Public Liability in EU Law

Brasserie, Bergaderm and Beyond

Pekka Aalto

• Publisher: Hart Publishing
• Year: 2011
• ISBN:
  9781847318190
• Edition: 1
• Topic: Law
• Subtopic: Tort Law
• Index: Law

Over the last two decades public law liability for breach of European Union law has been subject to remarkable developments. This book examines the convergence between its two constituent systems: the damages liability of the EU and that of its Member States for failing to comply with EU rules. Member State liability, based as it is on the Francovich case (1991) and Brasserie du Pêcheur and Factortame (1996) judgments of the European Court of Justice (ECJ) is well established. But it is yet to be closely scrutinised by reference to the detailed rules on the liability of the European Union. The focus of the book is on the two key legal criteria that are common to both systems, namely the grant of rights to individuals by EU law and the notion of sufficiently serious breach of such rights. The analysis concentrates on developments in the case law of the ECJ and the General Court since the Bergaderm judgment (2000), which consolidated the convergence of the two liability systems that was first indicated in Brasserie du Pêcheur and Factortame. These two criteria are set side by side to evaluate the extent, in real terms, of the convergence of Member State and EU institutional damages liability, and to determine the extent to which one has influenced the other. This book shows that although full convergence between the two liability systems is not likely, each stream of case law should look to the other more actively as this important element of EU remedial law develops. Convergence in EU law public liability is supported by developments in adjacent areas, most notably European tort law and European administrative law. This study also illustrates how convergence in the EU liability systems to date has had spill-over effects into national public liability law.

1

Introduction

THIS BOOK ADDRESSES the convergence effort concerning EU public liability law. While presenting the two constituent systems, it proposes that the two sets of EU public liability case-law form an operational whole. When these two sets are taken together, they form, it is submitted, a sufficient critical mass of case-law which forms a viable basis for its future development

This introductory chapter will set out briefly the essential development of the two EU public liability systems (section I), present the themes of the book (section II) and its structure (section III).

I. EU PUBLIC LIABILITY LAW AND ITS CONVERGENCE

A. Liability of the European Union

The non-contractual damages liability of the European Union stems from the original Treaty Establishing the European Economic Community (1957). The provision concerning non-contractual liability of the Community, which first appeared in Article 215(2) EEC, later became Article 288(2) EC. The current provision, following the entry into force of the Lisbon Treaty,¹ is now in Article 340(2) of the Treaty on the Functioning of the European Union (‘TFEU’).² Despite changes in the Article number, the substance of the current Article 340(2) TFEU is the same as in the original Treaty, with the exception that the Lisbon Treaty extended the coverage of liability from Community to Union as of 1 December 2009. The current treaty provision in Article 340(2) TFEU now obliges the Union, in the case of non-contractual liability, to make good any damage caused by its institutions in the performance of their duties, in accordance with the general principles common to the laws of the Member States. Exclusive competence to rule on liability has always been attributed to the Courts of the European Union in Luxembourg, namely the Court of Justice of the European Union (‘ECJ’), the General Court of the European Union (‘GC’, ex-Court of First Instance ‘CFI’) and the Civil Service Tribunal (‘CST)’.³

Since the creation of the Communities, the ECJ has worked out a restrictive set of liability criteria for the liability of the Community, starting from the Schöppenstedt case-law (ECJ 1971).⁴ However, during the last two decades, the restrictive and much criticised liability criteria developed by the ECJ have been opened up and some almost astounding judgments on liability have been delivered. The development has been incremental, based on individual judgments. For example, Mulder (ECJ 1992 and 2000), a well-known series of damages cases relating to the Community milk quota regime, marked a turning point in the number of applicants.⁵ The first Schneider case (CFI 2002), a competition law case relating to annulment of a Commission decision declaring a merger incompatible with the Treaty, was followed by a damages claim of more than 1663 million euros, largely accepted at first instance (CFI 2007), although reduced considerably on appeal (ECJ 2009).⁶ Before its extension to the Union, the overarching coverage of the liability principle was confirmed to include all of the Community, including the actions of the European Ombudsman in Lamberts (CFI 2002; ECJ 2004).⁷ Finally, in FIAMM (CFI 2003, ECJ 2006), the two Courts considered the issue of strict liability in EU public liability law.⁸

B. Liability of the Member States

The development of the damages liability criteria of the Member States for breaches of EU law has been even more remarkable. This form of liability was also the creation of the ECJ, but in contrast to the liability of the Union, the Treaty contained no express legal basis for such Member State liability. The existence of that principle was laid down in Francovich (ECJ 1991).⁹ The Court based the liability of the Member States on the effectiveness of Community rules. Effectiveness would be impaired, and protection of rights which individuals derive directly from Community law weakened, if they would not be able to obtain redress from breaches by Member States. The court laid down three criteria which must be fulfilled for liability.

