Acceso usuarios
Panos Koutrakos
The principle of direct effect of directives has not had an easy life. Its introduction was controversial, and its development long and convoluted. And yet, despite the heavy criticism levelled against the compromises struck by the current state of the law, there have been no surprises for some time. Is there, therefore, more to say about the direct effect of directives? The recent case law of the Grand Chamber of the Court of Justice answers this question in the affirmative. A case in point is the notion of “an emanation of the State”. In Farrell, the Court confirmed that the term should be interpreted broadly: the well-known criteria laid down in Foster twenty eight years ago are not cumulative, and a body or organisation would be deemed to constitute an emanation of the State if it is subject to the authority of the State or has special powers beyond those which result from the normal rules applicable to relations between individuals. This would be the case “either because they are legal persons governed by public law that are part of the State in the broad sense, or because they are subject to the authority or control of a public body, or because they have been required, by such a body, to perform a task in the public interest and have been given, for that purpose, such special powers”.
This interpretation by no means suggests a departure from the Foster judgment: it is entirely consistent with and confirms the broad construction of the notion of the emanation of the State that was articulated in the latter judgment. This view has always been an inherent part of the Court’s approach to the direct effect of directives. After all, such interpretation, along with the other principles introduced over the years, namely the indirect and incidental effects, has been necessary in order to compensate for the denial of horizontal direct effect.
Viewed from this angle, the judgment in Farrell provides a useful clarification of the broad scope of the vertical direct effect of directives. It also raises the question of how to interpret the “special powers” that domestic bodies may have in order to enable individuals to invoke directives against them. Neither prior case law nor the judgment in Farrell answers this question. In her Opinion, AG Sharpston had pointed out, on the one hand, the need for the term to have an autonomous meaning in EU law and, on the other hand, the absence of such a meaning in the case law.
How is, then, the concept of special powers to be construed? The Court does not appear particularly keen to provide a definition: it either relies on other parts of the Foster formula or refers to specific characteristics of the body in question. Recent case law illustrates this approach. In Anisimovienė, the Court (albeit not the Grand Chamber) held that the body responsible in Lithuania for guaranteeing the protection of deposits and investments in the event of the insolvency of investment firms was a legal person governed by public law, “so that it can without more be treated as comparable to the State”. In Grenville Hampshire, another Chamber provided more detail in order to conclude that Directive 2008/94 on the protection of employees in the event of the insolvency of their employer may be invoked against the Pension Protection Fund (PPF), that is, the body responsible in the United Kingdom for employees’ claims under a supplementary occupational pension scheme. The Court held that the body had been entrusted with special powers “since it imposes levies on eligible supplementary occupational pension schemes and has the right to issue those schemes with the necessary directions in connection with their winding up. In addition, by approving the valuation of the protected liabilities of a supplementary occupational pension scheme, the Board of the PPF sets the level of protection of each employee as regards his accrued entitlement to old-age benefits, both where the PPF assumes responsibility for the scheme and where the scheme may be wound up outside the PPF”.
There appears to be a whiff of “I recognise it when I see it” test in this approach. While far from ideal in terms of legal certainty, it is, nonetheless, difficult to envisage a different way of settling this issue. After all, is it realistic to expect an overall definition which would be both broad enough to capture the different ways in which powers are granted by the State to organisations or bodies in all their variety, complexity and sophistication and precise enough to be applied with confidence by domestic courts? The test is bound to be understood properly in a fact-specific context.
Viewed against the judgment in Foster, the broad definition of the emanation of the State in Farrell is by no means surprising. It is, nonetheless, important. It enhances the legal position of private parties and makes it easier for them to convince domestic courts of the wide vertical direct effect of directives. This is all the more so, given the emphasis on reaffirming and clarifying the state of the law in another recent judgment by the Grand Chamber, namely Smith. This takes us back to the beginning of the development of the direct effect of directives, and explains the various twists along the way: for instance, it clarifies the narrow and exceptional set of circumstances where the so-called principle of incidental effect would be relevant; it confirms the ratio of the Mangold principle and distinguishes it from the legal context of the case13; and it reminds us of the role of the principle of State liability for violations of EU law in order to fill in the gaps that emerge in the private enforcement of directives within the domestic legal orders. Viewed alongside Farrell, the judgment in Smith suggests that no surprises are forthcoming in the design of the legal effects of directives. This in itself is noteworthy. As is the confirmation of the wide scope of their vertical direct effect. And there is more to say about that.
