19 Jan 2017
About the vertical direct effect of EU directives
Regarding the direct effect of European acts, one needs to distinguish between vertical direct effect (meaning that individuals can invoke a European provision in relation to a member state) and horizontal direct effect (based on which an individual may rely upon a EU provision in relation to another individual).
Since its decision dated 5 April 1979 (Pubblico Ministero / Tullio RATTI – Case Nr 148/78), the Court of Justice has consistently recognized only a partial direct effect of EU directives, namely a vertical direct effect.
On this basis, the Court of Justice has considered that, as part of disputes against individuals, member states may not rely on the provisions of a directive which has not been transposed - or has been inadequately transposed - into national law.
In France, this stance is shared by both the Council of State (Council of State Nr 149226 155083 162001, decision of 23 June 1995, SA Lilly France) and the Supreme Court (see for example French Supreme Court, Civil Chamber 2, decision of 10 April 2014, Appeal Nr 13-16670, pursuant to which a directive may not, in itself, set any obligation for individuals and therefore may not be relied upon as such against any individual).
The Supreme court recently restated its stance in a decision dated 3 February 2016 (French Supreme court, Criminal Chamber, decision of 3 February 2016 – Appeal Nr 14-85198).
In the above case, the legal entity operating a pharmacy and its director had been summoned before the criminal court by the customs department, claiming that they had failed to keep a materials accounting record and committed a breach of applicable law and regulations regarding indirect taxes by failing to pay excise duty applicable to alcohol products sold to unidentified clients.
The Court of appeal in Aix-en-Provence used Art. 27 of Council Directive 92/83/EEC of 19 October 1992 as a legal basis to convict the accused and sentence them. Pursuant to this article, exemption of excise duties on alcohol products procured by pharmacies is limited to alcohol products used for medical or pharmaceutical purposes in pharmacies.
Considering Art. 288 of the Treaty on the functioning of the European Union, the French Supreme court, in its decision dated 3 February 2016, recalled the rule according to which "directives may not have any direct effect against individuals" and therefore quashed the above appeal decision, which "directly applied the provisions of a directive against the accused".
Since its decision dated 5 April 1979 (Pubblico Ministero / Tullio RATTI – Case Nr 148/78), the Court of Justice has consistently recognized only a partial direct effect of EU directives, namely a vertical direct effect.
On this basis, the Court of Justice has considered that, as part of disputes against individuals, member states may not rely on the provisions of a directive which has not been transposed - or has been inadequately transposed - into national law.
In France, this stance is shared by both the Council of State (Council of State Nr 149226 155083 162001, decision of 23 June 1995, SA Lilly France) and the Supreme Court (see for example French Supreme Court, Civil Chamber 2, decision of 10 April 2014, Appeal Nr 13-16670, pursuant to which a directive may not, in itself, set any obligation for individuals and therefore may not be relied upon as such against any individual).
The Supreme court recently restated its stance in a decision dated 3 February 2016 (French Supreme court, Criminal Chamber, decision of 3 February 2016 – Appeal Nr 14-85198).
In the above case, the legal entity operating a pharmacy and its director had been summoned before the criminal court by the customs department, claiming that they had failed to keep a materials accounting record and committed a breach of applicable law and regulations regarding indirect taxes by failing to pay excise duty applicable to alcohol products sold to unidentified clients.
The Court of appeal in Aix-en-Provence used Art. 27 of Council Directive 92/83/EEC of 19 October 1992 as a legal basis to convict the accused and sentence them. Pursuant to this article, exemption of excise duties on alcohol products procured by pharmacies is limited to alcohol products used for medical or pharmaceutical purposes in pharmacies.
Considering Art. 288 of the Treaty on the functioning of the European Union, the French Supreme court, in its decision dated 3 February 2016, recalled the rule according to which "directives may not have any direct effect against individuals" and therefore quashed the above appeal decision, which "directly applied the provisions of a directive against the accused".
Nasser Merabet
Attorney at law
Attorney at law
avocat@nmerabet.fr