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Koch, Cornelia --- "The Doctrine of Supremacy of European Community Law as a Condition Precedent for the Doctrine of Direct Effect" [2004] IntTBLawRw 8; (2004) 9 International Trade and Business Law Review 201

* The author is a Lecturer in Law at The University of Adelaide and a PhD candidate at The University of Queensland. An earlier draft of this paper was delivered to the 2002 PhD Colloquium at the TC Beirne School of Law at The University of Queensland. The author would like to thank the attendees of the Colloquium for their comments and Garrick Professor Gabriël Moens for his stimulating comments and suggestions throughout the completion process.

[1] For example, Ulrich Everling, , note 1 at 1206; AG Toth, The Oxford Encyclopaedia of European Community Law, vol 1, Institutional Law, Clarendon Press, Oxford, 1990 at 168; Trevor C Hartley, The Foundations of European Community Law, 4th edn, Oxford University Press, New York, 1998 at 191.

[2] Opinion 1/91, Draft agreement between the Community, on the one hand, and the countries of the European Free Trade Association, on the other, relating to the creation of the European Economic Area, [1991] ECR I-6079 at 6102.

[3] The term ‘condition precedent’ is usually used in contract law. The Concise Australian Legal Dictionary defines a condition precedent as ‘a stipulation that must be fulfilled before one of the parties becomes subject to a contractual obligation’; Peter E Nygh and Peter Butt (eds), Concise Australian Legal Dictionary, 2nd edn, Butterworths, Sydney, 1998 at 85. In this paper the term is used in a different, public law, sense to mean that one principle has to be present before another can have legal effect. It is argued that, unless a provision of Community law is supreme over domestic law, it cannot have direct effect.

[4] The ECJ uses the terms ‘ordinary international law’ or ‘ordinary international treaties’ to distinguish other international agreements and rules from the funding treaties of the European Communities and Community law. It takes this course because it regards the European Community as a special supranational organisation which differs from ‘ordinary’ international organisations’ because it is of unlimited duration, has its own institutions, personality, legal capacity and capacity of representation on the international plane and also real powers stemming from a limitation of sovereignty or a transfer of powers from the states to the Community; case 6/64, Costa v ENEL, [1964] ECR 585 at 593. In this article the term will be used in the same way.

[5] From the perspective of international law this statement is incorrect because all international treaties should be directly applicable and supreme over national law in all signatory countries to an international agreement from the time when the agreement is signed or enters into force. However, the domestic law of every country contains constitutional rules which deal with the status of international law in their domestic legal system. It is these rules which determine how international law can take effect in national law.

[6] JA Winter, ‘Direct applicability and direct effect, two distinct and different concepts in Community law’ (1972) 9 CMLRev 425 at 426–27; Trevor C Hartley, note 2 at 189–90; for a comprehensive analysis of the monist and dualist doctrines see John H Jackson, ‘Status of treaties in domestic legal systems: a policy analysis’ (1992) 86 Am Jo Int L 310.

[7] AG Toth, note 2 at 166.

[8] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1.

[9] Trevor C Hartley, note 2 at 191.

[10] Under Article 234 (ex Article 177) EC Treaty the European Court of Justice has jurisdiction to give preliminary rulings concerning the interpretation of Community provisions including the EC Treaty. Where a question concerning the interpretation of such a provision is raised before a court of a member state, that court can, if it considers that a decision of the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon. For a comprehensive discussion of the procedure under Article 234 (ex Article 177) see, for example, Paul Craig and Gráinne de Búrca, EU Law, Text, Cases and, Materials, 3rd edn, Oxford University Press, New York, 2003 at 432–38.

[11] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1 at 3.

[12] Article 12 EEC Treaty was replaced by a new provision in the Treaty of Amsterdam.

[13] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, Opinion of the Advocate General, [1963] ECR 1 at 20-2, 24. Under Article 222 (ex Article 166) EC Treaty the European Court of Justice has eight Advocates General who are officers of the Court. It is their duty to assist the Court by advising on the factual situation and the legal solution to a dispute with complete impartiality and independence. Each case coming before the court is assigned to an Advocate General who follows closely the progress of the case. Once the written procedure is completed, the Advocate General presents to the court his/her view on whether any preparatory inquiry is necessary and whether the case should be dealt with by a Chamber or by the Full Court. Subsequently, the Advocate General is present at the hearing of the case and is entitled to put questions to witnesses and parties. Some weeks after the hearing the Advocate General delivers his written Opinion to the Court. He/She analyses the facts and legal aspects of the case in detail, and proposes his/her solution to the problem. The Court is not bound by the Advocate General’s view, but the judges take it into account in the course of their deliberations and follow it in a majority of cases. The Opinion of the Advocate General is reported with the judgment. See Paul Craig and Gráinne de Búrca, note 11 at 88, 93–96.

[14] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1 at 12; this view was confirmed in case 43/75, Defrenne v Sabena, [1976] ECR 455 at 478.

[15] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1 at 12.

[16] Ibid.

[17] Ibid, at 13.

[18] Case 106/77, Amministrazione delle Finanze dello Stato v Simmenthal SpA.[1978] EUECJ R-106/77; , [1978] ECR 629.

