CHAPTER 5/LECTURE 10 – MEMBER STATE LIABILITY IN DAMAGES
Introduction
- The principle of State Liability was established in Francovich and others v Italy (Case C-6
&9/90) [1991] ECR I-5357:
o Facts: Francovich and other workers were made redundant when the company
employing them became insolvent. The company itself had made no payments, and
as a result of the insolvency, no action was possible against the company. The
workers claimed against the state for a guaranteed redundancy payment granted by
a Directive which had NOT been implemented by Italy.
o Issue: The Court first considered whether the Directive could have Direct Effect (it
could not as it did not satisfy one of the three conditions for a Directive to have
direct effect). It also did not have indirect effect (it was unclear as to which authority
was to be responsible for setting up a compensation agency and there was no
national law to interpret in conformity with the Directive). However, the MS still had
a duty to ensure the full application and enforcement of a Directive under Article
4(3) TEU and 288 TFEU, and if breached, it would give rise to liability. In addition, the
EU intended for employees to have rights under the Directive. The Courts response
was to develop an alternative solution to make those rights effective; it ruled that a
MS which breached its obligation to transpose a Directive by the deadline for its
transposition could be held liable in damages to an individual who had suffered a
loss as a result.
o Held: The Court laid down three conditions which must be satisfied before a State
could be held liable in damages to an individual for its failure to transpose a
Directive:
(1) the result prescribed by the Directive must involve a grant of rights to
individuals
(2) the content of those rights must be clear from the Directive
(3) there must be a causal link between the breach of the State’s obligation
and the damage suffered by the individual.
The Development of the Principle of State Liability
- Would the principle only apply only to cases where a directive was NOT implemented?
o Brasserie du Pecheur SA v Germany and R v Secretary of State for Transport, ex p
Factortame (Factortame III) (Joined Cases C-46 & 48/93) [1996] ECR I-1029, Court
of Justice: (week 5 lecture 10 powerpoint for more info on the separate cases)
The Court considered damages for a different kind of breach of EU law to
that issued in Francovich.
The Court of Justice held that it was essential that State liability in damages
be available where direct effect did not afford a remedy. However, it
considered that it was even more important to ensure that EU rights which
were directly effective in principle were also effective in practice, and thus, if
necessary, by making the state liable in damages.
- Conditions for state liability (when there is a directive):
o (1) the rule of law breached must be intended to confer rights on individuals
Introduction
- The principle of State Liability was established in Francovich and others v Italy (Case C-6
&9/90) [1991] ECR I-5357:
o Facts: Francovich and other workers were made redundant when the company
employing them became insolvent. The company itself had made no payments, and
as a result of the insolvency, no action was possible against the company. The
workers claimed against the state for a guaranteed redundancy payment granted by
a Directive which had NOT been implemented by Italy.
o Issue: The Court first considered whether the Directive could have Direct Effect (it
could not as it did not satisfy one of the three conditions for a Directive to have
direct effect). It also did not have indirect effect (it was unclear as to which authority
was to be responsible for setting up a compensation agency and there was no
national law to interpret in conformity with the Directive). However, the MS still had
a duty to ensure the full application and enforcement of a Directive under Article
4(3) TEU and 288 TFEU, and if breached, it would give rise to liability. In addition, the
EU intended for employees to have rights under the Directive. The Courts response
was to develop an alternative solution to make those rights effective; it ruled that a
MS which breached its obligation to transpose a Directive by the deadline for its
transposition could be held liable in damages to an individual who had suffered a
loss as a result.
o Held: The Court laid down three conditions which must be satisfied before a State
could be held liable in damages to an individual for its failure to transpose a
Directive:
(1) the result prescribed by the Directive must involve a grant of rights to
individuals
(2) the content of those rights must be clear from the Directive
(3) there must be a causal link between the breach of the State’s obligation
and the damage suffered by the individual.
The Development of the Principle of State Liability
- Would the principle only apply only to cases where a directive was NOT implemented?
o Brasserie du Pecheur SA v Germany and R v Secretary of State for Transport, ex p
Factortame (Factortame III) (Joined Cases C-46 & 48/93) [1996] ECR I-1029, Court
of Justice: (week 5 lecture 10 powerpoint for more info on the separate cases)
The Court considered damages for a different kind of breach of EU law to
that issued in Francovich.
The Court of Justice held that it was essential that State liability in damages
be available where direct effect did not afford a remedy. However, it
considered that it was even more important to ensure that EU rights which
were directly effective in principle were also effective in practice, and thus, if
necessary, by making the state liable in damages.
- Conditions for state liability (when there is a directive):
o (1) the rule of law breached must be intended to confer rights on individuals
