State Liability

1. ORIGIN: Francovich [1991] -`the Member States are obliged to make good loss and damage caused to individuals by breaches of Community law for which they can be held responsible'. And that `the conditions under which that liability gives rise to a right to reparation depends on the nature of the breach of Community law giving rise to the loss and damage'.
2. PURPOSE: To ensure the effective and uniform application of EU law; and to ensure that the rights granted to individuals by EU law can be enforced by them. SL can either be supplementary or an alternative regardless of whether the breach of EU law is directly effective (Factortame) or not (Francovich).

Nota:

• Established in the Francovich case

1. Conferral of Rights: It must be established that the infringed rule of law intended to confer rights on the individual [Francovich]
2. Sufficiently Serious test: This test is matter for national courts to decide on. The CJEU provided some guidelines to determine whether the breach was sufficiently serious and as such the threshold is high. 1) Clarity and precision of the rule was breached 2)The narrower of discretion left by the rule to national authorities (or the EU) the more likely they'll be liable; so as to 'manifestly and gravely disregard the limits on discretion' 3) Whether the breach or the damage was intentional or involuntary (in 'good faith' being a mitigating circumstance) 4)Whether any error of law was excusable or not 5) The possible contribution of EU institutions - Brasserie and Factortame (no. 3)

   Nota:

   • Quotations from Brasserie and Factortame (no. 3) [55]
   1. Francovich: In the reasoning of the CJEU it stated that instances where there is no margin of discretion left to MS, breach of EU is to be presumed sufficiently serious
      1. Similarly, in Hedley Lomas [1996] where there is "no discretion, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach".

         Nota:

         • Case concerned a QR on the export of animals that could not be justified. 
   2. Whereas in Factortame (no. 3) in cases where Member States are left with a margin of discretion, there is a sufficiently serious breach only if they have 'manifestly and gravely' exceeded the limits of their discretion.
      1. Another case is the British Telecommunications [1996] and was not in breach of the 'sufficiently serious test' because the Directive in question was 'imprecisely worded and was reasonably capable of bearing' and the interpretation by the UK was in 'good faith' and was not manifestly contrary to the objective of the Directive. There was no guidance from case law nor any objections from the LC.

         Nota:

         • Another case, with similar reasoning to BT was the Denkavit case [1996] where it found not have a direct causal link or be manifestly contrary to the wording of the Directive and was open to a number of perfectly tenable interpretations.
         1. Similar to Denkavit - Where the implementation and interpretation was incorrect but was done so by almost all other MS and there was no guidance from previous case law on the matter - Not in breach of SS
3. Direct Causal Link/Causation: There must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties. This condition is for the national court to determine. Dillenkofer [1996]

1. II. Public Bodies: In Haim II [2000] if "certain legislative or administrative tasks are devolved to territorial bodies with a certain degree of autonomy or to any other public-law body legally distinct from the State." They too could be held liable for the infringment of EU Law when applying it to national law.
2. III. National Courts: Köbler v Austria [2003] Generally, when establishing a sufficiently serious breach, it's likely to be extremely difficult as such a manifest infringement of the applicable law will only incur in “exceptional cases”. Nonetheless, this aspect is presumed when a last instance court decision was made in manifest breach of the case law of the CJEU. Traghetti v Italy [2006] Kobler authority was reaffirmed in this case. The exclusion of State liability, or the limitation of State liability to cases of intentional fault or gross negligence - in respect of national courts, is contrary to the general principle that MS are liable for an infringement of EU law.

   Nota:

   • Kobler: Concerned the salary increment in breach of Art.45 TFEU (workers). The Austrian Supreme Administrative Court withdrew a preliminary reference in light of a CJEU ruling which was interpreted differently. SL may apply if the breach of EU law can be attributed to a decision of a last instance court of a MS.  
   • Traghetti: NL may not liit liability only to cases of intentional fault or serious misconduct of the court. (Re-affirmed in Com v Italy [2011])
3. I. The Internal Organisational Structure of a State is Irrelevant: In Konle v Austria [1999], it was established that "reparation for damage caused to individuals by national measures taken in breach of Community law need not necessarily be provided by the federal State". It can also be provided by regional public bodies

1. LIMITATIONS ON NL: Principle of Equivalence: “[Procedures or remedies available under national law to ensure the observance of EU law] cannot be less favourable than those relating to similar actions of a domestic nature”.
2. LIMITATIONS ON NL: Principle of Effectiveness: National law cannot make it “impossible in practice to exercise the rights [under EU law] which national courts are obliged to protect”.
3. Art.19 (1) (2) TEU - "Member States shall provide remedies sufficient to ensure effective legal protection in the fields covered by Union law."
4. The extent of compensation must be proportionate so as to "commensurate" with the losses sustained (Brasserie & Factortame No.3)