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Summary mandatory readings European Commercial Law
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Summary mandatory readings European Commercial Law
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Lecture 1: Introduction to European Commercial Law- Law currently in force:
o Treaties
EU Treaty
The Treaty on the function of the European Union)
EU Charter of Fundamental Rights)
o Secondary legislation
o Case law of the European Court of Justice.
o European Convention on Human Rights (ECHR)
Influences matters governed by the general provisions of national private law.
- European private law does not have an established meaning in jurisprudence.
- The European Treaties.
o With the current state of affairs at the European Union, the most important treaty as far
as private law is concerned is the Treaty on the Functioning of the European Union (also
called TFEU or the FEU Treaty), and the legislation and case law based on it.
o Two treaties that can be considered to form the constitutional framework of the EU
The Treaty on European Union (TEU or the EUTreaty)
Treaty added two pillars”
o A common foreign and security policy and cooperation in the
fields of justice and home affairs.
The Treaty on the Functioning of the European Union (TFEU or the FEU Treaty).
- Under the Treaty of Lisbon the European Community merged into the European Union, which is
based on the two aforementioned treaties (TEU and TFEU).
- Sources of current European private law.
o The part of EU law that is relevant to private law is now embodied in the FEU Treaty, in
the general principles of EU Law established by the Court of Justice, in the conventions
concluded by the EU and in the secondary legislation based on the FEU Treaty.
In its case law, the court of Justice has established a large number of general
principles of Community Law. Article 6 TEU mentions the Charter of
Fundamental Right of the European Union according it the same force of law as
the Treaties. The article also announces that the EU will accede to the ECHR.
- Treaties made by the EU are primarily concerned with trade policies between the EU and third
countries. Treaties not relating to trade policies can be relevant to private law.
- Art 288 TFEU provides the basis for secondary legislation under this treaty, mentioning
regulations and directives.
o A regulation can be compared to a law: it is binding in its entirety and directly applicable
in every Member state.
o Directives are instructions given to the member states: a directive is binding on the
Member States as regards the result to be achieved, but the power of choosing form and
means is left to the national authorities.
o In practice the main legislative instrument chosen for private law is that of a directive,
with the exception of the subject matters regulated in article 81 TFEU.
o The FEU Treaty contains detailed regulations on the EU bodies’ competence to issue
legislative acts in the different policy areas, and also on the procedure for drafting them.
- Precedence of European Law. EU law has precedence over conflicting national law.
o Costa v ENEL
The ECJ issued a preliminary ruling on the question whether an individual could
rely on the EEC treaty to demonstrate that a law nationalizing the electricity
sector, enacted after the Treaty had come into effect, conflicted with the treaty:
‘The EEC Treaty has created its own legal system which, on the entry into force of
the Treaty, became an integral part of the legal systems of the Member States
and which their count are bound to apply.
Community law has precedence over conflicting national law.
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, o The precedence of Community law is confirmed by Article 189 TFEU, whereby a
Regulation ‘shall be binding’ and ‘directly applicable in all Member States’.
o The Court then went on to establish which of the articles of the EC Treaty had direct
effect, so that the challenged law could be assessed against them.
o The highest national courts in the Netherlands have followed the ruling of the court of
Justice without any reservations. This means among other things that in the Dutch legal
system the effect of European law is based on the FEU Treaty, and not on articles 93 and
94 of the Constitution (as is in the case of the ECHR).
o Treaty provisions that have a direct effect have precedence over national legislation
immediately upon their publication.
- Direct effect of European law individuals can really on a provision of European law before their
national courts.
o Van gend & loos:
‘The first question of the Tariefcommissie is whether Article 12 of the Treaty has
direct application in national law in the sense that nationals of Member States may
on the basis of this Article lay claim to rights which the national court must protect.
o To ascertain whether the provisions of an international treaty extend so far in their effects it is
necessary to consider the spirit, the general scheme and the wording of those provisions.
o The court of justice holds that a treaty provision can have direct effect. Under current law it is
sufficient for a provision to be unconditional and sufficiently precise for it to have direct effect.
o The Van Gend & Loos judgment shows that the fact that a provision is addressed to the
Member States does not prevent a court from giving it direct effect.
o Not only treaty provisions can have direct effect, general principles of EU law, provisions
of directives and of regulations can have direct effect as well.
o Community law can implicitly create individual rights, arising by reason of the clear obligations it
imposes upon both individuals and the Member States and the institutions of the Community.
