Diana Papazefkou

EU Tutorial Group : H, Nick Benard

C-106/89, Marleasing SA v La Comercial Internacional de Alimentacion SA

Section 1: Facts and procedure

Case C-106/891, involved a dispute between two companies: Marleasing SA (the plaintiff)
and La Comercial (the defendant). Marleasing sued the defendant company on a point of
national law where they alleged that its establishment was a sham, aimed at defrauding
its creditors, and thereby was void for lack of cause under the Spanish Civil Code. La
Comercial appealed, relying on Article 11 of the unimplemented Directive 68/151 as lack
of cause was not one of the mentioned situations where a declaration of nullity could be
ordered.

The notion of directives conferring rights upon individuals originated in the case of Van
Gend en Loos2 . The concept of a new legal order was created whereby the rights of the
citizens of member states would be recognised by their own courts. Although directives
are addressed to the governments of member states, it was recognised that they confer
rights to those who live within their community. In order for this to be achieved the
principles of direct effect, harmonious interpretation and state liability have developed.

Marshall v Southampton3 and South West Hampshire Area Health Authority4 outlined the
principle that a directive does not have horizontal direct effect. The notion of indirect
effect was given birth to in Von Colson5. It was identified that national courts should use
the provisions of a directive to aid the construction of national law. This maximised the
impact of directives on individuals. Marleasing, as I will explain later, expands and
highlights Von Colsons principle of indirect effect.

1 ECLI:EU:C:1990:310
2 ECLI:EU:C:1985:104

3 ECLI:EU:C:1985:345

4 ECLI:EU:C:1993:335

5 ECLI:EU:C:1984:37

Section 2 : Points of law raised by the case

In Marleasing, the Court decided that national courts had to interpret all national law as
far as possible in light of the EU directive, even when the national provisions were
unambiguous and were enforced before prior or after the directive. Two main legal issues
were raised.

1) The national court requested a preliminary ruling on whether an unimplemented

directive can be directly applicable so as to preclude a declaration of nullity on grounds
other than those listed in the article. The principle set out in Marshall of directives having
no horizontal effect seemed problematic as Marleasing involved two private companies.
However, by applying the notion of indirect effect derived from Von Colson, this could be
circumvented. This would not pose a problem as courts were asked to merely interpret
national law in a way that adheres to EU law, rather than applying the directive.
Marleasing clarifies and expands Von Colson by allowing this interpretive duty to be
applied regardless of whether national law existed before or after the directive. In Von
Colson, this could only apply if there was an implementing directive.

2) Can indirect effect apply to the unambiguous Spanish code?

It was clear that the establishment of a company on the grounds of lack of cause was
illegal under Spanish law. This expands Von Colson as there is no need for there to be
ambiguity within national law6 . Marleasing had the effect of strengthening and widening
the courts interpretive duty by manipulating unambiguous national law to give effect to
EU law provisions as long as there was no blatant contradiction.

Section 3 : Outcome of the case

The provisions of the unimplemented directive were required to use used to interpret
national law, even in a horizontal situation between two private companies: Marleasing
and La Comercial. By doing this, a declaration of nullity could not be ordered for lack of
cause despite the fact that it is not listed in Article 11 which exhaustively lists the cases in
which nullity of a company may be ordered. Moreover, it is irrelevant that the Spanish Civil
Code is unambiguous in saying lack of cause is illegal under national law and that the
Civil Code predates the directive: it still had to be interpreted in light of a subsequent
piece of EU legislation. There was no need for there to be an implementing directive as in
Von Colson.

6Docksey and Fitzpatrick, The duty of national courts to interpret provisions of national law in
accordance with Common law

Section 4 : Analysis

Marleasing is consistent with the earlier cases of Von Colson and Kamann7 . Under article 5
TFEU, the Member States have to take all appropriate measures whether general or
particular to ensure the result of the directive is achieved. This case expands and clarifies
Von Colson where it was implicitly suggested that the duty of harmonious interpretation
was not limited to legislation adopted specifically to implement a directive. This was
explicitly recognised in Marleasing : a duty could even arise to legislation adopted prior
to or after the entry into force of the directive. Moreover, Marleasing is even more
distinguishable with Marshall which underlined that directives have no horizontal effect.
Von Colson involved a vertical relationship so there was no explicit contradiction with
Marshall. However, the notion of harmonious interpretation which has evolved from Von
Colson and now Marleasing could be seen essentially to be allowing horiztonal claims to
take place. In essence, it is only superficially not implementing a directive horizontally
behind the facade of interpretation. Indeed, by tweaking and manipulating national law
to comply with EU Law has the same effect as directly applying the directive.

