'directives can never have horizontal direct effect.' discuss the problems which are caused by this.

The rule of horizontal direct effect remains that directives do not have direct effect against private individuals.

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European law comes into effect in a number of ways and is usually classed as either primary legislation or secondary legislation. This is not in itself unusual as we in the UK have a similar classification of primary (Acts) and secondary (delegated) legislation. Primary sources in the EU are the Treaties and secondary legislation consists of either regulations, directives or decisions. We are concerned with directives and the way in which they give rights to individuals in some cases and not others.


The EU is about member states working together to achieve common goals. The EU goals were borne out of the aftermath of the Second World War and ambitions to secure long term peace, security and economic well being for Europe. Working together would later mean the free movement of goods and services and the creation of an enlarged 'common market' to bring about a more prosperous Europe. This would mean, among other things, the creation of similar rules and regulations setting common standards across Europe so that individual countries did not obtain an unfair advantage but traded subject to common standards to be found elsewhere in Europe. This was to be achieved by the harmonisation of laws within the member states.


Directives are the main way in which harmonisation is achieved. The EU creates directives setting out what is required in terms of the law to be introduced. Many see this harmonisation process as 'big brother' telling us what is best but it would be difficult to see how national parliaments could devise a legislative programme which reflected the interests of the EU as a whole.


The power to create directives is given under Article 249 of the Treaty of Rome. This is the same Article that enables the EU institutions to issue regulations. The difference with directives is that whilst they set out what is required they leave it to the member state to implement the directive by passing laws in the member state.


It should be appreciated that the directive is binding upon the member state to which it is addressed. The member state has no discretion as to the result to be achieved. This is, as we have seen, consideration of what is required to achieve the harmonisation laws and this objective would be defeated if it were open to individual member states to quibble over the principle and effect of the legislation required.


The EU does however recognise that there may be various reasons why the introduction of a new law or measure could cause operational or practical problems in a particular country and this may be do do with the size and population of the country or particular methods of working in an industry. There are sometimes significant costs involved and for these reasons the EU will stipulate a time scale within which the legislation is to be passed. The time limit will be set by the European Commission.

Vertical direct effect


In this event a directive is issued but not implemented by the state to whom it is addressed.


In the case of directives it is possible that a member state may fail to implement a directive thereby potentially depriving an individual of rights to which they would otherwise have been entitled. The claimant in such situations has to show that the state failed to do what it should have done and that it was intended to give individuals rights which are clearly set out and provided for.


Regulations have both vertical and horizontal direct effect but directives do not have horizontal direct effect. This distinction is far from satisfactory as many lay persons find it difficult to see why compensation may be payable in one case but not in another.


The point is well illustrated by the leading cases on the subject Marshall v Southampton and South West Hampshire Area Health authority (1986) and Duke v GEC Reliance Ltd (1988). The former case brought by Mrs Marshall concerned a claim for discrimination on the basis that she was required to retire earlier than her male fellow workers. Mrs Marshall succeeded in her claim to the European Court of Justice despite the fact that a directive had not been fully implemented in the UK. In this case the directive had vertical direct affect and a claim was allowed.


Mrs Marshall's claim succeeded because her employers were considered to be an 'arm of the state' and presumably because it was the state that failed to implement the directive and because it was accepted that rights were created it was only right that the same state, or a part of it, compensated the claimant. The directive was said to have vertical direct effect but it was the difference that allowed her claim to succeed whereas a claim against a private employer would not be allowed. Mrs Duke, on the contrary, was not able to rely on the Directive because her employer was not an arm of the state but a private company.


This seems harsh and difficult to comprehend to many. One saving grace is that the concept of the state or an 'arm of the state' is widely interpreted. In the case of Foster v British Gas plc (1990) the European Court of Justice indicated that it covered situations whereby a public service was provided and that special powers existed which went beyond those normally associated for business purposes. As a result British Gas (a nationalised industry at the time) was considered to be a part of the State and as such the claim succeeded.


The principle was followed in the subsequent case of Gibson v East Riding of Yorkshire Council (1999) where a part-time swimming instructor succeeded in her claim in respect of holiday entitlements despite the fact that the Working Time directive had not been implemented within the time scale allowed. Her employers were an 'emanation of the state.'


Horizontal direct effect


Directives that have not been implemented do not have horizontal effect and as a result individuals do not have rights against others who are not considered an 'emanation of the state.' In Duke v GEC Reliance Ltd (1988) this point was highlighted. Mrs Duke was unable to rely upon the same directive that Mrs Marshall had been able to and her claim was disallowed on the basis that her employer was not an 'arm of the state'. As a result she was deemed not to have acquired rights. The unfairness in allowing rights in some cases and not in others is obvious. Any distinction drawn must appear to those affected to be purely artificial.


The difference has now been mitigated to some extent by the case of Francovich v Italian Republic (1991). In this case the Italian Government failed to implement a directive which provided safeguards for employees whose employers became insolvent. The claimant, Mr Francovich, claimed against the state in respect of unpaid wages when his employer went into liquidation. He succeeded in his claim.


In allowing the claim the European Court of Justice set out three conditions which needed to be met before a claim could be allowed:


  • that the rights were clear and defined;

  • that the directive gave rights to individuals; and

  • there had to be a causal link between the breach of the state's obligations and the damage or harm suffered.


The problems caused by the distinction made between employers forming part of the state and those who did not has largely been overtaken by the European court's acceptance of the right of individuals to a claim for compensation irrespective of which sector their employer was in. Such cases as The Queen v HM Treasury, ex parte British Telecommunications plc (1996) and Brasserie du Pecheur SA v Federation of Republic of Germany and R v Secretary of State for Transport, ex parte Factortame Ltd (No 4) (1996) will have a considerable bearing in the future upon claims for compensation in circumstances where the state has failed in its obligations to implement EU law.



(Word Count 1331)

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