EU State liability

8/12/2019 EU State liability

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SEMINAR 10

ENFORCEMENT OF EU LAW: MEMBER STATE LIABILITY

Learning Objective

After preparing for and participating in this seminar, students should be able to: explain the development and basis of Member State liability; apply this concept to a given factual situation; assess the interaction of direct effect, indirect effect and Member State

liability; and compare the influence of Union and national law as the award of a remedy

!"eti#n

! "ead paras #$%&' of the Francovich(udgment and bring a copy of them to theseminar

a) *hat is the Francovich test+

b) ow did the courts apply the test to the facts of this case+

c) -n what situations will it be applied+

# "ead paras #.%'/ of the Factortame III(udgment and bring a copy of them tothe seminar

a) *hat is the Factortame III test+

b) *hat factors did the 0ourt of 1ustice ta2e into account in determiningwhether there had been a sufficiently serious breach+

c) ow did the court relate these factors to the facts of this case+

d) -n what situations will the Factortame IIItest be applied+ 3iveauthority for your answer4s)

5 6oo2 bac2 at 7uestion 5 in the seminar on direct and indirect effect 48avidand 9ennine unnel) and address the following issues:

a) Advise 8avid as to whether he has any cause of action against anyoneelse;

b) *ould it ma2e any difference to your answer to a) if the !$$ Act wasinstead an Act of #


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Eentia$ Rea%ing

6ecture notesorspool = umphreys, #uropean Union 6aw, ?xford, ?U9, 0hapter . 9art ---.!!!%.!#!0raig = 8e @rca, #U 6aw: ext, 0ases and Materials, ?xford, ?U9, pp#%#//

0ases 0%'B$< and 0%$B$< Francovich and others v Italian Republic C!$$!D >0" !%/5/. paras #'%&' of the (udgment0ases 0%&'B$5 and 0%&B$5 Brasserie du Pcheur SA v Federal Republic of Germanyand R v Secretary of State for Transport ex parte Factortame td and others!Factortame III" C!$$'D >0" -%!

#5 % 5# of the (udgment0ases 0%!.B$& and !%$


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*a+ the assets of the institutions shall be independent of the employers' operatin capital

and be inaccessible to proceedins for insolvency

*b+ employers shall contribute to financin unless it is fully covered by the publicauthorities

*c+ the institutions' liabilities shall not depend on whether or not obliations to contributeto financin have been fulfilled!'

2-

$n my opinion, it follows from these provisions that the actual application of the Directiveis in any case sub.ect to two conditions, namely&

/ the creation of a uarantee institution or the desination of an existin

institution as liable to pay benefits provided by the Directive

/ the determination of the method by which that institution is financed, and, inparticular the intended role of the State in that financin!

20

1he ommission, which went into this problem in considerable detail, does not dispute

that the State is to have ta(en all these measures, but it does not, for all that, come to the

conclusion that the provisions of the Directive are not applicable as they stand! Accordinto the ommission, althouh one may not be able to show that financial liability for the

benefits provided by the Directive ultimately rests with the State, one may treat the

uarantee institutions in the same way as the State! $t follows from that the national .udemay find the State liable to pay the minimum amount of compensation provided by the

Directive! 1he ommission is of the opinion that the basis for treatin the institutions the

same way as the State can be found in Article )*b+ of the Directive, accordin to which'employers shall contribute to financin, unless it is fully covered by the public

authorities'! 1hus the Directive provides as an alternative option that the financin of the

institutions be fully covered by the State! 1he ommission continues that when theDirective provides for the possibility of implementation in accordance with the principle

of the financial liability of the State, the State may not avoid this liability by allein thatif it had fulfilled its obliation to implement the Directive it could have relied on others to

cover a part or perhaps all of the financin!

%3

However, $ am not convinced by this line of arument! #ne of the two possibilities must

be chosen! ither the financin of the uarantee institution is, as a rule, covered by the


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employers, and financin by public authorities is an alternative option, in which case the

ommission cannot maintain here, contrary to what it says in respect of Articles % and 4,

that in the absence of a decision by the Member State to exercise that option it isnevertheless that option which should apply or the Member State must of necessity ma(e

a choice reardin the financin of the uarantee institution, in which case the provision

in 5uestion is not unconditional! $t is this last proposition which, in my view, is correct!

1he 5uestion whether the uarantee institution can be treated in the same way as the Statedepends on a preliminary decision which must be ta(en by the State!

%

$ therefore suest a reply in the followin terms to the first part of the first 5uestion& theprovisions of Directive -370-"are not sufficiently precise and unconditional to create

rihts which individuals may rely on before the courts!

%2

$$! #n ma(in ood the damae suffered by individuals by reason of failure to implementDirective -370-"

1he first 5uestions put by both the courts ma(in a reference, secondly, deal expressly

with the position where the relevant provisions of Directive -370-"are held not to be

sufficiently precise and unconditional to be relied upon directly before the national court&the 5uestion is whether, in such a case, the individual who suffers damae as a result of

the failure of a Member State to implement the Directive is entitled to claim damaes for

any loss he may have suffered as a result!

%%

8iven the extensive consideration which must be iven to the various aspects of thisproblem, $ shall bein by presentin a summary of the conclusions which $ have reached

in the first part, and then, in the second part $ shall present in support detailed aruments

based, in the main,

9002: $;


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1he absence of direct effect does not in fact mean that the desired effect of ommunity

law is not to confer rihts on individuals, but only that those rihts are not sufficiently

precise and unconditional to be relied upon and applied as they stand!

%! =hen a Member State fails to implement a Directive, or to implement it correctly, it

deprives ommunity law of the desired effect! At the same time it breaches Articles )

and -0*%+ of the 1reaty which state that the Directive is bindin and oblie the MemberState to ta(e all the measures necessary to carry it out! 4! $n the event of the ourt

holdin under Articles 60 to " of the 1reaty that this obliation has been breached, the

ourt's .udment itself, as well as Article " of the 1reaty, oblies the Member State to

ta(e all the appropriate measures to rectify the failure and to carry out the desired effectof ommunity law, without raisin any ob.ection of any (ind! >y the same to(en, it may

also be oblied to ma(e ood any damae which it has caused to individuals by reason of

its illeal conduct!

)! ?nder ommunity law, it must at least be possible to hold the Member State liable incases where the conditions on which the ommunity would be held liable for a breach of

ommunity law by one of its institutions would be satisfied! $n the case of a Directive,which should have been implemented by means of a leislative act, it is sufficient that therelevant provisions of the Directive are intended to protect the interests of individuals!

1he re5uirement that there be a sufficiently serious breach of a superior rule of law must

be considered as satisfied in a case where the ourt has held a Member State liable for itsfailure to fulfil an obliation in a .udment iven under Articles 60 to "!

6! As ommunity law currently stands, a liability action aainst a Member State beun

before a national court in this way is conducted in accordance with other aspects of

national leal rules and, in particular, on the assessment of damae suffered and onprocedure, provided both that those rules are not less favourable than those relatin to

similar claims made under national law, and that they are not so framed as to render itvirtually impossible to ma(e ood the damae suffered! 1his implies that, at the veryleast, the most suitable leal remedy existin in the national leal system must be

interpreted so as to respect these re5uirements, and even that an appropriate leal remedy

must be created if one does not exist!

"! 1he liability action is of a different nature to the action for payment under theprovisions of a Directive with direct effect! $t is not simply a 5uestion of achievin by a

round@about route indirectly the same result which would have been achieved if the

Directive had had direct effect! 1he damae may be assessed by the national .ude exae5uo et bono! 1he provisions of the Directive may, however, serve as a point of

reference for him!

-! 1a(in into account the uncertainty, which up until now, has surrounded the 5uestion

of the liability of Member States for a breach of ommunity law, and ta(in into accountthe financial conse5uences which your .udment miht have for breaches which have

occurred in the past, it is appropriate to limit the scope of your .udment with reard to

time!


