EU Law

LESSON 4 – SOURCES OF EU LAW AND ITS RELATIONSHIP WITH NATIONAL

LAW

Content

I. SOURCES OF EU LAW

1. Introduction
2. Sources of EU secondary law

2.1 Regulations
2.2 Directives
2.3 Decisions
2.4 Recommendations and opinions

II. THE RELATIONSHIP BETWEEN EU LAW AND NATIONAL LAW

1. Autonomy of EU law
2. Direct effect of EU law

2.1 Introduction
2.2 Case 26/62 van Gend & Loos
2.3 Direct effect of primary law, regulations, directives, and decisions

2.3.1 Primary law

2.3.2 Regulations
2.3.3 Directives
2.3.4 Decisions

3. Supremacy of EU law

3.1 Introduction
3.2 Case 6/64 Costa v. ENEL
3.3 Supremacy over fundamental rights of a national constitution
3.4 What supremacy entails for conflicting national law
3.5 The reply of constitutional courts to the supremacy of EU law
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I. SOURCES OF EU LAW

1. Introduction

What are legal sources or sources?

1. They are the constitutionally-recognized different origins of law. For instance, one
source of law in a country is statute1 or written law (in Spanish, la ley). Customary law
and case-law are two other examples of legal sources. A comparison is useful here. Try
to imagine each legal source as one of the various pipes of a same fountain or spring of
water. Just as one water, or the same water, flows through the different pipes of the
fountain or trough, so does law flow through different legal sources.

2. Why are legal sources relevant? Why should we differentiate between them? Because
each source has a different impact on natural persons2, legal persons3, and Member
States. When one dominates the different types of legal sources, one understands fast
the different effects that each of those sources has on its addressees and the available
options they have to protect their interests.

3. The word “source” comprises all the potential manifestations of that source. For
instance, when we speak of statute law as a legal source in a certain country, we are
referring to all the statutes in force in that country. When we speak of case-law as a
legal source of a certain country, we are referring to all the judgments delivered in that
country. When we speak of treaty law as a source of international law, we are referring
to all international treaties.

4. Legal sources consist of different legal acts or acts. For example, regulations are a legal
source of EU law that consists of a plurality of specific regulations, each of which is a
legal act. We say that the regulation on data protection adopted in 2016 is a legal act or,
simpler, an act. This data protection regulation is one specific manifestation of the legal
source regulations. The terms legal source and legal act tend to be used interchangeably.

5. At the end of this Section I you will find a diagram depicting EU legal sources. There
are two main types of legal sources in that diagram: primary law and secondary law.
International treaties and supplementary law are additional legal sources.

6. Primary law is foundational EU law. It includes the treaties creating the EU (TEU, the
TFEU, and the EURATOM treaty); the older versions of the foundational treaties and
the foundational treaties that were abolished (for instance, the Treaty establishing the
ECSC); other treaties that affect the basic structure of the EU (for instance, the Merger
Treaty); the Charter of Fundamental Rights of the EU, and; general principles of EU
law, contained in the judgments of the Court of Justice of the EU and in the Treaties
(for instance, the principle of legal certainty). Doubts exist on whether the treaties of

1 The word statute stands for a law that is formally written down and passed by a parliament or another body with the
power to do so.
2 Natural persons are human beings. Some legal systems do not grant the condition of natural person to human beings in

their earliest phases of life and this is the object of strong controversy.
3Legal persons are groups of natural persons and abstract entities that are deemed to have many of the rights and obligations

of natural persons (for example a corporation like Google, or an association like the International Law Students
Association).
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accession are primary law (an example of an accession treaty is the one signed between
the European Communities and the Kingdom of Spain on 12 June 1985).

7. Secondary law develops and implements primary law and is in a lower position hierarchically.
It comprises the sources and legal acts listed and defined in article 288 of the TFEU
(these are the so-called typical acts), as well as other legal acts that are not defined by the
TFEU (these are the so-called atypical acts). The list of atypical acts is a large list of
different acts that are still waiting for proper classification. As of today, we do not have
a complete classification of every type of legal act of the EU.

8. After years of confusion, the Treaty of Lisbon incorporated into the TFEU a catalog of
the typical acts of secondary law. That catalog is in article 288 TFEU. You should master the
content of this article. The five items of the list are regulations, directives, decisions,
recommendations, and opinions.

9. Regulations, directives, and decisions are binding. Recommendations and opinions are
non-binding. Recommendations suggest a course of action but do not oblige in legal
terms. Opinions convey the point of view of an EU institution on a certain issue but
do not oblige in legal terms.

10. The binding acts of article 288 TFEU (regulations, directives, and decisions) can be
adopted following a legislative procedure, or they can be adopted following a non-legislative
procedure. Article 289.3 TFEU establishes that the former are legislative acts, while the
latter are non-legislative acts.

11. As of the Treaty of Lisbon, generally, non-legislative regulations, directives, and

decisions are either delegated or implementing. Lesson 5 elaborates on what delegated and
implementing acts are.

12. The list of article 288 TFEU is characteristic of EU law, its particular in comparison to other
legal systems. The system of sources that the list of article 288 TFEU constitutes is quite
different from national systems of legal sources. The EU system is different because
of, (i) the particular features of some of its sources, especially directives, and (ii) the fact
that there exists no hierarchy between EU secondary sources.

