when distinguishing the acts requiring a separate domestic implementation (e.g. directives) and those not requiring such implementation (e.g. regulations). EU regulations always have direct applicability, but not all provisions of the directly applicable (i.e. not requiring further transposition by a domestic legislative act) EU laws, are necessarily directly effective; and vice versa, even some provisions of the EU legislative acts, which are not designed to be directly applicable (i.e. EU directives) may become directly effective if not transposed by the Member State in due course. The concept of direct effect is also closely linked – but again only partially – with the principle of primacy of (some provisions of) one legal system over the other. The fact that the provisions of international or EU law may have primacy over the provisions of domestic law does not automatically imply the direct effectiveness of such provisions; and vice versa, not all directly effective provisions of EU law have necessarily the primacy over the domestic law.

The issue of direct effect is particularly relevant in the context of EU law. Historically, the Court of Justice of the European Union (CJEU) was designating direct effectiveness to many provisions of EU primary and secondary law (starting with the seminar van Gend en Loos, 1963) paving thereby the way to a more harmonious and comprehensive European integration. In this sense, the former is instrumental to the latter.

In the context of EU competition law, the provisions of Art 101 and 102 TFEU were confirmed of having horizontal direct effect in 1973 (BRT v SV SABAM, 1974). The concept of horizontal direct effect continues to have a paramount importance in the field of private enforcement as it enables bringing stand-alone and follow-on actions against the infringers of the provisions of Art 101 and 102 TFEU. This is particularly relevant for the follow-on actions, relieving the plaintiffs from various procedural burdens related to the discovery of evidences and proof of the infringement, allowing them to focus mainly on the issues of proving harm and showing causality. But stand-alone actions are not uncommon too.

The compensatory rationale has been established in a landmark 2001 Courage v Crehan judgment, in which the individual right to claim damages for the infringement of competition law has been explicitly acknowledged (This has been elaborated further by expanding the right to damages to the loss of profits in Manfredi, 2006). An important spillover of this ruling was a much wider and consistent use of the mechanism of private enforcement at the national courts of the EU Member States.

Direct effect of EU competition law does not answer the question of which jurisdiction – domestic of EU – has a primacy over applying the law, it only stipulates conditions under which the provisions of EU competition law may be applying by the individuals in the cases of breach of EU competition law. The parallelism in applying the provisions of Art 101 and 102 TFEU has been reaffirmed, institutionalised and calibrated by the Modernisation Regulation of 2003. While ideally the provisions of the directly effective EU norms must be read and interpreted uniformly in all Member States, the remedies available for the individuals may differ from one national legal system to the other, as the relevant norms could only be directly enforced via the substantive and procedural mechanisms of the domestic legal systems, which are inherently unique and can be very different. A number of effective steps aiming at the unification of EU rules and practices related to damages in competition law cases have been introduced, though the room for further improvements remain wide as the issue of damages goes in the heart of the procedural and substantive specificities of the national laws of EU Member States. One of the most problematic issues in this respect is the binding effect of the national competition authorities’ decisions declaring infringements of Articles 101 and 102 TFEU (Miguel Sousa Ferro). The doctrine of direct effect plays a paramount role in integrating and approximating the national legal systems of the EU Member States and contributes to the increasing role of European law in all EU Member States.

 

Bibliography

Miguel Sousa Ferro, ‘Antitrust Private Enforcement and the Binding Effect of Public Enforcement Decisions’, Market and Competition Law Review, Vol. 3, No. 2, 2020.

Barry Rodger, Miguel Sousa Ferro, Francisco Marcos, ‘The EU Antitrust Damages Directive: Transposition in the Member States’, Oxford University Press, 2018.

Szilárd Gáspár-Szilágyi, ‘The ‘Primacy’ and ‘Direct Effect’ of EU International Agreements’, European Public Law, Vol. 21, No. 2, 2015.

Richard Whish, ‘The Enforcement of EC Competition Law in The Domestic Courts of Member States’, European Business Law Review, Vol. 5, No. 1, 1994.

