Costa v ENEL1964

Facts

Mr. Costa was an Italian citizen who had owned shares in an electricity company and opposed the nationalisation of the electricity sector in Italy. He refused to pay his electricity bill, which amounted to 1,925 lire (€0.99), in protest and was sued for nonpayment by the newly created state electricity company, ENEL. In his defence he argued that the nationalisation of the electricity industry violated the Treaty of Rome and the Italian Constitution. The Italian judge, the Giudice Conciliatore of Milan referred the case first to the Italian Constitutional Court and then to the European Court of Justice.
The Italian Constitution Court gave judgement in March 1964, ruling that while the Italian Constitution allowed for the limitation of sovereignty for international organisation like the EEC, it did not upset that normal rule of statutory interpretation that where two statutes conflict the subsequent one prevails. As a result the Treaty of Rome which was incorporated into Italian law in 1958 could not prevail over the electricity nationalisation law which was enacted in 1962.
In light of the decision of the constitutional court, the Italian government submitted to the ECJ that the Italian court's request for a preliminary ruling from the ECJ was inadmissible on the grounds that as the Italian court was not empowered to set aside the national law in question, a preliminary ruling would not serve any valid purpose.

Judgment

The Court ruled partly in favour of the government because the relevant Treaty of Rome rule on an undistorted market was one on which the Commission alone could challenge the Italian government. As an individual, Costa had no standing to challenge the decision because that Treaty provision had no direct effect.
However, on the logically prior issue of Costa's ability to raise a point of EC law against a national government in legal proceeding before the courts in that Member State, the ECJ disagreed with the Italian government. It ruled that EC law would not be effective if Costa could not challenge national law on the basis of its alleged incompatibility with EC law:

It follows from all these observations that 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.

This case is additionally confirmation that under Article 267 of the Treaty on the Functioning of the EU, a court has an obligation to refer cases that have reached the highest point of appeal in their respective country, if there is a question of the application of EU Law. Costa had reached its highest point of appeal.