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%4

>! Development of the arument

1he plaintiffs in the main proceedins and the ommission as( you to ma(e an additional

declaration that the $talian state should pay compensation! 1he ommission souht at the

hearin to stress that it did not in any way propose that the ourt should, in the presentcase, address the eneral 5uestion whether the failure to implement a Directive which

does not have direct effect may ive rise to liability! 1he aruments of the ommissionconcentrate, on the contrary, on a close and detailed examination of the Directive in

5uestion! $t relies on elements of that examination! 1he ommission proposes to draw a

distinction between an action brouht to enforce payment and an action for liability topay damaes! Accordin to the ommission, an action to enforce payment, if it is to be

successful, re5uires proof that three sets of provisions have 'direct effect', namely&

/ those identifyin the beneficiaries of the rihts created by the Directive

/ those definin the extent of those rihts

/ those identifyin the institution liable in respect of those rihts!

#n the other hand, the ommission continues, in the context of an action aainst the

State for liability to pay damaes, it is not necessary to show that the third set ofprovisions have 'direct effect' because the institution liable in this case is, by definition,the State!

%)

uite apart from the fact that it seems wholly inappropriate to me to spea( of each of

these three sets of provisions as havin 'direct effect' in isolation and that it would bemore accurate to spea( of them bein 'provisions which are unconditional and

sufficiently precise', $ cannot follow the reasonin of the ommission! $n fact, even if one

were to accept its arument, namely that in the context of this Directive the extent of the

rihts of the beneficiaries is defined unconditionally and sufficiently precisely, onecannot avoid the need to decide once and for all, that is to say, not .ust in the context of

this case, whether Member States can be held liable for their failure to implement a

Directive! $n my opinion the problem posed here is precisely whether in eneral anational .ude can be re5uired under ommunity law to find a State liable where the

failure to implement a Directive which does not have direct effect has caused an

individual to suffer damae!


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%6

$n their statements to the ourt, the 8erman, >ritish, $talian and Dutch 8overnments

re.ected the obliation under ommunity law to ma(e ood the damae caused not onlyby the failure to implement a Directive such as that in 5uestion here, but also by the

breach of provisions of a ommunity law which is directly applicable or which has direct

effect! As they base their aruments on the case law of the ourt reardin suchprovisions, it is this case law which $ shall bein by examinin!

%"

1he case law of the ourt on provisions which have direct effect or are directly

applicable

As reards these it is established that&

'applyin the principle of co@operation laid down in Article ) of the 1reaty, it is the

national courts which are entrusted with ensurin the leal protection which citiBensderive from the direct effect of the provisions of ommunity law!'

and that&

'in the absence of any relevant ommunity rules, it is for the national leal order of eachMember State to desinate the competent courts and to lay down the procedural rules for

proceedins desined to ensure the protection of the rihts which individuals ac5uire

throuh the direct effect of ommunity law !!!'6!

%-

1his protection must, however, be 'effective' as the ourt stressed in its .udment of 0Culy 0-), >oBBetti, point " *"07-4, ;ep! p!2%3+, referrin to its .udment of 0

December 06-, Saloil *%76-, ;ep! p!66, 6")+, where it spo(e of 'direct and

immediate' protection! $t is a 5uestion of ensurin the 'full effectiveness' of ommunitylaw and any provision of a national leal system and any leislative, administrative, or

.udicial provision which miht impair the effectiveness of ommunity law and, a fortiori,

which miht prevent ommunity law from havin full force and effect is incompatiblewith those re5uirements which are

9002: $;


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'and must accordinly set aside any provision of national law which may conflict with it,

whether prior or subse5uent to the ommunity rules!'-

1his applies not only to national leal rules but to any provision of the national lealorder, as the ourt stated in its .udment of ) Culy 064, osta *6764, ;ep! p!)-), )04+&

'that an independent source of law could not, because of its special and oriinal nature, beoverridden by domestic leal provisions, however framed, without bein deprived of its

character as ommunity law and without the leal basis of the ommunity itself beincalled into 5uestion!'

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=here the application of national leal rules in breach of directly applicable ommunity

law has iven rise to an obliation on individuals to pay a certain sum, it is for theMember State, accordin to the case law of the ourt on the recovery of unwarranted

payments0, to ensure the reimbursement of that sum, and that obliation follows from the

direct effect of the ommunity provision which it has infrined! $n other words&

'the riht to repayment of amounts chared by a Member State in breach of the rules ofommunity law is the conse5uence and complement of the rihts conferred on

individuals by the ommunity provisions !!!'3!

4

$ cannot see the crucial difference between an action for the recovery of unwarranted

payments and an action for damaes, as in both cases it is a 5uestion of ma(in ood awron caused by the breach of ommunity law! Eurthermore, the ourt has already held

that the direct effect of a provision of ommunity law may be used as the basis for anaction for damaes& for example, $ refer you to the .udment of the ourt of 2 Culy003, Eoster *@--7-0,9003: $;ut, as the ourt reminded us in its .udment of 0 Culy 0-),

>oBBetti, point " *"07-4, ;ep! p!2%3+, if

'it is for the leal system of each Member State to determine which court has .urisdiction

to hear disputes involvin individual rihts derived from ommunity law !!! the Member

States are responsible for ensurin that those rihts are effectively protected in each case!'
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$f the payment of damaes is, therefore, the only means of ensurin effective protection,

where appropriate, the Member State is under an obliation under ommunity law to

provide parties with an ade5uate remedy to allow them to recover those damaes!

4%

1he four 8overnments which submitted observations maintained, however, that the ourtin its case law left to national law not only the methods by which possible actions for

damaes aainst the State should be overned, but also the principle accordin to whichit should be determined whether such actions could lie at all! Aain, accordin to those

8overnments, if the national leal system overns provisions which do have direct effect,

then a fortiori it must do so for those which do not! $t was in this way that the aents ofthe >ritish and 8erman 8overnments souht at the hearin first of all to refute the

aruments which the ommission souht to put forward in support of its thesis based on

the .udment of 22 Canuary 0"6, ;usso *637"), ;ep! p!4)+! $n this .udment the ourt

held that&

'if !!! damae has been caused throuh an infrinement of ommunity law, the State isliable to the in.ured party for the conse5uences in the context of the provisions of national

law on the liability of the State' *point 0+!

$n that case the breach in 5uestion was of a reulation on the common oranisation of thearicultural mar(et!

44

1he ourt did indeed refer to the 'provisions of national law on the liability of the State'!

evertheless, it declared that the State is bound to ta(e responsibility for the

conse5uences to the in.ured party resultin from a breach of ommunity law! $t thereforeseems to me that the ourt, in principle, imposed an obliation on the State to ma(e ood

the damae caused, while leavin it to the national court to determine the means by

which it was to ma(e ood that damae! $f the ourt had intended to leave the 5uestion ofprinciple to the national leal system as well, it would certainly have indicated that

intention in very clear terms, iven, on the one hand, that one of the 5uestions expressly

as(ed whether such a principle existed in ommunity law *see the fifth 5uestion, ;ep!0"6, p!4"+ and, on the other, that both the plaintiff in the main proceedins and

ommission2had clearly reached the conclusion that they did!

4)

As for the other .udments to which the 8overnments referred, particularly in the courseof the hearin, $ do not thin( that they are necessarily to be interpreted in the sense which

their summaries suested! Eurthermore, it is sinificant that in their own written

observations, the plaintiffs in the main proceedins and the ommission on one side, and

the >ritish and Dutch 8overnments on the other, all cited the same .udments in supportof differin and even opposite aruments%!


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46

See, for instance, the case of ;ewe, %%7"6! $n its .udment of 6 December 0"6, point )

*;ep! p! 0-0+, the ourt made the declaration cited above, which some maintain provesthat in the current state of ommunity law, the liability of the State for failure to fulfil its

obliations under ommunity law is overned entirely by national law! $t is nevertheless

5uite clear that the ourt only left it to the national leal system of Member States todetermine the courts havin .urisdiction and the procedural matters, which necessarily

implies that in principle a preliminary obliation exists to ensure leal protection of the

rihts which ommunity law confers on individuals! 1he fact that national law cannot o

so far as to 5uestion the principle itself of the obliation of a Member State to ensure theprotection of rihts which individuals en.oy under ommunity law is supported, on the

one hand, by the fact that the ourt has stated that procedural conditions, such as are

determined by national law, cannot&

'ma(e it impossible in practice to exercise the rihts which the national courts are obliedto protect!'

