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NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Dutch Tax Administration

Coded

aff. 26/62; CELEX 61964J0006

Organization

European Union

Court

CJEC (current CJUE)

Dated

February 5 , 1963

Legal details

Quote

Inability of States to enforce, against [Community law], a subsequent unilateral measure (definition of primacy from the judgment)

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edit Parts NV Algemene Transport- en Expeditie Onderneming van Gend & Loos Vs Dutch Tax Administration. Decided by The judgment of February 5, 1963 by the Court of Justice of the European Communities (or CJEC) Subject matter

is one of the bases of Community law and is the basis for the relationship between Community legal order and national legal order. This judgment, the first of importance in European jurisprudence, predates the merger of the executives in 1965. In essence, the Court ruled that by joining the EEC, the Member States had accepted the limitation of their sovereignty, and that their citizens were now able to rely on the Treaties to assert their rights before the courts national. This is called the direct effect of the Community legal order in domestic law. Facts 1. The Dutch transport company van Gend en Loos handled cross-border transport between, in particular, the Netherlands and the FRG . In 1962, a shipment of German area was subject to a new import tax of 8% at the Dutch border. Based on Article 12 of the very recent Treaty of Rome which stated that " Member States shall refrain (abstenerse) from introducing new import and export customs duties or charges having equivalent effect between them ", the company disputes the payment of this tax before the Dutch Tariefcommissie . Throughpreliminary question , the latter turns to the ECJ to find out if citizens (and businesses) can be directly affected by Community law in their national territories. Decision 1. This particularly daring decision would later constitute one of the foundations of European law with, inter alia, the Costa v . ENEL judgment . 2. The question before the Court had precedents: in 1962, an Italian court had established that the TEC had direct effects ( Societa Biscotti Panettoni Colussi di Milano v. Ministero del Commercio con l'Estero , CMLR 1963, 133). And in 1960, in two separate decisions ( Italy v. High Authority , judgment 20/59) and Netherlands v. High Authority , 25/59) concerning the ECSC Treaty , the Court had also noted that it constituted " the ultima ratio allowing Community interests enshrined in the Treaty to prevail against inertia and against the resistance of the Member States '. 3. The Court observed that " the Community constitutes a new legal order of international law, for the benefit of which the States have limited, although in limited areas, their sovereign rights and the subjects of which are not only the Member States but also their nationals " ( bold added). 4. For the Court, the EC Treaty is " more than an agreement which would only create mutual obligations between Contracting States ". Provided that a provision is " clear and unconditional ", European citizens can therefore rely on it at the national level to challenge decisions of their own government if necessary. Thus, Article 12 TEC was to be interpreted as having direct effects and creating individual rights which the national courts now had to protect.

5. This idea is reinforced by the use made by the ECJ of the term "new international legal order". Indeed, for the first time, the subjects of an agreement reached between sovereign nations are no longer only the Member States, as is still the case in current international law ( UN , Kyoto Protocol , for example), but also the citizens. Costa v ENEL

Full case

Flaminio Costa v E.N.E.L.

name Case number

6/64,

Case Type

Reference for a preliminary ruling

Chamber

Full court

Nationality of

Italy

parties Procedural

Giudice conciliatore di Milano,

history

Sezione I, ordinanza del 16 January 1964 21 January 1964 (RG 1907/63) Ruling

As a subsequent unilateral measure cannot take precedence over community law, the questions put by the Giudice Conciliatore, Milan, are admissible in so far as they relate in this case to the interpretation of provisions of the EEC treaty Court composition Judge-Rapporteur

Robert Lecourt Advocate General Maurice Lagrange Flaminio Costa v ENEL (1964) Case 6/64 was a landmark decision of the European Court of Justice which established the primacy of European Union law (then Community law) over the laws of its member states'.[1] Facts

1. Mr. Costa was an Italian citizen who had owned shares in an electricity company, Edisonvolta, and opposed the nationalisation of the electricity sector in Italy. He asked to two lower courts in Milan (two different Giudice Conciliatore) to ascertain that the real creditor of his electricity bill (a relatively small amount of money, 1,925 lire) was the nationalised company, Edisonvolta, and not the newly established state company, Enel 2.

He argued that the nationalisation of the electricity industry violated the Treaty of Rome and the Italian Constitution. The first Giudice Conciliatore of Milan referred the case to the Italian Constitutional Court and the second Giudice Conciliatore referred it to the European Court of Justice.

