<\/p>\n
The principle of direct effect is a technique developed to guarantee the supremacy of EU law. It refers to the status of EU law and whether it can be directly enforced by individuals in their domestic courts. The criteria for determining whether a provision has direct effect was set out in Van Gend en Loos [1<\/a>]<\/span> as follows: the provision must be clear and precise, unconditional, and must not be dependent on any further action by a Member State or the EU.<\/p>\n In relation to directives, for a long time they were thought to not have direct effect as they require further action by Member States in the form of implementation, thus not meeting the criteria set above. Then the European Court of Justice decided in Van Duyn [2<\/a>]<\/span> that directives could have direct effect and set the criteria as follows: the directive must be clear and precise, unconditional, and the time limit for implementation must have expired. Establishing this prevents Member States from using their inactivity or failure to implement a directive as a defence. The fundamental issue is the time limit, which according to Ratti [3<\/a>]<\/span> must have formerly ended although Inter-Environment [4<\/a>]<\/span> later held that Member States must \u2018refrain from taking any measures liable to seriously comprise the result prescribed\u2019 by the directive during the implementation period.<\/p>\n With directives there is also the question of whether they have horizontal or vertical direct effect, which has been a difficult question for many years, with people being divided on the subject [5<\/a>]<\/span> . Vertical direct effect enables individuals to bring actions against the State whereas horizontal direct effect allows actions between two private individuals i.e. against another individual.<\/p>\n The case of Marshall [6<\/a>]<\/span> seemed to solve this debate, when it was held that \u201ca directive may not of itself impose obligations on an individual\u2026” This meant that directives were capable of only vertical direct effect and thus could only be used to bring actions against the State or \u201cemanations of the state” [7<\/a>]<\/span> .<\/p>\n However, the court has at times allowed actions against individuals using what is known as \u2018incidental\u2019 horizontal direct effect. An example of this is Unilever v Central Foods [8<\/a>]<\/span> involving a private contract where the party relying on Italian law was held to be in breach as it didn\u2019t give effect to the relevant EU law and EU law rights.<\/p>\n From this, we can see the shortcomings of direct effect such as where the time limit of a directive hasn\u2019t expired, or if an individual wants to enforce a directive against a private party. In an attempt to fill these gaps, the principle of indirect effect was created. This places an interpretative duty upon national courts in order to ensure effectiveness of EU law. It was first seen in Van Colson [9<\/a>]<\/span> where it was held that domestic courts must \u201cinterpret their national law in the light of the wording and purpose of the Directive” once the implementation period is over. On the issue of horizontal indirect effect, the authoritative case is Marleasing [10<\/a>]<\/span> where it was held that indirect effect can be invoked in cases between private parties.<\/p>\n However indirect effect cannot be used where the national law is unambiguous or if it would increase a person\u2019s criminal liability.<\/p>\n As a result of the unfairness that direct effect can sometimes lead to, the principle of State Liability was created. This is the notion that where an individual has suffered a loss as a result of a Member State\u2019s failure to implement EU law then they can seek compensation from the State. It has been developed through case law of the European Court of Justice with reference to the obligations in Article 10 EC and Article 4 (3) TFEU. Compensation is not mentioned in the treaty articles but has been implied into the provision by the court.<\/p>\n One important thing to note is that compensation is awarded in national courts. The member state must however comply with the principles of equivalence, in regard to similar claims and effectiveness, in regard to respecting EU Law. [11<\/a>]<\/span> Whilst the remedy must be effective it should only be effective as to the criteria of a given Member State thus the amount awarded in compensation varies amongst Member States.<\/p>\n There are two tests used to determine State Liability. The first is the Francovich test [12<\/a>]<\/span> which applies where there is a complete failure by the Member State to implement the Directive. The following three conditions must be satisfied: the provision must have conferred rights on individuals; the rights must have been clearly defined; and there must be a causal link between the Member State\u2019s failure to implement the provision and the loss suffered by the individual.<\/p>\n This test aimed to fill the vacuum where there is no direct effect available. However, it left open several questions and didn\u2019t entirely fill the vacuum as it only applies in limited cases. This lead to the principle of State Liability being extended by subsequent cases.<\/p>\n Two such cases are Brasserie du Pecheur [13<\/a>]<\/span> and Factortame III. In these joint cases it was established that State Liability extends to situations where a Member State has failed to amend existing national legislation, where a Member State has implemented the Directive wrongly, and furthermore it applies in situations of direct effect as direct effect is only the minimum guarantee. The conditions for State Liability under this second test, known as the Factortame test, are as follows: there must be an infringement of a law conferring rights on individuals, there must be a sufficiently serious breach, and there must be a causal link between the breach and the loss suffered. However, there then came the question of what would constitute a sufficiently serious breach. The House of Lords considered this in Factortame V [14<\/a>]<\/span> and concluded that the breach must be \u2018manifest and grave\u2019.<\/p>\n