Moreover, according to Docksey and Fitzpatrick, Marleasing strengthened the courts duty
by placing an obligation on courts to ensure that the directive is effective and its outcome
is fulfilled8 . In absence of blatant contradiction, national courts are obliged to reconcile
national law with EU law. It further extends Von Colson as there is no need for there to be
ambiguity in the national provision. Realistically the Spanish Civil Code is highly
unambiguous in stating that contracts established on the ground of lack of cause are
void which is why Marleasing sought to claim that the transaction was a sham. The
traditional way of interpreting national law, may be altered following a directive which
comes into force, in order to achieve its result. By Marleasing requiring such a strong
interpretive duty of interpreting national law in such a way as to make a company liable
on grounds other than those exhaustively listed in Article 11, goes a step further than the
interpretative duty of courts laid out in Vol Colson. Indeed in Marleasing, the courts were
even prepared preclude the application of the Spanish Civil code in order to not produce
a result which was not envisaged by the directive.9

The approach of Marleasing has been taken up by UK courts. In Pickstone v Freedmans,

English courts adopt a wide interpretation, where they read certain words into relevant
national legislation in order to achieve a result which is compatible with the common law.

7 ECLI:EU:C:2010:773

8DOCKSEY, C. and FITZPATRICK, B. (1991). The Duty of National Courts to Interpret Provisions
of National Law in Accordance with Community Law. Industrial Law Journal, 20(2), pp.113-120.
9 Case C-456/98 Centrosteel [2000] ECR 1-6007; [2000] 3 CMLR 7

Also, Webb v Emo Cargo10 confirmed that national law had to be open to interpretation
consistent with the directive: so as to accord with the interpretation of the directive as
laid down by the European court. Lord Keith commented that this in essence was a
roundabout way of implementing the directive.

Finally, Marleasing has been carried on in cases such as Pfeiffer.11 Since Marshall, the
courts path of interpretation has widened, and carries on post Marleasing. Pfeiiffer and
Kcdeveci12 applied Marleasing by saying that the courts must must do whatever is in
their jurisdiction13 to ensure compatibility with EU law. These cases expanded Marleasing
by saying that the legal system as a whole could be open to interpretation in order to
be compliant with EU law. Pfeiffer does not confine courts to using only national law as an
interpretative tool, but allows other provisions to be used as well to help interpret
legislation in light of the directive. Webb profoundly agreed that a drastic interpretive
duty of relevant UK law is needed. It follows that a purposive rather than a literal
approach is taken. Indeed, the national court no longer highlights the need for a statute
not to be distorted through indirect effect, but instead, focuses on achieving the
directives result.

As I will expand on later, there are other cases where judges are reluctant to apply the
principle of Marleasing, such as in R v British Coal Corp exp Vardy14 where Glidewell J
said that Act was clearly at odds with the directive.The principle of interpretation has
limitations so far as possible and Wagner15 is an example of where interpretation is not
possible.This duty of interpretation is analogous to section 3 of the Human Rights Act
1998, where it is only so far as it is possible for courts to interpret legislation in a way to
give effect so as is compatible with the Convention Rights.16

10 ECLI:EU:C:1994:300

11 ECLI:EU:C:1998:338

12 ECLI:EU:C:2010:21
13 See Pfeier, cited supra note 6, paras. 118 and 119.

14 [1993] IRLR 104

15 ECLI:EU:C:1979:256

16 Nollkaemper, Andre and Betlem, Gerrit, Giving Eect to Public International Law and European
Community Law before Domestic Courts: A Comparative Analysis of the Practice of Consistent
Interpretation (September 1, 2009). European Journal of International Law, Vol. 14, pp. 569-589,
2003.