The Italian Constitution Court gave judgement in March 1964, ruling that while the Italian Constitution allowed for the limitation of sovereignty for international organisation like the European Economic Community, it did not upset that normal rule of statutory interpretation that where two statutes conflict the subsequent one prevails (lex posterior derogat legi anteriori/priori). As a result the Treaty of Rome which was incorporated into Italian law in 1958 could not prevail over the electricity nationalisation law which was enacted in 1962.[2] In light of the decision of the constitutional court, the Italian government submitted to the ECJ that the Italian court's request for a preliminary ruling from the ECJ was inadmissible on the grounds that as the Italian court was not empowered to set aside the national law in question, a preliminary ruling would not serve any valid purpose. Judgment[edit] The ECJ held the Treaty of Rome rule on an undistorted market was one on which the Commission alone could challenge the Italian government. As an individual, Costa had no standing to challenge the decision because that Treaty provision had no direct effect. However, Costa could raise a point of EC law against a national government in legal proceeding before the courts in that member state since EC law would not be effective if Costa could not challenge national law on the basis of its alleged incompatibility with EC law.[3]

As opposed to other international treaties, the Treaty instituting the E.E.C. has created its own order which was integrated with the national order of the memberStates the moment the Treaty came into force; as such, it is binding upon them. 1. In fact, by creating a Community of unlimited duration, having its own institutions, its own personality and its own capacity in law, apart from having international standing and more particularly, real powers resulting from a limitation of competence or a transfer of powers from the States to the Community, the member-States, albeit within limited spheres, have restricted their sovereign rights and created a body of law applicable both to their nationals and to themselves. The reception, within the laws of each member-State, of provisions having a Community source, and more particularly of the terms and of the spirit of the Treaty, has as a corollary the impossibility, for the member-State, to give preference to a unilateral and subsequent measure against a legal order accepted by them on a basis of reciprocity. [...] It follows from all these observations that the law stemming from the treaty, an independent source of law, could not, because of its special and original nature, be overridden (anulada) by domestic legal provisions, however framed, without being deprived of its character as community law and without the legal basis of the community itself being called into question.[4] Direct effect

In European Union law, direct effect is the principle that Union law may, if appropriately framed, confer rights on individuals which the courts of member states of the European Union are bound to recognise and enforce. Direct effect is not explicitly stated in any of the EU Treaties. The principle of direct effect was first established by the Court of Justice of the European Union (CJEU) in Van Gend en Loos v. Nederlandse Administratie der Belastingen.[1] Direct effect has subsequently been loosened in its application to treaty articles and the ECJ has expanded the principle, holding that it is capable of applying to virtually all of the possible forms of EU legislation, the most important of which are regulations, and in certain circumstances to directives. The ECJ first articulated the doctrine of direct effect in the case of Van Gend en Loos,[1] the European Court of Justice laid down the criteria (commonly referred to as the "Van Gend criteria") for establishing direct effect. The EU article provision had to be:   

clear, negative (a negative rather than a positive obligation) unconditional,

 

containing no reservation on the part of the member state, and not dependent on any national implementing measure.[2]

If these criteria were satisfied, then the right or rights in question could be enforced before national courts. Whether or not any particular measure satisfies the criteria is a matter of EU law to be determined by the EU Courts. Ajos case – Denmark Facts 1. On December 6, 2016, the Supreme Court of Denmark (DANISH COURT) ruled in the Ajos case1). The ruling will be read, remembered and taught as an example of defiance of clear guidelines from the Court of Justice of the European Union (CJEU) by the highest court in Denmark3). 2. According to the DANISH COURT, the case involved two central legal issues in a dispute between two private parties. (i) The first concerned the scope of the principle of non-discrimination on grounds of age. More concretely, the question was whether this principle could override a Danish statute, which deprived an employee of a severance allowance because he reached a certain age (la pregunta era si este principio podría anular un estatuto danés, que privó a un empleado de una indemnización por despido porque llegó a cierta edad). 3. And, closely linked, (ii) whether in such situations a national court could weigh the principle of non-discrimination on grounds of age against the principles of legal certainty and the protection of legitimate expectations and conclude that the latter took precedence? Perhaps most surprisingly, the Danish court used the occasion to set new boundaries to the applicability of the CJEU’s rulings in Denmark. It did so in two steps: first, the DANISH COURT delimited the competences of the European Union (EU) through the lens of its interpretation of the Danish Accession Act 2). Second, the DANISH COURT delimited its own power within the Danish Constitution. In regard to the first point, it concluded that the judge-made principles of EU law such as the general principle of non-discrimination on grounds of age, were not binding because it did not have its origin in a specific Treaty provision This conclusion was consequential since the case at hand concerned such a principle developed by the CJEU after an amendment. With regard to the second step, the DANISH COURT argued that it would in fact exceed its own judicial mandate within the Danish constitutional framework if it interpreted or dis-applied national law on those grounds4). Below, we offer three possible explanations of the response of the DANISH COURT. The first explanation is structural. Political trends have changed towards a renewed affirmation of national sovereignty. This is the result of a number of disintegrative processes, notably the refugee crisis, Brexit, and the global financial crisis. Political momentum existed, in other words, for a push-back response when the case

