Costa v ENEL (1964): The Supremacy of EU Law

Costa v ENEL (Case 6/64) is the landmark judgment in which the European Court of Justice established the doctrine of supremacy of EU law over conflicting national law. Decided on 15 July 1964, one year after Van Gend en Loos, it completed the constitutional foundation of EU law by ensuring that Community law could not be unilaterally overridden by subsequent national legislation. Together with Van Gend en Loos, Costa established the twin pillars of the EU legal order: direct effect and supremacy.

Facts of the Case

Flaminio Costa, an Italian lawyer and shareholder of Edison Volta, refused to pay his electricity bill — equivalent to approximately 1,925 Italian lire (about €1 at the time) — to protest the nationalization of the electricity sector under Italian Law No. 1643/1962, which created ENEL as the national electricity monopoly. Before the Giudice Conciliatore in Milan, Costa argued that the nationalization violated several provisions of the EEC Treaty, including rules on state aids (Article 93), distortion of competition (Article 102), and the prohibition of discrimination based on nationality (Article 7). The Italian government responded that national courts must apply the later Italian law, as lex posterior derogat priori — the later statute prevails over the earlier treaty under traditional international law principles. The Giudice Conciliatore referred preliminary questions to the ECJ, asking whether Article 102 EEC had direct effect and whether the Italian nationalization law violated the Treaty.

The ECJ’s Reasoning

The Court held that the EEC Treaty created a legal order that became an integral part of the legal systems of Member States and that national courts are bound to apply. Member States have limited their sovereign rights, creating a body of law that binds both their nationals and themselves. The Treaty could not be overridden by subsequent national legislation without depriving it of its character as Community law and jeopardizing the attainment of Treaty objectives.

The Court reasoned that the Member States’ transfer of rights and obligations from their national legal systems to the Community legal order carries a permanent limitation of their sovereign rights, against which subsequent unilateral acts incompatible with the Community concept cannot prevail. 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 Court distinguished Costa from ordinary treaties. The EEC Treaty created institutions with sovereign powers and established a legal order that was autonomous, directly effective, and supreme. The preliminary reference procedure (Article 177 EEC, now Article 267 TFEU) presupposed that national courts could apply Community law and required a uniform interpretation that would be undermined if national courts could be bound by conflicting national law.

Key Passage

The Court’s most frequently cited passage states: “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 of rights and obligations from national legal systems to the Community legal order carries a permanent limitation of sovereign rights that cannot be reversed by subsequent unilateral national measures. This reasoning established supremacy as an inherent quality of EU law, not dependent on any treaty provision.

Implications

The supremacy doctrine ensures uniform application of EU law across all Member States. National courts must disapply conflicting national law, whether adopted before or after the EU measure. This obligation extends to all forms of EU law and applies to all national authorities, including legislatures, executives, and courts. The obligation to disapply covers all conflicting national provisions, including constitutional provisions, fundamental rights, and administrative regulations. National courts must give full effect to EU law provisions, leaving national law unapplied to the extent of the conflict.

The practical implications were immediate and far-reaching. National customs authorities could not apply tariff provisions conflicting with the common customs tariff. Tax authorities could not impose taxes incompatible with Treaty fiscal provisions. National employment tribunals could not apply age limits or nationality restrictions that conflicted with free movement rights. Environmental agencies could not enforce national standards stricter than EU directives without proper justification.

Relationship with Direct Effect

Costa established the second pillar of EU constitutional law, complementing Van Gend en Loos. Direct effect determines whether a provision can be invoked; supremacy determines what happens when it conflicts with national law. Together, they ensure EU law is effective and uniformly applied. A provision must have direct effect to be invoked before a national court, but once invoked, supremacy requires that conflicting national law be disapplied. The two doctrines are distinct but interdependent: direct effect provides the entrance ticket for EU law into national legal systems; supremacy ensures that once admitted, EU law prevails.

Acceptance by Member States

Member States have accepted supremacy on various constitutional bases. Most recognized the transfer of sovereign powers as inherent in EU membership. The constitutional courts of Italy and Germany initially resisted in dicta but ultimately accepted supremacy through constitutional accommodation. The Italian Constitutional Court initially held that Community law could not prevail over fundamental constitutional principles (Frontini, 1973) but later aligned with the ECJ’s interpretation (Granital, 1984). The German Federal Constitutional Court in Solange II (1986) accepted supremacy conditionally, subject to EU protection of fundamental rights at a standard equivalent to the German Basic Law.

The French Conseil d’État, long resistant to supremacy over French legislation, finally accepted it in the Nicolo case (1989), more than 25 years after Costa. The French Cour de Cassation had accepted supremacy earlier (Administration des Douanes v Société Cafés Jacques Vabre, 1975). The British courts accepted supremacy through the European Communities Act 1972, which gave EU law domestic legal force, with the House of Lords confirming supremacy over subsequent UK legislation in Factortame (1991).

Legacy

Costa v ENEL remains a cornerstone of EU constitutional law. The principle it established is recognized in Declaration No. 17 annexed to the Treaty of Lisbon. Despite occasional challenges from national constitutional courts, supremacy endures as an essential feature of the EU legal order. The judgment transformed the EEC from a traditional international organization into a constitutional legal order, creating a vertical legal system where individuals could enforce rights against their own states. Costa’s concept of “permanent limitation of sovereign rights” remains the most powerful articulation of EU constitutionalism ever pronounced by the Court.