#n the other hand, by referrin to the capacity under Articles 33 to 32 and 2%) of the

1reaty to enable, where necessary, appropriate measures to be ta(en to remedydifferences between the provisions laid down by leislation, reulation or administrative

action in Member States, the ourt seems to me to have implicitly reconised that the

principle of the liability of the State arises under ommunity law! $n doin this, it has

nevertheless admitted that ommunity law may constitute a basis, if not for the creationof new remedies other than those established by national law, then at least for the

adaptation or interpretation of existin national leal remedies so that they may be used

to safeuard the rihts which individuals en.oy under ommunity law!

FA0?"AM>

"! =hat was contemplated, therefore, was the means made available in order

to reinforce the effectiveness of ommunity provisions throuh the effectiveness

of the .udicial supervision of the leal interests created by those provisions, and

li(ewise in order not to leave member states' failures to fulfil obliations without @inter alia, tanible @ conse5uences!

onse5uently, it is precisely in the liht of those ob.ectives that the position of the

individual has been used and iven its proper importance! 1he state's financial liability

vis@F@vis individuals for loss or damae caused by leislative inaction has been created bythe court in the final analysis as an instrument for securin protection for individuals, and

thereby also the proper implementation of ommunity law! Erom this point of view, it

has remote roots, both in terms of specific precedents for the liability and obliation to

compensate of the member states @ suestions to that effect were also to be found inacademic writins& see G! Gescatore, ;esponsabilitI des tats membres en cas de

man5uement aux rJles communautaires 90"2: $l Eoro Gadano 3 ;! Kovar, Loies de

droit ouvertes aux individus devant les instances nationales en cas de violation des


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normes et dJcisions du droit communautaire in ! 434 Gae 444

*0"- collo5uium+, p! 24), in particular at pp! 2"2 et se5!, and A! >arav, Damaes in

the domestic courts for breaches of ommunity law by national public authorities inon@contractual


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even after the breach at issue has been remedied may consist in establishin a basis for

the liability which a member state may incur, in particular, towards individuals as a result

of the breach of its obliations is to the same effect! 1hat dictum appears 5uitefre5uently& see ommission of the uropean ommunities v! $talian ;epublic *ase

3%7-4+ 90-6: !!;! ")0, "", para! 0 ommission of the uropean ommunities v!

$talian ;epublic *ase )47-)+ 90-": !!;! 2"", 2"%", para! 6, and ommission of the

uropean ommunities v! Hellenic ;epublic *ase @2-"7-"+ 9003: !!;! $@2)*summary

9006: !>! 434 Gae 44)

publication+! 1he court has further held that the interest in pursuin the action

may consist 9in particular: in establishin the basis for a liability which a member statemay incur, by reason of its failure to fulfil its obliations, towards those to whom rihts

accrue as a result of that failure& see the .udments in ommission of the uropean

ommunities v! Hellenic ;epublic *ase 2437-6+ 90--: !!;! -%), -)6, para! 4

ommission of the uropean ommunities v! Eederal ;epublic of 8ermany *ase @%67--+ 900: !!;! $@2)6", 263), para! %, and ommission of the uropean

ommunities v! Kindom of >elium *ase @2407--+ 900: !!;! $@2"), %-, para!4!

$t is clear that the conferment on individuals of a riht to compensation for damae

sustained owin to an infrinement of the 1reaty cannot be inferred from dicta of this

type, but only the possibility that, within the limits laid down by national law, theindividual may assert his riht to compensation in relation to such an infrinement!+

23! 1he affirmation of the obliation on member states to compensate

individuals is even more direct and explicit in ;usso v! ABienda di Stato per li$nterventi sul Mercato Aricolo *A$MA+ *ase 637")+ 90"6: !!;! 4), )6, para!

0, where the court held&

$f such damae has been caused throuh an infrinement of ommunity law the state is

liable to the in.ured party 9for: the conse5uences in the context of the provisions ofnational law on the liability of the state!

2! $t is un5uestionably clear from the above dicta, therefore, that a member

state may indeed be called on to compensate for the damae sustained by

individuals consistin in or resultin from an infrinement of ommunityprovisions!

However, the case law ma(es it clear that liability has to be made out by the national

court in the context of the provisions of national law on the liability of the state&
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24! 1he 8erman, etherlands and $rish 8overnments have arued to that effect

in these proceedins! 1hey reason that the ommunity leislature did not intendto establish a eneral system of member state liability for infrinements of

ommunity law! 1his, they maintain, is borne out in particular by the fact that the

member states did not incorporate any provision on this matter in the Maastricht1reaty! 1he 8erman 8overnment has further arued that it would not be

compatible with the system of division of powers between the ommunity

institutions and the member states as laid down by the 1reaty, or with the

principle of institutional balance, for the case law to flesh out ommunity lawabove and beyond cases in which that is .ustified by a lacuna in the leislation!

$n the final analysis, those overnments consider that the riht to reparation plays merely

a residual protective role, in the sense that it comes to the fore only in reard toprovisions which could not otherwise be relied on before the national courts! ssentially,

the court used the Erancovich .udment in order to bride a lacuna in the system for the

protection of rihts by imposin a sanction on the member state in breach in the shape ofan obliation to ma(e reparation! onversely, where an individual is already able to ta(eaction directly in order to enforce the provisions of ommunity law, as in the cases which

ave rise to these proceedins, there is no need for the ommunity system to re5uire

damaes to be awarded and there is no basis for imposin that! $ndividuals may be heldto have a riht to reparation only if and in so far as that is permitted by national law!

2)! $ do not consider that that view can be accepted! Eirst, it is clear from the

court's case law itself, which has contemplated on several occasions financial

liability on the part of the state for infrinements of

9006: !>! 434 Gae 44"

provisions with direct effect, that the possibility of substantive protection does not

indeed preclude financial protection! *$ refer to the .udment in ;usso v! ABiendadi Stato per li $nterventi sul Mercato Aricolo *A$MA+ *ase 637")+ 90"6:

!!;! 4), which $ have already mentioned, relatin to a ;eulation on the

common oranisation of the aricultural mar(ets, and to the .udment in Eoster v!

>ritish 8as Glc! *ase @--7-0+ 900: !>! 43), 42-, para! 22, where the

court held that article )*+of Directive "6723"7!!! on e5ual treatment for menand women may be relied upon in a claim for damaes aainst a body

responsible for providin a public service! See also, as reards an infrinement ofarticle %3, the .udment in ommission of the uropean ommunities v! $talian

;epublic *ase 3%7-4+ 90-6: !!;! ")0, "", para! 0!+ =hilst it is true that

in those cases the court merely held that it was for the member state to ma(ereparation, under the rules of national law, for the damae caused by it, it is also
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15/44

true that the 5uestions raised by the national courts in those cases were not

concerned with the specific sub.ect of the riht to compensation!

=hen the sub.ect was specifically tac(led in Erancovich 900): $!!;! "22, the courtdeliberately specified that the principle of liability is an inherent principle of ommunity

law by a eneral affirmation of principle which holds ood for any situation in which

ommunity law is infrined and not merely where there has been a failure to implementa Directive& see, in particular, pp! "", ""2, paras! %%, %) and %"! As far as failure to

implement a Directive is concerned, the court merely stated, at p! "", para! %4, that the

riht to redress is particularly indispensable, precisely because otherwise the individual

would be deprived of any protection, contrary to the rihts conferred on him by theDirective! However, that affirmation does not preclude liability in damaes for in.ury

caused by breaches of other types, particularly since the court itself went on to hold that

the conditions under whichN liability ives rise to a riht to reparation depend on thenature of the breach of ommunity law ivin rise to the loss and damae& p! ""2, para!

%-! *mphasis added!+

26! or does it seem to me that affirmation of the principle of state liability forbreaches of ommunity provisions havin direct effect conflicts in any way with

the division of powers, as laid down by the 1reaty, between ommunity

institutions and member states! $ would merely observe in this connection that it isthe infrinement of ommunity law itself which creates an imbalance in the

division of powers freely accepted and subscribed to by the states! Any

re5uirement which may be imposed by ommunity law to ma(e reparation for

loss or damae caused by such an infrinement constitutes merely a means ofrestorin the upset e5uilibrium!

