Vertical direct effect

The Marshall judgment in 1986 was also an important step with regard to the direct effect doctrine. Ms M. H. Marshall was employed by South West Hampshire Area Health Authority from June 1966 to 31 March 1980. From 23 May 1974 she worked under an employment contract as senior dietician. On 31 March 1980, that is, approximately four weeks after she had attained the age of sixty-two, she was dismissed, although she had expressed her willingness to continue in the employment until she reached the age of sixty-five. According to the order for reference, the sole reason for the dismissal was the fact that the appellant was a woman who had passed the retirement age applied by this health authority to women.

The employer had applied a national policy, which stated that the age for retirement was the age at which social security pensions became payable. In this sense, the Social Security Act 1975 established that state pensions were to be granted to men from the age of sixty-five and to women from the age of sixty. But the legislation did not impose any obligation to retire at the age at which the state pension becomes payable. The employer waived the policy in respect of Ms Marshall by employing her for a further two years after she had attained the age of sixty.

The question here was whether the employer was to blame because it had not acted according to Directive No 76/207, which provided for equal treatment for men and women. In this preliminary ruling the first question addressed to the Court was whether the principle of equality of treatment laid down by Directive No 76/207 had been infringed. The Court answered in the affirmative in that the cause for her dismissal constituted discrimination on grounds of sex, contrary to that directive. The second question was whether an individual could rely upon Article 5(1) of Directive No 76/207 before national courts and tribunals.

This case shows the inconsistency between national law and Community law. The Court reminded that ‘wherever the provisions of a directive appear, as far as their subject-matter is concerned, to be unconditional and sufficiently precise, those provisions may be relied upon by an individual against the State where that State fails to implement the directive in national law by the end of the period prescribed or where it fails to implement the directive

16 Ibid., paragraph 22.

16 correctly’.¹⁷

However, the Court stated that directives can only have vertical direct effect, i.e., in a relationship between an individual and the state, since the binding nature of a directive exists only in relation to ‘each Member State to which it is addressed’:

With regard to the argument that a directive may not be relied upon against an individual, it must be emphasized that according to Article 189 of the EEC Treaty the binding nature of a directive, which constitutes the basis for the possibility of relying on the directive before a national court, exists only in relation to 'each Member State to which it is addressed'. It follows that a directive may not of itself impose obligations on an individual and that a provision of a directive may not be relied upon as such against such a person. It must therefore be examined whether, in this case, the respondent must be regarded as having acted as an individual.¹⁸

Then it was concluded that the respondent, Southampton and South West Hampshire Area Health Authority (Teaching), was a public authority. The Court gave an expansive interpretation to the concept of the state for the purposes of vertical direct effect.

Faccini Dori¹⁹ concerned the possibility of relying on a directive in proceedings between a trader and a consumer. The problem was that the Member State (Italy) had not taken any steps to transpose the directive into national law, although the period set for transposition had expired. Ms Dori used the Francovich principle²⁰ and relied on the directive to withdraw from an English language course. The directive allowed consumers to cancel contracts within seven days if the contract had been made away from business premises - in this case at a railway station. Ms Dori could not rely on the directive against a private body but she was able to claim compensation from the Italian state.

The Court repeated its ruling from Marshall stating that ‘a directive cannot of itself impose obligations on an individual and cannot therefore be relied upon as such against an individual’:

17 Marshall, paragraph 46.

18 Ibid., paragraph 48.

19 Case 91/92 Faccini Dori v Recreb, EU:C:1994:292.

20 Principle of State liability developed in Andrea Francovich and Others v Italian Republic, Joined Cases C-6/90 and C-9/90, EU:C:1991:428: ‘It follows from all the foregoing that it is a principle of Community law that the Member States are obliged to make good loss and damage caused to individuals by breaches of Community law for which they can be held responsible.’

17 The effect of extending that case-law to the sphere of relations between individuals would be to recognize a power in the Community to enact obligations for individuals with immediate effect, whereas it has competence to do so only where it is empowered to adopt regulations.²¹

It follows that, in the absence of measures transposing the directive within the prescribed time-limit, consumers cannot derive from the directive itself a right of cancellation as against traders with whom they have concluded a contract or enforce such a right in a national court.²²

In Foster²³ the Court faced a similar situation as in Marshall. It restated that ‘a Member State which has not transposed the measures provided by the directive cannot claim against the individual its own failure to perform the obligations which the directive entails’.²⁴ So the state cannot take ‘advantage of his failure to comply with Community law’.²⁵

In addition, in Foster the notion of state was also discussed. As happened in Marshall, the Court adopted a wide interpretation of the notion of state for the purposes of vertical direct effect:

Article 5(1) of Council Directive No 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions may be relied upon in a claim for damages against a body, whatever its legal form, which has been made responsible, pursuant to a measure adopted by the State, for providing a public service under the control of the State and has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals.²⁶

1.1.3. ‘Triangular’ direct effect

The CJEU made it clear that vertical direct effect is not precluded even if the application of the directive against the Member State can have adverse consequences for another individual.

This is known as the triangular situation.

21 Ibid., paragraph 24.

22 Ibid., paragraph 25.

23 Case 188/89 Foster v British Gas plc, EU:C:1990:313.

24 Ibid., paragraph 16.

25 Ibid., paragraph 17.

26 Ibid., resolution of the Court.

18 The Wells case²⁷ was a clear situation in which an individual challenged the validity of a national measure on the ground that it conflicted with an obligation imposed on the Member State concerned by a directive, and that this implied that another individual would stop enjoying a right under national law.

To be more precise, the owners of a quarry in Wales which had been dormant for many years were granted permission to recommence mining operations. Ms Wells sought to have the permission revoked or modified on the ground that it had been given without due consideration as to whether there had been an environmental impact assessment, as provided for by Directive No 85/337.

The United Kingdom claimed that accepting that an individual is entitled to invoke an article of the directive ‘would amount to “inverse direct effect” directly obliging the Member State concerned, at the request of an individual, such as Ms Wells, to deprive another individual or individuals, such as the owners of Conygar Quarry, of their rights’.²⁸

The Court rejected this argument and immediately stated that ‘mere adverse repercussions on the rights of third parties, even if the repercussions are certain, do not justify preventing an individual from invoking the provisions of a directive against the Member State concerned’.²⁹ So Ms Wells was held to be entitled to rely upon the Environmental Impact Assessment Directive, in spite of the 'adverse repercussions' that the quarry owners would suffer.