The Direct Effect of the Country of Origin Principle

liability is to be inferred from the fact that the national authorities did not prevent an obstacle to traffic from being placed on the Brenner motorway.³⁹⁰ The question to deal with was solely whether the objective pursued by the national authorities in their implicit decision to authorise or not to ban the demonstration in question.

This decision was made upon considerations linked to respect of the fundamental rights of the demonstrators to freedom of expression and freedom of assembly as enshrined in the 1950 European Convention on Human Rights. The court attached importance to the fact that both the Community and its Member States are required to respect fundamental rights, the protection of those rights is a legitimate interest which, in principle, justifies a restriction of the obligations imposed by Community law, even under a fundamental freedom guaranteed by the EC Treaty such as the free movement of goods.³⁹¹

So even though Member States enjoy a margin of appreciation in its exercise of public powers, it is clear that severely insufficient governance is likely to constitute a breach of the fundamental freedoms of the EC Treaty. However, as showed in Schmidberger even deliberate failure to intervene may be justified under for example human rights considerations as dealt with above. It has been argued that a single solution as to the proper personal scope of the free movement of rules is to be based on convincing argumentation, and will obviously lie beyond certain dogmatic positions that can be traced in both case law and doctrine.³⁹²

person who is able to rely on a directive against the state may do so regardless of the capacity in which the state is acting (whether employer or public authority). In either case, it is necessary to prevent the state from taking advantage of its own failure to comply with Community law.³⁹⁵

The rejection of horizontal direct effect has later been maintained in for example Dori v. Recreb,³⁹⁶ which concerned a consumer's possibility of relying against a trader on the right of cancellation provided in directive 85/577,³⁹⁷ which was not duly transposed. The court noted that the effect of extending that case law to the sphere of relations between individuals would be to recognise a power in the Community to enact obligations for individuals with immediate effect, whereas it has competence to do so only where it is empowered to adopt regulations.³⁹⁸ In the absence of measures transposing the directive within the prescribed time-limit, consumers cannot derive from the directive itself a right of cancellation as against traders with whom they have concluded a contract or enforce such a right in a national court.³⁹⁹

2.8.2.1. Indirect Effect

Directives may entail an 'indirect effect',⁴⁰⁰ which means that national courts are required to interpret their national law in the light of the wording and the purpose of a directive. In the von Colson case⁴⁰¹ such obligation was derived from article 10 of the EC Treaty which provides that Member States shall take all appropriate measures to ensure fulfilment of community obligations. The court found that article 10 is binding on all the authorities of Member States including, for matters within their jurisdiction, the courts.⁴⁰² Although Member States are free to choose between different solutions suitable for achieving the directive's objective, it is nevertheless required that if a Member State chooses to penalise breaches of prohibition by the award of compensation, then in order to ensure that it is effective and that it has a deterrent effect, it must be adequate in relation to the damage sustained.⁴⁰³

395 M. H. Marshall v. Southampton and South-West Hampshire Area Health Authority (Teaching), Case 152/84 (26 February 1986), paragraph 49.

396 Paola Faccini Dori v. Recreb Srl., Case 91/92 (14 July 1994), paragraph 20.

397 Directive 85/577 (20 December 1985) to protect the consumer in respect of contracts negotiated away from business premises.

398 Paola Faccini Dori v. Recreb Srl., Case 91/92 (14 July 1994), paragraph 24.

399 Paola Faccini Dori v. Recreb Srl., Case 91/92 (14 July 1994), paragraph 25.

400 Craig, Paul and Bùrca, Gràinne de, EU Law, third edition, Oxford University Press, 2003, p. 211ff.

401 Sabine von Colson and Elisabeth Kamann v. Land Nordrhein-Westfalen, case 14/83 (10 April 1984).

402 Sabine von Colson and Elisabeth Kamann v. Land Nordrhein-Westfalen, case 14/83 (10 April 1984), paragraph 26.

403 Sabine von Colson and Elisabeth Kamann v. Land Nordrhein-Westfalen, case 14/83 (10 April 1984), paragraph 28.

The von Colson principle was refined in Kolpinghuis Nijmegen,⁴⁰⁴ where the court established that the obligation to refer to the content of a directive when interpreting national law is limited by the general principles of law which form part of Community law and in particular the principles of legal certainty and non-retroactivity. The court emphasised that a directive cannot have the effect of determining or aggravating the liability in criminal law of persons who act in contravention of the provisions of that directive.