1he state's responsibility for leislative activity *on the part of the leislature proper or of

the administrative authorities+ constitutes also from that point of view a natural and

necessary part of the ommunity leal system created by the 1reaty and by the memberstates themselves! $ cannot but remind myself that it was the member states which,

completely freely, areed the contractual rules underlyin the system as a whole and the

member states are still the decisive protaonists in the process for the formulation ofommunity measures! onse5uently, to

9006: !>! 434 Gae 44-

hold that liability exists for failure to fulfil obliations is tantamount simply to increasinthe effectiveness of the system and does not involve any activity supplementin @ letalone supplantin @ the leislature!

2"! 1his is all the more true when it is borne in mind that the state's financial

liability vis@F@vis individuals for loss or damae caused by leislative action or


16/44

inaction has been constructed by the court, $ repeat, as an instrument for ensurin

protection of individuals and, thereby, also for the purposes of the proper

implementation of ommunity law in all the member states!

$n sum, what is contemplated is the same as that contemplated by the @ now consolidated

@ case law which established direct effect, in the sense that provisions of the 1reaty and

secondary leislation may be relied on by individuals directly before national courts,provided of course that they are sufficiently clear and precise and unconditional!

2-! >y identifyin the direct effect of a 1reaty provision addressed to the

member states and containin an obliation on them, for instance to remove

certain barriers and not to reintroduce them, the individual's riht to theelimination of those barriers which is derived therefrom is identified and made

relevant, with the further conse5uence that that riht becomes capable of bein

asserted before the national court with a view to its bein duly protected! $n this

way, therefore, the riht arisin out of the state's obliation by which theindividual would have benefited if the obliation had been implemented properly

and precisely is identified and enhanced!

1his applies, not only on the substantive, but also on the procedural, level! Suffice it tomention what the court itself, in !L! Alemene 1ransport @ en xpeditie #ndernemin

van 8end O


17/44

!!;! -%0 and Eoster v! >ritish 8as Glc! *ase @--7-0+ 900: !>! 43)!

! 434 Gae 440

and administrative authorities in the member states to interpret national provisionsin conformity with the wordin and purpose of the Directive& see the .udments in

von olson v!


18/44

the provisions needed to secure the benefit of the riht which it confers on the individual,

or because of the absence of horiBontal direct effect of precise and unconditional

Directives, therefore also constitutes a means of reinforcin the position of the individualby ma(in it possible to offset, at least from the financial point of view, the imbalance

created by the state's failure to fulfil its obliations!

%! $n the final analysis, the individual's position directly created by a provisionwith direct effect bindin on the state is used in order to

9006: !>! 434 Gae 4)3

uarantee full, effective protection to the rihts conferred by that provision! $n the

same way, the individual's riht to compensation is used to uarantee protectionof the rihts conferred by a provision which does not have direct effect in the

sense that it cannot be invo(ed directly before the national court, yet also placesan obliation on the state, in the case of a failure to fulfil an obliation on the partof the state!

onse5uently, the concept remains the same& in order to implement a provision puttin

the state under an obliation, the individual's leal position is used, on the one hand, in

terms of its full, substantive content on the other, in terms of its financial content! venthe result is the same& on the one hand, the failure of the member state concerned to fulfil

its obliations is remedied on the other, the individual is uaranteed effective protection

of rihts claimed under ommunity provisions! 1he upshot is that the effectiveness of theprovision is reinforced, and hence that of the system as a whole!

%2! 1he foreoin remar(s show sufficiently clearly that, far from bein a

moment of eccentricity in the case law of the court, Erancovich was completely

consistent with and a loical extension of a value which has been upheld onseveral occasions without 5uestion in


19/44

$t is undeniable that this is a fundamental value of any leal system, whether ommunity

or national! $t is also undeniable that respectin that value may re5uire uaranteein

individuals, where necessary, the riht to compensation for loss or damae sustained byreason of the leislative action or inaction of the public authorities, irrespective of

whether or not the individual has other means, in addition to a remedy in damaes, of

assertin an infrinement of the leal position bestowed on him by ommunity law!

%%! Eurthermore, the *now uncontested+ affirmation of the state's obliation to

compensate the individual in cases of failure to implement a Directive, hence in

cases in which the infrinement of the state's obliation *infrinement of articles-0 and ) of the 1reaty+ can be lin(ed only indirectly to a breach of a correlative

riht of the individual, implies @ a fortiori @ that the same protection should be

available where provisions are directly infrined which uarantee the individual aleal position appertainin to himself and can therefore be relied on directly

before the national courts!

9006: !>! 434 Gae 4)

$n this sense, the arument that it is not possible to o beyond liability for failure to

implement Directives cannot be accepted, not only on the rounds set out above, but alsobecause it inores that it is the Erancovich situation itself which represents possibly the

furthest which the case law of the court can o *and not the nearest port of call+! #n close

inspection, the Erancovich .udment conferred a remedy *at least a financial one+ wherethe remedy provided for was that laid down in article 60, which does not afford direct

protection for individuals! #n the contrary, in cases of infrinement of provisions havin

direct effect, the protection already exists and a remedy may be asserted directly by the

individual, with the result that it is necessary only to accompany it by that somethin less,which is financial protection! onse5uently, in this case not even that small loical leap

has to be made which, in contrast, has to be made in order to move from infrinement of

article -0 to a breach of the riht potentially conferred on the individual by theDirective!

or should it be overloo(ed that, as far as provisions havin direct effect are concerned,

the court has consistently held that they must be fully and uniformly applied in all themember states from the date of their entry into force and for so lon as they continue in

force& see, inter alia, the .udments in AmministraBione delle EinanBe dello Stato v!

Simmenthal S!p!A! *ase 367""+ 90"-: !!;! 620, 64%, para! 4, and AmministraBione

delle EinanBe dello Stato v! Ariete S!p!A! *ase -7"0+ 90-3: !!;! 2)4), 2))%, para!), and that

1his conse5uence also concerns any national court whose tas( it is as an oran of a

member state to protect, in a case within its .urisdiction, the rihts conferred upon

individuals by ommunity law& .udment in Simmenthal 90"-: !!;! 620, 64%, para!6!


20/44

onse5uently, it is 5uite clear that a ommunity provision with direct effect confers a

leal position appertainin to an individual on the individual as from its entry into force

and for as lon as it continues in force, irrespective of and even despite any pre@existinor subse5uent national provision which may neate that leal position! $t therefore

follows that the national court is under a duty to provide full, effective .udicial protection

of the rihts conferred on the individual by the relevant ommunity provision!

%4! $t is un5uestionable that the infrinement of a provision ives rise to an

imbalance consistin in the reduction or annulment of the leal situation affected,

in this case that of an individual it is also un5uestionable that every lealsituation appertainin to an individual, every riht, if you prefer, has a

substantive content and a financial content, which can enerally be 5uantified!

8uaranteein the effectiveness of .udicial protection in the case of aninfrinement of a provision conferrin a leal position on an individual means

securin the reinstatement of the content of the riht impaired by the infrinement

of the provision! $f that which unlawfully adversely affects the individual's riht isan act of a public authority @ an administrative measure or a law @ it is whoeverbrouht it into bein who must reinstate the individual's riht or at least its

financial content!

9006: !>! 434 Gae 4)2

$n the final analysis, reinstatin its financial content is somethin less, a minimumremedy compared with full substantive reinstatement, which remains the optimum means

of protection! Annulment of an unlawful measure or settin aside a law which is

inconsistent with a superior parameter of leality is necessary in a state overned by the

rule of law! At times, however, this is not enouh and it may be necessary, in order torender the protection real and effective, to brin bac( into balance also the financial

content of the riht which has been impaired and hence to ensure that the damae is made

ood! onse5uently, reinstatin financial balance in respect of the riht which has beeninfrined is not somethin different or somethin more, even less somethin novel! or

does it constitute somethin optional which is sophisticated and remote in a leal system

which see(s and needs to be effective!

1o sum up, the principle of the state's financial liability must be applied as a remedy

which is both alternative and additional to substantive protection conse5uently, it must

be applied in the event of infrinements both of provisions without direct effect, in the

sense of provisions which may not be directly relied on before the national courts, and ofprovisions which may be so relied on!

