Brasserie du Pecheur v Bundesrepublik Deutschland; Regina v Secretary of State for Transport, ex parte Factortame and others (4): ECJ 5 Mar 1996

Member states may be liable to individuals for their failure to implement EU laws. The right of individuals to rely on directly applicable provisions of the EC Treaty before national courts is not sufficient in itself to ensure full and complete implementation of the Treaty.
LMA Brasserie de Pecheur – Claim by a French brewery for losses suffered as a result Germany’s purity of beer laws, in respect of which Germany had been found to be in breach of Art.30EC – freedom of movement of goods. The German court upon receiving the ruling ultimately awarded no damages to the plaintiffs on the basis that there had been no direct causal connection between Germany’s sufficiently serious breach and the damage suffered.
Factortame – Spanish fisherman had succeeded on substantive issue of UK’ s imposition of conditions for registration as a British vessel in breach of Art.52EC (right to establishment). They now sought damages for losses caused to them as a result of UK’s breach. The English Divisional Court on receiving and applying the ruling found that there had been a sufficiently serious breach to give rise to liability, but that although compensation was payable, exemplary damages would not be awarded. The amount of damages was not assessed at this hearing.
Held: Does decision turn on discretion on implementation?

  • State liability is not confined to failure to implement EC Directives
  • A remedy under Francovich should be available whether or not there were other means by which Community rights might be enforced, i.e. on the principles of direct and indirect effect.
  • A state should only be liable for ‘manifest and serious’ breach of EC law.
  • The 3 conditions that must be met (altered as a result of the increased scope given to the principle in Brasserie).
  • The rule of law infringed must be intended to confer rights on individuals.
  • The breach must be sufficiently serious, and
  • There must be a direct causal link between the breach of the obligation resting on the State’s failure and the damage suffered by the injured parties.
    ECJ The application of the principle that 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 cannot be discarded where the breach relates to a provision of directly applicable Community law.
    The right of individuals to rely on directly effective provisions before national courts is only a minimum guarantee and is not sufficient in itself to ensure the full and complete implementation of Community law. That right, whose purpose is to ensure that provisions of Community law prevail over national provisions, cannot, in every case, secure for individuals the benefit of the rights conferred on them by Community law and, in particular, avoid their sustaining damage as a result of a breach of Community law attributable to a Member State.
    Since the Treaty contains no provision expressly and specifically governing the consequences of breaches of Community law by Member States, it is for the Court, in pursuance of the task conferred on it by Article 164 of the Treaty of ensuring that in the interpretation and application of the Treaty the law is observed, to rule on such a question in accordance with generally accepted methods of interpretation, in particular by reference to the fundamental principles of the Community legal system and, where necessary, general principles common to the legal systems of the Member States.
    The principle that Member States are obliged to make good loss or damage caused to individuals by breaches of Community law for which they can be held responsible is applicable where the national legislature was responsible for the breaches. That principle, which is inherent in the system of the Treaty, holds good for any case in which a Member State breaches Community law, whatever be the organ of the State whose act or omission was responsible for the breach, and, in view of the fundamental requirement of the Community legal order that Community law be uniformly applied, the obligation to make good damage enshrined in that principle cannot depend on domestic rules as to the division of powers between constitutional authorities.
