State Liability For Breach Law

Introduction

Under the European Union (EU) law, states are liable for the violation of the EU law, which liability comes into play if there is a violation of EU law by any public authorities of the state. The TFEU, Article 258 provides the European Commission with the right to approach the European Court of Justice (CJEU) to take action against a state that has violated the EU law. However, there was no similar right available to individuals to take action against the state that has violated EU law affecting the individual’s rights, leaving individuals without recourse against the state that violated the EU law. Over a period of time, the doctrine of direct effect, indirect effect and state liability were evolved by the CJEU to provide recourse to individuals against the states that violated the EU law. However, such liability arises in case of ‘sufficiently serious breach’ of the EU law, which is one of the conditions for state liability. This essay considers the CJEU case law on what constitutes sufficiently serious breach and argues that the case law developed by the CJEU leaves important areas unclear.

Sufficiently Serious Breach: CJEU Jurisprudence

Member States of the EU have the responsibility to enforce the EU law, and can be held liable for breach of EU law, if any of their government bodies breach the EU Law, if the breach is sufficiently serious. The CJEU has considered the requirement of sufficiently serious breach to be a standard of liability of the state and this carries with it the connotations of fault. In other words, if the breach is a sufficiently serious breach on the part of any state authority, that will constitute fault and make the state liable for breach of EU law. It may be noted that national courts and judicial authorities also come within the purview for breach of EU law as decided in Köbler. It may also be noted that the issue of sufficiently serious breach takes significance in cases that involve breach of fundamental rights of individuals, which are increasingly seen to be important as they form general principles of Union legal order, and have been incorporated in the European Convention of Human Rights.

“The conditions under which the state may incur liability for damage caused to individuals by a breac

“The conditions under which the state may incur liability for damage caused to individuals by a breach of community law cannot in the absence of particular justification be different from those the liability of the Community in like circumstances.”

What constitutes sufficiently serious breach of EU law is a question that has been left to the CJEU’s interpretation. Over the years, the EU has developed the jurisprudence on this question; however, one criticism in this regard is that the law developed by the CJEU lacks clarity. This criticism arises from the way CJEU has time and again interpreted ‘sufficiently serious breach’.

It may be mentioned here that TFEU, Article 340 contains general provision relating to the EU’s liability for damages and Article 268 allows jurisdiction to the CJEU for disputes relating to the compensation of damage in cases of non-contractual liability of Union and European Central Bank. These are general principles that provide that damages shall be paid in accordance with general principles common to the laws of the Member States. This has allowed wide space for the CJEU to develop these general principles that can help determine conditions under which the Union and its institutions can be held liable for breaches of Union law. Eventually, this has also led to the development of sufficiently serious breach requirement, as the CJEU has tried to standardise the principles of liability for state and the EU institutions.

In cases that come before the CJEU, where the court assesses whether state liability arises, the issue of sufficiently serious breach forms the threshold for liability. Whether that threshold is reached in a particular case or not is a matter for the CJEU to decide. In most cases, the mere infringement of EU law constitutes a sufficiently serious breach; however, the complication arises where the EU institution or Member States have Margin of Appreciation, that is, some discretion to apply the EU law as per national considerations, in which case, whether there is a sufficiently serious breach or not depends on the circumstances of the case. This has been laid down in Aktien-Zuckerfabrik Schöppenstedt, wherein the CJEU laid down the criteria for such cases: (a) a superior rule of law; (b) protection of individuals under the law; and (c) flagrant breach of the law. As this essay will note later, there is a significant difference between the way breach described in this case as ‘flagrant breach’ and how it is described in subsequent cases as ‘sufficiently serious breach’. The threshold is higher under the Schöppenstedt test. Thus, the beginning of the development of this principle led to the restrictive Schöppenstedt test.

The Schöppenstedt test is considered to be one of the most important cases in the Court’s early jurisprudence on sufficiently serious breach of EU law, which can be summed up as the “sufficiently flagrant violation of a superior rule of law for the protection of the individual.” Schöppenstedt test was applicable in cases of breach within legislative power in action involving measures of economic policy where only a sufficiently flagrant violation of a superior rule of law would lead to state liability. There should thus be protection of individual in a superior law and a causal link between breach, and the consequent loss. As the test involved flagrant breach, the threshold was higher and harder for the individual to prove. In Francovich, the CJEU introduced for the first time the liability of Member States for violations of EU law and applied softer conditions for Member States to incur liability, which avoided the condition of sufficiently serious breach. The court however did not mention the requirement of a sufficiently serious breach in this case, although the CJEU did infer such breach from the circumstances of the case in the latter case of Dillenkofer.

In Francovich, the CJEU introduced for the first time the liability of Member States for violations of EU law and applied softer conditions for Member States to incur liability, which avoided the condition of sufficiently serious breach. The court however did not mention the requirement of a sufficiently serious breach in this case, although the CJEU did infer such breach from the circumstances of the case in the latter case of Dillenkofer.

Over time, what constitutes sufficiently serious breach of EU law is a question that have received somewhat unclear answers from the EU. In Brassiere, the CJEU had held that for the breach to be sufficiently serious, it must be "manifest and grave" and the rule breached must be clear and precise. Other factors that were held relevant to deciding whether the breach was sufficiently serious were also described: clarity and precision of rule breached; measure of discretion to national authorities; intentional or voluntary nature of infringement or damage; possible contributory position of EC institutions; and retention of measures contrary to Community law. This is different from what was decided in the Schöppenstedt, in that the threshold was lowered.