13. EU supplementary law complements the rest of the legal sources. It includes the case-
law from the CJEU, international public law, general principles of law4, and the
teachings of academic legal doctrine.

4 Please note that in EU law, general principles of EU law are primary law, while general principles of law are supplementary
law.
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2. Sources of EU secondary law

Sources of EU secondary law are important because they are the ordinary means
through which the EU acts. You should be very familiar with them.

2.1 Regulations

14. Article 288 TFEU establishes that “(...) A regulation shall have general application. It
shall be binding in its entirety and directly applicable in all Member States (...)”.

15. In principle, regulations are of general application.

16. “General application” indicates that regulations are enacted for a group of addressees
defined according to an abstract criterion. For example, a regulation will be addressed to
“the higher education institutions of the European Higher Education Area” (in this
case the addressee is defined in abstract), and not to “Universidad de Navarra” (in this
second case the addressee is defined nominally).

17. General application also indicates that regulations are applied to situations defined
according to an abstract criterion. For example, a regulation will punish cases of illegal
tax aid provided by countries to selected companies (in this case the situation is defined
in abstract), and not only the specific occasion in which Ireland provided tax aid
amounting to 13 million € to Apple (in this second case the object of the regulation is
just a specific event and not a situation defined in abstract).

18. Regulations are binding in their entirety and are directly applicable in all Member States.
What is directly applicable? This alludes to the relationship between regulations and the
national laws of Member States. Direct applicability is explained later in Section II 2 of
this lesson.

19. Regulations are the equivalent to national statute law. In fact, regulations were named
European laws by the failed Treaty Establishing a Constitution for Europe. After the
decision was taken to avoid constitutional language in the Treaty of Lisbon, the term
law was repudiated and the historical term regulation was kept. The concept of
regulation can be traced back to the Treaty Establishing the European Economic
Community.

2.2 Directives

20. Directives are addressed to Member States, not to legal, nor natural persons, and are binding
as to the result to be achieved. Directives are the most special of the sources of EU
law, but they are not purely an invention of EU law; they already existed in international
law.

21. Directives are considered to be, in principle, more respectful of the autonomy of
Member States than regulations because they leave States to choose the means through which they
attain the results that the directive demands. It is up to Member States to decide how they are
going to implement a directive addressed to them.
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22. If we compare the percentage of adopted regulations with the percentage of adopted
directives we will notice that the EU legislator uses more regulations than directives.
This poses a problem. The principle of proportionality of article 5.4 TEU demands that
the form of the action of the EU shall not exceed what is necessary to achieve the
objectives of the Treaties. It may be considered that the Union is going too far by
issuing more regulations than directives. Could not the Union be less intrusive by way of
issuing more directives and fewer regulations?

23. Some scholars understand that the EU does not respect the principle of proportionality
because of this reason. For them, directives should be used more frequently. Some
others understand that, actually, directives can be more intrusive than what their
definition suggests because a directive can be very strict with Member States. This
second group is not so concerned with the comparatively high percentage of regulations
approved by the EU.

2.3 Decisions

24. Decisions are binding in their entirety. They are not of general application. In principle,
decisions are for an addressee nominally identified and apply only in a specific case. In
a sense, decisions can be seen as the opposite to regulations. A decision would be
addressed to the Universidad de Navarra, and not to “the higher education institutions
of the European Higher Education Area”. A decision would deal with the specific
occasion in which Ireland provided tax aid amounting to 13 million € to Apple in 2003,
and not with all the cases in which countries provide illegal tax aid to selected
companies. This description of a decision corresponds to the classic version of decisions.
In some legal systems, this type of legal act is called an administrative act.

25. Scholars started to notice that the EU was adopting frequently a type of legal act that
was similar to classic decisions but slightly different. These acts were conceived for
specific cases but had no specific addressee. These acts were used to adopt measures in
organizational and budgetary matters. For example, a decision like the one that creates
the Office for infrastructure and logistics in Brussels5. This decision has no addressee.
One of the working groups preparing the Treaty Establishing a Constitution for Europe
became aware of this fact (it was Working Group IX on Simplification) and proposed
to recognize formally the existence of this new type of decision sui generis. The Lisbon
Treaty incorporated the idea and now refers to decisions with no addressee in the catalog of
legal acts of article 288 of the TFEU. Today we need to differentiate between decisions
with an addressee and decisions with no addressee.

2.4 Recommendations and opinions

26. A recommendation is a suggestion of a course of action addressed to Member States.

It is not legally binding. For example, a recommendation of the Council of the EU to
Member States to improve the quality of student traineeships with the aim of easing
the transition from education, unemployment, or inactivity to work6.

5 Decision 2003/523/EC.
6 Council recommendation of 10 March 2014 on a Quality Framework for Traineeships (2014/C 88/01).
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27. An opinion is the standpoint of one of the institutions of the EU on a specific issue. It
is not legally binding. For example, the statement of the Commission considering that
a Dutch decree amending previous rules banning the use of permanent dermal fillers
for aesthetic purposes was justified7.