[19] Ibid, at 643.

[20] In the last part of this paper it will be argued that direct effect only ensures the uniformapplication of Community law in the member states if it is coupled with supremacy.

[21] AG Toth, note 2 at 168.

[22] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands

Inland Revenue Administration, [1963] ECR 1 at 13.

[23] See Articles 81 (ex Article 85), 82 (ex 86), 244 (ex 187), 249 (ex 189), 254 (ex 191) and 256 (ex 192) EC Treaty.

[24] See Articles 84 (ex Article 88), 234 (ex 177), 244 (ex 187), 256 (ex 192) EC Treaty; Articles 26 and 27 EEC Statute.

[25] For example, Case 2/74, Reyners, Opinion of the Advocate General, [1974] ECR 631 at 659.

[26] For example, Case 41/74, Van Duyn v Home Office, Opinion of the Advocate General, [1974] ECR 1337 at 1354–55

[27] For example Case 43/75, Defrenne v Sabena, [1976] ECR 455 at 480–81 as interpreted and applied in Case 61/79, Denkavit Italiana, [1980] ECR 1205 at 1223–34 and in Joined Cases 66, 127, 128/79, Salumi, [1980] ECR 1237.

[28] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1 at 13.

[29] Case 57/65, Lütticke v Hauptzollamt Saarlouis, [1966] ECR 205 at 210; see also Case 28/67, Firma Molkerei-Zentrale Westfalen v Hauptzollamt Paderborn, [1968] ECR 143 at 153.

[30] AG Toth, note 2, 1990 at 173; Trevor C Hartley, note 2 at 191.

[31] Gabriël Moens and David Flint, Business Law of the European Community, DataLegal Publications, Brisbane, 1993 at 283.

[32] Gabriël Moens and David Flint, note 32 at 283; AG Toth, note 2 at 172.

[33] Regulations, directives and decisions are those legislative Community instruments which are binding on the member states and not merely recommendatory. Regulations and directives are general rules, while decisions are addressed to particular addressees. Under Article 249 (ex Article 189) EC Treaty regulations are directly applicable in all member states. Directives, on the other hand, are only binding as to the result to be achieved, but it is in the member states’ discretion how to achieve it.

[34] Trevor C Hartley, note 2 at 216f; Toth A G, note 2 at 173ff; Pescatore Pierre, ‘The doctrine of “Direct Effect”: an infant disease of Community law’ (1983) 8 ELRev 155 at 171ff; Josephine Steiner and Lorna Woods, Textbook on EC Law, (5th edn, Blackstone Press, London, 1996) at

[61] . 35 There is no similar provision in the ECSC Treaty for general decisions (equivalent to EC Treaty regulations). 36 Trevor C Hartley, note 2 at 197; Josephine Steiner and Lorna Woods, note 35 at 38; Pierre Pescatore, note 35 fn 2.

[37] The first one to make this distinction was JA Winter, note 7.

[38] See for example AG Toth, note 2 at 160–61, 166; Gabriël Moens and David Flint, note 32 at

[284] ; Josephine Steiner and Lorna Woods, note 35 at 38; D Lasok and KPELasok, Lasok and Bridge, Law and Institutions of the European Union, (6th edn, Butterworths, London, 1994) at 294–45.

[39] Trevor C Hartley, note 2 at 187.

[40] Josephine Steiner and Lorna Woods, note 35 at 65.

[41] See explanation in note 6.

[42] For example, Articles 93–94 of the Dutch constitution accord supremacy to all forms of international law, whether prior or subsequent to domestic law; Article 55 of the French constitution provides that treaties and agreements duly ratified ‘have authority superior to that of laws’; Article 24 of the German constitution provides that the state ‘may transfer sovereign powers’ to intergovernmental institutions; according to Article 11 of the Italian constitution the state ‘consents, on condition of reciprocity with other States, to limitations of sovereignty necessary for an arrangement which may ensure peace and justice between the nations’. The principle of reciprocity means in this context that if one party to an agreement breaches its obligations, the other contracting parties may regard themselves as entitled to be relieved of theirs. The UK takes a dualist approach to international law, which means that Treaties have to be transformed into national law before they become part of the UK legal system. Furthermore, it does not have a written constitution. Therefore, it must provide for priorities in the statute that incorporates the international Treaty. This statute has the same status as any other national statute and will as such be vulnerable to the doctrine lex posterior derogat priori whereby any inconsistency between an earlier and a later statute is resolved in favour of the latter. The later statute is impliedly deemed to have repealed the earlier one (see Ellen Street Estates Ltd v Minister of Health (Ellen Street Estates Ltd v Minister of Health) (1934) 1 KB 590). With regard to Community law that would mean that any provision of a UK statute passed subsequent to the statute incorporating EC law (the European Communities Act 1972 ) which was inconsistent with Community law would take priority. Translations of constitutions taken from Josephine Steiner and Lorna Woods, note 35 at 65–66.

[43] The doctrine is also referred to as primacy or precedence of Community law.

[44] Toth AG, note 2 at 168.

[45] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1.

