European Union Law: Direct and Indirect Effect, Liability of State

This report provides an evaluation of the doctrine of direct effect, indirect effect, and the liability of state in European Union Law. It explains the principles of direct effect and how individuals can invoke EU provisions before national and European courts. It also discusses the conditions for direct effect and the distinction between vertical and horizontal direct effect. Additionally, it explores the concept of indirect effect and the interpretation of national laws in accordance with EU law. Furthermore, it examines the liability of state for non-compliance with EU laws and the consequences for breaching EU directives. Overall, the report emphasizes the obligations of EU member states to comply with EU laws and the potential liability they face for non-compliance.

European Union Law

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The European Union Law or EU laws are those which are specifically for the members of
the European Union. Currently there are 27 members in EU. The aim of this law is to promote
peace, vale and also people's well-being. The legal foundations of the EU laws are based upon
the treaties unanimously agreed upon by all the member states by its government1. The countries
part to EU are bound by its law and all the laws of EU apply to the members. If any conflict
pertains to domestic and EU laws then the EU law shall prevail over to domestic law. If if the
country have not inculcated the laws in their domestic laws, the laws of EU are still binding upon
them. This report will contain an evaluation of doctrine of direct effect, indirect effect and the
liability of state developed by the court of Justice of European Law.
MAIN BODY
The principles of direct effect permits people to right away invoke an European Union
Provision before a national and European Court. This principle surely relates to the European
Act and also there are several other conditions. Precedents are considered as the fundamental
principles of the law of European. This was set out by the CJEU i.e. Court of Justice of the
European Union. The principle of direct effect ensures that the European Law are applicable and
effective in all the EU countries. There are various conditions to make European laws
immediately applicable.
The doctrine of direct effect was set out firstly by the court of justice in the landmark
case of Van Gend En loos. In this case court held that the European laws do not only put
obligations upon EU countries but also provide rights to its individuals. Therefore individuals
may directly take advantage of those rights provided before European and National courts.
The direct effect has not been stated in any of the Treaties of EU but it is applicable upon
them. ECJ laid down the test criteria of the direct effect where the court stated few test rules2.
The provisions of the EU must be Precise, Clear, unconditional, shall not contain any reservation
on members part and shall not be dependent on any implementing measures of nation. The test
of direct effect is applicable to treaties, regulations, decision of court and directives of EU. The
two aspect are there of the direct effect i.e. horizontal and vertical direct effect.
1 Turner, C., 2019. EU law. London: Routledge.
2 Craig, P. and De Burca, G., 2020. EU Law. Oxford: Oxford University Press.

Vertical direct effect relates to those consequences that are in between country and
individual's relations. That means, the provisions of EU can be invoked by individuals with
respect to the country. Horizontal direct effect is relations between the individuals that are
consequential. That means, the provisions of EU can be invoked by individuals with respect to
another individual.
The direct effect of the EU mainly depends on what type of act it is. Regulations of EU
have direct effect on the countries which is specifically mentioned in Treaty of the Functioning
under article 288 of the EU. The directives are addressed to the countries of EU and they are
under obligation to inculcate their laws in their domestic laws. The direct effect of directives are
recognised by the court so that they can protect the individual's right3. Therefore, the directives
are made obligatory upon the condition that such laws shall not hinder rights of the individuals.
The decision of the court have vertical direct effect when the matter is in relation to the country.
The international agreements too have direct effect under condition that no right of individual is
at stake. Lastly, the opinions and recommendations do not have any binding force as they are
merely interpretations and have no direct effect.
In the landmark case of Marshall, it was established that on the unimplemented
directives there exist no horizontal direct effect. Under this case, the court rules that the
directives are binding only to the EU member's state in which they can provide individual's with
rights but cannot impose any obligations upon them4. Even if all the test rules of Van Gend En
loos case applies to the directive, it still cannot be binding if its against the other individual.
In the landmark case of Van Duyn, the directive's vertical direct effect was established.
The case was related to the movement of workers freely between the EU member state. In this
case the court stated that the provisions of EU are directly applicable upon the countries and
therefore can have direct effect. Therefore it can be said that the provisions even if are directly
applicable does not mean that it may have direct effect. The circumstance may determine the
effectiveness of direct effect. The possibility of effectiveness in discretionary. Therefore it can be
said that the direct effect of the provision may or many not have direct effect depending on the
circumstances of the matter in question.
3 Chalmers, D., 2020. Introduction: The Conflicts of EU Law and the Conflicts in EU Law. European Law
Journal, 18(5), pp.607-620.
4 Kaczorowska, A., 2019. European Union law.

