The rules on horizontal direct effect of directives have been criticized for leading to situations of unfairness and uncertainty. To what extent is the decision of the Court of Justice of the EU in Bauer (C-569/ 16) an improvement? Critically assess the decision by reference to the Court’s earlier case law.
Direct effect refers to “the obligation of a court…to apply the relevant provisions of Community law, either as a norm which governs the case or as a standard for legal review” (Prechal, 1995). Simmenthal clarified that this obligation includes disapplying or setting aside conflicting national rules. Directives produce a special case. Whilst it is “trite law” (Dashwood, 2007) that Directives have vertical direct effect, they may not be invoked in proceedings between individuals and thus have no horizontal effect. This essay will evaluate the exceptions to the ‘no horizontal direct effect’ rule and the resulting uncertainty and unfairness in the law. It will additionally consider how, in light of Bauer, the CJEU facilitated the possible horizontal effect of Directives by employing the Charter of Fundamental Rights (‘the Charter’). If confined to specific facts, the decision represents an improvement from the orthodox position concerning the horizontal effect of Directives.
The Rule: No Horizontal Direct Effect of Directives
Directives will be directly effective if they meet the Van Gend conditions: sufficiently clear and precise, unconditional and independent of further implementation measures. At the time Van Gend was radical, but Pescatore (1983) has described direct effect as the “infant disease” of EU law, implying that all novelty has worn off. Van Duyn represented the earliest authority using these conditions, and Ratti, later added a limitation that a Directive cannot be directly effective until its implementation deadline has passed. In this context, the key limitation on Directives is the ‘no horizontal effect’ rule. (Marshall I). This rule was confirmed by Faccini Dori and has been reiterated in strong terms in Pfeiffer. Since Van Gend direct effect has thus broadened into a concept very different to what was initially conceived. Whilst legal certainty was reiterated in Marshall I as a motivating feature behind retaining ‘no horizontal effect’ rule, subsequent attempts to subvert the orthodox position have arguably led to uncertainty and unfairness.
Unfairness: Gaps and Distinctions
The current rules may result in enforcement gaps where domestic law does not comply with the Directive, but direct effect is still not available to individuals, thus creating situations of unfairness. Furthermore, the Court’s refusal to allow horizontal effect is frequently criticized in an employment context. If individuals employed by public employers can invoke rights under a Directive against their employer, it seems an arbitrary distinction that those working for private employers cannot. This discrepancy is exemplified by Von Colson and Harz. The former involved a vertical claim against the German prison service whereas the latter concerned a horizontal claim against a private company. Consequently, the Court has developed several doctrines aimed to mitigate the harshness of the ‘no horizontal effect’ rule including using a broad conception of the state, incidental direct effect, consistent interpretation and using Directives as expressions of general principles or Charter Rights. Dashwood believes that “restricting the scope of the rule by various stratagems” has resulted in case law “which it is hard to give an account that is intellectually satisfying”, exemplifying the uncertainty of the law.
Uncertainty: Exceptions to the Rule
By defining the scope of ‘vertical’ claims broadly, through generous interpretation of ‘public body’ in Foster, the CJEU softened the ‘no horizontal effect’ doctrine. Farrell confirmed that these requirements are not cumulative, making it easier for an applicant to prove that a body is an emanation of the state. This promotes uncertainty as well as unfairness. By allowing flexibility for treating private bodies like they were public, the Court undermines the very purpose of the vertical-horizontal distinction in the first place. This blurs the clarity of the orthodox position.
Another doctrine arose when the CJEU accorded ‘incidental’ effect to Directives in disputes between private parties, where one party relied on a Directive to challenge national legislation. For example, in CIA and Unilever, the CJEU incidentally changed the legal relationship between private parties. Yet, whilst the Court implicitly allowed horizontal direct effect in these cases, it stressed that there was no departure from the basic position: that Directives cannot have horizontal effect. In this way, the CJEU creates uncertainty by asserting orthodoxy in theory but producing different results in practice.
