Directive

From Max-EuP 2012

by Karl Riesenhuber and Florian Möslein

1. Meaning of private law

For private law, especially contract, commercial, labour and intellectual property law, the directive is still the most important form of legislative action provided in Art 288 TFEU/249 EC. Decisions and regulations mainly play a role in cartel law. The regulation has lately also become increasingly important for international private and procedural law. Recommendations and other legal instruments (legal instruments of the EU (others)) hardly appear in private law. Unlike the regulation, the directive is not directly applicable in all Member States, but is binding as to the result to be achieved upon each addressed Member State and leaves the ‘choice of form and methods to the national authorities’. This is why the directive is also called an ‘indirect legislative tool’. As opposed to the decision and the recommendation, the directive has an abstract character.

The importance of the directive for European legislation is mainly due to the fact that the EU, to a large extent, lacks the competence to adopt regulations. In particular, the legislative competences for the internal market arising from Arts 114, 115 TFEU/94, 95 EC, which are the most important competence bases for private law, are subject to the limitations of the principles of proportionality and subsidiarity. From the viewpoint of the Member States, the directive constitutes a rather gentle form of legislation as it only sets an aim while still allowing the Member States to retain a certain amount of leeway as to how to achieve it. The directive thus allows for the integration of its aims into the national legal systems. At the same time, it has to be acknowledged that the EU has passed very detailed directives in the past and the duties of transposition (see 3. below) further reduce the leeway given to the Member States.

2. Interpretation of directives

The rules for interpreting directives mainly follow the methods known in the national laws of the Member States (interpretation of EU law). When interpreting directives, the European Court of Justice (ECJ) assumes that the terms used in the directive, even where they are not explicitly defined, are to be interpreted autonomously and not from the standpoint of the national legal systems. This means that they cannot be equated with the same terms used in the national law and especially not be understood as a reference to the national law.

The interpretation of a directive is carried out by interpreting the meaning of the words of the directive (in its various language versions), the general scheme of the directive itself and the European legal system as a whole, the spirit and purpose of the directive as well as the purpose of harmonization, and the history of origin (as expressed, in particular, in the preamble). Among the various methods, the purposive interpretation (‘teleological interpretation’) is of the foremost importance.

3. Transposition requirements

Addressed to the Member States, the directive needs to be transposed into national law in order to take effect. According to the ECJ, the transposition needs to comply with the principles of equivalence and effectiveness; the latter can also include the principle of transparency. Pursuant to the principle of equivalence, rights determined by the directive must be arranged and enforced in a way that is equivalent to that applied to rights constituted by the national law. ‘In choosing the appropriate solution for guaranteeing that the objective of the directive is attained, the Member States must ensure that infringements of Union law are penalised under conditions, both procedural and substantive, which are analogous to those applicable to infringements of domestic law of a similar nature and importance’ (ECJ Case 180/95 – Draehmpaehl [1997] ECR 2195 para 29). With the principle of equivalence, the Court evaluates the transposition with the measure of the respective national law and in this sense demands systematic consistency. Systematic consistency will normally be sufficient in order to ensure an effective transposition of the directive. At the same time it preserves a realm of autonomy of the Member States.

Pursuant to the principle of effectiveness, the Member States must ensure that the rights determined by the directive will not, in practice, be ineffective. With regard to sanctions, the Court demands that they must be effective, proportionate and dissuasive (eg ECJ Case 382/92 – Commission v United Kingdom [1994] ECR 2435 para 55). The principle of effectiveness thus complements the relative standard of equivalence by an absolute standard of control. As a sub-principle of effectiveness, the principle of transparency can apply, in particular where a directive provides for rights of the individual. Efficient transposition requires as a minimum that individual rights are transparent and easily understandable for the respective addressee. In private law, the transposition requirements of equivalence and efficiency are especially important in order to determine the legal consequences and sanctions which directives usually leave for the Member States to determine.

