Marleasing SA v La Comercial Internacional de Alimentacion SA (C-106/89)

Marleasing sought nullity of La Comercial's incorporation, claiming it was a sham to defraud creditors. The ECJ ruled national courts must interpret domestic law consistently with EU directives, even unimplemented ones, to achieve directive purposes. This established the principle of indirect effect of directives.

Facts

Marleasing SA brought proceedings against La Comercial Internacional de Alimentacion SA, a public limited company established by three persons including Barviesa SA. Marleasing claimed that the establishment of La Comercial lacked cause, was a sham transaction, and was carried out to defraud the creditors of Barviesa SA. The claim was based on Articles 1261 and 1275 of the Spanish Civil Code, which provide that contracts without cause or with unlawful cause have no legal effect.

La Comercial defended the action by arguing that Article 11 of Council Directive 68/151/EEC exhaustively lists the grounds for nullity of a company, and lack of cause is not among them. Spain had not yet implemented this directive into national law despite being obligated to do so from the date of accession.

Issues

Primary Legal Question

The Spanish court referred the following question: Is Article 11 of Council Directive 68/151/EEC, which has not been implemented in national law, directly applicable so as to preclude a declaration of nullity of a public limited company on a ground other than those set out in the said article?

Subsidiary Issues

Whether national courts are required to interpret domestic law in conformity with unimplemented directives, and how the term ‘objects of the company’ in Article 11 should be interpreted.

Judgment

The Court reaffirmed that a directive may not of itself impose obligations on an individual and cannot be relied upon directly against a private party:

a directive may not of itself impose obligations on an individual and, consequently, a provision of a directive may not be relied upon as such against such a person

However, the Court established the crucial principle of consistent interpretation (indirect effect):

the Member States’ obligation arising from a directive to achieve the result envisaged by the directive and their duty under Article 5 of the Treaty to take all appropriate measures, whether general or particular, to ensure the fulfilment of that obligation, is binding on all the authorities of Member States including, for matters within their jurisdiction, the courts. It follows that, in applying national law, whether the provisions in question were adopted before or after the directive, the national court called upon to interpret it is required to do so, as far as possible, in the light of the wording and the purpose of the directive in order to achieve the result pursued by the latter and thereby comply with the third paragraph of Article 189 of the Treaty.

Regarding the interpretation of Article 11(2)(b), the Court held:

the words ‘objects of the company’ must be understood as referring to the objects of the company as described in the instrument of incorporation or the articles of association.

Implications

Development of Indirect Effect

This case significantly expanded the doctrine of indirect effect established in Von Colson. It confirmed that national courts must interpret national law consistently with directives regardless of whether the domestic provisions were adopted before or after the directive. This applies even in horizontal disputes between private parties.

Company Law Harmonisation

The judgment reinforced the protective purpose of Directive 68/151, emphasising that grounds for nullity must be strictly interpreted to ensure legal certainty in relations between companies and third parties. Nullity cannot be declared on grounds beyond those exhaustively listed in Article 11.

Limitations

The obligation to interpret consistently applies only ‘as far as possible’, recognising that there are limits to interpretive conformity that cannot be overcome through judicial interpretation alone.

Verdict: A national court hearing a case which falls within the scope of Directive 68/151 is required to interpret its national law in the light of the wording and the purpose of that directive in order to preclude a declaration of nullity of a public limited company on a ground other than those listed in Article 11 of the directive.

Source: Marleasing SA v La Comercial Internacional de Alimentacion SA (C-106/89)