7 Commission opinion of 22 July 2015 on the measure adopted by the Netherlands prohibiting the use of dermal fillers
for aesthetic purposes (2015/C 241/01).
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(2) Secondary Law

Regulations.
Article 288 TFEU typical legal acts (3 binding

BINDING
Each of these binding acts may be legislative
Directives. or non–legislative depending on the procedure
to an individual or used for their elaboration (article 289.3 TFEU).
legal person.
+ 2 non-binding)

Directed to an addressee.
Decisions. to a Member State.
With no addressee (Beschluss
sui generis).
NON–BINDING

Recommendations.

Opinions.
Atypical acts of
Secondary law

For instance, white papers, green papers, communications, resolutions, working programmes….

(3) International treaties signed by the EU

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II. THE RELATIONSHIP BETWEEN EU LAW AND NATIONAL LAW

28. The attempt to define the link between EU law and the laws of Member States has
captured the efforts of EU legal scholars for decades. It is one of the oldest discussions
in EU law. Already in the 1960s the amount of literature on the topic was
unsurmountable.

29. Let us propose a condensed description of the relationship between EU law and
national laws: EU law and national law interact in a relation of imperfect cooperation in
which EU law has a direct effect in the internal spheres of Member States (principle of
direct effect) and displaces national law in cases in which both collide (principle of supremacy
of EU law). This relationship relies on the assumption that EU law is an autonomous
legal system.

Autonomy of EU law is elaborated first (Section 1). Direct effect and supremacy of EU
law, second and third, respectively (Sections 2 and 3).

1. Autonomy of EU law

30. Autonomy of EU law is a fundamental assumption at the base of the explanation of

the relationship between EU law and national law. Autonomy of EU law means that EU
law exists as a separate legal order or system. Obviously, if EU law did not exist as a reality of
its own, then it would make no sense to analyze the relationship between EU law and
national law.

31. The recognition of the existence of EU law as an autonomous legal system is the
starting point from which the CJEU explains the relationship between EU law and
national law. Autonomy has to be explained first.

32. Autonomy of EU law has several meanings.

33. Firstly, autonomy is the above said: EU law exists as a legal order or a legal system. Autonomy
means, hence, separate existence, the fact that EU law is different from international law and
national law. The CJEU considers this as a given fact. The reasoning of the CJEU goes
along the following: EU law is not an invention of this court but something we have to
acknowledge.

34. Secondly, autonomy of EU law also means that EU law has its own original legal sources
that are binding per se. The force of EU law comes from independent legal sources and not from the
legal sources of national law.

35. Thirdly, autonomy of EU law is that EU law is self-referential. EU law is considered to be

self-referential because EU law forms a complete system that is able to provide solutions to
legal issues with no aid from international law nor national law. The CJEU affirms that EU law
has a logic of its own, different from that of internal law and national law. This logic is the logic of
political integration. According to the CJEU, integration inspires EU law. Integration is a
yardstick that the CJEU uses to interpret EU law.
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36. Fourthly, for the CJEU autonomy of EU law implies the capacity of the CJEU to shield EU
law from the effect of international law. The CJEU understands autonomy as its own power
to decide how international law shall be implemented in the EU. The Kadi case8 and the
Mox plant case9 are good examples of this position of the CJEU.

37. Fifthly, the CJEU interprets autonomy as the power to impose a uniform
implementation of EU law across the Union. This avoids potential disparities in
interpretation and implementation. This way, for example, the Spanish Tribunal
Supremo will apply EU law in the same way as the French Conseil d’État, or the Italian
Consiglio di Stato.

38. Some scholars summarize the above-said by stating that the CJEU understands
autonomy of EU law as the capacity of the CJEU to act as if it were the court of a sovereign power.

Is this description of autonomy precise? Is the autonomy of EU law to be understood

in the exact terms explained so far?

39. The way that the CJEU defines the autonomy of EU law may be clarifying but it is not
fully accurate. Actually, the type of autonomy of EU law that the CJEU describes does not
correspond to how in real life EU law, national law, and international law intermingle.

40. Please take into account the following: EU law depends on national law. EU law is in fact
implemented, made real, through the different national laws of Member States. Furthermore,
EU law is also influenced by international law. This cannot be ignored. The idea that EU
law remains isolated from national law and international law is not precise. The idea
that EU law is uniformly applied in all the EU to the last word is not precise either.
Autonomy of EU law cannot be conceived as independence. EU law looks more like a hybrid
product of EU, international and national rules than a pure one made only of EU rules.
This argument is not new, nor revolutionary. Older texts raised the point10.

8 References C-402/05 and C-415/05.

9 Reference C-459/03.
10 Please check La specificité du droit communautaire from Léontin Constantinesco, in the Revue trimestrielle du droit européenne,

volume 2, 1966, pages 1-30.

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2. Direct effect of EU law

2.1 Introduction

Three ideas have to be outlined initially.

41. First. The major novelty that the doctrine of direct effect of EU law brings is that it is
EU law, and not national law, who decides how EU law is going to impact internal legal situations11
and legal relationships12 in Member States. This is quite different from what happens with
international law because the effect of international law in the internal sphere of States
is decided by national law.

42. Second. EU law derives from different legal sources (please recall what a source is from
Section I of this lesson). The type of source is the first indicator of the effect of EU law
in the internal sphere of Member States. Some sources (for instance, EU primary law)
have a direct effect in Member States, some others do not (for instance, directives in
certain cases).