The transposition requirements of the directive are in principle addressed to the national legislature. Directives usually include the Member States’ obligation to pass legislation. The only instance when a specific transposition law may not be required is where the national law already conforms to the words and objectives of the directive. In such cases, legislative activity may only be required where the directive further requires that the national laws include a reference to the transposed directive (as is often the case with recent directives). In regard to legal form, directives will usually require transposition by a statute; exceptionally, a change of the national constitution may be necessary. In individual cases, a transposition may be carried out in the form of an executive legal act (such as the ordinance of Art 80 German Federal Constitution). Even a factually binding administrative practice or administrative regulation will fail to meet the transposition requirement if undertaken without a legal basis satisfying the directive or if the existing laws are counter to the directive. This will often follow from the principle of equivalence. Where the directive provides for individual rights, the same result can also derive from the principle of transparency.

The transposition requirements demand an integration of the directive’s provisions into national law in a way that assures their practical effect. This does not necessarily mean that the requirements of the directive have to be adopted verbatim; the transposition can, for example, also be carried out by adopting a general clause (provided that the directive’s requirements are not too detailed already). Conversely, a literal adoption may not be sufficient in other cases, especially where effective enforcement demands a more detailed framework of legal consistency.

The transposition requirements are mainly enforced by the infringement procedure of Arts 258 ff TFEU/226 ff EC. Other mechanisms of enforcement include the duty to construe national law in conformity with the directive (see 5. below), the possibility of direct applicability (see 6. below) and state liability for deficient transposition (see 7. below).

4. Transposition period and effects produced in advance

As an instrument that requires the transposition of its objectives into national law, the directive sets a time-limit for the transposition in the Member States. While this is not formally required by Art 288(3) TFEU/249(3) EC, the transposition period appears to be an essential element of the directive rather than merely a ‘usual practice’. In principle, the directive only has effects after the transposition period has lapsed. Before that, the law of the Member States need not conform to it; this is the very meaning of the transposition period.

However, since the Member States are bound to ensure the objective of the directive upon lapse of the time limit (Art 288(3) TFEU/249(3) EC, effet utile), they must not in advance act in a way that could practically defeat the objective. This would also be inconsistent with the principle of loyalty vis-à-vis the Union (Art 4(3) TEU/10 EC). The directive may thus produce effects in advance. Given their limited reach, these effects can be described as a prohibition of frustrating the objective of a directive.

5. Construction of national law in conformity with directives

Addressed to the Member States, the directive is binding for all bodies of public authority, the legislature as well as the judiciary and the administation. Where the legislative transposition (see 3. above) does not (entirely) meet the requirements of the directive, courts and administration are bound by Art 288(3) TFEU/249(3) EC ‘to interpret [the national law] as far as possible in the light of the wording and the purpose of the directive in order to achieve the result pursued by the directive’ (ECJ Case C-106/89 – Marleasing [1990] ECR I-4135 para 8). A similar duty may arise from national constitutional law (as, for example, in Germany where courts and administration pursuant to Art 20(3) German Federal Constitution are bound by ‘law and legislation’) or from the transposition legislation itself. Unlike the direct applicability of a directive (see 6. below), an interpretation in conformity with directives may not only be invoked in favour of, but also against individuals.

The duty under Union law to interpret national law in conformity with the directive applies where the national law does not (fully) comply with the requirements of the directive after the time-limit for transposition has lapsed. (Before the end of the transposition period, the prohibition of frustrating the objective might be applicable, see 4. above). The duty to interpret in conformity with the directive not only applies with regard to legislation enacted to transpose the directive, but with regard to the entire national legal system, irrespective of whether the provisions in question were adopted before or after the directive. National courts and administration are bound to apply the whole repertoire of national methodology in order to meet the requirements of the directive. In addition to the ‘interpretation’ mentioned by the ECJ (probably following French diction) the duty may also require a further development of the law (eg by analogy). When the ECJ emphasizes that the duty of interpretation in conformity with the directive applies ‘as far as possible’ it expresses on the one hand the intensity of the duty (do anything possible) but at the same time indicates boundaries (‘possible’). Such boundaries may, in particular, result from national methodology or, respectively, the national law of methods. In particular, Union law does not oblige national courts or administration to an interpretation contra legem where this is not possible under national law.