SECTION 5 :

The main issue of Marleasing is that its application has generated legal uncertainty. The
requirement that national courts should as far as possible interpret legislation in line with
the directive is in fact quite a subjective standard which is open to divergent
interpretation by national courts depending on their own jurisdictions approach to
interpretation. It ultimately depends on the will of the courts: if national courts conclude
that there is no room for interpretation, then nothing can be done. Furthermore, this wide
discretion of the courts could be viewed as the ECJ demanding that courts carry out tasks
which belong to national legislators. Perhaps the issue of legal certainty would be
minimised if the court would stipulate in a clearer manner the point in time when a duty is
imposed on national courts to interpret national law to be reconciled with community
law.17

Moreover, strengthening the power of the courts to such an extent as to preclude the
application of national law as in Marleasing, would be tantamount to allowing directives
to have direct horizontal effect. Indeed, perhaps legal certainty would be enhanced if the
rule of Marshall were simply abolished. It can be argued that granting horizontal direct
effect to directives, would in fact be more acceptable than allowing such legal uncertainty
caused by harmonious interpretation.

Perhaps with more ECJ decisions and litigation it will become clearer what the limits are
for the courts to interpret national law in compliance with EU law. By saying interpret as
far as possible, the CJEU has not created a fixed standard and national courts are likely to
do this quite differently in practice. To an extent the Court is aware of the implications
and risks by the use of harmonious interpretation and hence has established two main
limitations to the courts interpretative duty.

1. Limits of contra legem principle as laid out in Pupino,

2. Non imposition of criminal sanctions and non retroactivity

While the courts interpretive obligation is strong, they are restricted from finding an
interpretation which would result in a contra legem interpretation : when the meaning of
national law is clear it is not open to interpretation. There has been a restriction in some
cases from the expansive interpretation approach in Marleasing, for example, in Wagner.
Glidewell J concluded that the was Act clearly at odds with directive and it was tacitly

17S Drake, Twenty years after Von Colson: the impact of "indirect effect" on the protection of the
individual's community rights (2005) 30 (3) European Law Review, 329-348.
acknowledged that it would not always be possible to interpret national laws in light of
EC legislation18 .

While the contra legem doctrine may appear sound in principle, in reality it does not
negate legal uncertainty. For example, Dominguez 19 and Pupino20 , while on the one hand
they acknowledge that courts cannot require a contra legem interpretation of national
law, on the other, they say that courts must interpret legislation as far as possible in the
light of the wording and purpose of the directive. Indeed, as Pupino urges for conformity
between EU and national law, this seems to be an implicit contradiction to the contra
legem principle which yet again creates legal uncertainty. Moreover, the same applies in
Pfeiffer where national courts are obliged to use all national methods of construction to
fulfil their interpretative duty, indirectly qualifying a contra legem reading. Marleasing and
the cases followed do not alleviate the problem of whether national courts must do more
or act differently according to Community law, than they would have under their national
law.21 . A counter argument to this, put forward by M.Amstutz, is that a skilful harmonious
dichotomy of EU and national law has been created. While Community law unravels
adjudication to wider norms and concerns, national law helps to ensure that local
traditions and contexts concerning the dispute are not bypassed.22 However, yet again
this does not make the law any more certain.

What is more, courts have to be extremely cautious in applying indirect effect in the field
of criminal law.23 a directive cannot have indirect effect in criminal proceedings when it
would cause the accused to be convicted when he would otherwise have been acquitted.
The limits of this is linked to the principle of non retroactivity of criminal law.

A final issue is that Pupino has developed state liability. With direct effect, indirect effect
and state liability in place, this raises the question of whether parliamentary sovereignty is
encroached. As this point goes beyond Marleasing I will not address it here, but it is
important to note that the impact of Marleasing and the chain of case law it develops

18ECLI:EU:C:1996:363

19 ECLI:EU:C:2012:33
20 ECLI:EU:C:2005:386
21n Pfeier, the Court still left it to the discretion of the national court to use the teleologische
Reduktion.
22 Sara Drake (n 18)
23 S Drake, Twenty years after Von Colson: the impact of "indirect effect" on the protection of the
individual's community rights (2005) 30 (3) European Law Review, 329-348.
goes beyond the realm of questions as to direct and indirect effect, and extends into
considerations of the balance between EU law and national law more generally.
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