The principle of direct effect was first established by the Court of Justice of the European Union (CJEU) in Van Gend en Loos v. Nederlandse Administratie der Belastingen.
The ECJ first articulated the doctrine of direct effect in the case of Van Gend en Loos,[1] the European Court of Justice laid down the criteria (commonly referred to as the "Van Gend criteria") for establishing direct effect.
Direct effect is applicable when the particular provision relied on fulfils the Van Gend en Loos criteria.
As Article 288 TFEU (ex Art 249 TEC) explicitly provides that regulations "Shall be binding in its entirety and directly applicable in all Member States" the ECJ has confirmed that they are therefore in principle directly effective stating that "Owing to their very nature and their place in the system of sources of Union law, regulations operate to confer rights on individuals which the national courts have a duty to protect"[6] If a specific right is conferred therefore a regulation can be both vertically and horizontally directly effective.
[10] However, the ECJ has always resisted a change of the Marshall case law so as to allow a general right to invoke on unimplemented directives against private parties.
The case of Foster v British Gas demonstrates the court's willingness to confer the rights of a directive unto individuals, for the purpose of this case the court purported that any government organisation, nationalised company or company working in the public sector can be considered as a public body for the purpose of implementing vertical direct effect when a more narrow reading of the case might infer that horizontal direct effect would need to required for application.
Further case law to demonstrate this practice is Francovich v Italy, where action could be taken against the government by an individual for their failure to implement a directive and the subsequent loss of rights suffered in court.
In Grad v Finanzamt Traunstein,[12] a case involving VAT, the ECJ ruled that a decision could be directly effective, as they imposed an obligation to achieve a required result.
[20] In Comet v. Produktschap,[21] the European Court of Justice established that the procedural rules of each member state generally apply to cases of EU law.