Keenan and Riches’BUSINESS LAW

Chapter 2Law making

An example of a directive is Directive 93/13/EEC
on unfair terms in consumer contracts (see further,
Chapter 9 ). The directive, which introduced a gen-
eral requirement of fairness in consumer contracts, was
implemented in the UK by means of delegated legislation
(the Unfair Terms in Consumer Contracts Regulations
(SI 1999/2083)).
If a directive is not implemented by the required date:

■The state in default may find itself subject to enforce-
ment proceedings brought by the Commission. In 1982
the UK was found to be in breach of its Community
obligations for failing to comply with the require-
ments of ‘equal pay for work of equal value’ set out in
the Equal Pay Directive (EC Commission vUnited
Kingdom(1982)).
■Public employees may be able to rely on the directive
as against the state in its capacity as an employer
(Marshall vSouthampton & SW Hampshire Area
Health Authority (Teaching)(1986) – see later). In
Foster vBritish Gas plc(1991) the Court of Justice
defined ‘the state’ in broad terms so that in certain
circumstances it might include newly privatised
industries.
■Individuals who have suffered loss as a result of failure
to implement a directive may be able to sue the state
for damages, provided that: (a) the result required by
the directive involved conferring rights on individuals;
(b) the content of the rights can be determined from
the directive; and (c) there is a causal link between the
failure to implement the directive and the damage
suffered by those affected (Francovich and Bonifaci v
Italy(1991)).
The ECJ has also developed the concept of the indir-
ect effectof directives by requiring national courts to
interpret national law in light of the wording and pur-
pose of a directive to achieve the result intended by the
directive (Von Colson and KamannvLand Nordrhein-
Westfalen(1984)). This principle was confirmed in the
following case.

(c)Decisionsmay be addressed to a state, a company or

an individual and are binding on the addressee. Some

decisions may have direct effect in the sense that third

parties may be able to rely on the decision in an action

against the addressee. An example of a decision is

Council Decision 89/469 ‘concerning certain protective

measures relating to bovine spongiform encephalopathy

in the United Kingdom’, which was adopted in the wake

of the discovery of ‘mad cow’ disease.

3 Decisions of the Court of Justice.Judgments of the

Court of Justice on matters of European law are binding

on courts within the member states.

The law-making process

Regulations, directives and decisions come into effect

by a number of different procedures. The procedure to

be followed in each case is determined by the relevant

treaty article.

33

R was prosecuted for breach of Italian law concerning

the labelling of chemical solvents, even though he had

observed the requirements of two EC directives. The

Italian government had not implemented the relevant

directives by the due date and as a result was prevented

from relying on its own failure in order to take action

against R under Italian law.

Marleasing SAv La Comercial

Internacionale de Alimentacion SA

(1990)

Marleasing claimed that La Comercial, a Spanish com-

pany, had been established to defraud the creditors

of Barvieso SA, a founding member of La Comercial.

Marleasing was a creditor of Barvieso and it sought to

have the formation of La Comercial declared void under

the provision of Spanish national law. La Comercial

arguedthat an EC directive did not allow the agreement

establishing the company to be rendered void in these

circumstances. The Spanish government should have

implemented the directive on their accession to the EC

but had not done so. The ECJ confirmed that it had con-

sistently held that a directive does not of itself impose

obligations on an individual and it cannot be relied on

against an individual (i.e. it does not have horizontal direct

effect). However, when applying national law, whether the

domestic law was enacted before or after the directive,

the national court is required to interpret the domestic

legislation in light of the wording and purpose of the

directive in order to achieve the result intended by the

directive.

Comment. It is not entirely clear whether the obligation

to interpret domestic law in accordance with a directive

applies only where the domestic legislation is ambigu-

ous or if it can apply where the legislation is clear and

unambiguous but directly conflicts with a directive.