Member States' Liability for Breaching EU Law (PDF)

Member States’ liability for breaching EU law EU LAW (Global Law) a. a. 2024/2025 PROF. AVV. LUCA CALZOLARI, PH.D, LL.M 0  Preliminary remarks  Another form of so-called indirect effects of EU law upon national legal orders...

Member States’ liability for breaching EU law EU LAW (Global Law) a. a. 2024/2025 PROF. AVV. LUCA CALZOLARI, PH.D, LL.M 0  Preliminary remarks  Another form of so-called indirect effects of EU law upon national legal orders, together with the duty of consistent interpretation  The underlying problem is always the same:  EU law must be primarily applied by the Member states, since the EU legal order is a system that relies on a decentralized enforcement mechanism  what happens if a Member State fails to fulfill its obligations arising from its membership to the EU?  The Treaty provides specific remedies (e.g., the infringement procedure) to cope with violation of EU law committed by the Member States who have a systematic impact and/or affect the general interest  The case law has created further remedies to safeguard the effet utile and effectiveness of EU law in the specific cases, i.e., to enable individuals to benefit from the rights conferred on them by EU law (direct effect, duty of consistent interpretation)  What happen if these remedies are not available e.g., because the rule in question cannot have direct effect and the duty of consistent interpretation cannot be applied?  Once again, the Court of Justice has "created" an1 additional remedy based on the principle of loyal cooperation  Member States’ liability as a last resort remedy + direct effect Disapplication by any the result intended by national judge of the (if compliance with VGL the EU Provision is internal rule that is not criteria) achieved compatible with EU law Primacy the result intended by (always and in any case) Duty of consistent the EU provision is ) interpretation achieved But no direct effect (if Indirect effects no compliance VGL Compensation because criteria) of EU law the result intended by the rule of EU law is not achieved Liability of Member States Defendant = the State competent court = national judges (not the ECJ!) 2  National law remedies vs procedural autonomy  «although the EEC Treaty has made it possible in a number of instances for private persons to bring a direct action, where appropriate, before the court of justice, it was not intended to create new remedies in the national courts to ensure the observance of community law other than those already laid down by national law” [i.e. procedural autonomy].  “the system of legal protection established by the Treaty , as set out in article 177 in particular, implies that it must be possible for every type of action provided for by national law to be available for the purpose of ensuring observance of community provisions having direct effect, on the same conditions concerning the admissibility and procedure as would apply were it a question of ensuring observance of national law” [i.e. equivalence] (Caso Rewe, 158/80)  Problem = what if the domestic legal order does not offer an appropriate action and/or remedy? 3  Francovich case, 1991  Through the adoption of a directive, EU law requires Member States to implement various protective measures to the benefit of workers to cope with the event of employer insolvency (e.g., to establish a mechanism to guarantee payment of wages)  Italy has not transposed the directive  The directive cannot have direct effect because it is not sufficiently clear (e.g., it does not identify who should be responsible for guaranteeing the payment the employees of the wages that are not paid by the employer)  As the directive does not have direct effect, Mr. Francovich cannot benefit from the protection that the directive was intended to offer to him as a worker 4  Factortame – Brasserie du Pecheur joined cases, 1996  U.K. national law required that owners, managers and charterers of ships shall be citizens and/or residents of the UK, as a requirement for registering such ships in the UK.  Some companies (correctly) challenged the violation of the right of establishment and/or of the freedom to provide services (Treaty’s rules that have direct effect).  The German national law did not allow the sale of beers that did not comply with national standards  An importer of beer (correctly) challenged the violation by Germany of the free movement of goods (another rule having direct effect)  What remedy for losses and damages suffered5 by shipowners and the beer importers due to the UK’s and Germany’s failure to respect these basic economic freedoms?  A new EU law remedy  The full effectiveness of Community rules would be impaired and the protection of the rights which they grant would be weakened if individuals were unable to obtain redress when their rights are infringed by a breach of Community law for which a Member State can be held responsible. [NB: effet utile]  The possibility of obtaining redress from the Member State is particularly indispensable where, as in this case, the full effectiveness of Community rules is subject to prior action on the part of the State and where, consequently, in the absence of such action, individuals cannot enforce before the national courts the rights conferred upon them by Community law. [NB: more important if no direct effect]  It follows that the principle whereby a State must be liable for loss and damage caused to individuals as a result of breaches of Community law for which the State can be held responsible is inherent in the system of the Treaty [just as the duty of consistent interpretation, and even if there is no Treaty provision laying down this principle in an explicit manner]  A further basis for the obligation of Member States to make good such loss and damage is to be found in Article 5 of the Treaty under which the Member States are required to take all appropriate measures, whether general or particular, to ensure fulfilment of their obligations under Community law. Among these is the obligation to nullify the unlawful consequences of a breach of Community law [NB: loyal cooperation, now enshrined by article 4(3) TUE] 6 (Francovich, joined cases C-6/90 e C-9/90, §§ 33-37);  The legal basis of the new remedy  The nature and essence of the Treaties and the role recognized to individuals  The effet utile of EU law  The principle of loyal cooperation (article 4(3) TEU)  The general principle of non-contractual liability accepted by all Member States and mentioned in Article 340 TFEU 7 Main features of the Member States liability What provisions of EU law? Under what conditions? What violations? 