Direct effect is a principle of EU law. It applies to those aspects of EU law that are enforceable directly by Union citizens in their own Member State, regardless of whether the Member State has introduced specific national laws to implement the provisions. It can apply in relation to regulations, directives, Treaty provisions and decisions. The term ‘direct effect’ was first used by the European Court of Justice (ECJ) when it attributed to specific Treaty articles the legal quality of ‘direct effect’ in the case of NV Algemene Transporten Expeditie Onderneming van Gend en Loos v. Nederlandse Administratie der Belastingen, Case 26/62 . In this case, the ECJ identified three situations necessary to establish direct effect of primary EU law. These are:
- the provision must be sufficiently clear and precisely stated;
- it must be unconditional and not dependent on any other legal provision;
- it must confer a specific right upon which a citizen can base a claim.
If these conditions are met, provisions of the Treaties can be given the same legal effect as Regulations under Article 288 TFEU. However, there is little legislation on employment and industrial relations to be found other than in the primary law and in the Regulations concerning the free movement of workers.
By virtue of the doctrine of supremacy of EU law, provisions of Community law with ‘direct effect’ take precedence over domestic laws (Flaminio Costa v. ENEL, Case 6/64, ). EU labour law rules take precedence over national labour law rules.
Taken together, the principles of direct effect and supremacy mean that Treaty provisions may be used to make claims before domestic courts and override domestic law. Probably the best-known example is Defrenne v. Sabena, Case 43/75, , where the European Court decided that: ‘The principle that women and men should receive equal pay, which is laid down by Article [141 EC now 157 TFEU], may be relied on before the national courts. These courts have a duty to ensure the protection of the rights, which that provision vests in individuals’. In the Viking case (Case C-43805), Article 43 EC (now Article 49 TFEU) is interpreted as capable of conferring rights on a private undertaking that may be relied on against a trade union or an association of trade unions. In the Laval Case (Case C-341/05), Article 49 EC (now Article 56 TFEU) was held to have direct effect, so that Member States must modify national laws that restrict any freedom incompatible with the Treaty’s principles.
Most EU law on employment and industrial relations takes the form of directives. According to Article 288 TFEU: ‘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,’ The decision of the European Court to extend the principle of direct effect to directives, therefore, was of crucial importance.
The rationale for attributing direct effect to directives was to secure the ‘useful effect’ (effet utile) of EU legislation. Since EU law was a new transnational legal order capable of conferring rights on individuals, an interpretation of Article 249 EC(now Article 288 TFEU) was developed, which emphasised the binding result to be achieved by Directives, rather than, as stated by Article 288TFEU, leaving ‘to the national authorities the choice of form and methods’.
Direct effect can apply both horizontally and vertically, with the distinction based on who the right is being enforced against and the nature of the right itself. Where rights conferred by a Directive are being violated by the state or emanations of the state, a citizen can exercise ‘vertical direct effect’. Vertical direct effect concerns the relationship between EU law and national law and the state’s obligation to ensure its legislation is compatible with EU law. Citizens can reply on it in claims against the state (or against an emanation of the state) as defined in Foster v British Gas Case C-18/89. If a provision of EU law has ‘horizontal direct effect’ citizens are able to rely on it in actions against each other. However, horizontal direct effect does not apply to EU directives, as these are generally only enforceable against the state and the Court has refused to extend the direct effect of Directives to allow for claims by individuals against other private individuals, including private employers.
See also: emanations of the state; enforcement of EU law; horizontal direct effect; indirect effect; justiciability of EU law; Laval case; regulations; state liability; supremacy of EU law; treaty provisions; vertical direct effect; Viking case