In the Marleasing case,⁴⁰⁵ the European Court of Justice established that national courts are required to interpret national law, as far as possible, in the light of the wording and the purpose of directives in order to achieve the result pursued by the latter and thereby comply with the third paragraph of article 249 of the EC Treaty -no matter whether the national provision is adopted before or after the directive. In this case, the European Court of Justice precluded the national court from interpreting national law in such a manner that the nullity of a public limited company may be ordered on grounds other than those exhaustively listed in the unimplemented directive in question.⁴⁰⁶

In Océano Grupo v. Quintero,⁴⁰⁷ the European Court of Justice decided in a case concerning an unfair jurisdiction clause in a consumer contract that the Spanish court should interpret national law, as far as possible, in accordance with the 1993 Directive on Unfair Contract Terms,⁴⁰⁸ and to favour the interpretation that would allow the court to decline of its own motion the jurisdiction conferred on it by virtue of an unfair term. All the facts giving rise to this case postdated the expiry of the period allowed for transposing the mentioned directive. Even though the court only obliged the directive provisions to be applied to the extent possible, it did not refrain from encouraging indirect effect of a directive in a civil dispute.

The situation was summed up by the Advocate General Jaqcobs in Centrosteel v.

Adipol:⁴⁰⁹ 'In summary, I am of the opinion that the Court's case law establishes two rules: 1) a directive cannot of itself impose obligations on individuals in the absence of proper implementation in national law; 2) the national courts must nevertheless interpret national law, as far as possible, in the light of the wording and purpose of relevant directives. While that process of interpretation cannot, of itself and independently of a national law implementing the directive, have the effect of determining or aggravating criminal liability, it may well lead to the imposition upon an individual of civil liability or a civil obligation which would not otherwise have

404 Criminal proceedings against Kolpinghuis Nijmegen BV, Case 80/86 (8 October 1987), paragraphs 13 and 14.

405 Marleasing SA v. La Comercial Internacional de Alimentacion SA, Case 106/89 (13 November 1990).

See especially paragraph 8.

406 Article 11 of Directive 68/151.

407 Océano Grupo Editorial SA v. Rociу Murciano Quintero, Case 240/98 (27 June 2000, joined with Cases 240-244/98). See especially paragraphs 31 and 32.

408 Directive 93/13 (5 April 1993) on unfair terms in consumer contracts.

409 Centrosteel Srl v. Adipol GmbH, Case 456/98 (13 July 2000).

existed'.⁴¹⁰

It should for good measure be mentioned that if the result prescribed by a directive cannot be achieved by way of interpretation, Community law requires the Member States to make good damage caused to individuals through failure to transpose a directive, provided that three conditions are fulfilled. First, the purpose of the directive must be to grant rights to individuals. Second, it must be possible to identify the content of those rights on the basis of the provisions of the directive. Finally, there must be a causal link between the breach of the State's obligation and the damage suffered.⁴¹¹ Member States' liability for not transposing directives is not further dealt with in this thesis.

2.8.2.2. Incidental Horizontal Effect

The European Court of Justice has despite the ruling in Marshall v.

Southampton,⁴¹² which established that 'a directive cannot of itself impose obligations on an individual and cannot therefore be relied upon as such against an individual', occasionally attached horizontal direct effect to directives. The case law has been described as complex, confusing and difficult to distinguish, in convincing conceptual terms, from direct horizontal effect.⁴¹³

CIA Security v. Signalson and Securitel⁴¹⁴ concerned Belgian legislation requiring security systems to be approved under a specific procedure before being marketed. CIA Security sued two competing, foreign companies claiming unfair trading practices for failing to comply with the Belgian procedure. The Belgian procedure was not notified to the EU Commission in accordance with the required procedure in directive 83/189.⁴¹⁵ The European Court of Justice found that the directive lay down a precise obligation on Member States to notify draft technical regulations to the Commission before they are adopted. Being, accordingly, unconditional and sufficiently precise in terms of their content, those articles could be relied on by individuals before national courts.⁴¹⁶ The court concluded that the directive was to be interpreted as meaning that breach of the obligation to notify renders the technical regulations concerned inapplicable, so that they are

410 Opinion of Mr Advocate General Jacobs delivered on 16 March 2000, Centrosteel Srl v. Adipol GmbH, Case 456/98, paragraph 35.

411 Paola Faccini Dori v. Recreb Srl. Case 91/92 (14 July 1994), paragraph 27 with references.

412 M. H. Marshall v. Southampton and South-West Hampshire Area Health Authority (Teaching), Case 152/84 (26 February 1986).

413 Craig, Paul and Bùrca, Gràinne de, EU Law, third edition, Oxford University Press, 2003, p. 220.

414 CIA Security International SA v. Signalson SA and Securitel SPRL., Case 194/94 (30 April 1996).

415 Directive 83/189 (28 March 1983) laying down a procedure for the provision of information in the field of technical standards and regulations (OJ 1983 L 109, p. 8), as amended by Directive 88/182 (22 March 1988).