43. Third. Please differentiate, (i) legal relationships between legal or natural persons and
public entities (these are vertical relationships), from (ii) legal relationships between legal
or natural persons among them (these are horizontal relationships). This is relevant because
the effect of EU law varies depending on the type of relationship it affects.

How do we define direct effect? The essence of the answer is in the case van Gend &
Loos (case reference 26/62). This judgment is, perhaps, the most important in the history of
EU law. At that time, the EU did not exist, nor did EU law as such. The three
Communities existed and the law of each of the Communities existed. For the sake of
clarity, we will refer to EU law in the explanation.

2.2 Case 26/62 van Gend & Loos

44. The Dutch company van Gend & Loos sued the Dutch customs authorities for infringing
the prohibition of article 12 of the Treaty Establishing the EEC (“TEEC”). Article 12
ordered that, after the entry into force of the treaty (1st of January 1958), Member States
would not introduce new duties on imports or exports between them. For example,
after the 1st of January 1958, France could not raise the amount of export duties13 that
a car manufacturer like Citroën had to pay for selling cars in Italy.

45. Since the TEEC was primary law, van Gend & Loos was requesting that the Dutch
authorities comply with a command of primary law. Since the case was on the legal
relationship between a private company and Dutch public authorities (in this case,
customs authorities), the legal relationship of the case was a vertical relationship.

11 The legal situation of someone must be understood as all his or her rights and obligations.
12 A legal relationship is a link between two or more subjects that is qualified by the law for some reason in the sense that
one owes something to the other. For example, law qualifies the link between a seller and a purchaser as a legal relationship.
The law also qualifies the link between a tax authority and a tax-payer as a legal relationship.
13 Export duties are the tax that an exporter must pay to the customs authority.
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What happened?

46. Van Gend & Loos imported from Germany several tons of the chemical solution urea-
formaldehyde. When paying the duties for the import it found that the Netherlands had
increased the custom duties for this type of product in March 1960, well after the TEEC
had entered into force the 1st of January of 1958. The increase was based on a rule of
Dutch national customs law. Van Gend & Loos objected before the Dutch national
judicial authority (in this case, the Dutch Tariefcommissie) arguing that article 12 TEEC
had been infringed, but the claim was not answered because the judges doubted whether
the prohibition of article 12 of the TEEC could be considered as law that the court could apply to solve
the case that the company was bringing.

47. The Dutch judicial authority asked the CJEU using the preliminary reference
procedure. Do not worry if you do not know now what the preliminary reference
procedure is, we will analyze it in Lesson 6. Important now is the answer that the CJEU
gave to the Dutch judicial authority.

48. On the one side of the discussion were the Netherlands, supported by Belgium and the
Federal Republic of Germany. Fundamentally this side contended that the prohibition
to raise customs duties of article 12 of the TEEC was a matter of international law that
only affected Member States and not private parties. Hence, only a Member State of
the EEC could sue the Netherlands because of the infringement of article 12 TEEC,
but not a private company negatively affected by such infringement. They defended
that the implementation of article 12 was an issue that the CJEU could only judge if the
Netherlands was sued by another country of the EEC.

49. On the other side of the argument were van Gend & Loos and the Commission. The
Commission was conscious of the relevance that the decision of the CJEU would have.
It argued that, if control over compliance of EU law was considered an issue of
international law in which only Member States would intervene, then citizens would
not be able to invoke the rights that EU law granted them. This implied that only
Member States would have the legal power to request other Member States to comply
with EU law and that Member States would be free to apply EU law in the manner that
their internal rules established. This would be a major blow to the idea of securing a
uniform implementation of EU law across the Union. It would also have been a blow
to the purpose of EU law of granting rights to the citizens of Member States because
they would not have the opportunity to invoke them before a court.

50. Finally, the CJEU answered to the Tariefcommissie stating that article 12 TEEC had direct
effect and, therefore, could be invoked by van Gend & Loos in the case. The reasoning
of the CJEU was the following:

51. EU law is an autonomous legal order (please recall what autonomy of EU law is). EU
law creates rights and obligations for Member States but also for citizens. Citizens are also
subjects of EU law and, therefore, must be able to satisfy the rights that EU law grants
them. When the judgment on van Gend & Loos was issued, the main purpose of EU law
was to establish a common market.

52. EU law is directly applicable in Member States. Direct applicability means that the rules
of EU law become an integral part of the law in force in Member States automatically
from the moment in which EU law is validly approved.
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53. EU law is not only directly applicable, but it can also foresee that some of its rules
directly impact legal situations and relationships in Member States with no need for a
previous intervention of national law. EU law decides when this is the case, not national
law. The CJEU underlined that direct impact of EU law in Member States will occur if the rule
of EU law is, (i) clear, (ii) unconditional, and (iii) absolute.

54. Citizens shall be able to invoke before a national court the content of those EU rules,
and that national court has the duty to enforce the content of those EU rules. In fact,
if the national court fails to do so, the Member State of the court may be liable for the
losses and damages deriving from the failure to implement EU law properly (this last
statement on the State liability was introduced in the case C-6 and 9 /90, Francovich and
Bonifaci v. the Italian Republic and specified for cases in which courts fail to apply EU law
in case C-224/01 Köbler v. the Republic of Austria).

