Extending the scope of direct effect: old tools for new challenges

In Farrell, rendered by the Grand Chamber of the Court, the doctrine of direct effect has been given a boost. The case is a rather straight-forward one, but the questions raised by the Irish Supreme Court prove that old classics die hard, and that clarity is not always a synonym of well-established law.

In brief, the Irish Supreme Court raised to the Court of Justice its doubts as to the scope of the Foster doctrine, according to which individuals in national proceedings can directly invoke Directives, but only if they do so against an “emanation of the State”. The Court of Justice had developed a broad interpretation of the term in Foster and stated that:

a body, whatever its legal form, which has been made responsible, pursuant to a measure adopted by the State, for providing a public service under the control of the State and has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals is included in any event among the bodies against which the provisions of a directive capable of having direct effect may be relied upon”.

It is important to highlight that the two main features that put a body under the category of “emanation of the State” are mentioned conjunctively: to provide a public service under the control of the State and to hold special powers.

In Farrell, the Irish Supreme Court had doubts as to the scope of this assertion and how both requirements interacted, and the Court of Justice, in line with Advocate General Sharpston’s Opinion, confirmed that the Foster doctrine is to be interpreted broadly. A judgment that was already rather broad, is now to come to terms with an even broader interpretative approach.

According to the Court, the two conditions that confirm whether a body is an emanation of the State are not to be considered accumulatively, but alternatively. Despite the fact that Foster is quite clear in the use of the conjunction “and”, in Farrell the Court comes to the conclusion that “the conditions that the organisation concerned must, respectively, be subject to the authority or control of the State, and must possess special powers beyond those which result from the normal rules applicable to relations between individuals cannot be conjunctive”.

Farrell is a welcome development in the case-law. Many years have passed since Foster, but the case-law had been hinting on several occasions at the changing nature of the doctrine of emanations of the State and its impact on directives. In fact, the Irish Supreme Court made the reference in Farrell because it considered that the case-law of the Court had developed inconsistently. The judgment in Farrell confirms that the broad approach is the one to follow in the future.

The Court’s decision in Farrell is proof of the importance that direct effects still holds in EU law. After more than half a decade, the doctrine of direct effect carries on evolving and adapting to the changing nature of the EU. It is wrong to affirm that direct effect does not matter anymore, or that it is just an infant disease. Whether we like it or not, direct effect is still a crucial tool for EU lawyers without which we cannot properly work in national jurisdictions.

But it is also important to reflect on the implications that this broadening of direct effect has in the current context of integration and EU law.

First, the “emanations of the State” have appeared as means of State action through non-conventional bodies. The welfare state of the late XX century has forced most Member States to assume different forms and appearances in order to provide public services and to guarantee public interests efficiently. Foster is a reaction to those developments. But thirty years later, we are witnessing how new and challenging “emanations” evolve with a power equivalent to the State’s. Just to give an example, the growing power of on-line platforms, whether they may be for social or commercial purposes, is proving to be a terrific challenge for the traditional powers of the State. The way in which we communicate, socialize, buy and learn are coming increasingly conditioned by the policies of multinational on-line platforms. They are obviously not an emanation of the State, but when they breach a Directive they can hardly be considered to be innocent bystanders.

Second, the broadening of the scope of Foster has an impact on other areas in which “horizontality” is relevant. Think, for example, of the Court’s case-law on the scope of free movement freedoms among private parties. The traditional Wouters and Bosman case-law applies quite nicely to FIFA or trade unions, but it can hardly be applicable to Facebook or Google. If the Court is taking an important step in Farrell, it would be reasonable to assume that it will start providing similar guidance in the area of free movement.

This also applies, even with more force, to the horizontal application of fundamental rights, or at least of some fundamental rights. After Dominguez and AMS, the Court showed its unwillingness to engage on the issue of horizontal effects of the Charter. It seems to me that the Court was simply begging for time, waiting to resolve other principled and complex issues that also concerned the Charter. At the time of Akerberg Fransson, Melloni, Digital Rights Ireland, etc…, the Court seemed in need of some breathing space in order to address other tricky issues (in theoretical, dogmatic and practical terms), as is the question of horizontal effect of fundamental rights. Several years have gone by since those judgments were rendered, and Farrell is good proof that the Court has begun to think about the issue of horizontality. The time has probably come to address the issue of horizontal effects of fundamental rights in the Charter, both in the case of “rights” and “principles”.

All in all, Farrell can be the starting point in a new line of case-law that adapts and refines the scope of EU law in situations in which individuals engage in relation with other individuals, or entities, that act as individuals but are closer to a State or to a State’s function. In the time of on-line platforms, but also of fake news and disruptive private movements with an ability to alter democracy and the rule of law, it is good news that the Court of Justice is taking the first steps in revisiting old classics, now in need of fresher looks.

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