The horizontal effect of Directives

By Evlampia Tsolaki, Attorney at Law

EU law constitutes a sui generis legal order, namely an environment with distinguishable characteristics in comparison with the traditional patterns of lawful action that have been established on the basis of standard public international law. 

Its special nature derives from a pivotal general principle that has been conceived and articulated by the leading judicial body of EU, the European Court of Justice (hereinafter ECJ), which has been followed in an absolute way, meaning with no exceptions being accepted, and states that EU incarnates a prototypical legal order. Namely, it is a public international legal formation with no precedence universally for it does not go with the flow of the rules long and deeply rooted in the arena of the states’ international relations, but it does make itsown rules. An essential parameter of the aforementioned innovative rules refers to the legal instruments having been designed and used for the support of the EU law-making process, which (instruments) express the so-called “secondary EU law”, as the latter is opposed to the “primary EU law” that is basically composed of the TFEU and the TEU as well as the Charter of Fundamental Rights of the EU. More specifically: 

As very well known, the principal legal tools for the introduction of new legislation within EU are Regulation along with Directive and the central legislative target each of them determines itsown legal profile. The first one (Regulation) is a means for unification of the respective legal regime regulated. Therefore, it is applicable in a direct way within member-states towards all entities without the necessity for any legislative initiative being taken by domestic legislators. So, literally it functions as and resembles common national law that enters into effect, without prejudice to the respective formalities, in an immediate way. From that angle, mutatis mutandis Regulation could be considered as the law of EU. On the contrary, Directive endeavors to succeed in harmonizing the member-states’ internal legal systems in areas of law fallen within EU’ s competence. This means that aims to introduce some legislative prerequisites acting as a common denominator throughout EU. To that end, it is foreseen to be binding exclusively for member-states per se and noteworthy not in toto, but only partially as regards its final goal served. In the opposite, it does not define the exact means and the formalities that each time are assessed as more suitable for being employed in order for the legislative mission given to be accomplished by national governments. To that respect, in principle, it is regarded that the only legitimate addressee of Directive are exclusively member-states and not natural and other legal persons residing in them in contradiction to Regulation that ipso iure binds and applies to all the entities throughout EU, without prejudice to exceptions expressed each time in itsown provisions. Under this very construction, it becomes apparent that there is a willingly produced legal vacuum of application between Directive on the one hand and private entities of member-states on the other. This void is foreseen to be covered by national authorities by the way of issuing a domestic act of transposition which is the only directly mandatory for natural and legal persons. This legal device that unavoidably strikingly simulates the manner, by which international agreements are adopted in national legal orders, has been qualified as being the most appropriate in order for member-stated to enjoy a pretty enough latitude of legislative maneuvering for promoting the goals advanced by a Directive. This is the case whenever the harmonization is considered not only desirable, but in addition purposeful, as well, instead of following the unification process by the means of Regulation. In this line of legal logic, each Directive acknowledges a time-period that is usually long enough in order for member-states to prepare and introduce the respective legal framework being fitted and compatible with the special features of their local legal sphere, only though which notably natural and legal personalities, other than member-states, become the subjects of the rights intended to be conferred to them by a Directive. Therefore, while in theory Regulation and Directive are regarded as equal legal tools, in praxis from the point of view of private entities the first one is obviously more favourable by virtue of its direct application erga omnes, as opposed to the latter that by the letter of EU law cannot be invoked by and applied to personalities with no state-status and as such it is manifestly more disadvantageous, in the sense of being ineffective. Towards this background that leaves private entities deprived of the rights that are aimed to be recognized by Directives, the ECJ has accepted a two-fold exception to the general rule that Directives’ recipients are exclusively states. In particular: 

The first one has become known as the vertical application of Directives and refers to the case, in which the time-period available by a Directive for being transposed into national legal orders, has been elapsed without a member-state having issued the legal act required or the latter despite its adoption is considered insufficient for reaching its targets. In this instance, ECJ ruled that a member-state cannot take advantage of itsown negligence towards its citizens by preventing them from exercising that Directive’s rights. Therefore, private entities have been credited by virtue of its long established jurisprudence with the extra legem capacity to invoke directly before national courts and other administrative authorities those Directive’s provisions that their wording is clear, precise and contains no terms and conditions. In spite of the general objection that in this manner Directives acquire the legal status of Regulations, especially in vertical legal relationships this aspect is easily disputable with the basic argument that ECJ itself has been steadily using in this string of cases. According to its syllogism, a member-state cannot thwart its obligations originating from a Directive while it is its all alone addressee since in so doing it gives a wide berth to itself for avoiding taking the responsibility towards its nationals. However, this stance is a manifest expression of abusive behavior and simultaneously contradicts with the general liability borne by states to take care of their citizens’ prosperity. That is a central principal going across EU member-states, the demanded degree of fulfillment of which depends on their specific constitutional commitments. Consequently, if member-states practically refuse to take this part, then their existential reason almost eliminates. So, through this very lens it becomes evident that vertical application of Directives is nothing more than a minimum prerequisite for the observance of Rule of Law that is undoubtedly cornerstone of EU legal order. 