    In order to define the conditions under which a Member State may incur liability for damage caused to individuals by a breach of Community law, account should first be taken of the principles inherent in the Community legal order which form the basis for State liability, namely, the full effectiveness of Community rules and the effective protection of the rights which they confer and the obligation to cooperate imposed on Member States by Article 5 of the Treaty. Reference should also be made to the rules which have been defined on non-contractual liability on the part of the Community, in so far as, under the second paragraph of Article 215 of the Treaty, they were constructed on the basis of the general principles common to the laws of the Member States and it is not appropriate, in the absence of particular justification, to have different rules governing the liability of the Community and the liability of Member States in like circumstances, since the protection of the rights which individuals derive from Community law cannot vary depending on whether a national authority or a Community authority is responsible for the damage. Accordingly, where a breach of Community law by a Member State is attributable to the national legislature acting in a field in which it has a wide discretion to make legislative choices, individuals suffering loss or injury thereby are entitled to reparation where the rule of Community law breached is intended to confer rights upon them, the breach is sufficiently serious and there is a direct causal link between the breach and the damage sustained by the individuals. Subject to that reservation, the State must make good the consequences of the loss or damage caused by the breach of Community law attributable to it, in accordance with its national law on liability. However, the conditions laid down by the applicable national laws must not be less favourable than those relating to similar domestic claims or framed in such a way as in practice to make it impossible or excessively difficult to obtain reparation. In particular, pursuant to the national legislation which it applies, the national court cannot make reparation of loss or damage conditional upon fault (intentional or negligent) on the part of the organ of the State responsible for the breach, going beyond that of a sufficiently serious breach of Community law. The decisive test for finding that a breach of Community law is sufficiently serious is whether the Member State concerned manifestly and gravely disregarded the limits on its discretion. The factors which the competent court may take into consideration include the clarity and precision of the rule breached, the measure of discretion left by that rule to the national or Community authorities, whether the infringement and the damage caused was intentional or involuntary, whether any error of law was excusable or inexcusable, the fact that the position taken by a Community institution may have contributed towards the omission, and the adoption or retention of national measures or practices contrary to Community law. On any view, a breach of Community law will be sufficiently serious if it has persisted despite a judgment finding the infringement in question to be established, or a preliminary ruling or settled case-law of the Court on the matter from which it is clear that the conduct in question constituted an infringement.
    Reparation from Member States for loss or damage caused to individuals as a result of breaches of Community law must be commensurate with the loss or damage sustained. In the absence of relevant Community provisions, it is for the domestic legal system of each Member State to set the criteria for determining the extent of reparation. However, those criteria must not be less favourable than those applying to similar claims based on domestic law and must not be such as in practice to make it impossible or excessively difficult to obtain reparation. National legislation which generally limits the damage for which reparation may be granted to damage done to certain, specifically protected individual interests not including loss of profit by individuals is not compatible with Community law. Moreover, it must be possible to award specific damages, such as the exemplary damages provided for by English law, pursuant to claims or actions founded on Community law, if such damages may be awarded pursuant to similar claims or actions founded on domestic law.
    The obligation for Member States to make good loss or damage caused to individuals by breaches of Community law attributable to the State cannot be limited to damage sustained after the delivery of a judgment of the Court finding the infringement in question. Since the right to reparation under Community law exists where the requisite conditions are satisfied, to allow the obligation of the Member State concerned to make reparation to be confined to loss or damage sustained after delivery of a judgment of the Court finding the infringement in question would amount to calling in question the right to reparation conferred by the Community legal order. In addition, to make the reparation of loss or damage conditional upon the requirement that there must have been a prior finding by the Court of an infringement of Community law attributable to the Member State concerned would be contrary to the principle of the effectiveness of Community law, since it would preclude any right to reparation so long as the presumed infringement had not been the subject of an action brought by the Commission under Article 169 of the Treaty and of a finding of an infringement by the Court. Rights arising for individuals out of Community provisions having direct effect in the domestic legal systems of the Member States cannot depend on the Commission’s assessment of the expediency of taking action against a Member State pursuant to Article 169 of the Treaty or on the delivery by the Court of any judgment finding an infringement.
    Rodriguez Iglesias (Rapporteur), President
    Times 07-Mar-1996, [1996] 2 WLR 506, [1996] IRLR 267, (1996) 1 CMLR 889, C-46/93, [1996] QB 404, C-48/93, [1996] ECR 1-1029, [1996] EUECJ C-46/93, [1996] CEC 295, [1996] All ER (EC) 301
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    These lists may be incomplete.
    Updated: 11 March 2021; Ref: scu.161075