Where an interpretation of national law in conformity with the directive is possible, the aim of the Union legislation is fulfilled, albeit in a ‘second-best’ way (second-best in comparison to flawless legislative transposition), and the autonomy of the law of the Member State is interfered with in the least intrusive manner. For these reasons, the interpretation in conformity with the directive is preferable to and ranks higher in priority than direct applicability of the directive (see 6. below). The possibility of an interpretation in conformity with the directive can in some instances suffice in order to comply with the ‘primary’ duty of transposition (see 3. above). An interpretation in conformity with the directive cannot, however, function as an equivalent alternative to legislative transposition, in particular where transparency or an obligation to refer to the transposed directive require transposition through an act of legislation.

6. Direct applicability

In principle, directives are not directly applicable given that they are addressed to the Member States and that they are only binding as to the result to be achieved. The ECJ, however, recognizes the possibility of direct applicability towards the Member States under certain circumstances on the grounds of the effet utile and the prohibition of contradictory behaviour (estoppel).

Direct applicability is only recognized under the conditions that (1) the time-limit for transposition has lapsed, (2) the directive has not (entirely) or not correctly been transposed into national law, and (3) the directive is unconditional with regards to its content (ie its applicability does not depend on any other conditions) and sufficiently definite for a direct application.

Furthermore, a directive may only be applied directly against the Member State (to whom it is addressed) but not against private individuals. The scope is somewhat widened by the fact that ‘Member States’ is to be understood in a functional way, covering ‘organizations or bodies which are subject to the authority or control of the State or have special powers beyond those which result from the normal rules applicable to relations between individuals, such as local or regional authorities or other bodies which, irrespective of their legal form, have been given responsibility, by the public authorities and under their supervision, for providing a public service’ (ECJ Joined Cases C-253/96 and 258/96 – Kampelmann [1997] ECR I-6907 para 46). A directive may thus also be directly applied in private law relations as against the state (ie where the state acts in the realm of private law), eg where the state acts as employer in an employment relationship governed by private law. Direct applicability can, however, not be invoked as against private individuals even where the individual himself relies on the direct applicability of the directive as against the state.

Where a directive is directly applied it supersedes conflicting national law (primacy of application). All public authorities have to observe it until a national norm is introduced which conforms with the directive (or which can, at least, be so interpreted). Direct applicability is, however, not a substitute for the proper transposition of the directive; the ‘primary’ transposition duties persist and can still be enforced by means of the infringement procedure (see 3. above).

7. State liability

The ECJ has recognized state liability flowing directly from Union law on the basis of Art 4(3) TEU/10 EC and the effet utile. Such state liability is, of course, not only to be considered when transposition duties are breached but also—more generally—whenever Union law is breached; deficient transposition of directives is, however, an area of considerable practical importance for state liability. Following the seminal decision in Francovich (ECJ Joined Cases C-6 and 9/90 – Francovich [1991] ECR I-5357 paras 39 ff), state liability applies where the following conditions are met: (1) the Member State has failed to fulfil its transposition obligation with regard to a provision in a directive that grants rights to individuals; (2) there is a sufficiently serious breach of the transposition duty (always the case where the Member State has not transposed the directive at all or within the transposition period); (3) there must be a causal link between the breach of the state’s obligation and the loss and damage suffered by the injured parties. A breach of the duty to transpose the directive occurs where the national legislature does not implement the directive entirely and correctly or within the given time-limit. If the courts or administrative bodies do not fulfil their obligation to interpret national law in conformity with the directive, that too is a violation of the obligations flowing from the directive (see 5. above).

With regard to breach by non-transposition, the second condition (qualified breach of transposition duty) has proved to be a substantial obstacle. Here, the national court deciding on the claim has to consider a number of factors, namely the clarity and accuracy of the provision not adequately transposed; the amount of discretion the directive leaves to the Member States; whether the breach was carried out deliberately or resulted from an (excusable or not) mistake in law; and whether actions of a Union body induced the breach. Given that directives are binding only as to the results to be achieved, they often leave the Member States with a considerable amount of discretion or different options of transposition. The court has, however, assumed state liability regardless of a vague wording where, for instance, Germany failed to establish a security for the event of insolvency according to Art 7 of Dir 90/314 of 13 June 1990 on Package Travel, Package Holidays and Package Tours (ECJ, Joined Cases C-178, 179, 188, 189 and C-190/94 – Dillenkofer [1996] ECR I-4845). A judicial breach of transposition obligations is only sufficiently concrete when the decision is obviously inconsistent with the directive, eg if it obviously mistakes the relevant rulings of the ECJ.

