#14640 - State Liability - GDL EU Law

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Remedies in the National Courts

Before Francovich individuals relied on domestic public noncontractual liability: the “noninterventionist” (Michael Haba) approach leaving procedural rules untouched – this left the impression that state liability flowed from national legal systems as the Court approached remedies “with almost complete indifference” (Caranta)

However gradually the “period of intervention” (Haba) sought to harmonise remedial access for citizens of the free market:

Principle of Procedural Autonomy: no duty to establish special remedies for EU law infringements; however:

Rewe 1976

Violation of treaty provision & regulation (directly effective)

Held: national courts “entrusted with ensuring the legal protection which citizens derive from the direct effect of the provision of Community law” either in accordance with EU law, or in the absence of harmonisation of the right by the conditions laid down by national rules

Van Schijndel 1995:

Raised question of EU law at SC stage; SC felt bound to accept facts of first instance court – could it depart from normal judicial procedure to give effect to EU law?

Held: it should apply EU law & the principle of procedural autonomy means courts will have to work out “procedural rules governing actions for safeguarding rights which individuals derive from the direct effect of Community law”

• Principle of Equivalence

• Principle of Effectiveness

  • Importance of remedial action for EU breaches, as otherwise it is powerless

  • Duty of cooperation Art 4 TEU– MS must give judicial protection to individuals

• Could a national rule be saved by the principle of reason? i.e. if a domestic rule stands in the way to EU law whether it could be justified by “the basic principles of the domestic judicial system, such as protection of the rights of the defence, the principle of legal certainty and the proper conduct of procedure” Here it could – the SC did not have to depart from its passive role

Peterbroeck: principle of reason did not save a Belgian rule about limitation periods for appeals

Unibet:

1. Effective judicial protection is a general principle of EU law(ECHR influence & constitutional traditions)

2. Art 4 duty of cooperation

3. Principle of procedural autonomy (Rewe)

4. Principle of subsidiary – in the absence of EU rules, the domestic rules apply (Rewe)

5. The Community Court was not “intended to create new remedies”

6. However this is not to the extent of undermining effective judicial protection

   1. Principles of equivalence & effectiveness

7. Domestic procedural rules must be towards the objective of ensuring effective judicial protection

Birth of state liability

Art 340 TFEU : noncontractual liability to make good any damages

Zuckerfabrik Schoeppenstedt

“the Community does not incur noncontractual liability…unless a sufficient flagrant violation of a superior rule of law for the protection of the individual has occurred”

The creation of an EU remedy for state breaches:

Francovich 1991

Working in Italy & employer went bust. Directive where employers must set up insolvency fund. Mrs. Francovich tried to get some money out of this fund, but realised there was no money. Wanted to see if she could sue using national laws - she could not (directive not implemented). She tried to rely directly on the directive - could not (failed Marshall test). She thought about indirect effect - could not (no relevant Italian legislation). She decided to sue the state (under direct effect) for making it impossible for her to exercise her EU right: Italian gov’s failure to implement directive was the direct cause of the breach of her right.

Held: the full effectiveness of EU rules would be impaired & weakened if individuals couldn’t seek a remedy for a breach where other tools are unavailable. A state must be liable for its own breaches is inherent in the “system of the treaties” and especially Art 4 duty of cooperation - thus the legal basis is EU law, not national law. However this rule is NOT laid out in primary law

Conditions for liability (pure omission):

1. The directive’s prescribed result must involve granting rights to individuals

2. Possible to identify the content of those rights

3. Direct causal link

• “it is for the internal order of each MS to designate the competent courts and lay down the detaiuled procedural rules for legal proceedings intended fully to safeguard the rights which individuals derive from [EU] law…” Francovich (mirroring the effective judicial protection discourse above – complete integration of the national judicial order with Community laws

What is a sufficiently serious breach?

Brasserie du Pecheur/Factortame 3

Brasserie = beer purity laws as breach of free movement

Factortame = Merger Shipping Act not repealed as an infringement by the legislature

Held: adaption of the Francovich rules:

1. The rule of law infringed must be intended to confer rights

2. The breach must be sufficiently serious

3. Direct causal link

How do you determine a sufficiently serious breach?

• The state must have “manifestly and gravely disregarded the limits on its discretion”

  • This mirrors Art 340 liability for Community institutions

  • Things taken into account:

    • Clarity & precision of the rule breached

    • Measure of discretion left by that rule

    • Intentional/voluntary breach

    • Error of law excusable/inexcusable

    • Contributory failures by Community institutions

    • MS adoption of contrary laws

Dillenkofer suggests Factortame 3 does not change Francovich as the serious breach was evident from the surrounding facts of that case – non-implementation

Dillenkofer is also authority for non-implementation of a directive amounting to a sufficiently serious breach ex officio

Ex p BT

Incorrect implementation of directive

Held: the rule here was imprecisely worded the interpretation of...