DIRECT EFFECT

There are a couple of events on the 5^th February, which attracted attention.

On the 5^th February 1919, United Artists was incorporated as a joint venture by four of the leading figures in early Hollywood: Mary Pickford, Charles Chaplin, Douglas Fairbanks and D.W. Griffith. Each held a 20% stake, with the remaining 20% held by lawyer William Gibbs McAdoo. The idea for the venture originated with Fairbanks, Chaplin, Pickford, and cowboy star William S. Hart a year earlier as they were traveling around the U.S. selling Liberty Bonds to help the World War I effort. Already veterans of Hollywood, the four film stars began to talk of forming their own company to better control their own work as well as their futures. They wanted a direct effect on their own lives.

Douglas Fairbanks, Mary Pickford, Charles Chaplin & D.W. Griffith in 1919

William Gibbs McAdoo

Of more importance to the present day, was the Judgment delivered by the European Court of Justice on the 5^th February 1963 in Van Gend en Loos v Nederlandse Administratis der Belastingen  (1963) Case 26/62

The case arose from the reclassification of a chemical, by the Benelux countries, into a customs category entailing higher customs charges. The Court held that this breached a provision of the treaty requiring member states to progressively reduce customs duties between themselves, and continued to rule that the breach was actionable by individuals before national courts and not just by the member states of the Community themselves.

Van Gend en Loos, a postal and transportation company, imported urea-formaldehyde from West Germany to the Netherlands. The Dutch customs authorities charged them a tariff on the import. Van Gend en Loos objected, submitting that the tariff was contrary to EC law. Article 12 of the Treaty of Rome (now replaced by Article 30 TFEU) stated:

"Member States shall refrain from introducing between themselves any new customs duties on imports and exports or any charges having equivalent effect, and from increasing those which they already apply in their trade with each other."

Van Gend en Loos paid the tariff but then sought to retrieve the money in the national court. The national court made a request for a preliminary ruling to the European Court of Justice, asking whether the then Article 12 of the Treaty of Rome conferred rights on the nationals of a member state that they could be enforced in national courts.

The European Court of Justice, delivering its judgment on the 5th February 1963, firmly held that Article 12 was capable of creating personal rights for Van Gend en Loos. In a seminal judgment it gave a wide and purposive interpretation to the Treaty of Rome.

The Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights, albeit within limited fields and the subjects of which comprise not only member states but also their nationals. Independently of the legislation of member states, community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage. These rights arise not only where they are expressly granted by the treaty, but also by reason of obligations which the treaty imposes in a clearly defined way upon individuals as well as upon the member states and upon the institutions of the community.

—Judgment of the Court of 5^th  February 1963.

As a result of this Judgement, the principle of direct effect was established. Direct effect has subsequently been loosened in its application to treaty articles and the ECJ has expanded the principle, holding that it is capable of applying to virtually all of the possible forms of EU legislation, the most important of which are regulations and in certain circumstances to directives.

The European Court of Justice laid down the criteria for establishing direct effect. The provision must:

▪   be clear,

▪   negative,

▪   unconditional,

▪   containing no reservation on the part of the member state, and

▪   not dependent on any national implementing measure.

If these criteria are satisfied, then the right or rights in question can be enforced before national courts. Of course whether or not any particular measure satisfies the criteria is a matter of EU law to be determined by the EU Courts.

What it all means is that a citizen is able to enforce a right granted by European Community legislation against the state. There were two varieties of direct effect: vertical direct effect and horizontal direct effect, the distinction drawn being based on against whom the right is to be enforced.

Vertical direct effect concerns the relationship between EU law and national law - specifically, the state's obligation to ensure its observance and its compatibility with EU law, thereby enabling citizens to rely on it in actions against the state. Horizontal direct effect concerns the relationship between individuals (including companies). If a certain provision of EU law is horizontally directly effective, then citizens are able to rely on it in actions against each other. Directives are usually incapable of being horizontally directly effective due to the fact that they are only enforceable against the state. Certain provisions of the treaties and legislative acts such as regulations are capable of being directly enforced horizontally.

The importance of this is that we, as individual citizens, can maintain some action against the larger European State as well as our own governments. I submit this is not a bad thing.