The second one has been equally shaped by ECJ’ s case-law and it is connected with Directives’ horizontal effect, meaning its application to the relationships between private persons.From this point of view, it is mentioned to the most controversial dimension of Directives’ impact, as concisely explained in the following More specifically, this case could be divided into two subcategories. The first one is related to the national authorities’ obligation of interpreting the domestic legal framework each time at stake in full accordance with the Directive that has not been transposed on legislator’s part. Methodological-wise, it is nothing more than a procedural rule of legal reading moving pretty much in the well-known line of thought that national law shall be interpreted in the light of the respective international agreements signed and ratified by a state. The ultimate threshold of that approach is that the judge has no competence to alter the meaning of a provision by adopting an apparently contra legem legal meaning, that one corresponding to a Directive’s mandate in spite of it being obviously opposite to the letter of national law. As very easily understood, the above variant reflects a soft version of Directives’ horizontal effect whereas there is one more that is, methodologically speaking, much less mild. Exactly, this is the reason why it has become an apple of contention in the European legal circles of discussion. In this legal device, a private person is entitled to invoke a Directive’s provision vis-à-vis another private entity providing that it specifies a right enshrined expressly in the EU Charter of Fundamental Rights when this right is formulated in such a way so that it could be called upon any way individually, even if the Directive given had not been entered into force. Against this reasoning, the basic objection raised is that in this way Directives are equated with Regulations, something which is evidently contrary to the letter of primary EU law that distinguishes them crystal clear as regards their normative influence towards private legal subjects. Furthermore, it is advocated that such an approach results in inventing a secondary EU law of another kind, meaning utterly detached from that one originally foreseen in the founding Treaties of EU, as have been modified. 

However, though ostensibly palatable, this criticism is not irrefutable and as a matter of fact ignores some significant parameters. To begin with, it should be clarified that indeed Directives are addressed only to member-states. Nevertheless, the crucial point in their legislative design is states’ functional role, which is to become a bridge between EU and national citizens, more technically speaking an intermediary of the first towards the latter. From that angle, the whole question is put in another perspective as member-states are seen not as the exclusive subjects of Directives in the meaning of being their beneficiaries, but instead as becoming beholden of acknowledging the rights set out by their provisions to EU nationals. Therefore, the omission of transposing a Directive within their legal orders at last substantiates an act of violating that very obligation. This fact cannot be accepted as being legally justifiable and forgivable towards citizens, which member-states have the general responsibility to protect, additionally based accordingly on their constitutions. This means that ultimately the horizontal application of Directives in essence not only do not bypass their legislative qualifications set out by the founding Treaties, but more over on the contrary it constitutes a means of its fulfillment, where memberstates disregard their targets. Practically, the failure of Directives’ transposition and thus the incapacity of private persons to draw rights from them among them (horizontal application) is another form of abuse that is equally important with the aforementioned case of vertical application. This happens as in the current financial reality apart from states and in parallel with them there have been developed many other sources of power that produce structurally substantial inequalities between typically equivalent private operators. So, especially, in all those instances the horizontal application of Directives is essential, mainly for the weaker part of a legal relationship. Moreover, on a closer analysis, the approach followed in order to describe this version as the so-called Directives’ horizontal application, is not legally accurate in toto. Namely, a dispute arisen between two private persons is indeed brought before national authorities, usually national courts. However, these ones have the obligation to apply the appropriate legal framework, in the given case the Directives’ one, of which they are its addressees since as state shall be considered not only national legislators. Courts, tribunals and other administrative authorities as well, are some other dimensions of state on the basis of the general principle of the powers’ division that constitutes a common legal legacy within EU. Through that prism, which notably is the one adopted by the Council of Europe and this is the reason why even in legal differences between private persons before the European Court of Human Rights the defendant is always state, which is accused for its failure to protect their citizens on the basis of the European Charter of Human Rights and all its additional Protocols, the distance between vertical and horizontal application in real do not exist. In any case, it cannot be justified which is the reason a provision of the Charter of fundamental Rights of the EU that has the normative quality to be applicable on itsown, namely its phrasing is clear, precise and is articulated without terms and conditions, why it cannot be applied, when a Directive with relative provisions has been issued without being transposed into a national legal order. A fortiori, that shall be the case, based on the premise that iura novit curia, which prevails throughout the continental Europe, under which the judge is called upon to apply law ex officio and especially provisions safeguarding fundamental rights. Actually, this practice does not depend on their discretion, but it is an obligation that mandatorily shall be exercised from their part. Last, but not least the marginalization of Directives’ horizontal effect to a purely theoretical legal schema without any practical impact leads to the undermining of two other prevailing principles of EU law, the principle of its effectiveness and having access to an efficient legal system that guarantee iτs smooth operation. Put it e contratio, if the voices of contention against Directives’ horizontal effect dominated, then this would cause the massive frustration of EU law as the latter is expressed primarily via Directives, especially after EU enlargement. That as a sheer factum it has made even more difficult the unification process so that the usage of Regulation has given momentum to Directives. Eventually, that in case of EU law infringement by member-states is provided for the remedy for compensation, which is an argument largely advocated, should not be regarded as a decisive factor. On the one side, such a practice consolidates the culture of a kind of member-states’ “legislative delinquency” since they “bet” and “outbid” on the very fact that especially under the given circumstances of lasting financial crisis privateindividuals will not afford the money and time required for bringing an action before national courts. Additionally, on the other side, pecuniary compensation constitutes a secondary claim that can be very easily understood that it cannot be compared with the so-called in natura satisfaction, which in this context is inextricably linked with the horizontal application of Directives’ provisions having the normative quality required. 

So, from the above concisely mentioned it becomes rather clear that despite the prevalent rhetoric as against Directives’ horizontal effect between private actors, which by the way reflects a formalistic understanding of EU law and results in subverting its goals, such an application is a precondition for the real enactment of the harmonization process. Otherwise, this is reduced to an overdrawn promise that cannot be originally fulfilled so that the legislative convergence is endangered to end up a sheer verbal legal mechanism.

Read more articles by Evlampia Tsolaki here


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