*c+ 1he obliation of the state to compensate for acts or omissions of the leislature


21/44

%)! $t does not seem to me that that conclusion may be invalidated by the fact

that occasionally or often infrinements of ommunity law are attributable to the

leislature!

$ would point out in this connection that Erancovich, with which not even any of the

states which have submitted observations in these proceedins have ta(en issue, ma(es

no distinction dependin on whether the loss or damae ensues from an infrinementattributable to omissions of the leislature or of the executive! ertainly, that is no reason

for considerin that a different conclusion should be reached as reards the circumstances

under consideration here!

However, as the national courts have shown in their respective orders for reference, theyare debarred from awardin damaes by their national law, precisely because the

infrinements at issue of ommunity law are attributable to the leislature, either because

it failed to amend a national law so as to brin it into conformity with ommunity law

*ase @4670%, >rasserie du GIcheur+ or because it passed a national law inconsistentwith ommunity law *ase @4-70%, x parte Eactortame+! ssentially, therefore, iven

that it is impossible to brin an action for damaes in the event of action or inaction onthe part of the leislature, in such cases national law leads to the neation of the veryprinciple of liability!

%6! Admittedly, in the past the idea that the state was not liable for acts or

omissions of the leislature was a widespread one! $ts rationale was that thesoverein could do no wron or, accordin to a more modern, democratic version,

parliamentary sovereinty! $n other words, in so far as it was the hihest

expression of the soverein power, the leislature fell in principle outside the

eneral rules overnin liability in view, inter alia, of its democratic leitimacy!

9006: !>! 434 Gae 4)%

1hat view, which too( root above all in leal systems in which the law was not reviewed

in the liht of some hiher parameter, should ta(e on a different complexion where there

is a hiher norm which can be used to verify and, in an appropriate case, deny the lealityof the leislature's activity! Tet, also in those leal systems in which there is not only a

clear, formal hierarchy as between constitutional rules and leislative rules, but also a

mechanism of ad hoc supervision as to constant compliance with that hierarchy *Austria,$taly, 8ermany and Spain, for example+, the 5uestion as to whether compensation can be

awarded for loss or damae ensuin from an unconstitutional law is far from havin beenincontestably resolved! *Eor instance, in 8ermany such a possibility is not ruled out perse, but only to the extent to which the official duty infrined is not referable to a

particular third party, which, as $ have already mentioned, is true in most cases involvin

an unlawful act or omission attributable to the leislature for those very reasons, the

possibility in 5uestion is un5uestionably available in relation to individual@case laws*inBelfall@ esetBe+! However, the prevalent view amon academic writers is that an

individual should have the riht to compensation at least in the event of breaches of
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22/44

fundamental rihts& see, for instance, in this connection, 8! Haver(ate, Amtshaftun bei

leislativem ?nrecht und die 8rundrechtsbildun des 8esetBebers 90"%: eue

Curistische =ochenschrift 44! $n $taly, in which the 5uestion is still the sub.ect ofdebate, such a possibility has been allowed, for example, in the specific case of

presidential expropriatin decrees issued pursuant to the ararian reform which have been

declared unconstitutional, where the ararian reform aency was held liable in damaes

even thouh it was not uilty of any unlawful conduct hence the conviction that in such acase the compensation is more in the nature of restitution of undue payments, relatin

solely to the value of the asset lost! Eor some more eneral observations in thisconnection, see 8! Rarebels(y, Grocesso costituBionale *0-"+ %6 nciclopedia del

Diritto 6%0!+ 1he fact remains, however, that in such a case it cannot be ruled out that the

state will be called on to answer for the loss or damae caused by laws declaredunconstitutional!

%"! $t is true that when the leislature is bound in carryin out its leislative

tas(s to comply with particular limits imposed by superior rules, there is noreason in eneral leal theory for denyin that the state may be bound tocompensate for the damae caused by laws which exceed those limits! $n those

circumstances, liability for acts or omissions of the leislature is not conceptually

very remote or different from responsibility of the administrative authorities forleislative activity, which is upheld more or less everywhere today without

difficulty!

And that is not all! $t is well (nown that, in most leal systems, compensation is awarded

in certain cases for the diminution of assets sustained by individuals on account of aperfectly lawful activity of the leislature, in that it was brouht into bein without any

infrinement of any enablin law @ ta(e, for instance, cases of nationalisation andexpropriation for purposes of public utility! $f, therefore, it is conceded that the sacrificelawfully imposed on the leal and financial situation of individuals for the sa(e of the

public interest must be accompanied by fair compensation, it would be curious, to say the

least, not to consider that if

9006: !>! 434 Gae 4)4

such loss or damae is produced by a leislative act which is unlawful because it

conflicts with a superior rule *constitutional, ommunity or in any event prevailin over

the act+, there is no room for compensation!

%-! $t is scarcely necessary to point out that, in relationships overned by

international law, state responsibility for acts or omissions of the leislature isuniversally and un5uestionably ac(nowleded! *$n fact, international law

contemplates only state liability viewed in the round, that is to say, as a whole

conse5uently, there is no difference dependin on whether the infrinement which


23/44

ave rise to the damae is attributable to the leislature, the .udiciary or the

executive! Moreover, the same approach can be seen in the court's case law on

article 60 @ the infrinement of a ommunity obliation is imputed to the state inany event, reardless of the entity which was actually responsible for fulfillin the

obliation& see, for example, the .udments in ommission of the uropean

ommunities v! Kindom of >elium *ase ""760+ 90"3: !!;! 2%", 24%, para!

) ommission of the uropean ommunities v! $talian ;epublic *ase -7"3+90"3: !!;! 06, 066, para! 0, and ommission of the uropean ommunities

v! $talian ;epublic *ase )27")+ 90"6: !!;! 2"", 2-), para! 4!+ #f the manyinstances, it is worth recallin the principle laid down by the Germanent ourt of

$nternational Custice to the effect that the obliation to ma(e reparation is the

direct conse5uence of a harmful act contrary to international law which isattributable to a state! More specifically,

$t is a principle of international law that the breach of an enaement involves an

obliation to ma(e reparation in an ade5uate form! ;eparation therefore is the

indispensable complement of a failure to apply a convention and there is no necessity for

this to be stated in the convention itself& ase concernin the factory at horBPw,Cudment o! - of 26 Culy 02", G!!$!C!, Series A, o! 0, p! 2! *My emphasis!+

*1he same principle was subse5uently reaffirmed by the $nternational ourt of Custice in

the advisory opinion of %3 March 0)3 on the $nterpretation of Geace 1reaties with>ularia, Hunary and ;omania& $!!C!, 0)3, p! 22-!+

%0! ertainly, $ am aware that, in international law, the state's obliation to

ma(e reparation for damae arises even where in practice the compensation is

aimed at restorin the financial position of individuals vis@F@vis one or more statesand not, as is souht in the cases now before the court, directly vis@F@vis

individuals!

However, it does not seem possible to me to inore the specific, peculiar features of theommunity leal order! 1hat system is based, as far as is relevant for present purposes,

on a contractual foundation! 1he 1reaty, in common also with other areements

establishin international oranisations, contains a series of obliations on member stateswith reard to the achievement of the aims set out therein, which have been freely

subscribed to, and to the operation of an institutional structure whose powers are very

larely, but not wholly, predefined! However, the peculiar, ultimate aim of the

contractual basis in the case of the ommunity is interation and more specificallylay9in: the foundations of an ever closer union amon the peoples of urope *see the

Greamble

9006: !>! 434 Gae 4))

to the !! 1reaty+, inter alia throuh the achievement of the common mar(et! $t followsthat traditional instruments, those of international law in fact, prepared in order to


24/44

promote the due, precise fulfilment of obliations on the part of the member states have

resulted and continue to result to a very reat extent in ivin maximum, direct relevance

to the leal position of individuals! 1he reason for this is that the obliations of themember states and ommunity institutions are directed above all, in the system which the

ommunity system has souht and sets out to be, to the creation of rihts of individuals!

1his is the picture drawn by the authors of the 1reaty and consolidated by the

ommunity leislature!