[46] Ibid, at 12.

[47] Case 6/64, Costa v ENEL, [1964] ECR 585.

[48] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands

Inland Revenue Administration, [1963] ECR 1.

[49] Article 10(2) EC Treaty reads: [Member States] shall abstain from any measure which could jeopardise the attainment of the objectives of this Treaty.

[50] Article 12 EC Treaty reads: Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.

[51] Case 6/64, Costa v ENEL, [1964] ECR 585 at 593–94.

[52] AG Toth, note 2 at 502; Steiner Josephine and Woods Lorna, note 35 at 69.

[53] Case 11/70, Internationale Handelsgesellschaft v Einfuhr- und Vorratsstelle für Getreide &

Futtermittel[1970] EUECJ R-11/70; , [1970] ECR 1125.

[54] Ibid, at 1134.

[55] Ibid.

[56] Case 106/77, Amministrazione delle Finanze dello Stato v Simmenthal SpA [1978] EUECJ R-106/77; [1978] ECR 629.

[57] Case 11/70, Internationale Handelsgesellschaft v Einfuhr- und Vorratsstelle für Getreide &

Futtermittel[1970] EUECJ R-11/70; , [1970] ECR 1125.

[58] Case 106/77, Amministrazione delle Finanze dello Stato v Simmenthal SpA.[1978] EUECJ R-106/77; , [1978] ECR 629 at

[643] . 59 Ibid, at 644. 60 Ibid. 61 Case 167/73, Commission v France, [1974] ECR 359 at 372. 62 Ibid, at 372–73. 63 Case 22/70, Commission of the European Communities v Council of the European Communities.

European Agreement on Road Transport (ERTA), [1971] ECR 263. 64 Ibid, at 274.

[65] Case 158/91, Levy, [1993] ECR I–4287 at 4307.

[66] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1.

[67] The only exception that could be anticipated is where no national rule exists in an area that is regulated by Community law. However, this situation would only arise very rarely.

[68] See above fn 43.

[69] For example, the Netherlands, Luxembourg, France, Belgium; see John H Jackson, note 7 at 320. 70 For example Germany, Italy and the United Kingdom, see John H Jackson, note 7 at 320. 71 For a thorough analysis of the status of international treaties in national legal systems see

John H Jackson, note 7. 72 In 1963, case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1 73 In 1963 the European Community only had six Member States: France, Germany, Italy, Belgium, Luxemburg and the Netherlands.

[74] The doctrine of implied repeal lays down the rule that any inconsistency between an earlier and a later statute is resolved in favour of the latter, see note 43.

[75] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1.

[76] John H Jackson, note 7 at 320.

[77] Costa v Enel e soc Edisonvolta, 7 March 1964, n 14.

[78] Josephine Steiner and Lorna Woods, note 35 at 66.

[79] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands

Inland Revenue Administration, [1963] ECR 1.

[80] Advocate General Romer’s argument corresponded to the first part of the analysis conducted under the previous heading. He examined the legal systems of the six member states and pointed out how directly effective Community law would apply in each state. He came to the conclusion that Community law would apply unevenly in the states if the doctrine of direct effect was created.

[81] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1 at 12.

[82] Emphasis added.

[83] Case 6/64, Costa v ENEL, [1964] ECR 585 at 593 the Court said: ‘By creating a Community of unlimited duration, having its own institutions, its own personality, its own legal capacity and capacity of representation on the international plane and, more particularly, real powers stemming from a limitation of sovereignty or a transfer of powers from the States to the Community, the member states have limited their sovereign rights, albeit within limited fields, and have thus created a body of law which binds both their nationals and themselves’ [emphasis added].

[84] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, Opinion of the Advocate General, [1963] ECR 1 at 23–24; Advocate General Romer concluded that Belgium had a dualist system. The Belgian courts have taken the opposite view, see John H Jackson, note 7 at 320.

[85] Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, Opinion of the Advocate General, [1963] ECR 1 at 24; Although the Advocate General uses the term ‘direct application’ it is clear from the context that he means ‘direct effect.’ As stated above, regrettably the European Court of Justice does not make a clear distinction, but uses the two expressions interchangeably.

[86] Case 106/77, Amministrazione delle Finanze dello Stato v Simmenthal SpA, [1978] EUECJ R-106/77; [1978] ECR 629 at

[643] . 87 Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, [1963] ECR 1.

[88] Case 6/64, Costa v ENEL, [1964] ECR 585.

[89] Josephine Steiner and Lorna Woods, Textbook on EC Law, (7th edn, Blackstone Press,

London, 2000) 487; Paul Craig and Gráinne de Búrca, note 11 at 432; Trevor C Hartley, note 2 at 289–90; Andrew Evans, A Textbook on EU Law, (Hart Publishing, Oxford, 1998) at 138–39.

[90] Case 6/64, Costa v ENEL, [1964] ECR 585.

[91] This view had been confirmed by the Italian Constitutional Court in its review of Costa v ENEL, Costa v Enel e soc Edisonvolta, 7 March 1964, n 14.

[92] Case 6/64, Costa v ENEL, [1964] ECR 585 at 593–94.