• Michalis Papachristodoulou

Legal Building Blocks: Van Gend en Loos – The case which built the EU

When the first foundations for the European Union were laid out in 1957, few envisioned it would develop to become an all-encompassing economic, monetary, and political union that would comprise most of Europe’s nations. This development was by no means a foregone conclusion. The Court of Justice of the European Union (CJEU) has played a very active role in promoting this multi-faceted union through its judgments. Whilst closer cooperation and integration would have been possible even without the CJEU’s interventions, it is unlikely that the EU would be the same without it. The concept of direct effect, as borne out of the case of Van Gend en Loos, is the most significant illustration of the CJEU’s creative interpretation of EU law and forms the basis of the contemporary European legal order.


The Facts


In 1957, the Treaty of Rome was signed by the EU’s founding members, West Germany, the Netherlands, France, Italy, Belgium, and Luxembourg. This treaty established the precursor of the European Union, the European Economic Community. The treaty provided for the progressive reduction of customs duties and the established of a customs union, creating a single market for goods, labour, and services across the signatory states. Significantly for this case, article 12 provided that the Member States should not introduce new customs duties on imports and exports between them, nor should they increase the pre-existing ones.


A Dutch company imported goods from Germany in 1963, thinking that no tariff would be payable due to article 12 preventing the Netherlands from charging a new tariff on imports from another Member State. The authorities, though, charged a tariff on the importer, Van Gend en Loos. The private company paid the tariff but sued to retrieve its money, arguing that the Netherlands's failure to abide by its treaty obligations caused it damage and that the government had to repair that damage.


Judgment


The importer’s argument was novel at the time. The treaty was an agreement between states. Private entities and individuals were clearly not parties to the treaties and the Dutch government argued that the importer had no locus standi to sue under article 12. The treaty made no mention of creating individual rights or of allowing individuals to enforce it against the Member States. Prior to the judgment, the enforcement of the treaty’s provisions fell solely to the European Commission, as provided for in the treaties themselves.


The court’s judgment, though, caught the Member States by surprise. A new legal order was effectively crafted, as the court concluded that the treaties has a direct effect in the legal relationship between the Member States and their subjects. The CJEU argued that community law did not only impose obligations upon individuals, but it also conferred rights upon them which they could enforce in national courts. As the intention of the treaty was to create a common market for the benefit of individuals in the Member States, it would only be sensible to enable them to enforce the rights that the treaty provided for them. Additionally, the court sensibly recognised that giving direct effect to treaty provisions was the most effective supervisory mechanism, as individuals had the most incentive to see Member States complying with the treaty’s provisions.


A test was introduced to identify which provisions should be directly applicable. To be directly enforceable, the provisions had to be clear and unambiguous, unconditional, and not dependent on further Union or national actions. It was a shrewd decision by the court, increasing its power and relevance, whilst forcing governments to comply with EU law by making them accountable to their citizens when failing to do so.


EU law everywhere


This case formed the bedrock of a line of judgments which gigantified the significance of EU. Van Gend en Loos itself applied to not just the provisions of the treaties, but also to the Commission’s Regulations, as they were automatically and directly applicable in all Member States.


It wasn’t long before the CJEU held that treaty provisions and regulations could be enforced against individuals as well (Defrenne). This was due to EU law’s direct applicability, meaning that EU law provisions would be considered part of the law of the member state, giving the same rights to their citizens as national laws. Any violation of those rights would be treated similarly to a violation of national law, and those rights were to be respected by both the government and individuals. This interpretation of direct effect forced obligations upon individuals, but it did so to enhance the protection of the individual rights conferred to them by the treaties or regulations.


The principle of direct effect was further expanded when the CJEU held in Van Duyn that directives can also have direct effect, albeit only against a Member State’s government. Directives differ from treaty provisions and regulations, as they give Member States flexibility in the way they are to be implemented. They allow national governments to use any means preferable to them to reach a clear and precise objective inside a prescribed time limit. As such, directives are not unconditional by definition. Yet, the CJEU held that citizens are entitled to rights arising from directives when they are not implemented appropriately. If a directive is clear, precise and the deadline for implementation had passed, citizens can rely on them to bring an action against the government.


The UK might be leaving the EU, yet the influence of EU law will remain. The EU is the UK’s most significant trading partner, and this will continue even beyond Brexit. Even though the UK is likely to depart from the jurisdiction of the CJEU, the interconnectedness between the UK and the EU means that decisions of the CJEU will still be relevant. Traders will have to comply with EU law when trading with EU countries and much of the EU’s regulatory framework will still bind the UK entities wishing to continue their pan-European operations. Hence, it is important to understand how EU law works and how it developed to work in this way.


Looking Forward


The development of EU law’s direct effect in Van Gend en Loos and the subsequent jurisprudence of the CJEU have had a monumental impact in the operation of EU law. Individuals were given the power to monitor the correct implementation of EU law in their own countries, ensuring a level of compliance that would not have been possible otherwise. The granting of individual rights to EU citizens bolstered the EU’s prestige, increasing its relevance and support amongst the general population and allowing it to grow to its current form.


#law #eulaw #lawyer #lawstudent #commercialawareness #lawblog #legalnews #directeffect #brexit

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