8  What provisions of EU law? Eu provisions without direct effect  Where the infringement consists in the non-implementation of a directive without direct effect (as in the Francovich case), the omissive conduct of the Member State prevents the possibility for the individual to enjoy the right that the directive intended to confer upon him.  As the actual right provided by the directive is not yet been assigned to the intended beneficiary, it follows that the prejudice suffered by the recipient does not relate to the impairment of a right that is already existing, but precedes such right and is autonomous from it.  In this case, one can speak of indirect effectiveness of the directive, since the right to compensation is not an alternative to the main right, but a different (albeit connected) and autonomous right EU provisions with direct effect  If the infringement of EU law concerns rights conferred on individuals by a EU provisions having direct effect, the right to compensation “is the necessary corollary of the direct effect of the Community provision whose breach caused the damage sustained (Brasserie du Pecheur, judgment of March 5, 1996, Joined Cases C-46/93 and C-48/93, paragraph 22). 9  The conduct of the Member States  The ECJ has clarified that the Members State is liable regardless of the nature of the body that carried out the action or omission, so that liability can also arise from facts attributable to the national legislature, beyond and irrespective of whether the legislature can be held liable in individual national jurisdictions.  State liability may also derive from the conduct of national courts that issue judgments that cannot be appealed under national law (i.e. last instances courts)  In addition, state liability for violation of EU law has also been affirmed by the ECJ for conduct attributable for example to national tax authorities (Brinkmann, judgment Sept. 24, 1998, Case C-319/96), to a public pension fund for dentists (Haim, judgment July 4, 2000, Case C-424/97) to a local authority (Konle, judgment June 1, 1999, Case C- 302/97), as well as for certain statements made to the press by a public official which, given their form and circumstances, were likely to create the impression in the recipients that they were official positions10 of the State and not personal opinions of the official  At what conditions?  Not all violation of EU law may lead to Member States’ liability  In order to set the conditions that shall be met for Member States to be liable in case of a violation of EU law, the ECJ based its reasoning on the premise that the protection of the rights conferred to individuals cannot vary according to the nature, national or European, of the body that caused the damage (Brasserie du Pecheur § 42)  In the light of the principle of equivalence, therefore, the conditions for the arising of Member States’ liability cannot in principle differ from those which, under Article 288 EC (now Article 340 TFEU), are relevant for the purposes of the liability of the Union in similar circumstances 11  Conditions (2) 1. The EU provision that has been violated must be intended to grant rights to individuals 2. The violation shall be sufficiently serious 3. There shall be a causal link between the (sufficiently serious) violation and the prejudice suffered by an individual NB: this is an exhaustive list  The above conditions are necessary but also sufficient  If they are met, and no further conditions and/or requirements can be set by the national legal order  In particular, the existence of intent or fault in the conduct of the state is irrelevant (see however art. 28 of the new version of Directive 2008/50/EC adopted in October 2004)  however, any less restrictive legal regime set forth in the national law, shall be applicable (by virtue of the principle of equivalence) 12  Conferral of rights to individuals ‹The first condition is manifestly satisfied in the case of Article 30 of the Treaty, the relevant provision in Case C-46/93, and in the case of Article 52, the relevant provision in Case C-48/93. Whilst Article 30 imposes a prohibition on Member States, it nevertheless gives rise to rights for individuals which the national courts must protect […]. Likewise, the essence of Article 52 is to confer rights on individuals› (Brasserie du Pecheur, § 54)  Article 30 TEC = “Quantitative restrictions on imports and all measures having equivalent effect shall, without prejudice to the following provisions, be prohibited between Member States”  Article 52 TEC = “Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be abolished by progressive stages in the course of the transitional period. Such progressive abolition shall also apply to restrictions on the setting up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State”. “Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 58, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital”. See however, the JP judgment (case C-61-21), where the ECJ held that not all EU provisions having direct effect necessarily confer rights to individuals 13  Sufficiently serious violation  General principle = not all violations result in the right for individuals to be compensated by the Member States  Legislature (serious and manifest violation) - Brasserie para 45  Judicial power (manifest violation) - Kobler para 53  What matters is the discretion enjoyed by the Member State in implementing/applying EU law  The more discretion there is, the more difficult it is for the violation to be serious and manifest  If there is no discretion, it is always a serious and manifest violation (see e.g. Art. 108(3) TFEU Art. 267 TFEU, Art. 288 TFEU) 14  Basic features of the remedy: autonomy, equivalence and effectiveness  Responsible for the violation is always the State as such = The defendant is always the Member State, regardless of which authority/administration actually committed the violation  Domestic law remedy = The action is governed by domestic law and the state is a defendant before the domestic court  However, the principle of procedural autonomy is limited by the general principles of equivalence and effectiveness 15  Thank you! - questions? AVV. LUCA CALZOLARI, LL.M, PH.D [email protected] 16