The directives do not have direct effect until the given time limit for its implementation
have not expired. This was held by the court in case of Pubblico Ministero v. ratti. For instance:
if the member state of the EU have inculcated the law in a defective manner then, in this
scenario, it will still be effective upon the country directly.
The another leading case of EU i.e. Foster Case helps in determining the emanation of
state. In this the test was proposed to determine the emanation of state to know which state have
direct effect of the EU laws and provisions. There were three prongs given to determine, firstly,
its governance by public law. Secondly, controlled by public body and lastly, it is given with
special powers to perform task relating to public interest.
The indirect effect basically is the interpretation by the judges of court in National Law.
Indirect effect is interpretation of the national laws of member country which are badly
implemented or are not implemented in their domestic law must be interpreted in accordance
with the EU law5. Indirect effect arises only when the member state do not inculcate law of fails
to do so which is mentioned under article 4(3) of TEU. This doctrine was created in the famous
case of Von Colson. This doctrine is the manipulation of the national laws so that the order can
be passes in accordance with the directives of EU.
In case when the member state of the EU fails to correctly implement a directive, the ECJ
make an expansion to the situation of indirect effect where the EU member state had not at all
implemented the EU directives in the case of Marleasing. Under this case it was held that the
national laws are to be interpreted as fas as possible. Indirect effect has more advantage to that of
vertical effect as no conditions are there. The only limitation to the Indirect effect is that, the
national law must be in existence or otherwise it cannot be used6.
In the case of Pfeiffer, it was held that The court must interpret the law so as to give
directive result. It was also held that the court must observe national laws along with other
related provisions to draw appropriate conclusion. The indirect effect of any provision have a
very wide reaching impact. The obligation to interpret any directive is continuous even when its
transposition is done into national law.
5 Brautigam, T., 2018. European Union Law. European Journal of International Law, 18(2), pp.377-378.
6 Sayde, A., 2019. Defining the Concept of Abuse of Union Law. Yearbook of European Law, 33(1),
pp.138-162.

There are few limitations of the indirect effect. It imposes obligations upon the national
court to comply with unimplemented directives. The other obligation is that the court cannot
interpret the directive which is against the law.
There are many obligations upon the member states imposed by the EU to be followed.
When any non compliance is done by the member of the laws and regulations of the Eu then the
members are held liable. The principle of liability of state is explained in Article 4(3) of TEU. It
is the duty of national courts to comply with EU directives and it there is any breach or violation,
the state is liable.
In the case of Francovich, national legislator breached the law of EU. In this case
elements of liabilities were determined by the court, which includes: EU law was breached,
breach was done by EU member state and damage has been caused to an individual. If all the
elements are fulfilled then in the legal action, compensation can be claimed before the national
court7. The nature of breach depends upon the conditions upon which the liability or the state
was raised. To avoid breach, community laws are to be followed and the rights of the individuals
are to be protected.
Whenever any member state breach any community law then they liable under the Article
of 215, EC treaty. This was held by the court in case of Brasserie/Factortame. This case
expanded the scope of the liability of state. The Factortame III test was given under this case in
which the the state liability is determined of the member state in case any breach is done of the
EU laws. The three liabilities are as follows: firstly, the infringed law must be providing laws to
the individuals. Secondly, the breach of law must be of serious nature and lastly, the loss
suffered and the breach committed must have casual link in between.
In the case of Dillenkofer, the test of Factortame III was applied and it was determined
that the non implementation of any of the directives is considered as a breach of serious nature.
The incorrect implementation of the directive may be considered as a breach of less serious
nature but the non implementation of any of the directive is against the EU laws and the state is
liable8. In the case of Fub v Stadt, there was a breach committed of settled case law. In this case
the casual link between the damage and breach was found. The test of factortame III was applied
7 Hartley, T., 2020. The foundations of European Union law.
8 Zemánek, J., 2019. Fundamental Rights Protection in the European Union - Edited by Jan
Barcz. European Law Journal, 17(2), pp.279-285.

in this case and determined that the when there are no causation EU laws then the national court
will determine the domestic causation rules relating to the matter. As the state liability comes
under the domestic law of tort, therefore the law of tort was applied in this case.
In the case of Ex parte hedley Lomas, “serious breach” of the UE law was found. In this
case, UK banned the export to Spain of ship on the grounds that they are not complying with EU
directives. Spain to this implemented the said directive but no assurance was provided by UK. It
was held that the ban imposed by UK was itself a serious breach under article 35 and it is
unjustifiable under article 36 as no evidence was provided by UK. Applying the test of
Factortame III, it was determined that the law provided was infringed which is of serious nature
and the loss was suffered due to such infringement. Therefore UK was held liable under state
liability by the EU.
CONCLUSION
From the above, it is concluded that the laws of EU are obligatory for all its member
countries to follow. Any non compliance or breach of law by the state will make them liable
under the state liability for the payment of damages. The laws made by the EU are to be
complied by all the member state by inculcating all the laws provided by the EU in its domestic
laws. The treaties signed by the members of EU made all the members state obligatory to comply
with those laws and regulations. There are many tests determined by the judges of the court to
determine the direct and indirect effect of the directives of EU laws. When the directives do not
have direct effect then the national court needs to interpret the laws in accordance to the laws of
EU. Therefore it is concluded that the laws are obligatory to be followed by members of EU or
else the state will be liable for damages.

REFERENCES
Books and Journals
Brautigam, T., 2018. European Union Law. European Journal of International Law, 18(2),
pp.377-378.
Chalmers, D., 2020. Introduction: The Conflicts of EU Law and the Conflicts in EU
Law. European Law Journal, 18(5), pp.607-620.
Craig, P. and De Burca, G., 2020. EU Law. Oxford: Oxford University Press.
Hartley, T., 2020. The foundations of European Union law.
Kaczorowska, A., 2019. European Union law.
Sayde, A., 2019. Defining the Concept of Abuse of Union Law. Yearbook of European Law,
33(1), pp.138-162.
Turner, C., 2019. EU law. London: Routledge.
Zemánek, J., 2019. Fundamental Rights Protection in the European Union - Edited by Jan
Barcz. European Law Journal, 17(2), pp.279-285.