Private contracts between individuals are often overlooked in terms of actual rights, so when an Italian consumer entered into an agreement to purchase an English language course while visiting a railway terminal, the vendor looked to enforce the contract when notified that her order was to be cancelled.
Relying upon Doorstep Selling Directive (85/577/EEC) the applicant issued proceedings against the vendor and contended to the Giudice Concilliatore (Judge-Concillaitor) that arts.1(1), 2 and 5 conferred protective measures that allowed for rescindable notice within a period of seven days between consumers and private companies; which on this occasion was undertaken through written instruction to the contracting parties.
While the Directive had been in force for a number of years, the Italian government had failed to transpose it within the time allowed and therefore no domestic legislation existed concerning the facts of the case. As was common knowledge to Member States a failure to adopt Directives in the prescribed period results in a loss of profit to the Member State when defending against direct effect claims by their citizens. In this instance however, the terms of the Directive while both clear and precise, were related to dealings between individuals and therefore not subject to the benefit of protection unless transposed under the guidance of Community law and within the adoption window.
This presented the national court with a dilemma inasmuch as they were unable to determine exactly what rights the claimant had when seeking cancellation of the contract and if consideration was ultimately due to the vendor as per the terms of their agreement. For this reason the court sought a preliminary ruling under art.177 and requested that the European Court of Justice clarify (i) if the terms of the Directive were clear and precise enough to provide direct effect and (ii) whether despite a failure to adopt the measures in accordance with the Treaty, the claimant could rely upon them to enforce her individual right to cancel.
Having examined the arguments around horizontal effect between parties and the power of Directives, it was agreed that for reasons of legal certainty, future consideration must be given to broaden the scope of those entitlements when applying them to private and not public matters. That aside it was still held that although the terms of the Directive were that of horizontal dealings, it was not possible for the claimant to rely upon them when seeking to terminate her agreement with the vendor; however because the Italian government had failed to adopt the Directive and in light of the fact that there existed no domestic legislation to settle the matter, it was now possible for the national courts to transpose the effects of the Doorstep Selling Directive in order that a remedy could be provided in favour of the consumer.
“The obligation to ensure the effectiveness of Community law by way of interpretation does not relate only to the legislation adopted in order to implement a directive, but to the national legal system as a whole.”
“In the case of directives whose content is intended to have effects in relations between private persons and which embody provisions designed to protect the weaker party, 42 it is obvious that the failure to transpose a directive deprives it of effet utile.”
“Member States are not entitled to invoke, after the expiry of the period for transposition, freedoms which were conferred on them only for the purposes of the due implementation of the directive within the time limit laid down.”
“Directives are not measures of lesser quality but are addressed, with a view to their implementation, to the Member States, which are under an obligation under the Treaty to transpose them into national law in full and in good time.”
“For reasons of legal certainty, which is a fundamental right of the citizen on whom a burden is imposed, the public must be prepared as of now for the fact that directives will in future have to be recognised as having horizontal direct effect…”
“…horizontal effect seems to me to be necessary, subject to the limits mentioned, in the interests of the uniform, effective application of Community law. In my view the resulting burdens on private individuals are reasonable, since they do not exceed the constraints which would have been applied to them if the Member State concerned had acted in conformity with Community law.”
“…in the absence of measures transposing the Directive within the prescribed time limit, consumers cannot derive from the Directive itself a right of cancellation as against traders with whom they have concluded a contract or enforce such a right in a national court.”
“Where damage has been suffered and that damage is due to a breach by the State of its obligation, it is for the national court to uphold the right of aggrieved consumers to obtain reparation in accordance with national law on liability.”