What is an EU Directive?
With the upcoming EU Directive on disclosure on non-financial and diversity information by large companies and groups, the confusion around CR reporting and monitoring related issues is rapidly increasing.
While we wait for the Directive to be transposed in our national systems and tell us what is actually going to happen, let`s have a look at how European law works.
How does the European law work?
Who writes down the European law? Among the European Union the Institution responsible for laws drafting is the European Commission. Neither the members, nor the European Parliament have the power to draw any drafts.
These drafts are elaborated in order to accomplish opinions, needs and requirements coming from the member states or, from 2012, from European citizens as well (in this case the proposal needs the support of 1 million citizens coming from at least 7 different countries).
ORDINARY LEGISLATIVE PROCEDURE
Once the new legislation has been drafted, the so called ordinary legislative procedure begins.
EU legislation needs to be approved by the European Parliament (representing citizens) and the European Council (representing member governments).
In 80% of cases, they have equal power.
European law is divided into three different categories:
- primary law, constituted by treaties,
- secondary law, consisting in regulations, directives, decisions, recommendations and opinions,
- supplementary law consisting in EU case law coming from the decisions of the Court of Justice of the European Union, International law and the EU general principles of law.
While treaties constitute the base of the European law, establishing its vital political organs and how they work, regulations, directives and other acts are set in order to realize and put into practice aims, goals and objectives stated in the treaties.
European law is dominant compared to the national law.
Regulations (direct effect) are addressed to all European members and they apply in full. They are directly applicable without the need for national legislation.
Different story for directives and decisions.
Decisions are released by the Council or the Commission, and are not addressed to all members. They might indeed been dedicated to a particular State, individuals or companies. Although they are not of general application, they are binding for the state, the individuals or the companies they are addressed to.
Directives (indirect affect)are addressed to all member states and they require them to put into practice a corresponding national legislation within a set time frame (usually 2 years) in order to realize the objective or the policy stated in the directive.
In the UK, Directives are usually implemented by Statutory Instruments and occasionally by Acts.
European directive are usually used in order to improve free trade, free movement and competition rules across the European Union, and they also can be introduced to equilibrate or establish employment, safety, health or social related common policies.
Through the introduction of the new domestic legislations, directives are likely to significantly affect businesses and companies as well, and that`s what`s going to happen with the new EU Directive on disclosure of non-financial and diversity information.
Singular states have the power to introduce even stricter rules and requirements.
What happen if a member doesn`t transpose the European legislation into the national one?
If a member state fails to adapt the national legislation, or if the national legislation doesn`t meet the requirements of the European Directive, the European Commission can take action and decide to refer the member state to the European Court of Justice starting in this way a legal action against it.
Furthermore, even if directives are not per se a binding measure and weren`t designed to become binding before the corresponding national implementation, whenever the state is not successful in the implementation (because the directive is totally unimplemented or badly transposed) the directive can actually display direct legal effect (in this direction goes the doctrine following the European Court of Justice’s latest decisions).
The European Court of Justice makes sure that European Law is interpreted and applied in the same way across the different member states.
For more information visit http://eur-lex.europa.eu/homepage.html