TheDoctrineofDirectEffectUnderEULaw

25 July 2003

Charlotte de Panafieu

The final provisions of each directive of the new regulatory package provide that “Member States shall adopt and publish the laws, regulations and administrative provisions necessary to comply with this Directive not later than 24 July 2003.(…) They shall apply those measures from 25 July 2003” (that latter phrase referring most probably to the internal implementing provisions and not to the provisions of the directive itself).

However, some Member States (such as France and Italy) have not yet taken all necessary steps to implement the directives in their own national regulatory framework. From a practical standpoint, can telecommunications operators directly rely on EU provisions, even though they have not been transposed into national law?

This possibility, known under EU law as the doctrine of “direct effect”, was developed by the European Court of Justice (ECJ) to give force to EU directives and thereby, to indirectly pressurize Member States that were reluctant to transpose EU measures into their own national framework.

The three conditions for application of the doctrine of direct effect

An undertaking may only rely on the doctrine of direct effect provided three conditions are met, relating respectively to the nature of the EU provisions at stake, the entity against which they are relied upon and the grounds for such action.

First, the provisions in the directives at stake must be precise, clear and unconditional. These requirements were set in particular in the van Duyn case, where the Court considered that the “provision [which] lays down an obligation which is not subject to any exception or condition and which, by its very nature, does not require the intervention of any act on the part either of the institutions of the Community or of Member States (…) requires that [persons concerned] should be able to rely on this obligation even though it has been laid down in a legislative act which has no automatic direct effect in its entirety” .

Second, and as stated in the Marshall case, the direct effect of a directive could only be claimed by an individual against the State which had failed to implement it, and not against a non-State entity or individual. In other words, in the present case, a telecommunications operator may only rely on un-transposed directives either against the national operator if it can prove that it qualifies to be considered as part of the State or against the State. In no way can it invoke direct effect in a horizontal manner, i.e., against a competitor.

Finally, direct effect depends on the applicant having a right which would be violated by the absence of implementation into national law of the EU provisions of the directive in question.

Provided all three conditions are met, a telecommunications operator may have scope for defining those of the provisions contained in the telecommunications package that could be awarded direct effect before national courts or national regulatory authorities.

An exhaustive list and analysis of such provisions is not feasible here although such studies have been conducted.

The “facilitating factor”: the absence of corresponding national provisions.

Direct effect is an exception to the principle that directives are only binding on Member States but there will generally be scope for interpretation to determine whether the provisions at stake are actually clear, precise and unconditional “enough” to be directly applicable into national legislation. Therefore, the decision to grant direct effect to a given provision will ultimately depend on the will of the authority whose intervention is sought.

National authorities may be more inclined to grant direct effect to provisions which have no corresponding national provisions. This is known as the “ability to plead substitution” (as opposed to the “ability to plead exclusion”). It refers to the ability of a party to “rely on a directive before a national court, instead of a national instrument which is non-existent or which does not comply with the directive, in order to enjoy a right established by that directive”. This possibility presents several advantages likely to encourage national authorities into upholding direct effect of directives:

  • The first (legal) advantage derives from the possibility left to the authority at stake to rely on a “consistent interpretation” of national law with regard to the new non implemented EU provisions, without having to expressly take a position on the direct effect of the EU measure at stake. Indeed, in the Marleasing case the Court laid down the principle that national authorities who are called upon to interpret national provisions are required to do so, as far as possible, in the light of the wording and the purpose of directives.
  • The second (practical) advantage relies on the reach of the decision to be adopted. From a pragmatic point of view, it is indeed “easier” for a national authority to rely on direct effect in the absence of a national provision rather than to expressly condemn its own national regime and declare it incompatible with community law.

The “complicating factor”: the overall structure of the EU Telecommunications package.

Notwithstanding the above, the complexity of the new electronic communications package, which forms a consistent whole, has to be taken into account. The Framework Directive lays down a general framework, which is the foundation of the entire body of rules, particularly as concerns the prior definition of markets by National Regulatory Authorities and the subsequent imposition of ex ante obligations on operators with a dominant position or Significant Market Power. Therefore, the initial market definition, notification to the Commission as well as the definition of the obligations imposed could be considered as a pre-condition which would undermine the direct effect of the provisions contained in the directives.

The ulterior possibility to claim damages

In any event, should the direct effect doctrine be rejected by national authorities, it may still be possible to claim damages, resulting from the responsibility imposed upon Member States to transpose directives into national law in due time. Indeed, Member States can be required to offer financial compensation to individuals if they fail to adequately transpose a directive. Such actions may be lodged provided three conditions are fulfilled:

  • The results prescribed by the directive must entail the grant of rights to individuals.
  • It must be possible to identify the content of those rights on the basis of the provisions of the directive.
  • There must be a causal link between the breach of the State’s obligations and the damage suffered.

The purpose of reparation should be to redress the harmful consequences of the failure on the part of the Member State, to beneficiaries of the directive. Non-implementation of a directive is considered a sufficiently serious breach of Community law for finding a Member State liable. However, this option is generally a last resort.