Paul Craig, ‘Once upon a Time in the West: Direct Effect and the Federalisation of EEC Law’, Oxford Journal of Legal Studies, Vol. 12, No. 3, 1992.

Author

  • University of Strathclyde (Glasgow)

Quotation

Oles Andriychuk, Direct effect, Global Dictionary of Competition Law, Art. N° 85998

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Institution Definition

The principle of direct effect enables individuals to immediately invoke a European provision before a national or European court. This principle only relates to certain European acts. Furthermore, it is subject to several conditions.The direct effect of European law is, along with the principle of precedence, a fundamental principle of European law. It was enshrined by the Court of Justice of the European Union (CJEU). It enables individuals to immediately invoke European law before courts, independent of whether national law test exist. The direct effect principle therefore ensures the application and effectiveness of European law in EU countries. However, the CJEU defined several conditions in order for a European legal act to be immediately applicable. In addition, the direct effect may only relate to relations between an individual and an EU country or be extended to relations between individuals.

Definition : The direct effect of European law has been enshrined by the Court of Justice in the judgement of Van Gend en Loos of 5 February 1963. In this judgement, the Court states that European law not only engenders obligations for EU countries, but also rights for individuals. Individuals may therefore take advantage of these rights and directly invoke European acts before national and European courts. However, it is not necessary for the EU country to adopt the European act concerned into its internal legal system.

Horizontal and vertical direct effect : There are two aspects to direct effect: a vertical aspect and a horizontal aspect. Vertical direct effect is of consequence in relations between individuals and the country. This means that individuals can invoke a European provision in relation to the country. Horizontal direct effect is consequential in relations between individuals. This means that an individual can invoke a European provision in relation to another individual. According to the type of act concerned, the Court of Justice has accepted either a full direct effect (i.e. a horizontal direct effect and a vertical direct effect) or a partial direct effect (confined to the vertical direct effect).

Direct effect and primary legislation : As far as primary legislation is concerned, i.e. the texts at the top of the European legal order, the Court of Justice established the principle of the direct effect in the Van Gend & Loos judgment. However, it laid down the condition that the obligations must be precise, clear and unconditional and that they do not call for additional measures, either national or European. In the Becker judgment (Judgment of 19 January 1982), the Court of Justice rejected the direct effect where the countries have a margin of discretion, however minimal, regarding the implementation of the provision in question (Judgment of 12 December 1990, Kaefer & Procacci).

Direct effect and secondary legislation : The principle of direct effect also relates to acts from secondary legislation, that is those adopted by institutions on the basis of the founding Treaties. However, the application of direct effect depends on the type of act: (i) the regulation: regulations always have direct effect. In effect, Article 288 of the Treaty on the Functioning of the EU specifies that regulations are directly applicable in EU countries. The Court of Justice clarifies in the judgement of Politi of 14 December 1971 that this is a complete direct effect; (ii) the directive: the directive is an act addressed to EU countries and must be transposed by them into their national laws. However, in certain cases the Court of Justice recognises the direct effect of directives in order to protect the rights of individuals. Therefore, the Court laid down in its case-law that a directive has direct effect when its provisions are unconditional and sufficiently clear and precise and when the EU country has not transposed the directive by the deadline (Judgement of 4 December 1974, Van Duyn). However, it can only have direct vertical effect; EU countries are obliged to implement directives but directives may not be cited by an EU country against an individual (Judgement of 5 April 1979, Ratti); (iii) the decision: decisions may have direct effect when they refer to an EU country as the addressee. The Court of Justice therefore recognises only a direct vertical effect (Judgement 10 November 1992, Hansa Fleisch); (iv) international agreements: in the Demirel Judgement of 30 September 1987, the Court of Justice recognised the direct effect of certain agreements in accordance with the same criteria identified in the Judgement Van Gend en Loos; (v) opinions and recommendations: opinions and recommendations do not have legal binding force. Consequently, they are not provided with direct effect. © European Commission

 
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