43! $n case law, which is only too well (nown, the court has simply ta(en note

of that specific intention of the authors of the 1reaty and subse5uently of theleislature, observin that the !!! 1reaty set up its own leal order for the

benefit of which the states have limited their soverein rihts, albeit within

limited fields& see, in particular, the .udments in !L! Alemene 1ransport @ enxpeditie #ndernemin van 8end O


25/44

$t would N be contradictory to rule that an individual may rely upon the provisions of a

Directive which fulfil the conditions defined above in proceedins before the national

courts see(in an order aainst the administrative authorities, and yet to hold that thoseauthorities are under no obliation to apply the provisions of the Directive and refrain

from applyin provisions of national law which conflict with them,

9006: !>! 434 Gae 4)6

implies in fact that even the administrative authorities are under an obliation touarantee protection of rihts claimed by individuals under ommunity provisions with

direct effect! $t follows, accordinly, that in such a case it is 5uite possible to enforce the

liability of administrative authorities for havin adopted pre.udicial measures pursuant toa law which is alleed to be incompatible with ommunity law or, in any event, for

havin applied such a law!

1he Erench onseil d'tat *State ouncil+, for example, seems to have ta(en that

approach in inferrin state liability from the breach *faute+ @ it is scarcely necessary to

point out that, in relation to leislative activity of the administrative authorities, the termfaute is used by academic writers and by Erench administrative case law *where the

concept was evolved+ to denote maladministration and hence, even thouh this may seemodd, does not re5uire fault indeed, the rule often referred to is that toute dIcision

illIale est en principe fautive in short, in the Erench system the difference between

responsabilitI pour faute and responsabilitI sans faute does not correspond so much

to that between fault@based liability and strict liability, but, albeit only fairly rouhly, tothe distinction between liability for unlawful acts and liability for lawful acts @ of the

administrative authorities, at least where they exercised a discretion conferred on them by

a domestic law contrary to ommunity law& see the .udment of 2- Eebruary 002 inSociItI AriBona 1obacco Groducts v! S!A! Ghilip Morris Erance 9002: l'ActualitI

.uridi5ue @ Droit administratif 23! *#n the other hand, the our Administrative d'Appel,Garis, in holdin that there was an obliation to pay compensation in respect of anunlawful situation created by the leislature, reard bein had to ommunity law,

referred enerally to the responsibility of the state, in the .udment of Culy 002 in

SociItI Cac5ues Daneville9002: l'ActualitI .uridi5ue @ Droit administratif "6-,

includin a critical note by U! GrItot!+ Admittedly, in cases of this type the oriin ofliability is invariably to be found in unlawful conduct attributable to the leislature, that

is, in a law incompatible with ommunity law! However, it is obviously for national law

to determine whether attributability to the administrative authorities is an indispensableprocedural and7or substantive expedient in order to et the leislature to answer or the

correct mode of proceedin!

4%! =hat is re5uired by ommunity law for present purposes is that, in anyevent, the necessary instruments be made available in order for individuals to be

able to see(, and possibly obtain, compensation for loss or damae sustained as a

result of infrinements of ommunity law! $n this connection, moreover, it shouldbe made very clear that the problem of determinin a .udicial remedy which is not


26/44

already (nown to or permitted by the .udicial systems of the member states is not

insuperable or a new problem that is so on account of the specific factors under

consideration in these proceedins, and also because the problem has already beendealt with by the court in a number of historic, uncontested passaes in its case

law!

1his is testified to, in particular, by cases such as AmministraBione delle EinanBe delloStato v! Simmenthal S!p!A! *ase 367""+ 90"-: !!;! 620 and ;e! v! Secretary of

State for 1ransport, x parte Eactortame ! 434 Gae 4)"

was as(ed whether a particular .udicial remedy, which the national court held was notavailable under the national .udicial system, could or had to be conferred and

implemented by virtue of ommunity law!

44! =hat was in 5uestion in Simmenthal was the $talian court's power itselfforthwith to disapply a national provision conflictin with ommunity law,

without havin first to obtain a prior rulin from the onstitutional court that it

was unconstitutional! >y basin on ommunity law the national court'spower7duty to disreard the provision conflictin with ommunity law, a

power7duty un(nown to the national system @ indeed, there was express, repeated

case law of the onstitutional court to the contrary @ the court introduced a

deroation from the member states' autonomy in relation to means for the .udicialprotection of rihts conferred on individuals by ommunity law! Moreover, it is

remar(able @ also for the present proceedins @ that in Simmenthal the courtconsidered intolerable, not the absence of protection, but even a mere delay inprotection, thereby ivin pre@eminence to that aspect over the advantaes in

terms of certainty and finality which the system based on the assessment of

constitutionality as hitherto operated undoubtedly possessed!

$n x parte Eactortame


27/44

m!b!H! v! HauptBollamt Kiel *ase )-7-3+ 90-: !!;! -3), -%-, para! 44, in

which the court held that the 1reaty was not intended to create new remedies in

the national courts other than those already laid down by national law or to reducethe choice of the courts as to the most effective means of protection in actual fact,

that rulin is much less absolute in scope than would appear at first siht @ is

sub.ect to considerable deroations& in particular, whenever it is essential to

deroate in order to ensure the proper implementation of ommunity law andcorrect, effective protection of the rihts claimed by individuals under

ommunity law!

Accordinly, for example, whereas in S!p!A! Saloil v! $talian Ministry for Eorein 1rade*ase %76-+ 906-: !!;! 4)%, the court emphasised the obliation on the national

courts to ensure direct and immediate protection of individuals' interests, but went on to

specify, at p! 46%, that

$t is for the national leal system to determine which court or tribunal has .urisdiction toive this protection and, for this purpose, to decide how the individual position thus

protected is to be classified,

9006: !>! 434 Gae 4)-

that ambiuity disappears in >oBBetti v! $nverniBBi S!p!A! *ase "07-4+ 90-): !!;!2%3! $n that .udment, at p! 2%-, para! ", the court reaffirmed the obliation to ensure

that individual's rihts are effectively protected in each case and that, within those

precise limits only *Sub.ect to that reservation+,

it is not for the court to intervene in order to resolve any 5uestions of .urisdiction whichmay arise, within the national .udicial system, as reards the definition of certain leal

situations based on ommunity law!

1he 5ualification sub.ect to that reservation is manifestly the most relevant (ey to the

interpretation of that passae, in as much as it mar(s out the limits to the autonomy of thenational systems, and it is no accident, to my mind, that the same 5ualification is set out

in pararaph 42 of Erancovich 900): $!!;! "22, ""2!

46! $t should not be overloo(ed that the ommunity leislature, too, hasintroduced exceptions to the member states' autonomy, for example in the field of

public contracts overned by ommunity law, precisely as reards compensationfor damae! $ refer, obviously, to ouncil Directive *-0766)7!!!+ of 2December 0-0 on the co@ordination of the laws, reulations and administrative

provisions relatin to the application of review procedures to the award of public

supply and public wor(s contracts *#!C! 0-0

relation to the so@called excluded sectors *#!C! 002


28/44

Eaced with a lare variety of solutions in the member states' leal systems, the

ommunity leislature acted, not only with reard to aspects relatin to substantive,

hence real, protection, but also by providin for a system @ which was certainly novel to aood many national systems @ of damaes to compensate for the in.ury caused by

unlawfulness of contract award procedures in the event of the absence or insufficiency of

real protection! *1hat provision introduced a sinificant innovation into many member

states' leal systems! Eor instance, in the $talian system, which, even thouh it was amonthose affordin the reatest protection and, in any event, one of the few in which it was

possible, followin the annulment of the unlawful administrative measure, even to havethe ensuin contractual situation set aside, provision for compensation for infrinement

of situations which had traditionally been classed as interessi leittimi *protected

interests+ and not as diritti soettivi *individual rihts+ constitutes nothin less than acultural revolution *see .udment o! 266" of the orte di assaBione of ) March 00%

*00%+ 6 $l Eoro $taliano, vol! 2, p! %362+, albeit confined solely to relationships

overned by ommunity law!+

4"! $n the final analysis, it can certainly be said that the member states'autonomy with reard to .udicial remedies for the infrinement of rihts conferred

by ommunity provisions is firmly tied to the result souht by ommunity law!