appeared before the DANISH COURT; and if the time was right, the case at hand was certainly also conducive. The Ajos case offered in many ways a perfect springboard (trampoline) for a ‘push-back strategy’ as it concerned an area of EU law that is both controversial and weakly-founded according to many commentators. By pushing the case to its extreme, the DANISH COURT eventually forced itself into what it saw as a contra legem situation – and Danish law needed to prevail by necessity if the DANISH COURT was to stay within its domestic constitutional mandate. Closely linked, a second explanation for the marked change is the gradual development of a tougher stance on the limits of EU law. For long, the DANISH COURT was known for a pragmatic but genuinely open approach towards international law. In recent years the DANISH COURT has hardened its line on the EU. While the DANISH COURT’s 1998 ruling on the Maastricht Treaty5) followed the German Federal Constitutional Court’s decision in the Brunner case6), the DANISH COURT seems to have changed its course thereafter. In its ruling on the constitutionality of the Lisbon Treaty 7), the DANISH COURT noted that although the CJEU is charged with settling any disputes on the interpretation of EU law: ‘… this must not result in a widening of the scope of Union powers …’. The Court further emphasised that since Denmark’s implementation of the Lisbon Treaty was based on the government’s constitutional assessment that no new powers were transferred to the EU: ‘… Danish authorities are obliged to ensure that this is observed.’ In Ajos, the DANISH COURT further develops this approach which it has been working towards since its 2013 decision. In essence, Ajos is illustrative of a turn towards a greater national patrolling of the limited mandate given to the EU, including its judicial organ. A third explanation posits that Ajos is a product of what might best be described as a growing irritation with international courts over their perceived legal micromanagement. In this view, the expansive tendencies of international courts via dynamic interpretation essentially collide with Danish legal culture and its focus on textual interpretation. There is a growing choir extolling the virtues of taking a hard stance against the perceived intrusions of international tribunals and their dynamic legal approaches, notably the CJEU but also the European Court of Human Rights. What Ajos adds to this picture of a growing ‘sovereigntism’ – at times even plain nationalism – is that it does not stop short of implementing the viewpoint into legal practice. And these new and stronger formal legal requirements for making EU law applicable also have political consequences. Going forward, Danish politicians will have to both draft far more detailed accession acts and be careful when participating in EU legislative processes. All in all, this is likely going to complicate Danish participation in the EU. Domesticating EU Law

1. The conclusion in Ajos highlights two clear assertions which however only become fully visible through the narrow lens of Danish law. (i) Firstly, that the Accession Act does not provide the legal basis for a general unwritten principle to be unfolded in specific rulings by the CJEU in a way that takes precedence over national legislation. (ii) Secondly, that the DANISH COURT perceives itself to be violating its constitutional mandate were it to dis-apply Danish legal provisions, even when those provisions are contrary to EU law. In both cases the DANISH COURT seeks legitimacy for its ruling by reference to legal certainty and legitimate expectations. The result of the approach is effectively a domestication of the question of the effect of EU law – now essentially a question of the limits of the Danish Accession Act which itself is limited by the relevant provision in the Danish Constitution (Art. 20). Using this approach, the legal status of the contested principle of nondiscrimination is that of an unwritten principle without a clear legal basis in the Treaty. As such, it is not deemed to be covered by the Accession Act. Instead, the DANISH COURT views it as judge-made and thus belonging to a quasi-legal realm outside the constitutionally binding sphere of EU law in Denmark. This reconstruction of the validity of EU law is obviously deeply troubling when seen from a supranational perspective. The consequence is that every single national constitution of member states creates its own variation of EU law. This transforms EU law from an autonomous order into a residual order, the latter contingent on national legal practice and specific constitutional provisions. Yet by far the most striking issue arising from the DANISH COURT’s actions concerns the decision to portray itself as legally virtuous against the CJEU political activism. Although Ajos is drafted in the spirit of judicial restraint, giving weight to legislative texts and especially to the intention of the legislator (including preparatory works from Parliament) , it is likely to be viewed and received in very different terms. Judicial self-restraint simply fails to materialise as the guiding rationale of the decision. The approach of supposedly avoiding politics, the formal Leitmotiv of the decision and its formalism (defined as ‘playing by the Danish rules’), comes across as political: it effectively changes the dynamics of EU-Danish law and politics. The main reason for this is that EU law simply cannot be reduced to an exterior phenomenon. Rather, it is part and parcel of Danish law. It follows that switching it off, as in Ajos, even when justified under an interpretation of national law, necessarily entails applying one law by breaking another. That is not a viable path for any legal system taking supranational obligations seriously. Horizontal and direct effect The terms direct effect and direct applicability often get confused by students of EU law, but it is important to understand the distinction between them. We shall try to break them down here so that they become straight forward.

Direct applicability Direct applicability talks about whether an EU law needs a national parliament to enact legislation to make it law in a member state. EU treaties and EU regulations are directly applicable. They do not need any other acts of parliament in the member state to make them into law. Therefore, once a treaty is signed or a regulation is passed in Brussels by the Council of Ministers, it instantly becomes applicable in all member states. EU directives are not directly applicable. Directives, in essence, tell member states to do something, so when passed they need a piece of legislation to make them into national law. Direct effect Direct effect refers to whether individuals can rely on the EU law in domestic courts. There are two types of direct effect – vertical and horizontal. 

Vertical direct effect means that you can use EU legislation against a member state.



Horizontal direct effect means that you can use EU legislation against another individual. Treaties, regulations, directives and direct effect Treaties and regulations are vertically and horizontally directly effective. Either a treaty or a regulation can be used as a piece of law in a member state court against the state or another individual. Confusingly, directives are ...