Still, the requirement that the breach be manifest and grave, brings in a subjective element, which may create lack of clarity. In any case, it is the CJEU which decides whether the breach is grave or not. The CJEU has attempted to clarify the elements for establishing state liability in Bergaderm, the court brought European Commission and state liability at par by establishing an identical test for both: conferral of a right on individuals; a sufficiently serious breach and a direct causal link between the loss and the breach. Again the use of sufficiently serious breach requirement was made by the court. In Bergaderm, the CJEU held that what is relevant in such cases is the margin of discretion allowed to the states rather than the nature of the measures that are at issue. This also brings subjectivity into the issue as instead of just focussing on the rule that is breached by the state, the focus shifts to the margin of discretion. In other words, it is not necessary that just because there is a breach of an EU law, state liability would arise. This however seems contrary to the earlier decision in Dillenkoffer, CJEU held that failure to transpose a directive into national law within the prescribed time limit would be considered a sufficiently serious breach, giving rise to state liability in every case. However, the decision in Bergaderm provides that the issue of margin of discretion has to be taken into consideration. Does this mean that a simple failure to transpose a directive into national law would not be considered a sufficiently serious breach in every case?

Subsequent decisions have added to this lack of clarity. A case in point is Giordano, wherein the CJEU held that measures resulting in fishing seasons to end before the normal date will not be sufficiently serious breach as these comply with the principle of proportionality. However, the case contributed to the lack of clarity on what constitutes sufficiently serious breach of EU law, because it remained unclear whether restrictions of fundamental rights are automatically considered sufficiently serious breach if such restrictions are contrary to the principle of proportionality. In other words, what is the position of principle of proportionality on sufficiently serious breach and how does this accord with the rights of the individuals to take action for breach of EU provisions?

In Van Gend en Loos v Nederlandse Administratie der Belastingen, the CJEU introduced the doctrine of direct effect, and held that not only states but also individuals are subjects of EU law. However, the lack of clarity on what constitutes sufficiently serious breach of EU law for individuals to get a remedy or damages, leads to a situation where individuals’ position is still unclear.

In Francovich, the CJEU introduced the non-contractual liability of the Member States as “inherent in the system of the Treaty”, which led to the liability for failure to transpose in its national legislation an EU directive that created rights for individuals. Brasserie, gave the opportunity to the CJEU to clarify the conditions under which state liability arises for violations of EU law. The CJEU used the same expression of “sufficiently serious breach” in Brassiere as well as in Bayerische HNL. The expression used in the aforementioned cases differs from the expression of “sufficiently flagrant violation” used in Schöppenstedt.

While the CJEU applied a flexible approach in cases like Frankovich, Köbler, and Traghetti, a more regressive stance was taken by it in British Telecommunications, where it applied sufficiently serious breach condition in cases where Member State does not have wide margin of discretion, thus narrowing the liability of Member States as compared to the Schöppenstedt test. In Traghetti,as in Köbler, the CJEU had held that state liability of Member States arose in cases of violations of EU law committed by the national courts of last instance.

Conclusion

CJEU has developed a general principle of state responsibility for failure to comply with the EU law. The principle that underlies such responsibility or liability is that the Member States of the EU are responsible for implementation and enforcement of EU law, and the national courts are to enforce the state liability for violation of rights of individuals under the EU law. A public organ of the state violating the law, will incur liability under the EU law. While the CJEU has developed direct and indirect effect doctrines to ensure that individuals are also able to bring actions against the Member States for breach of EU law, what constitutes such breach is not always clear because it depends on the requirement to prove a sufficiently serious breach of EU law. What this sufficiently serious breach constitutes is decided by the CJEU; however, there is a lack of clear conditions for defining such breach. The use of margin of appreciation or discretion further complicates matters. In the case of fundamental rights as well, it is not necessary that breach of EU law would lead to state liability because the principle of proportionality may be used to avoid such liability.

List of Cases

• Aktien-Zuckerfabrik Schöppenstedt v Council of the European Communities [1971] ECR 975.
• Bayerische HNL Vermehrungsbetriebe GmbH & Co. KG and others v Council and Commission of the European Communities [1978] ECR 1209.
• Bergaderm v Commission [2000] ECR I-5291.
• Brasserie du Pêcheur, Secretary of State for Transport, ex parte Factortame Ltd and Others (1996) ECR I-1029.
• Dillenkoffer and others v. Federal Republic of Germany [1996] ECR I-4845.
• Francovich and Bonifaci v Italy [1991] ECR I – 5357.
• Gerhard Köbler v Republik Österreich 2003] ECR I-10239.
• Jean-François Giordano v European Commission (2014) ECLI:EU:C:2014:2282.
• Traghetti del Mediterraneo SpA v Repubblica Italiana (2006) ECR I-05177.
• The Queen v H. M. Treasury, ex parte British Telecommunications plc [1996] ECR I-1631
• Van Gend en Loos v Nederlandse Administratie der Belastingen [1963] ECR 1.

Books

Aalto P, Public Liability in EU Law: Brasserie, Bergaderm and Beyond (Bloomsbury 2011).
• Craig PP and De Búrca G, EU Law: Text, Cases, and Materials (Oxford University Press 2015).

Journals

• Lock T, ‘Is Private Enforcement of EU Law through State Liability a Myth: An Assessment 20 Years after Francovich’ (2012) 49 Common Market L. Rev. 1675.
• Machnikowski P, ‘Sufficiently serious breach of a rule of law intended to confer rights on individuals’ (2014) 5(1) Journal of European Tort Law 98.
• Tridimas T, ‘Liability for breach of community law: growing up and mellowing down’ (2001) 38 Common Market L. Rev. 301. Vajda C, ‘Liability for breach of Community law: A survey of the ECJ cases post Factortame’ (2006) 17 Eur. Bus. L. Rev. 257.

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