416 CIA Security International SA v. Signalson SA and Securitel SPRL., Case 194/94 (30 April 1996), paragraph 44.

unenforceable against individuals and that national courts must decline to apply a national technical regulation which has not been notified in accordance with the directive.⁴¹⁷

The court attached importance to the fact that the directive was designed to preventively protect the free movement of goods and serves a useful purpose by only permitting obstacles which are necessary to satisfy compelling public interest requirements. The court noted that the aim of the directive is not simply to inform the Commission, but 1) to eliminate or restrict obstacles to trade, 2) to inform other Member States of technical regulations, 3) to give the Commission and the other Member States time to react and to propose amendments and 4) to afford the Commission time to propose a harmonising directive.⁴¹⁸

Unilever v. Central Food⁴¹⁹ concerned the direct effect of the directive⁴²⁰ dealt with in CIA Security v. Signalson and Securitel. This case concerned an Italian law on the labelling of origin of olive oil. The Commission was informed of the law, in accordance with the mentioned directive, but the Commission informed the Italian authorities of its intention to legislate in the field covered by the draft law and called on them to postpone the adoption, as provided for in directive 83/189.

Unilever brought proceedings against Central Food concerning payment by Central Food for a consignment of olive oil supplied by Unilever.

The question concerned the direct effect between two private parties of the obligation to postpone adoption of the Italian labelling requirements. The European Court of Justice concluded that a national court is required, in civil proceedings between individuals concerning contractual rights and obligations, to refuse to apply a national technical regulation which was adopted during a period of postponement of adoption prescribed in directive 83/189. Building upon the reasoning in CIA Security v. Signalson and Securitel, the court noted that in the civil proceedings in question, the Italian rules were liable to hinder Unilever in marketing the extra virgin olive oil which it offers for sale.

The court emphasised that the finding of inapplicability as a legal consequence of breach of the obligation of notification in CIA Security v. Signalson and Securitel was made in connection with proceedings between competing undertakings based on national provisions prohibiting unfair trading. The court found no reason to treat disputes between individuals relating to unfair competition, as in CIA Security v. Signalson and Securitel, differently from disputes between individuals concerning contractual rights and obligations, as in

417 CIA Security International SA v. Signalson SA and Securitel SPRL., Case 194/94 (30 April 1996), paragraphs 54 and 55.

418 CIA Security International SA v. Signalson SA and Securitel SPRL., Case 194/94 (30 April 1996), paragraph 50.

419 Unilever Italia SpA v. Central Food SpA, Case 443/98 (26 September 2000).

420 Directive 83/189 (28 March 1983) laying down a procedure for the provision of information in the field of technical standards and regulations, as amended by Directive 94/10 (23 March 1994) materially amending for the second time Directive 83/189.

the main proceedings.⁴²¹

The court recognised the Marshall/Dori doctrine, but emphasised that that case law does not apply to this directive, where non-compliance which constitutes a substantial procedural defect, renders a technical regulation adopted in breach of either of those articles inapplicable. In such circumstances, and unlike the case of non-transposition of directives, with which the Marhsall and Dori concerned, directive 83/189 does not in any way define the substantive scope of the legal rule on the basis of which the national court must decide the case before it. It creates neither rights nor obligations for individuals.⁴²² Directives can thus be directly invoked in proceedings against other individuals only in circumstances where they do not of themselves impose an obligation on a private party.⁴²³

2.8.2.3. The Country of Origin Principle

The country of origin principle in the 2000 E-Commerce Directive cannot of itself impose obligations on an individual or be relied upon against an individual. This is also emphasised by imposing obligations on 'Member States' in articles 3(1) and 3 (2). For the Business, the country of origin principle provides an obligation to comply with the legislation in the country of origin and a right to provide information society services unhindered to other Member States. The country of origin principle in the 2000 E-Commerce Directive does not share the same procedural characteristic as the directive mentioned above⁴²⁴ under incidental horizontal effect.

The country of origin principle could come into play between private parties if the Business is met with private cross-border law enforcement, either traditional or alternative law enforcement. In traditional law enforcement, the national court, before which the case is pending, would be obliged to apply the national provisions implementing the directive. If the directive is not correctly implemented, the national court would be obliged to construct national law in the light of the directive as provided for above. In connection to alternative law enforcement, the Member States will have an obligation, according to article 10 of the EC Treaty to take all appropriate measures to ensure fulfilment of the obligations arising out of the EC Treaty. But it should be emphasised that Member States enjoy a quite wide margin of appreciation in its exercise of public powers.⁴²⁵

421 CIA Security International SA v. Signalson SA and Securitel SPRL., Case 194/94 (30 April 1996), paragraph 49.

422 CIA Security International SA v. Signalson SA and Securitel SPRL., Case 194/94 (30 April 1996), paragraphs 50 and 51.

423 Craig, Paul and Bùrca, Gràinne de, EU Law, third edition, Oxford University Press, 2003, p. 228.

424 See 2.8.2.2.

425 See 2.7.1.