COSTA v ENEL

General principle:

National law cannot override EU law.

Name:

Flaminio Costa v ENEL (Case 6/64) [1964] ECR 585

Facts:

ENEL was an electric company that has been put under state ownership by the Italian government. Costa, a shared owner of the company before its nationalisation, has suffered a loss attributable to the Italian Government. He argued before its national Courts that the Italian law nationalizing the industry was incompatible with EC monopoly laws. The case was referred to the ECJ. Throughout the procedure, the Italian government claimed that national law should prevail as it was enacted after the law ratifying the EC Treaty.

Preliminary question before the Court:

Whether or not a national law, enacted after the law ratifying the founding treaties of the Communities, could contravene to its main objectives?

Preliminary Ruling:

The answer of the Court in Costa v ENEL is clearly negative; incompatible domestic provisions cannot override Community law, regardless whether or not they were enacted after the ratification of the founding treaties.

The ECJ based its reasoning on the framework of Van Gend en Loos but extended it: “By creating a Community of limited duration having (…) a transfer of powers from the states to the community, the member states (…) have thus created a body of law which binds both their nationals and themselves”. Thus, according to the Court, the supremacy of EU law logically stems from the Member Stats’ transfer of power that created an independent body of law.

Application:

This case defines and develops the principle of the supremacy of EU law justifying it by the “special and original” nature its legal order.

Regarding the contributions of Costa and Van Gend en Loos, a clear conclusion can be reached. The Member States have delegated a portion of their sovereign authority to the Community in order to enact laws that bind them and their citizens. Thus, Member States cannot enact new national legislation that conflict with EU law.

Analysis:

Moreover, in Costa v ENEL (1964) Case 6/64 the ECJ as they were then held:

“the Member States have limited their sovereign rights, albeit within limited fields, and have thus created a body of law which binds both their nationals and themselves...Such a measure cannot therefore be inconsistent with that legal system… 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 point to note is that supremacy of the EU law was created by ECJ and is not something which is in Treaties. ECJ talked about “spirit” of Treaty, this was not the drafters’ intentions. Commentators argue that EU law should be accorded superiority because it stems from the treaty that has been made by the MSs when they joined the EU and formed a new legal order. Yet, no reference to the constitution of MSs was made. This perhaps should have been done. Functional commentators argue the aims of the Treaty would not be achievable unless EU law was accorded supremacy. The security of uniform application of EU law and it effectiveness is the only way the EU can achieve its purpose. Dougan in "When worlds collide! Competing visions of the relationship between direct effect and supremacy." Common market law review 44.4 (2007): 931-963 has argued that the doctrine of primacy produces exclusionary effects within national legal systems, in that it sets aside domestic laws that are inconstant with a “hierarchically superior norm of Community law”. This is distinguished from the substitution effects where the direct application of Community law is concerned.