55. Please note that you may have overlooked that there exist direct applicability and direct
effect. They are not the same. Direct applicability is a prerequisite for direct effect: if
an EU rule is not directly applicable, it cannot have direct effect. Direct applicability of
a rule of EU law refers to the fact that the moment the rule is issued by the EU it
becomes a rule that integrates the law in force of Member States in the same way the
rest of their internal rules do. Direct effect of a rule of EU law happens when the rules
that are directly applicable impact legal situations and relationships in Member States.

56. You can now better understand the key paragraphs of the judgment. Please find an
extract below:

[...]
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[...]

2.3 Direct effect of primary law, regulations, directives, and decisions

2.3.1 Primary law

57. In van Gend & Loos, article 12 TEEC was considered. The case was on a rule of primary
law. The CJEU concluded that this rule had direct effect because it was a prohibition
formulated in a clear, unconditional, and absolute fashion. The case affected a vertical
relationship (between a private Dutch company and the Dutch customs authorities).

58. Progressively, in the decades following van Gend & Loos, the CJEU has recognized the
direct effect of rules of primary law that do not necessarily fulfill the requirements of
van Gend & Loos. Today the CJEU admits that every piece of primary law can have direct effect and
be invoked before a national judge. This is also in cases dealing with horizontal relationships
(for example, case Familiapress v. Bauer14).

59. Note that the CJEU has also admitted the direct effect of primary law establishing a
prohibition set in rather unclear terms, instead of in clear ones (cases Iannelli & Volpi
SpA v. Ditta Paolo Meroni15, Defrenne v. Sabena16). The CJEU has admitted the direct effect
of primary law establishing a prohibition that was conditional instead of unconditional
(case Martínez Sala v. Freistaat Bayern17). The CJEU has admitted the direct effect of
primary law establishing relative prohibitions instead of absolute ones (case van Duyn
V. Home Office18).

14 Reference C-368/95.
15 Reference 74/76.
16 Reference 43/75.
17 Reference C-85/96.
18 Reference C-41/74.
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But what about the binding sources of EU secondary law (regulations, directives,
decisions)? Do they have a direct effect as the rules of primary law?

2.3.2 Regulations

60. Recall that according to article 288 TFEU, regulations are directly applicable in all
Member States. The moment they are approved by the EU, they automatically integrate
the list of rules that apply in each of the Member States.

Regulations are directly applicable. Are they directly effective?

61. Regulations have a direct effect on vertical and horizontal legal relationships if the regulation in
question establishes so. In a sense, it is up to the regulation to determine the extent of its
effect. The regulation can contain rules that have a direct effect on a legal relationship,
but they can also contain rules that do not have a direct effect because they require
further action by Member States.

62. An example of a regulation with direct effect is article 3 of the regulation on the trade
of seal products19. The article establishes strong restrictions that are directly effective
because they affect the legal situation of individuals in the business of seal products
trade with no need for legal action of Member States. Because of article 3 of this
regulation, those involved in the trade of seal products cannot trade freely, regardless
of whether a national rule on the matter exists or not.

63. An example of a regulation that is directly applicable but does not have direct effect is
article 12 of the regulation on common rules for the operation of air services20.
According to article 12, aircraft used by a Union carrier21 has to be registered. But it is
up to the Member State where the carrier has its operating license to decide whether
the registration of the aircraft is going to be in a register of that Member State, or in the
register of the Union. Consequently, before article 12 can be invoked by a party before
a court, the Member State where the carrier has its license has to do something: it has
to choose if the registration of the aircraft will be in its territory or in the register of the
Union. Only after the mode of registration is specified can article 12 be fully effective.
This article is directly applicable in the Union but has no direct effect because before it
can be invoked before a court Member States need to intervene by choosing the register
for aircraft of Union carriers.

2.3.3 Directives

64. Remember what directives are: they are legal acts addressed to Member States (not to
legal, nor natural persons) and are binding as to the result to be achieved.

65. In principle, directives establish obligations only for Member States and not for natural and
legal persons in the Member States. Fulfillment or non-fulfillment of the content of a
directive is a business between the Union and Member States. The only party that can
demand the fulfillment of a directive is the Union or another Member State.

19 Regulation (EC) 1007/2009.

20 Regulation (EC) 1008/2008.
21 Iberia is a carrier. Lufthansa is another one.
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66. Since directives are not addressed to citizens, citizens are not entitled to invoke a
directive before a court, and, therefore, we say that directives do not have direct effect
on a vertical relationship, nor on a horizontal one.

But this is not always the case.

67. The CJEU has admitted that in certain circumstances citizens can invoke directives
before a judicial authority. The CJEU has admitted that in certain circumstances directives
have a direct effect.

In which circumstances?

68. The CJEU admits the direct effect of directives on vertical relationships (when a citizen
is acting against a public entity) if, and only if, (i) the Member State of that public entity
fails to implement the directive when it is supposed to, and (ii) the content of the directive that
the citizen invokes contains a clear and unconditional legal obligation. The CJEU set this
doctrine in several judgments; for example, in cases Van Duyn v. Home Office22 and Ratti23.

