2.3.2.1 Substantive compatibility review

24. In amongst others Mangold, Palacios de la Villa, Kücükdeveci and Dansk Industri the Court of Justice clarified that when, in the context of proceedings between private parties, a provision of national law cannot be interpreted consistently with the general principle prohibiting age discrimination, the national court must assess whether it can set aside the problematic national provision. This depends on the rule of Union law that it is incompatible with. Thus far, in proceedings between private parties, Article 21 Charter,1 Article 31(2) Charter,2 the right to effective judicial protection as codified in Article 47 Charter3 and Article 56 TFEU4 have been successfully invoked in this way. It is beyond doubt that other principles and fundamental rights can also be invoked by a private party with the aim to assess the compatibility of a national provision in the context of the horizontal proceedings5. In AMS the Court of Justice has laid down a criterion: the specific rule of Union law must be sufficient in itself – i.e. unconditional6 – to confer on private parties a subjective right that they may invoke as such.7 However, when a national provision is substantively incompatible with a directive, the Court of Justice has consistently held that a directive cannot be invoked to set aside the particular national provision in horizontal proceedings regardless of how unconditional and precise the directive confers a right upon a private party. In such a case it takes more, namely a rule of Union law stemming from an instrument not being a directive and complying with the criterion just phrased.8 This does not mean that a national court in horizontal proceedings is not allowed to assess the compatibility of a national provision with a directive; it simply cannot set aside the provision in case it is deemed incompatible with only the directive.

25. Since the compatibility review intends to assess the substantive harmony of the national provision with a substantive rule of Union law, this review is referred to as the substantive compatibility review. The substantive compatibility review is distinguished from the procedural compatibility review, which applies in case a Member State adopted legislation without complying with procedural obligations stemming from Union law, in particular the obligation to notify intended legislation to the European Commission.9 Note that the substantive compatibility review is often referred to as a ‘legality review’. The substantive compatibility review is a manifestation of direct vertical effect, which can occur not only in proceedings against a Member State or state authority, but also in horizontal proceedings. This is demonstrated in for instance Mangold, Palacios de la Villa, Kücükdeveci and Dansk Industri,in which cases national legislation was assessed against a rule of Union law. The result of this vertical assessment can have an impact on the horizontal legal relationship. Therefore, a substantive compatibility review is a way of indirect horizontal effect, namely via the vertical assessment of national legislation.10

26. The substantive compatibility review of a national provision against Union law requires a proportionality test11 on the basis of which the conclusion is drawn whether or not the national provision is compatible with Union law. If the national provision survives the proportionality test, it stays intact12; if it is found to be incompatible with the rule of Union law, the national court has to disapply the national provision13.

27. The disapplication of the national provision can impact the horizontal legal relationship that originally relied upon the inapplicable national provision. Yet, in many cases, the rule of Union law against which the national provision was reviewed does not have direct horizontal effect and in most cases it will not provide for a remedy in case of infringement. Consequently, the legal consequences of the disapplication of the national provision must be sought in remaining provisions in Union law or in national law or in an agreement between the parties to the case.14 In Chapter 4 this type of indirect horizontal effect and its potential legal consequences are discussed.