Costa V Enel in Europe

Content about Costa V Enel from the publication “The ABC of European Union law” (2010, European Union) by Klaus-Dieter Borchardt.

Just a year later, the Costa v ENEL case gave the Court of Justice an opportunity to set out its position in more detail. The facts of this case were as follows. In 1962, Italy nationalised the production and distribution of electricity and transferred the assets of the electricity undertakings to the national electricity board, ENEL. As a shareholder of Edison Volt, one of the companies that was nationalised, Mr Costa considered that he had been deprived of his dividend and consequently refused to pay an electricity bill for ITL 1 926. In proceedings before the arbitration court in Milan, one of the arguments put forward by Mr Costa to justify his conduct was that the nationalising act infringed a number of provisions of the EEC Treaty. In order to be able to assess Mr Costa’s submissions in his defence, the court requested the Court of Justice to interpret various aspects of the EEC Treaty. In its judgment, the Court of Justice stated the following in relation to the legal nature of the EEC:

Context of Costa V Enel in the European Union

‘By contrast with ordinary international treaties, the EEC Treaty has created its own legal system which … became an integral part of the legal systems of the Member States and which their courts are bound to apply. By creating a Community of unlimited duration, having its own institutions, its own personality, its own legal capacity and capacity of representation on the international plane and, more particularly, real powers stemming from a limitation of sovereignty or a transfer of powers from the States to the Community, the Member States have limited their sovereign rights … and have thus created a body of law which binds both their nationals and themselves.’

More about Costa V Enel in the European Union

On the basis of its detailed observations, the Court reached the following conclusion:

Other Aspects

‘It follows from all these observations that the law stemming from the Treaty, an independent source of law, could not, because of its special and original nature, be overridden by domestic legal provisions, however framed, without being deprived of its character as Community law and without the legal basis of the Community itself being called into question. The transfer by the States from their domestic legal system to the Community legal system of the rights and obligations arising under the Treaty carries with it a permanent limitation of their sovereign rights, against which a subsequent unilateral act incompatible with the concept of the Community cannot prevail.’

Details

In the light of these judgments, the elements which together typically characterise the special legal nature of the EU are:

_ The institutional set-up, which ensures that action by the EU is also characterised by the overall European interest, i.e. is reflected in or influenced by the Union interest as laid down in the objectives;

_ the transfer of powers to the Union institutions to a greater degree than in other international organisations, and extending to areas in which States normally retain their sovereign rights;

_ the establishment of its own legal order which is independent of the Member States’ legal orders;

_ the direct applicability of Union law, which makes provisions of Union law fully and uniformly applicable in all Member States, and bestows rights and imposes obligations on both the Member States and their citizens;

_ the primacy of Union law, which ensures that Union law may not be revoked or amended by national law and that it takes precedence over national law if the two conflict.

Last Remarks

The EU is thus an autonomous entity with its own sovereign rights and a legal order independent of the Member States, to which both the Member States themselves and their nationals are subject within the EU’s areas of competence.

The EU has, by its very nature, certain features in common with the usual kind of international organisation or federal-type structure, as well as a number of differences.

The EU is itself not yet a ‘finished product’; it is in the process of evolving and the form it finally takes still cannot be predicted.

The only feature that the EU has in common with the traditional international organisations is that it too came into being as a result of an international treaty. However, the EU has already moved a long way from these beginnings. This is because, although the Treaties establishing the EU were based on international treaties, they led to the creation of an independent Union with its own sovereign rights and responsibilities. The Member States have ceded some of their sovereign powers to this Union. In addition, the tasks which have been allotted to the EU are very different from those of other international organisations. While the latter mainly have clearly defined tasks of a technical nature, the EU has areas of responsibility which together constitute essential attributes of statehood.

Through these differences between the EU and the traditional type of international organisation, the EU is in the process of acquiring a status similar to that of an individual state. In particular, the Member States’ partial surrender of sovereign rights was taken as a sign that the EU was already structured along the lines of a federal state. However, this view fails to take into account that the EU institutions only have powers in certain areas to pursue the objectives specified in the Treaties. This means that they are not free to choose their objectives in the same way as a sovereign state; nor are they in a position to meet the challenges facing modern states today. The EU has neither the comprehensive jurisdiction enjoyed by sovereign states nor the powers to establish new areas of responsibility (‘jurisdiction over jurisdiction’).

The EU is therefore neither an international organisation in the usual sense nor an association of states, but rather an autonomous entity somewhere in between the two. In legal circles, the term ‘supranational organisation’ is now used.