69. In Van Duyn v. Home Office, the CJEU admitted the direct effect of the directive on the
free movement of citizens24 in a case in which a Dutch lady (Ms. van Duyn) acted
against the British authorities because they did not let her enter the UK. The UK did
not allow Ms. van Duyn to enter because the UK had not implemented the content of
the directive timely and that implied that the legislation of the UK was not updated.
Had the UK legislation been updated in the term the directive foresaw, van Duyn would
not have been refused entry. The CJEU admitted that van Duyn could invoke the
directive before a judge and ask for admittance in the UK. The CJEU accepted the
direct effect of the directive in this vertical relationship.

Why would the CJEU admit the direct effect of a directive if directives are obligations
addressed only to Member States?

70. The best argument of the CJEU is that the alternative option would be equal to inviting
Member States not to fulfill directives. Think about it: if a Member State fails to comply
timely with a directive and the citizens who are negatively affected because of the non-
fulfillment of that directive are not able to invoke it before a court, then the Member
State that is failing to comply with the directive is benefiting from its own failure. By
frustrating the directive, the infringing Member State frustrates the purpose of EU law
and, at the same time, is protected from the claims of its citizens.

22 Reference 41/74.
23 Reference 148/78.
24 Directive 64/221 on the coordination of special measures concerning the movement and residence of foreign nationals

which are justified on grounds of public policy, public security or public health.
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What about the direct effect of directives on horizontal relationships? Could, for
instance, a citizen invoke a directive that protects consumers from private companies
that offer their services on the street?

71. The answer of the CJEU is no. The Marshall25 and the Dori v. Recreb26 cases are clear in
this respect. Directives are addressed to States and the purpose of recognizing their
direct effect on vertical relationships has to do only with Member States taking
advantage of their failure to implement them. When EU law wants to grant rights to
citizens that can be invoked before a natural or a legal person, then the EU shall do so
using regulations and not directives.

72. Nevertheless, there are exceptions. In certain cases, the CJEU has admitted that a
directive may have direct effect on horizontal legal relationships.

73. The Court declared the direct effect of directives on some horizontal relationships by
way of considering that the relationship, actually, was, in reality, a vertical one because
it was between a private party and a public entity. In these cases, the CJEU considers
that one of the parties may act as a private party, but has to be considered a public
entity. This happened with the West Hampshire Area Health Authority. This authority
acted as an employer in its relation with Ms. Marshall27, a nurse. The CJEU considered
that the relationship between Ms. Marshall and her employer was not a horizontal
relationship between employer and employee, but a vertical one because the health
authority pertains to the UK Government. Therefore, the directive could have a direct
effect on this specific relationship if the rest of the circumstances required to recognize
the direct effect of a directive concurred. This was the approach also in Foster and others
v. British Gas28.

74. A second exception. In two isolated judgments, the CJEU admitted that a directive
could be invoked by a private party before another private party (horizontal legal
relationship) because the Member State of the case had failed to implement the
directive. These are the CIA Security v. Signalson and Securitel29 case, and the Unilever Italia
v. Central Food30 case. However, they are very particular cases: in both of them what the
failure to implement the directive entailed was that one of the parties of the case was
applying outdated technical rules. These cases have to be considered rare exceptions.

75. A third exception. Another way that the CJEU has admitted the direct effect of
directives on horizontal relationships is by declaring that the directive contains a general
principle of EU law. Since general principles of EU law are primary law, and since
primary law has a direct effect on horizontal relationships, by declaring that part of a
directive is a general principle of EU law, the CJEU converts that part of the directive
into law that has direct effect on horizontal relationships. This reasoning is problematic
and has been strongly criticized. Examples are the Mangold31 and the Kücückdeveci32 cases.

25 Reference 152/84.
26 Reference C-91/92.
27 Marshall case, reference 152/84.
28 Reference C-188/89.
29 Reference C-194/94.
30 Reference C-443/98.
31 Reference C-144/04.
32 Reference C-555/07.
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76. Additionally, the CJEU has established that a directive can affect indirectly (not directly) a
horizontal relationship.

How?

77. Through the interpretation that national judges make of national law in light of EU law.
In some cases, despite the fact that a directive does not directly affect a case between
two private parties, the content of the directive may inspire the solution of the case and,
therefore, have an indirect effect on the case. For instance, a judge may have to solve
using national law a case of sex discrimination in the dismissal of an employee. Think,
in a pregnant woman being dismissed because of her inability to substitute another
employed woman that is on pregnancy leave (Webb v. EMO Air Cargo33 case). Initially,
the national court may come to the conclusion that according to national law there was
no discrimination in the dismissal. But the court may interpret the content of the
national law on discrimination taking into consideration a directive on the issue, and end up
changing its conclusion. This happened with Ms. Webb. Initially, national courts
considered that according to national law there was no discrimination when she was
dismissed, but the CJEU indicated that the interpretation of national law had to change
because of the Equal Treatment Directive34. Inspired by this directive the national court
interpreted the national law on discrimination differently than before and accepted the claim of
Ms. Webb.

78. The duty of national courts (it is also a duty of national executives) to interpret national
law as far as possible in light of EU law is the duty of consistent interpretation. As in the case
of Ms. Webb, consistent interpretation may cause that a directive affects indirectly a
horizontal relationship.