*Eor a somewhat different approach, see Mr! Advocate 8eneral Cacobs' opinion of) Cune 00) in van Schi.ndel v! Stichtin Gensioenfonds voor Eysiotherapeuten

*Coined ases @4%3 and 4%70%+ 9006: All !;! *!!+ -3!+

9006: !>! 434 Gae 4)0

=here ommunity provisions are infrined by member states, the result which should be

attained, as far as is relevant for present purposes, for the proper operation of theommunity leal system as a whole, is that of ensurin, assumin that specific

preconditions are satisfied, that the same leal situation is restored, at least in terms of its

financial implications, as would have obtained if the member state had not failed to fulfilthe obliation imposed on it by ommunity law!

$i @ onditions for the State's #bliation to Gay ompensation

4-! onse5uently, liability attaches to any case in which ommunity law is

infrined, includin that in which the loss or damae results from infrinements

of 1reaty provisions havin direct effect, reardless of the oran of the state*includin the leislature+ to which the loss or damae is attributable! $t now

remains to consider the conditions in which liability exists and, in parallel, theindividual's riht to compensation!

$n the absence of specific ommunity provisions overnin the area, the problem lies in

definin the conditions determinin state liability and in actually bein able to ascertain


29/44

when they are present! $n addition, careful consideration should be iven to the

practicality of the possible solutions!

40! ertainly, ommunity law could very well, as some states have proposed in

these proceedins, confine itself to affirmin that liability exists in principle andthat there is an obliation to compensate, whilst leavin it to national law to

determine the preconditions and lay down the detailed substantive and proceduralrules!

Such a solution, as $ mentioned at the beinnin, would however have considerable

drawbac(s, the first amon them bein that it would not ensure the result souht by

ommunity law throuh an affirmation of the principle of liability, that is to say, full,effective protection of the rihts claimed by individuals under the ommunity provision

which is assumed to have been infrined! 1hat this is a real ris( is shown by the very

5uestions referred by the national courts, which arose precisely because the applicable

national law did not allow any compensation to be ranted in the cases before them!Aain, in any event, it is only too obvious that a mere reference to national law would be

in daner of endorsin a discriminatory system, in so far as for a iven infrinementsome ommunity citiBens would receive different protection, and some none at all!

)3! $n order for protection in damaes to be assured in all the member states in

at least a homoeneous @ if not exactly uniform @ manner, it is vital that it should

be ommunity law itself which lays down at least the minimum conditionsdeterminin the riht to compensation, in particular the criteria by which those

conditions are established, and the ommunity limits imposed on the nationalconditions relatin to compensation, be they procedural or otherwise!

1his, moreover, was the solution adopted by the court in Erancovich v! $talian ;epublic*Coined ases @6 and 0703+ 900): $!!;! "22, albeit with some particular features

connected with the case at issue! 1here is no round for considerin that that solution

should apply only in the event

9006: !>! 434 Gae 463

of failure to implement a Directive and not to the infrinement of provisions with direct

effect!

)! $n Erancovich, $ recall, the court, while specifyin that it was in the context

of the rules of national law that the state was bound to ma(e reparation for theconse5uences of the damae caused, itself identified and defined the conditions

sufficient to ive rise to a riht on the part of individuals to obtain reparation, a


30/44

riht founded directly on ommunity law *p! ""2, para! 4+! 1he member state to

which the failure to implement a Directive is attributable is therefore bound in

every case to ma(e reparation for the loss or damae sustained by the individual,provided that the conditions laid down by the court are fulfilled!

However, this must not be ta(en as meanin that the presence of those conditions is

sufficient for the purposes of compensation with respect to any infrinement ofommunity law whatsoever! As the court itself explained, at p! ""2, para! %-,

Althouh state liability is thus re5uired by ommunity law, the conditions under which

that liability ives rise to a riht to reparation depend on the nature of the breach of

ommunity law ivin rise to the loss and damae!

)2! onse5uently, the necessary re5uirements in order for member states to be

liable are li(ely to vary from case to case! However, as in Erancovich, the

re5uirements must be identified and defined by ommunity law itself!

$n other words, it is true that, in the case of infrinements of 1reaty provisions havindirect effect, the conditions set out in Erancovich may not be necessary and7or sufficient

to ive rise to a riht to reparation! evertheless, in such cases too, it will be necessary to

identify what conditions are sufficient in order to enable an individual to obtainreparation! $t is scarcely necessary to point out that the sufficient conditions, as is clear

from the Erancovich .udment itself, relate to the substantive preconditions for liability!

)%! A rapid appraisal of the rules in force in the national leal systems onliability on the part of public authorities shows that it is commonly accepted atleast that the principle should be that the entity to which the event which ave rise

to the loss or damae is attributable is answerable for that event, provided that

there is causal lin( between the event and the loss or damae!

1he substantive preconditions for liability are more or less the same everywhere& actualdamae, a causal lin( between the damae and conduct on the part of the perpetrator of

the damae, and the fact that the conduct was unlawful! $n contrast, the differences @

which in some cases are important in so far as they affect, for example, even the nature of

the individual interests protected *suffice it to recall the particularities of the $talian

system as reards the lac( of a remedy in damaes for breaches of interessi leittimi*protected interests+ for the tormented chapter of the protection in tort of interessi

leittimi in $taly, see 8! GonBanelli,


31/44

related to the breach of an interesse leittimo+ @ relate to the manner in which those

preconditions are defined and the criteria for ascertainin whether they are met!

)4! Eor present purposes, therefore, it is necessary, not so much to identify the

eneral conditions for liability, which in point of fact are practically the same inthe various leal systems, but to establish the criteria for determinin whether

they are met or, if you prefer, those criteria which will enable a commondefinition to be found of the conditions in 5uestion!

1o that end, $ consider that $ should dwell initially on the conditions which the court

considers sufficient in cases of failure to implement a Directive in order to ive rise to a

riht on the part of individuals to compensation!

*+ 1he Erancovich solution

))! 1he obliation on the state to ma(e reparation for leislative omissions was

reconised by the court in cases of failure to implement a Directive within the

prescribed period, sub.ect to findin that the followin three conditions @identified in Erancovich 900): $!!;! "22, ""2, para! 43, but set out here in the

form in which they were stressed and summarised by the court in Eaccini Dori v!

;ecreb S!r!l! *ase @0702+ 9004: !!;! $@%%2), %%)", para! 2" @ were met&

Eirst, the purpose of the Directive must be to rant rihts to individuals! Second, it mustbe possible to identify the content of those rihts on the basis of the provisions of the

Directive! Einally, there must be a causal lin( between the breach of the state's obliation

and the damae suffered!

A first 5uestion needs to be as(ed& are those conditions necessary and sufficient also in a

case where the loss or damae was caused by infrinement of a 1reaty provision havin

direct effect

)6!


32/44

hence @ by definition @ this condition is always met in the case of provisions

havin direct effect!

1he second condition, which at first blush seems merely to specify the first, emphasisesthe need for the riht resultin from the Directive to have a precise content, that is to say,

its sub.ect matter must be capable of determination, with the result that this condition

should aain be rearded, in principle, as bein satisfied by 1reaty provisions with directeffect! *Eor this aspect, see pararaphs ") and "6 below!+ $t is worth stressin at this

.uncture that in Erancovich, as in Dillen(ofer v! Eederal ;epublic of 8ermany *Coined

ases @"-, "0 and --@03704+, !!C! .udment pendin, on which $ am also

deliverin an opinion today, the content of

9006: !>! 434 Gae 462

the riht conferred on the individuals coincides exactly and precisely with their pecuniary

claims asserted by virtue of that same riht under the relevant ommunity provisions and

hence with the loss for which damaes may be payable! *$n Erancovich, $ recall, this was

the amount owin to the employees followin the employer's insolvency in Dillen(ofer,it is sums paid by purchasers of pac(ae holidays for trips never made!+ #f course, this

does not mean that the condition in 5uestion has to be interpreted as meanin thatwhether damaes may be awarded in respect of the damae sustained by the individual is

dependent on whether the exact content of the pecuniary loss sustained by the individual

is capable of bein identified on the basis of the actual provision infrined! $n contrast, it

is enouh for the infrinement of the provision in 5uestion, which confers on theindividual a riht whose sub.ect matter can be precisely identified, to have affected the

in.ured party's financial interests! $f that were not so, in fact, only claims in cases in

which the aim of the provision infrined was precisely to confer a pecuniary riht onthe individual would sound in damaes!