- The term precedence can be given a narrow as well as a broad interpretation.
o The narrow interpretation, used in Costa v. ENEL, applies in the situation that EU law is
implemented through the fact that a citizen invokes precedence to argue that a national
statutory or administrative measure does not apply because it conflicts with EU law and
the court allows this plea. In such cases precedence is achieved through direct effect.
o But precedence can also be given a broader interpretation and then it is not inextricably
linked with direct effect. In this broader sense, precedence of EU law can also be
achieved even if it has no direct effect, for example because the courts must interpret a
national provision in conformity with a treaty or a directive, or because the courts have
power to award damages to citizens on account of serious breach of a rule of eu law
- Direct Horizontal effect: the invocation of EU law between individuals, with the result that one
individual can enforce a right to be released from an obligation vis-à-vis another individual.
o Vertical effect: Direct effect in the relation between the state and individuals
o Inverse vertical effect: where the state invokes European law against an individual
o Horizontal effect occurs where a provision of European law has effect in a (legal)
relationship between individuals.
Direct horizontal effect: when European law creates, modifies or extinguishes
rights and obligations between the parties.
Indirect effect
o 'State' = includes all public bodies and also legal entities governed by civil law that are
entrusted with performing a public task.
o Individuals = all natural persons and legal persons insofar as not entrusted with
performing public tasks.
o According to settled case law of the Court of Justice, however, directives do not have
direct effect.
- If a rule of European law has direct horizontal effect but does not itself provide for the resulting
legal effects (as article 101(2) TFEU does), it is the responsibility of the Court of Justice to do so.
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, o The Court may leave it entirely or partly to national law to determine the legal effects.
o Under Dutch law the legal effect will in that case ensue from article 3:40(2) of the Civil
Code.
- Direct horizontal effect can also result in acts of individuals being unlawful
o Courage v. Crehan (C-453/99)
The Court pointed out that the national courts must ensure that the provisions of
Community law take full effect and protect the rights which they confer on
individuals. Individuals may also be liable for infringement of treaty provisions and
other rules having direct horizontal effect falling outside the field of competition law.
o A treaty provision may result in a claim arising from undue payment or unjust
enrichment; or it may restrict individuals in the exercise of unqualified (absolute) rights
they have under national private law.
o Once a provision has been recognized to have direct horizontal effect, it may in principle
result in a variety of private-law effects.
- A norm having DHE can also have effect in legal relationships between the state and a citizen.
o This is called direct vertical effect.
o The ECJ has ruled that a directive may be relied on against a state that has failed to
implement it or failed to implement it correctly or in time, provided that the directive is
sufficiently precise and unconditional to have direct effect, because the state may not
take advantage of its own failure to comply with EU law.
o The reverse, however, is not allowed: a state may not invoke the directive against citizens'.
o A provision that has direct horizontal effect, meaning that by its nature it has effect in
private-law relationships, has that effect both ways, so that in a private-law relationship
between a state and a citizen not only the citizen but also the state may rely on the
provision against the other party
- Indirect horizontal effect: three legal situations. Direct horizontal effect must be distinguished from
other more diffuse types of influence exerted by EU law on private law relationships. These legal
situations, or at any rate some of them, are sometimes referred to as indirect horizontal effect.
o Interpretation of national law. The first situation ranged under indirect horizontal effect is
the situation where a European rule is realized in private-law relationships through the
interpretation of a rule of national law.
With respect to non-implemented or incorrectly implemented European directives
the method is called 'harmonious interpretation'.
The case law of the ECJ shows that the national courts must apply this method of
interpretation whenever they can possibly do so.
Although it is true that the obligation to use harmonious interpretation extends to
all national laws, in practice it will often be applied to the national legislation
implementing the directive in question, and therefore to more or less specific
provisions of law. The method can also be used with regard to provisions of the FEU
Indirect horizontal effect of provisions of the FEU Treaty through interpretation by
the courts will mainly take the form of influence exerted by the treaty provision
through open-ended principles of national private law
o Positive obligations. It means that the national constitution or the ECHR, as the case may
be, must be interpreted to mean that the state does not only have a 'negative' obligation
to refrain from infringing the citizens' fundamental rights, but under certain
circumstances also a 'positive' obligation to safeguard the exercise of those rights both
towards the state and towards other citizens by means of legislative or other action.
Failure to comply with the positive obligation may make the (member) state
liable in damages.
o Review of compatibility with EU Law in proceedings between individuals.
Member states must act in accordance with EU law, which implies among other
things that they cannot issue and maintain legislation in contravention of EU law,
in particular any FEU Treaty provision. If there is a dispute whether a legislative
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, act is contrary to a treaty provision having direct effect, individuals may submit
the dispute to the courts for assessment.
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