2.3.4 Decisions

79. Decisions are directly applicable and can have a direct effect on horizontal and vertical
relationships.

80. Decisions addressed to private parties (natural and legal persons) can have a direct effect on
the vertical and horizontal relationships of those private parties. Therefore, private
parties can invoke an EU decision before a judge in cases in which they are acting
against a public authority, and also in cases in which they are acting against another
private party.

81. Decisions addressed to a Member State can have a direct effect on the relationships between
that Member State and a private party (vertical relationships). This was recognized in
Grad v. Finanzamt Traunstein35.

82. Can decisions addressed to Member States have a direct effect on horizontal relationships? The
reasoning explained for directives applies. In principle, no.

33 Reference C-32/93.
34 Directive 76/207/EEC.
35 Reference C-9/70.
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3. Supremacy of EU law

3.1 Introduction

83. Supremacy is a complement to the doctrine of direct effect. Whereas direct effect makes
sure that EU law impacts legal relations within Member States with no need of national
law mediation, supremacy makes sure that if a national law collides with EU law and
disables the effect of EU law, the problematic national law is displaced and leaves free
way to EU law.

84. Please be aware that the doctrine of supremacy is relevant only in cases of conflict
between EU law and national law. Supremacy is, then, a mechanism that is activated
just in a reduced number of problematic cases. It is a rule to solve conflicts. Supremacy does not
define itself alone the type of relationship existing between EU law and national law. It
is just an aspect of it. Should an excessive emphasis be put on supremacy, it may mislead
the efforts to understand the relationship between EU law and national law. Normally
legal rules are obeyed voluntarily. With EU law the same happens. Normally, EU law
is respected by Member States. The number of cases in which supremacy applies is
reduced.

3.2 Case 6/64 Costa v. ENEL

Just as the CJEU created the doctrine of direct effect in Van Gend & Loos, it created
the doctrine of supremacy in Costa v. ENEL36.

What happened?

85. The Italian citizen Mr. Flaminio Costa presented a claim before an Italian court, the
Giudice Conciliatore of Milan. The Giudice Conciliatore found itself in the need to ask
the CJEU on the interpretation of several articles of the Treaty Establishing the
European Economic Community (“TEEC”). The question was made using the
preliminary reference procedure. As indicated above, do not worry if you do not know
now what the preliminary reference procedure is, we will analyze it in Lesson 6.
Important now is the answer of the CJEU.

86. The Giudice Conciliatore formulated its question because Mr. Costa invoked in his
claim a number of TEEC articles (102, 93, 53, and 37). Broadly, these articles protected
fair competition between companies of the Common Market, granted freedom of
establishment across the territory of the EEC, and prohibited national commercial
monopolies.

87. Mr. Costa alleged that an Italian law had infringed these rules of the TEEC. The law
was Italian Law number 1643 of 16 December 1962. The law allowed the Italian Ente
Nazionale Energia Elettrica (ENEL) to nationalize the assets of private Italian
electricity companies, including those of the company Edison Volta, of which Mr.
Costa was a shareholder.

88. In the case, in addition to the question on the interpretation of articles 102, 93, 53, and
37 TEEC, a critical question had to be answered before: what if the content of the
Italian Law 1643 was contrary to the TEEC? How should the Giudice Conciliatore
36 Reference 6/64.
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proceed? Should the court solve the case according to Law 1643, or according to the
TEEC? Was the court obliged to apply national Italian law contravening the TEEC or
should it apply the TEEC and contravene Italian law instead? These were challenging
questions at the time because they were asking the CJEU to decide whether EU law
would follow the model of traditional international law, or follow a new path.

89. The CJEU declared that national law could not be an obstacle to the implementation of EU law.
This is what the supremacy of EU law means.

How did the CJEU reason its position in favor of the supremacy of EU law? The
following was argued:

90. The moment a Member State enters into the EU, it agrees to limit its sovereignty so
that the common goals of European integration can be achieved. One of the limits that
a Member State accepts is EU law. For a Member State participating in the EU this
entails being bound by an autonomous legal system (EU law) that is directly applicable
in the Member State. Please recall what autonomy and direct applicability of EU law
mean (Sections II.1 and II.2 above).

91. It is critical that this autonomous legal system that EU is be equally implemented across
the Union, and that Member States are not allowed to block the effects of EU law by
way of adopting internal national law contravening EU law. If every different Member
State chose to give precedence to its internal law over EU law, then the possibility exists
that EU law has a different effect in different Member States. Should this be the case,
the political purposes of the EU –for instance creating a unified market in the Member
States– would crumble.

92. Therefore, the CJEU concluded, Member States cannot nullify EU law with internal
law. EU law has precedence over national law. EU law overrides national law.

93. You can now better understand the key paragraphs of the judgment. Please find an
extract below:
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3.3 Supremacy over fundamental rights of a national constitution

94. The CJEU went a step further and declared that EU law overrides rules on fundamental
rights of a constitution. The CJEU declared so in Intenationale Handelsgesellschaft37, in
reference to the constitutional principles and rights enshrined in the Federal
Constitution of Germany protecting an import-export company based in Frankfurt.
Specifically, the constitutional principles were the principle of proportionality, the
constitutional right of freedom of action and disposition, and the constitutional right
of economic liberty.

Why would the CJEU argue that EU law overrides fundamental rights?

