On 19 January 2010, the Court of Justice of the EU delivered its judgment in Case C-555/07, Seda Kücükdeveci v. Swedex, (not yet reported), which provides the latest twist in the saga of cases concerning the legal effects of EU directives which have not been implemented or have been incorrectly implemented by national law in actions involving private parties. In Marshall I (Case 152/84, [1986] E.C.R. 723), the Court, relying exclusively on a textual interpretation of the (then) Article 189 EC – later Article 249 EC and now Article 288 TFEU- set out the principle that, given that directives are addressed to Member States, they can impose obligations only on the State but not on private parties. Consequently, while unimplemented directives could be invoked by a private party “vertically” against the State – if the deadline for implementation had expired and the relevant provisions were sufficiently clear and precise – a directive fulfilling the same conditions could not be invoked “horizontally”, that is, against another private party, because the latter would otherwise become the subject of an obligation. The same rationale was applied in cases of incorrect implementation (Case C-62/00 Marks and Spencer [2002] E.C.R. I-6325 at para. [25]).

However, no sooner had the Court created the principle of non-horizontal direct effect of directives than it began to erode it by providing a set of alternative mechanisms that private parties could use to draw effects from unimplemented and mis-implemented directives against other natural or legal persons. These techniques were as follows: the adoption of a broad conception of the notion of the State – so as to maximise the use of vertical direct effect – in Marshall I itself and then in Foster (Case C-188/89 [1990] E.C.R. I-3313); the duty of consistent interpretation imposed on national courts in Von Colson (Case C-14/83 [1984] E.C.R. 1891), Marleasing (Case C-106/89 [1990] E.C.R. I-4135) and, with a particularly strong formulation, in Pfeiffer (Joined Cases C-397 to 403/01 [2004] E.C.R. I-8835) and, finally, the incidental direct effect of the so-called “public law” directives in CIA (Case C-194/94 [1996] E.C.R. I-2201). Furthermore, the principle of state liability was promoted by the Court not only as another inducement for Member States to implement directives on time (Joined Cases C-6 and 9/90 Francovich [1991] E.C.R. I-5357) and correctly (Case C-392/93, ex parte BT [1996] ECR I-1631) but also as an “alternative remedy” available to natural and legal persons. Finally, came the ruling in Mangold (Case C-144/04, [2005] E.C.R. I-9981) where the Court held – in an action between two private parties and where the deadline for implementation of a directive had not even expired – that the general principle of non-discrimination on grounds of age enshrined in the relevant EU directive applied to existing national legislation which falls within the scope of EU law. As a result, incompatible national legislation would have to be disapplied. The unavoidable consequence of this – though carefully avoided by the Court in its reasoning – was that the directive was, effectively, directly enforced in a “horizontal” situation by the apparent self-standing force of a general principle of law.

It is evident that such a convoluted and unpredictable body of case law did little to enhance legal certainty. Calls for the Court to either abolish the vertical-horizontal divide or to uphold it properly were voiced early on (see the Opinion of Advocate General Jacobs in Case C-316/93 Vaneetveld [1994] E.C.R. I-763) but criticism became even more clamorous after the Mangold decision, not only from within the Court itself (see the Opinion of Advocate General Mazak in Case C-411/05, Palacios de Villa [2007] E.C.R. I-8531) but also from academic circles (See Dashwood, 9 C.Y.E.L.S. (2006–2007), 81 and Craig, 34 E.L.Rev. (2009), 349).

The Kücükdeveci judgment, again concerning the principle of non-discrimination on grounds of age, shows that the Court will persist in its assertion that directives cannot produce horizontal direct effects even if the results of the case yield the opposite conclusion. Ms Kücükdeveci had been employed by a German company since the age of 18 and was dismissed at the age of 28, having been given a one month's period of notice, which was calculated as if she had been employed only for three years. Under German legislation that incorrectly implemented Council Directive 2000/78/EC on equal treatment in employment (O.J. [2000] L 303/16), no account could be taken of periods of employment completed before the age of 25 to calculate the notice period. Ms Kücükdeveci argued that the national legislation was discriminatory and that her period of notice should have been four months, corresponding to her ten-year length of service.

Unlike Mangold, the deadline for implementation of the directive had by now expired and Germany had implemented the directive – albeit incorrectly. The Court ruled that the national legislation was indeed discriminatory and then went on to consider whether, given that this was a case between two private parties and the principle of non-discrimination was contained in an EU directive, the national legislation could be disapplied. The Court first re-asserted the principle that directives cannot produce horizontal direct effects, at para. [46], and then followed the conventional avenue of ascertaining whether the national law could be interpreted in conformity with the directive. However, this was not possible because the German legislation was unambiguous and hence not capable of sustaining an interpretation consistent with the directive. Undeterred, and following the lead of its equally enthusiastic Advocate General, the Court went on to hold that the need to give full effectiveness to the general principle of non-discrimination on grounds of age meant that any conflicting national legislation ought to be disapplied, (see paras. [53]–[56] of the judgment).

The Kücükdeveci ruling shows that Mangold is very much alive. It follows that it is irrelevant that the deadline for implementation of a directive has not expired, that the directive has not been implemented on time or that it has not been implemented correctly. The principle of non-discrimination on grounds of age given expression by an EU directive can still apply in actions between private parties to preclude conflicting national legislation – and it can be reasonably expected that the same conclusion will apply when other general principles are at stake. This approach clearly enhances the effectiveness of EU directives but it is at variance with the rule that there is no horizontal direct effect for directives. First, it results in the imposition of obligations on private parties – which undermines the Marshall I rationale. Secondly, it creates further legal uncertainty by confirming the addition of another circumventing mechanism – this time with a very significant potential – available to natural and legal persons nominally unable to rely on the direct effect of directives. To promote effectiveness might be good but to pretend that the principle of non-horizontal direct effect of directives still exists when it has been so fatally damaged seems untenable.