State Liability Flashcards
Seminal case that established state liability
Francovich
Francovich
Facts: Concerned a directive that protected the wages of employees where an employer became insolvent that had not been implemented. (Same directive as in Wagner)
Wagner: There was no direct effect because there was discretion on who would be responsible for paying the guaranteed wages.
The principle of indirect effect was not useful here either.
Held: The full effectiveness of EU law would be impaired if there was no right to redress where an individual has suffered due to a breach of EU law.
Rights granted under EU law would be significantly weakened.
Inherent in the duty to fulfil obligations should be a remedy.
Note: Recognises that there could be an action for damages because a member state fails to implement EU law.
Conditions for state liability under francovich
Apply it to francovich
Case C-6/90 and C-9/90, Francovich and Bonifaci and others v Italian Republic [1991] ECR I-5357 p.40
Held:
The Directive must grant rights to an individual.
The content of those rights must be identifiable.
There must be a causal link between the breach by the member state and the damage suffered by the injured party.
Present Case:
1: Directive granted rights to guarantee wages to employees with insolvent employers.
2: Because Italy didn’t implement the directive, his wages weren’t guaranteed.
3: Causal Link: Lost wages due to Italy not implementing the directive
Result: The applicant should be able to sue the Italian state for the damages caused as a result of their failure to implement the directive.
Other case on state liability
Brasserie and Factorame
Brasserie and Factorame
Brasserie:
Concerned beer that was produced in France that was not allowed to be sold in Germany.
Germany had laws on the purity of beer, and French beer didn’t comply.
Previous case: Beer purity laws were contrary to the free movement of goods.
Therefore the German law was contrary to EU law.
Factorame:
UK government tried to stop Spanish fishing boats from fishing in their waters unless it was majority British-owned.
The vessels were seeking damages for the loss incurred due to those laws.
Both Cases:
Germany/Netherlands/Ireland stated that the decision in Francovich aimed to give a remedy where direct effect was not possible.
Germany: The general remedy of state liability could only be implemented through legislation and not case law.
Held: The court disagreed with Germany.
General principle of law: if you act unlawfully, you are responsible for the damage that was caused.
Issue: Could state liability exist if the rights enjoyed direct effect?
P22: The CJEU stated that the right to reparation is the necessary corollary of the direct effect of the Community provision whose breach caused the damage sustained.
The right to reparation is an addition; it repairs the harm that has already arisen.
Issue: Which bodies can be liable?
Any organ of the state whose act/omission was responsible for the breach.
New criteria under factrame and brasserie
Revised conditions for state liability:
The Directive must grant rights to an individual.
The breach must be sufficiently serious.
Did the Member State manifestly & gravely disregard the limits on its discretion?
There must be a causal link between the breach by the member state and the damage suffered by the injured party.
Note:
The state will only be liable if a sufficiently serious breach occurred.
Not every breach of EU law gives rise to damages.
If a member state manifestly exceeds its limits on discretion, it can be held liable:
Factors to consider
Clarity & precision of the rule?
Discretion left to national authorities?
Intentional infringement?
An excusable error of law?
Did any EU institution contribute to the omission?
Where factorame and brasserie sufficently serious breeaches
Brasserie:
The fact that the law remained in place even though it was against EU law constitutes a serious breach.
Factorame:
CJEU told the UK that it was against EU law.
The rule was clear rule therefore there was no excuse for the UK not to abide.
Constituted a sufficiently serious breach where the government could be held liable.
xample of a sufficiently serious breach
Hedley
Hedley
Facts: EU agricultural law: The animal must be stunned before they are slaughtered, they cannot be conscious.
Concerned a Spanish company that was exporting live sheep from the UK to Spain, where they would be slaughtered.
The UK prohibited the export of the live sheep because it believed that they werent respecting animal wellfare rules under EU law.
Hedley brought an action against the UK provision arguing that this was against the EU law providing for the free movement of goods.
Issue: Was the UK in breach of the EU law?
Was the breach sufficiently serious?
Held: It wasn’t for the UK to enforce EU law in relation to Spain.
That job lies with the European Commission.
The Comission was satisfied that the Spanish company were in compliance with EU law and the UK provided no evidence on the welfare of those animals.
Conclusion: This constituted a sufficiently serious breach as the UK did not have the discretion to make such a decision.
Example of not sufficiently serious brrach
R v HM tellocomunications
R v HM tellocomunications
Facts: Concerned a law on public procurement.
Stated that any public body that buys goods has to put out a public competition for it.
Must publish that you are seeking to buy goods so producers can compete.
BT had been state-owned but then became privatised.
It controlled 90% of telecom and the UK required them to stick to the rule on public procuremenent even though it was now private.
BT challenged this arguing that it was a breach as the rules do not apply to private companies.
Held: It was a wrong application of the EU law because the company was private.
However, this was a good faith error by the UK as they had overapplied the law, ie. They went beyond what the law required.
Furthermore, other countries also applied it similarly.
Conclusion: Not a sufficiently serious breach, therefore, it didn’t give rise to liability.
Is this a residual remedy, when direct effect or indirect effect are insufficient?
State cases that comment on this
It is possible for state liability to occur even where there is no direct/indirect effect.
However, cases are very limited and not many cases are brought before national courts so it may be regarded as a residual remedy.
Farrell v Whitty .
Faccini Dori
Pharel v Whitey
Held: Advocates general stated that state liability was a remedy of last resort.
Facinni Dori
Held: An individual litigant taking on the cost of pursuing a state liability claim may be deterred as in the end their claim may not be successful if the breach is not considered sufficiently serious.
Case study
Thelen
Facts: Concerned an industrial office development in Berlin.
The defendant was an engineer who had worked on the development for the plaintiff.
There was a dispute over how much the plaintiff had to pay for the services.
German law had a minimum fee rate for engineers; the defendant sought to enforce this.
During this, the EC brought a case against Germany stating that the minimum fee was in breach of the Services Directive as it restricted the possibility for other service providers.
The plaintiff argued that the minimum fee shouldn’t be applied as it was deemed to be in breach of the directive.
Issue: How does the directive apply?
Held:
Indirect effect:
Could the courts interpret the law in a way that is compliant with the EU directive?
No: The law was unambiguous and there was no space to interpret it in a different way.
Direct effect:
Could they rely on the directive against the engineer?
No: There is no horizontal direct effect between private parties in relation to directives.
Primacy:
A directive does not allow a national court to disapply a provision of its national law which conflicts with it if an additional obligation would be imposed on an individual.
Clarified that primacy is tied to direct effect.
It doesn’t give you the chance to have a remedy outside of direct effect.
Can’t get around one by the other.
State Liability:
Held: There had already been a judgement that the German law was in breach of EU law.
The breach of EU law will clearly be sufficiently serious if it has persisted despite a judgment finding the breach in question to be established.
Conclusion: The real remedy is to sue Germany for damages because the plaintiff had to pay higher fees for the engineer’s services.
The implication of the decision:
Had to start a separate case.
Must establish causation: Did the plaintiff have to pay more than they otherwise would’ve paid had the national law not been implemented?
Note:
Cannot have direct effect v Germany because the initial legal dispute was against the company and the engineer.
Cannot have direct effect against private parties in relation to directives.
The case must be separate because the state was not a party to the dispute.