8. ‘Excessive transposition’

The Member States often transpose directives beyond their actual scope, eg by extending the control of fairness of contractual terms to non-consumer contracts. One can speak of ‘excessive’ or ‘extended transposition’. Such excessive transposition often results from the fact that, given the limited legislative competence of the EU, harmonization of laws only has a limited reach or scope (eg only extending to consumer law) while the issue concerned is also of relevance beyond that scope. Directive 93/13 of 5 April 1993 on Unfair Terms in Consumer Contracts can serve as an example.

In such cases of extended transposition the question arises whether the rules and obligations resulting from the directive govern the ‘excessive’ part as well. Certainly, there cannot be a direct applicability regarding the ‘excessive’ part because it is beyond the scope of application. Issues of interpretation and procedural questions are controversial.

Is there an obligation under Union law to uniformly interpret national law transposing the directive and other parts which extend the directive’s results beyond its scope or is a ‘split interpretation’ also possible? In principle, Union law—the transposition obligations in particular—cannot demand a uniform interpretation: ‘there is no Community law outside its field of application’ (Opinion of AG Darmon, Joined Cases C-297 and 197/89 – Dzodzi [1990] ECR I-3780 para 11). The obligation to transpose directives effectively (and transparently) will usually not require a different decision given that the uncertainty regarding which part of the law is determined by the directive and which is extending its scope results from the directive’s scope of application itself. An obligation to uniformly interpret the law transposing a directive and other parts extending its rules beyond the directive’s scope may, however, flow from national law, eg in the context of historical or purposive (‘teleological’) interpretation. Whether and to what extent a uniform or a split interpretation applies, however, remains for the national law and jurisprudence to determine.

For the same reasons there cannot be an obligation under Art 267(3) TFEU/234 EC to refer issues concerning the extended part to the Court of Justice for a preliminary ruling. The national courts do, however, have a right to make such reference if they consider the answer to the question necessary for their decision; whether that is the case is, with a wide margin of discretion, for the national courts to decide.

Literature

Marcus Lutter, ‘Die Auslegung angeglichenen Rechts’ (1992) JZ 593; Winfried Brechmann, Die richtlinienkonforme Auslegung (1994); Karl Lackhoff and Harold Nyssens, ‘Direct Effect of Directives in Triangular Situations’ [1998] 23 E L Rev 397; Martin Franzen, Privatrechtsangleichung durch die Europäische Gemeinschaft (1999); Claus-Wilhelm Canaris, ‘Die richtlinienkonforme Auslegung und Rechtsfortbildung im System der juristischen Methodenlehre’ in Festschrift Franz Bydlinski (2002) 47; Jörg Neuner, ‘Die Vorwirkung von Gesetzen im Privatrecht’ in Festschrift Claus-Wilhelm Canaris (2002) 83; Karl Riesenhuber and Ronny Domröse, ‘Richtlinienkonforme Rechtsfindung und nationale Methodenlehre’ (2005) RIW 47; Sacha Prechal, Directives in European Community Law (2nd edn, 2005); Claus-Wilhelm Canaris, ‘Gemeinsamkeiten zwischen verfassungs- und richtlinienkonformer Rechtsfindung’ in Festschrift Reiner Schmidt (2006) 41; Carsten Herresthal, Rechtsfortbildung im europarechtlichen Bezugsrahmen (2006); Christian Hofmann, ‘Die Vorwirkung von Richtlinien’ in Karl Riesenhuber (ed), Handbuch Europäische Methodenlehre (2nd edn, 2010) 462; Wulf-Henning Roth, ‘Die richtlinienkonforme Auslegung’ in Karl Riesenhuber (ed), Handbuch Europäische Methodenlehre (2nd edn, 2010) 393.

Retrieved from Directive – Max-EuP 2012 on 05 December 2022.

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