)"! 1he above observations lead me to an initial conclusion& in so far as they

relate to the leal position which an individual must occupy in order to be able toclaim a riht to reparation, the conditions laid down by the court in Erancovich

are manifestly necessary and satisfied even in the case of 1reaty provisions

havin direct effect! =hat has to be clarified here is whether those conditions aresufficient in every case!

1o that end, it is worth examinin the reasons which prompted the court to confine itself

to those conditions and not also to specify, for instance, the criteria for holdin that therelevant infrinement of ommunity law involves unlawful conduct such as to cause thestate to incur liability! $n Erancovich, as $ have already said, the court referred expressly

to only one of the classic preconditions for liability& the causal lin(! $n contrast, it

provided no further clarification about the unlawfulness of the conduct of the perpetrator

of the loss or damae and the actual existence of the loss or damae, the national courtnot havin been as(ed to carry out any review in that reard!


33/44

)-! $n my view, the choice made by the court in Erancovich was due, very

simply, to the fact that in that case the existence of the aforementioned twopreconditions was obvious at first siht! 1here could be no doubt as to whether

the omission on the part of the state was unlawful& the result souht by the

Directive @ in respect of which the state had no marin of discretion, at any rate inrelation to the time within which the Directive had to be implemented @ was not

attained nor was there any doubt as to whether loss or damae had actually

occurred, since it essentially coincided with the amount to which the applicants

would have been entitled had the Directive been implemented within theprescribed period!

Accordinly, in those circumstances, since the court had first found that the Directive

could not be relied on directly by individuals before the national courts, it merelyindicated that, for the purposes of the obliation to ma(e reparation of the member state

in breach of its obliations, it must be possible to identify a precise, exact riht on the

part of the individuals!

9006: !>! 434 Gae 46%

)0! $n sum, it is undeniable that, from the point of view of state liability and the

obliation to ma(e reparation, Erancovich was virtually a textboo( case! 1he fact

that the court did not feel the need to specify the limits of state liability, in

particular in so far as it omitted expressly to indicate the ommunity criteria for.udin whether the conduct of the state was unlawful, should be seen solely in

the liht of the particular features of the case before it! $t is sinificant in this

reard that different, even opposite, reactions are to be encountered in academicwritins! Accordin to some commentators, the court intended only to taret

serious infrinements or infrinements involvin fault it shows, amon other

thins, that failure to implement a Directive constitutes a conscious breach,conse5uently a deliberate one and for that very reason one involvin fault& see C!

1emple state to incur liability are not clearly defined in Erancovich is closely connected with the

particularly straihtforward nature of that case! 1he court's very statement that the


34/44

conditions under which state liability ives rise to a riht to reparation depend on the

nature of the breach of ommunity law ivin rise to the damae should therefore be

construed as meanin not only that the eneral conditions for liability to be incurred varyaccordin to the type of breach, but also that the particular characteristics of a specific

type of breach, such as failure to implement a Directive within the prescribed period, may

be such as not to re5uire detailed consideration as to whether one or more of the

conditions in 5uestion are present!

63! 1o interpret Erancovich differently would mean that every infrinement of

ommunity law affectin the financial interests of an individual occupyin a lealposition claimed under the provision infrined entailed per se and automatically a

riht to reparation!

$t does not seem to me that this was the result intended by the court or by ommunity

law! Moreover, it would not actually be reasonable, iven that, as $ have already

mentioned, in all the leal traditions liability for leislative activity on the part of thepublic authorities is limited in various ways! =hat is more, the court's own case law on

the non@contractual liability of the ommunity institutions on account of their leislativeactivities ta(es a different line!

*2+ 1he case law on the second pararaph of article 2)

6! Althouh this is not the proper place in which to analyse and discuss thiscase law, $ consider it necessary at least to point to the need

9006: !>! 434 Gae 464

for calm, profound reflection thereon! $n these proceedins, the member states

have constantly referred to the case law in 5uestion and as(ed for the same criteria

set forth in that case law also to be applied in respect of liability for infrinementsof ommunity law attributable to them!

1hat point of view does not seem completely baseless, bearin in mind, first, that thesecond pararaph of article 2) refers, for the purposes of the reparation of damae

caused by ommunity institutions in the performance of their duties, to the eneralprinciples common to the laws of the member states, and, secondly, that, conse5uently,

that case law could and should constitute, reard bein had to the absence of uniform

rules in this field, a useful frame of reference for common rules on state liability!


35/44

62! 1he court does not seem @ or at least not at first siht and unli(e that which

Mr! Advocate 8eneral Mischo proposed in his opinion in Erancovich @ to have

intended to ma(e state liability hine on the same restrictive conditions re5uiredby the case law in order for the ommunity to incur liability!

evertheless, $ consider it worth precedin my consideration of each of the eneral

conditions for liability by a few observations desined to assess whether, and to whatextent, an infrinement of ommunity law attributable to the state is comparable to an

infrinement on the part of the ommunity institutions, and whether, in the final analysis,

the criteria set forth in the relevant case law may or may not constitute a useful frame of

reference, at least iven similar situations!

6%! 1o that end, $ would call to mind as a preliminary point that the court has

consistently held, for example in the .udment in ayerische H< Lermehrunsbetriebe

8!m!b!H! O o! K!8! v! ouncil and ommission of the uropean ommunities*Coined ases -% and 047"6 and 4, ) and

9006: !>! 434 Gae 46)

437""+ 90"-: !!;! 230, 224, para! ), has explained its restrictive approach as

follows&


36/44

the leislative authority, even where the validity of its measures is sub.ect to .udicial

review, cannot always be hindered in ma(in its decisions by the prospect of applications

for damaes whenever it has occasion to adopt leislative measures in the public interestwhich may adversely affect the interests of individuals!

1he application of that approach, however, in a ood few cases has made for perplexity!

6)! 1he limits of ommunity liability are relied on and applied not only inrelation to leislative measures which presuppose the existence of a broad

discretion on the part of the relevant institution, but also in relation to measures

which fall within the ambit of implementin leislation *typically ommission

implementin ;eulations+& see, for example, the .udment in Asteris A!! v!ommission of the uropean ommunities *Coined ases 04@2367-%+ 90-):

!!;! 2-), 2-2-, paras! 2 and 22, in which the court held that the ommunity

had incurred no liability for the erroneous fixin by the ommission pursuant to a

ouncil ;eulation of aid for tomato concentrates see also the .udment inSofrimport S!F!r!l! v! ommission of the uropean ommunities *ase @)27--+

9003: !!;! $@24"", in which the ommunity was held liable on account of anessentially individual ommission ;eulation implementin another ommission

;eulation which in turn implemented a ouncil ;eulation, and the riid criteria

used for leislative measures involvin choices of economic policy were applied!ssentially, the court has applied the restrictive criteria formulated in assessin

the ommunity's liability on account of leislative measures of a eneral nature,

even where the damae arose out of an individual measure not in fact involvin

economic policy choices of such scope as to necessitate the fullest possibleprotection of the institutions' discretionary powers!

?n5uestionably, it would be more correct to apply different rules on liability dependin

on whether the activity in 5uestion was more particularly leislative or in the nature of

executive activity, iven that, in principle, the discretion available to the ommunityinstitutions differs sinificantly in the two cases& see Mr! Advocate 8eneral >iancarelli's

opinion in Stahlwer(e Geine@SalBitter v! ommission of the uropean ommunities

*ase 1@237-0+ 900: !!;! $$@2"0, %43, where he stated that, as far as liability wasconcerned, what was important was

essentially @ the marin of appreciation available to the ommission when it adopts its

decision and the more or less complex economic context in which the decision is

adopted!

More enerally, the re5uirement for virtually arbitrary conduct in order for non@

contractual liability on the part of the ommission to arise is .ustified where the

ommunity has a broad discretion @ as i

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