In Von Colson, the CJEU made clear that national courts must interpret domestic rules consistently with objectives of the Directive, demonstrating another subversion from the basic rule. Marleasing expanded the duty, stipulating that national courts must interpret law, “as far as possible”, in line with the Directive. Dashwood observed that this proves an “effective means of limiting the scope of no horizontal direct effect rule in practice”. Leczykiewicz (2015) even asserted that the doctrine “could in fact substitute for direct effect”. Pfeiffer confirmed that national courts must look at the legal system as a whole as part of their duty. The duty of consistent interpretation is onerous, requiring re-interpretation of law if necessary (Egenberger). There are, however, limits. For example, the duty does not extend to contra legem interpretation (Miret) and courts do not have to interpret provisions against their clear meaning (Pupino). Overall, however, notwithstanding the limitation in Marshall, consistent interpretation has been suggested to be “indistinguishable from ascribing the Directive ‘horizontal direct effect’”. Craig (2004) further asserts that “legal certainty would be enhanced by abolishing the Marshall prohibition”. Such claims demonstrate the uncertain nature of the case law surrounding the erosion of the rule.
Changing Times: Directives as Expressions of Norms
Recently, we have seen novel interaction between the Charter, general principles and secondary acts, such as Directives. Bauer represents a recent case in this arena, treating Directives as able to “concretise the Charter provision” (Leczykiewicz).
The CJEU generated “fresh uncertainty” (Dashwood) in Mangold, whereby an employee was permitted to sue their employer for a breach of the general principle of non-discrimination based on age, which was enshrined in a Directive. This case complicates the general position as the Court allowed for the horizontal effect of a Directive even before the expiration of the transposition period. In the subsequent case of Kücükdeveci, the ECJ explicitly confirmed that whilst Directives do not possess horizontal direct effect themselves, to maintain effectiveness of EU law, the general principles enshrined within them do. Dougan (2000) and others believe that such a case may be explained as “disguised vertical cases”, with Leczykiewicz calling it “horizontal direct effect of Directives through the back door”. Yet these arguments fail to recognise the Court treating Directives as reflecting or giving expression to general principles.
Bauer – an improvement?
The horizontal enforcement of general principles in Mangold and Kücükdeveci was controversial doctrinally, due to their unwritten nature which risked a normative drift from written to unwritten sources and from secondary law to primary law. Conversely, it is uncontroversial to say that written Charter rights can have horizontal direct effect. In AMS the horizontal applicability of the Charter was introduced. The tendency is now to focus on treating Directives as giving concrete expression to rights contained in the Charter, as in Bauer
In Bauer, the Court circumvented the orthodox position by giving direct effect to Article 31(2) Charter and, as primary law, this could be applied in horizontal situations. Instead of giving horizontal direct effect to a Directive, the Court instead enforced the right contained in the Charter – including horizontal enforcement. This can be seen as an improvement, with Muir (2020) noting that in this way the Charter was “being used as a last resort option to mitigate the lack of horizontal direct effect of directives”.
However, Bauer may not represent a total improvement. The use of Charter rights has limited applicability as not every Charter right has direct effect – it must have sufficient normative content. If it does not, the Court may simply redirect parties to a remedy in damages, rather than engaging with the right (as in Dominguez). Whilst it is tempting to use EU fundamental rights law to support “a constitutional posture” and to act as “a legitimising device” (Tridimas and Gentile, 2019) for the process of European integration, there are dangers associated with this use of a constitutional narrative on rights. Muir argues that the emerging line of cases on the horizontal effects of the Charter ought to be interpreted restrictively and treated with extreme caution, to avoid rocking the emerging EU fundamental rights regime as a whole. Therefore, whilst Bauer represents an improvement in context of horizontal effect of Directives, it must be kept within limits.
Overall, it can be argued that the ‘no horizontal direct effect’ rule for Directives has indeed led to situations of unfairness in the past. To mitigate this, the Courts have developed doctrines to subvert the rule, consequently creating uncertainty in the law. Bauer represents an improvement in the sense that Courts can utilize the provisions of the Charter and enforce them horizontally in situations where direct effect is not possible, thus closing the enforcement gap and mitigating unfairness. However, this trend should be narrowly confined to avoid undermining the EU fundamental rights regime and the principle of direct effect more widely.