The jurisdiction to rule on Member State liability lies with the Member State courts, applying in part EU law, in part national damages law. The applicability of this principle in all sectors of Member State activity when applying EU law has been progressively and expressly confirmed in the case-law: first for legislative action in Brasserie du Pêcheur (ECJ 1996),¹⁰ then for administrative action in Norbrook (ECJ 1996)¹¹ and Hedley Lomas (ECJ 1996)¹² and finally, and more controversially, for judicial action, in Köbler (ECJ 2003) and Traghetti (ECJ 2006).¹³

C. Convergence as an Approach to get ‘Beyond Brasserie and Bergaderm’?

The convergence and mutual alignment of these two liability systems is the most recent issue. Albeit the three essential conditions for liability were the same in the two liability systems (breach of an EU law obligation, existence of actual damage, and a direct causal link between the two), the detailed criteria in the two systems originally developed in different directions. The criteria for Community liability for legislative acts – which in reality has been the main category of liability situations – were laid down by the ECJ in the restrictive criteria of the Schöppenstedt judgment (1971).¹⁴ The criteria for Member State liability as established in the Francovich judgment (1991) were less strict.¹⁵ However, some years later, in Brasserie du Pêcheur (1996), the ECJ ruled that the criteria for the two liability systems should not, ‘in the absence of particular justification’ be different in like circumstances. The Court of Justice affirmed in Brasserie du Pêcheur a statement of principle that protection of the rights which individuals derive from European Union law cannot vary depending on whether a national authority or a Union authority is responsible for the damage.¹⁶ The first case concerning liability of the Union where this alignment of conditions was put into practice was Bergaderm (ECJ 2000).¹⁷ It was here that the objective of convergence of the two liability systems, which forms the focus of this study, was first established by the ECJ.

Convergence of the two public liability systems will be used here as an approach to enhance the understanding of their functioning. One of the fundamental purposes of European integration is to increase coherence in the European legal arena by reducing and flattening divergences, through various mechanisms in different areas. To present, in schematic form, how convergence works in general within European integration, this interactive process can be simplified so as to make the different relationships more clearly visible. Figure 1.1 depicts EU law as the upper level, and Member State law as the lower level.

Figure 1.1 Basic Relationship Between EU Law and National Law

The basic interactions can be described through the following phases. The (1) first phase relates to the general effects of EU law in Member States: direct effect, primacy and interpretation in conformity. The (2) second phase, or relationship, is thus the ‘refined feedback’ effect on EU law. This could result for example from difficulties which become apparent in implementing a directive. When a directive is amended on the basis of a new Commission proposal, a Member State can suggest amendments to the Commission proposal based on its national law/problems, which, when adopted, become EU law. Further, a (3) third relationship is the convergence between various areas within the different sectors of EU law.

An assessment of convergence and divergence would necessarily have to be completed by an assessment of what happens at national level as a whole. Apparently this analysis should consist of two elements: what has taken place in a Member State in implementing this one specific remedy, and what effects that has had beyond the specific area in question (4), in terms of convergence spill-over.

The construction presented above can be transposed to the law concerning public liability in damages. Mutual interaction between national public liability law and two public liability systems created at EU level could be schematised as follows. Although the picture becomes slightly more complicated, three essential relationships should be noted, namely the relationship between EU law and national law, the mutual relationships between the two liability systems within EU law, and the spill-over effect on Member State law outside the EU law field.

Figure 1.2 Cross-infection (Cross-fertilisation) of the Public Liability Law of the Member States and that of the European Union

In the picture, the starting point is (1) national principles governing public liability in damages in Member States. These inspired the (2) principles governing the liability of the Community (now: Union), the famous Schöppenstedt/Adams conditions. In turn, these principles influenced the formulation of conditions for Member State liability for breaches of EU law, even if not yet in (3) Francovich, but already in (4) Brasserie du Pêcheur and (5) Bergaderm. Oddly enough, in the current situation EU liability principles (6a) ‘infect’ national systems, which again provide (7a) ‘cross-infection’ to EU level, both to Member State liability conditions, as well as (7b) conditions governing Union liability. What is more, the ‘infection’ (6a) and the ‘cross-infection’ (7a) have a spill-over effect on national law (6b), going beyond the field of application of EU law.

One of the characteristics of public liability in damages in EU law is that all convergence and approximation of law takes place without the intervention of the EU legislator. In view of the democratic legitimacy or democratic deficit of the European Union, the role of democratic processes and public participation in policy-making is important. Here, however, EU level policy is formulated by the EU courts in Luxembourg without intervention by the Union legislator. In this respect it is clearly different from legislation-driven areas, such as the internal market, where the essential part of legal norms is enacted by the EU legislator, nowadays increasingly with the participation of the European Parliament. For public liability law in the EU, no external institution exists which can encourage or inhibit, promote or prevent, development of the law. This is carried out solely by the EU courts.

II. RESEARCH ISSUES

A. The Aim and the Research Questions

The aim of this study is to present the two public liability systems established in EU law from the standpoint of their parallel assessment. In view of that, the study purports to discuss and find answers to the three following research questions:

Systematisation. The first research question is to make visible and present the law at the current state of development of the two public liability systems in EU law, including systematising case-law (the law) and through applying some specific tools and approaches to better grasp future issues.

Parallel assessment. The second question is to assess the similarities and differences between the two systems, discuss the roles of the EU courts and the procedural differences. An attempt should also be made to find out how potential new issues in each system could be solved by learning from the ‘other’ system. This would also include highlighting problems in application of the criteria and practical application of the criteria (‘law in action’), such as an overview of successful cases, success rate of damages cases, observations on applicants and nature of the cases.

Contextualisation. Thirdly, the question is to place public liability for breaches of EU law in context, beyond Bergaderm and to show the connections with convergent developments in general, including the more general convergence based on European Union law and others, and the role of this area of law in the context of the constitutionalisation of the European Union.

The choice of subject matter of the study, and the choice of approach, builds upon earlier research I have done in respect of public liability in EU law.¹⁸

B. Added Value: is it Still Worth a Try to Dig into Francovich, and EU liability?

Studies concerning various aspects of EU public liability law would seem to be numerous, in fact all too numerous to be cited or listed in full.¹⁹ By taking a more narrow starting point, and limiting the assessment to some of the published doctoral dissertations in this field (without any attempt at being exhaustive, or even representative), the following groups emerge.²⁰

Liability of the European Community (now: Union) has given rise to the first group of dissertations, which include the wor...