Direct effect, interpretation in conformity and primacy in times of COVID-19 – topic reflexions in an interjurisdictional approach in the EU

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 by Joana Abreu, Editor and Jean Monnet Module eUjust Coordinator

Departing from the previous UNIO Blog’s contribution “VAT and customs duties in COVID-19 times in the European Union – do the ends justify all means?”, authored by Andreia Barbosa, some other EU law fundamental questions arose concerning the principle of direct effect and its directions, particularly when it is related to Directives’ rules, and its symbiotic relations with primacy and interpretation in conformity.

The consistent jurisprudence of the ECJ (despite doctrinal criticism on the matter) widely exposed its fundamental requirements when the direct effect of a Directive’s rule is being assessed, i.e., there is a need for it to i) create a right in the individuals’ legal sphere; ii) which has to be stated in clear / precise and unconditioned terms; iii) lacking of concretization’s need by a European or national rule.

Therefore, direct effect can be defined as the ability of a EU rule / norm to be evoked before Member States’ authorities, as long as its requirements are fulfilled. In this sense, we can also understand the underlying teleology of this principle, particularly when relating to Directives: it aimed at promoting the protection of individuals, particularly when Member States have not accomplished their obligation to transpose the Directive in the pertinent period of time thought to accomplish it or, taking into consideration the transposition’s terms, they fall short or they can be perceived as contrary concerning Directive’s pursued objectives.

Furthermore, when Directives’ transposition occur in a period where turmoil was not expected, as much as the national legislator was able to establish a scalable framework to the Directive’s aims in that period of time, there can still be found some inefficiencies that can be understood only when demanding times – as those we are now experiencing – appear and defy all the odds and general terms we knew so far.

In fact, there can be a need for some posterior measures to be adopted, particularly to provide the new enforcement to the European legal framework and its updated interpretation. In fact, Article 288 (3) of the Functioning Treaty states that “[a] Directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods” and, departing from a literal analysis, Member States are bound to the aims and goals steaming from the Directive’s rules.

Insofar, when a complete new challenge arises – as COVID-19 is appearing to all mankind –, and in order to continuously fulfil their obligations steaming from EU law, Member States see themselves in a position to update their national rules and practices in order to continuously fulfil their primary obligations under the treaties and steaming from the principle of sincere cooperation.

In line with the previous remarks, Portuguese legislation seamed already to fulfil transposition demands concerning VAT exemption in the context of transmission of goods free of charge, for later distribution to people in need, made to the Portuguese State agencies or other philanthropic organizations [at least, in abstract terms, it accomplished Directive 2009/132/EC, of October 19th, 2009 and Directive 2006/112/EC transposition]. In this sense, a wider interpretation was made, in the Portuguese legal order, by Order (Despacho 122/2020-XXII, of March 24th) which made that VAT exemption applicable, as an exceptional instrument, to enhance the needed help to COVID-19 victims.

Despite not being one of the main legal instruments to proficiently transpose a Directive [under Article 112 (8) of the Portuguese Constitution], we do not believe there is solely (or, at all) a problem of lacking formal transposition’s demands (steaming from Portuguese Constitution) as there was not a need to transpose those Directives, but an answer to conduct an interpretation in conformity with EU law goals and to newly addressed teleological scenarios so a new problem demanding urgent answers could be minimized.

On the other hand, ECJ’s jurisprudence concerning intertwined relations between the principles of direct effect and interpretation in conformity (see, on the matter and as a pedagogical example, Maribel Dominguez judgment, C-282/10, whereas 23) stated it is up to national authorities to firstly conduct an interpretation in conformity of national rules and, only when this interpretation would not be possible, direct effect could be thought.

In fact, direct effect has another umbilical relationship with primacy principle which determines setting aside national rules which are not compatible with EU law and directly enforcing the European rule which direct effect was acknowledged. Therefore, ECJ found a way to firstly opt by a more systemic approach (the interpretation in conformity) and, only when it was not possible, to resort to direct effect.

On the other hand, if that national Order was not adopted in the national legal sphere, we could understand a direct effect of those Directives’ rules, enforced by public authorities. On the matter, ECJ’s jurisprudence has been addressing “inverted” vertical direct effect (evoking Directive’s rules by the Member State against the individuals) in a prohibitive approach. As steams, for instance, from Berlusconi judgment (joint proceedings C-387/02, C-391/02 and C-403/02), Member States cannot benefit from their own EU law infringement when they have not fulfilled their transposition obligation, being that understanding even more obvious when, evoking the Directive’s rule, it creates or accentuates obligations in the legal sphere of an individual.

However, in this unprecedented scenario, what happened was the need to “read between the lines” and understanding, in the EU law framework, what could be dealt in a way to ease a joint answer to COVID-19 challenges. That is to say, it would be important to understand if an “inverted” vertical direct effect could be allowed in cases where the Member State evoking the Directive’s rule was not creating / enhancing an obligation in the legal sphere of the individual but creating an advantage / easing demands.

In one case or the other, if conflicts steam from these options, the resolution has to be  addressed in a EU law approach, by resorting to preliminary references, in order to understand, from the interjurisdictional dialogue between national courts and the ECJ, if those European rules can be interpreted in that sense; if the updated interpretation has to be concretized in the Member States’ national orders fulfilling all the formal requirements of an “updated” transposition; or if they can resort to the principle of interpretation in conformity to hastily answer the nowadays demands.

Therefore, in line with ECJ’s jurisprudence Mecanarte (C-348/89) and Melki (joint cases C-188/10 and 189/10), as the question arises from a EU law standpoint, firstly of tackling those matters in a national constitutional approach, there is a need to establish, through the preliminary ruling, the interpretation of applicable EU law and, in the same sense, which are the limits and potentialities steaming from the principles of interpretation in conformity and direct effect. On the latter, it would be also important to understand how far can a Member State go – or if it can take this road at all – concerning the “inverted” vertical direct effect, as, in this case, it seems not to create or enlarge an obligation imposed in the juridical sphere of an individual and, in that sense, assess if it could happen.

These are also important times to densify the use of e-CURIA in preliminary references as it is a digital mean to hastily present a preliminary reference before the ECJ and to allow further celerity of proceedings before that organic court. In fact, it allows further communications between ECJ and the national court to be made digitally, saving time and allowing proceedings’ development even in an isolation situation of all judiciary members.

Two main ideas are underlined in this text: 1) the first one, of material nature, concerns the need to understand how problems arise in the EU law scope of application, having to be dealt in this legal order (as national rules and conducts are formally national but European in their origin); and 2) the second one, of empirical nature, as these shortcomings and challenges can only be solved by resorting more and more to European procedural instruments, as the preliminary reference, which known a great development with the possibility of presenting preliminary references through e-CURIA platform, without undermining this proceedings’ efficiency and allowing the time elapsed on it to be, if not minor, at least the same as it used to be.

Pictures credits: Bands tangled… by pxfuel.

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