95. The CJEU contended that, despite the fact that EU law overrides internal constitutional
rules on fundamental rights, these fundamental rights remain protected in EU law
because fundamental rights are general principles of EU law. Consequently, in case a
national rule on fundamental rights conflicting with EU law has to be overridden, the
overriding rule of EU law will always respect the fundamental rights of the citizen
involved since fundamental rights are also part of EU law.

96. Please read paragraphs 3 and 4 of the judgment:

37 Reference 11/70.
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3.4 What supremacy entails for conflicting national law

What is the effect of supremacy on conflicting national law? What happens when
national law and EU law collide?

97. When a national authority thinks that a national rule of law and EU law collide, that
authority shall try to interpret that national rule so as to make both of them compatible. This duty
to interpret national law in light of EU law is what we named above as the duty of
consistent interpretation (please recall the end of Section II 2.3.3). The duty of
consistent interpretation was formulated in the case von Colson38.

98. If there is no way that both rules can be combined and the collision is unavoidable,
then the national authority shall not apply in that specific case the national rule
conflicting with EU law. We express this by saying that the national authority shall
displace or disapply the national rule. This was established by the CJEU in the case
Simmenthal II39.

Does that mean that the national law that is being displaced because of its collision with
EU law is automatically null and void?

99. No. Let us insist: no.

100. From the standpoint of EU law, the fact that a rule of national law contravenes EU law
entails that that national rule cannot block the implementation of EU law, but it does not
entail a judgment on the validity of the national law. The command of EU law to national
authorities is: you shall not apply to a case a rule of national law contradicting EU law,
but the judgment on the validity of that national law is not for EU law to make but for
the internal legal system of Member States. EU law abstains itself from stating whether
national law is valid or not. That is out of the scope of EU law. EU law can only demand
that EU law is implemented. Supremacy of EU law means disapplication of conflicting national
law, but not invalidation. The invalidation of the conflicting national law must occur
according to internal constitutional law.

Which authorities of a country are obliged to disapply national law if it conflicts with
EU law?

101. The judicial authorities of the country and also its administrative authorities, including those of
lower territorial levels, such as regional and local administrative authorities. This was established
in the case Fratelli Costanzo40.

38 Reference 14/83.
39 Reference 106/77.
40 Reference 103/88.
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3.5 The reply of constitutional courts to the supremacy of EU law

102. Some national constitutional courts have refused to admit the supremacy of EU law to
its full extent. Among them, the German, the Spanish, and the Danish.

103. Constitutional courts underline that the powers that the CJEU has were transferred by
Member States in full compliance with their respective national constitutions. The
powers of the CJEU are, therefore, derived. National courts argue that the fact that the
transfer of power in favor of EU institutions was done respecting national constitutions
is not compatible with actions of EU institutions (for instance, the CJEU) infringing
national constitutions because the power EU institutions hold comes, precisely, from
those constitutions.

104. Constitutional courts have questioned the supremacy of EU law in cases concerning
fundamental rights (cases Solange I, Solange II in Germany) and in cases in which the EU
is deemed to exercise power beyond its limits (Maastricht decision in Germany). To an
action that the EU carries out beyond its competences, we name it an ultra vires action.

105. One of the most recent chapters of the discussion between national constitutional
courts and the CJEU took place on 5 May 2020 when the Federal Constitutional Court
of Germany declared that the European Central Bank exceeded its competences by
establishing a purchase program of government bonds that the CJEU had previously
approved41. The German court used, perhaps, improper language for referring to the
judgment of another court, and stated that the approval of the CJEU was done
recurring to an arbitrary interpretation of the EU Treaties.

106. We can see how there are two different positions on supremacy: that of the CJEU and
that of some national Courts. The question is if there is one authority over all of them
that solves the discrepancy. The answer is: no. There is not only one correct answer to
the question on which is the legally best position. Is it that of national courts, or that
of the CJEU?

107. Scholars denominate this situation as one of legal pluralism in the EU. We have a state of
affairs in which different highest courts (the CJEU and national constitutional courts)
approach the collision between EU law and national constitutional law differently.
But...are the positions of the CJEU (absolute supremacy of EU law over national law,
even constitutional law) and of constitutional courts (just relative supremacy of EU law)
actually confronted? Well, they are, but not as much as it may seem at first sight.

108. Please think that it is a rule of EU constitutional law that the constitutional identity of
Member States be respected. That includes their constitutions. This is the content of
article 4.2 TEU. Additionally, respect for the fundamental rights of citizens is also part
of EU law. Hence, EU law itself compels the CJEU to respect both the constitutional
identity of Member States and the fundamental rights of citizens, which is what the
different national constitutions also do. On the other hand, it must be underscored that
national courts presume that the EU acts legally. National courts also presume that when
the CJEU invokes the doctrine of EU law supremacy, it does so respecting the limits
that national courts have set. In principle, then, national constitutional courts will
respect the supremacy of EU law. Only in exceptional cases, they will challenge it.

41 Judgment 2 BvR 819/15.

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109. The CJEU and national courts tend to respect the decisions of each other. We describe this
situation by saying that the CJEU and national constitutional courts are engaged in a
structural dialogue that channels their discrepancies. Conflict between EU law and
national law is an exceptional situation, and so is conflict between the CJEU and
national constitutional courts.