C-46/93

I— Theprinciple of State liability in Community law: basis and scope I - 1076

(a) The obligation on Member States to make reparation for failures to fulfil obligations as affirmed in the Court's case-law: the Francovich judgment and its precursors I - 1078

(b) The 'Community' principle of liability: merely a means of closing a lacuna in the protection of rights or a principle of broader scope? ... I - 1082

(c) The obligation of the State to compensate for acts or omissions of the legislature I - 1088

II — Conditions for the State's obligation to pay compensation I -1095

1. The Francovich solution I - 1097

* O r i g i n a l language: Italian.

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(c) The causal link I-1116 — Conduct of the injured party I-1117 — Remedies in damages and administrative remedies: independent or ancillary? I-1117 4. The other conditions I-1120 5. The time from which the obligation to make reparation starts to run I-1123 III — Replies to the national courts' questions I-1124 (a) Case C-46/93 (Brasserie du Pêcheur) I-1124 (b) Case C-48/93 (Factortame III) I-1126 Conclusion I-1128

vant legislation and the facts which have comply with the BiStG was incompatible given rise to these proceedings, I shall con- with Article 30 of the Treaty, Brasserie du fine myself to those aspects which are most Pêcheur brought an action against the Fed- relevant for present purposes. eral Republic of Germany for compensation for the loss suffered by it as a result of that import restriction between 1981 and 1987, in the sum of DM 1 800 000, which is presum- ably a fraction of the loss actually incurred. That action was dismissed by the lower (a) Case C-46/93 (Brasserie du Pêcheur) courts. Brasserie du Pêcheur is pursuing the same claim in its appeal on a point of law before the Bundesgerichtshof.

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Moreover and in any official duties the exercise of which is event, in this case there was no interference expressly directed at a third party and there- with the appellant's legal interest which may fore has the aim of protecting a right of the be protected under the law of property. third party. However, it is precisely that requirement which is normally absent in the case of a legislative wrong, including the ille- gality in point in this case. 4 As the national court has pointed out, in fact, in the BiStG the legislature imposed burdens concerning the community which do not relate in partic- ular to any individual or class of individual capable of being regarded as third parties for 5. The Bundesgerichtshof, taking the view the purposes of the provisions adverted t o . 5 that German law affords no basis for upholding the appellant's damages claim, has therefore made a reference for a preliminary ruling to the Court in order to establish whether the principle of State liability for loss or damage caused to individuals by infringements of Community law attribut- able to it, as may be inferred from the judg- ment in Francovich, is applicable to the case pending before it. More specifically, it has Secondly, the national court observes that asked the Court: neither in this case can there be State liability on account of an unlawful act of the public authority which is capable of being equated with expropriation, a principle developed by the case-law of the Bundesgerichtshof (Fed- eral Court of Justice). 6 The national court considers this to be inevitable in that the

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steuergesetz to Article 30 of the EEC Case 178/84 Commission ν Germany Treaty)? [1987] ECR 1227 that Paragraph 10 of the German Biersteuergesetz infringed higher-ranking Community law?' 2. May the national legal system provide that any entitlement to compensation is to be subject to the same limitations as those applying where a national statute breaches higher-ranking national law, for example where an ordinary Federal law breaches the Grundgesetz of the Federal Republic of Germany? (b) Case C-48/93 (Factortame III)

3. May the national legal system provide that entitlement to compensation is to be conditional on fault (intent or negligence) on the part of the organs of the State responsible for the failure to adapt the legislation?

6. The action for damages arising out of the application of the Merchant Shipping Act 1988 brought by the 97 applicants in the 4. If Question 1 is to be answered in the main proceedings is the sequel to the well- affirmative and Question 2 in the negative: known Factortame affair, of which I shall merely set out the gist.

(a) May liability to pay compensation under the national legal system be limited to the reparation of damage done to specific individual legal inter­ ests, for example property, or does it require full compensation for all financial losses, including lost profits?

ity, residence anddomicile of the natural In the meantime, the Commission brought and legal persons who were the true own an action against the United Kingdom under ers of the vessels. If those requirements Article 169 on the ground of the alleged were not met, fishing vessels were ineligi incompatibility with Community law of the ble to be entered on the new register and British statute, but only as regards the consequently were not allowed to fish nationality aspect. The Commission also under the British flag. applied for interim measures requiring the United Kingdom to suspend the application of the statute, which the Court granted by order of 10 October 1989. 9Following that order, the United Kingdom partially amended the Merchant Shipping Act with effect from 2 November 1989.

Then, by order of 18 November 1992, it gave leave to a number of companies and various other per 7 — In order to give the full picture, it is recalled that following sons to be joined as parties to the proceed the claimants' appeal to the House of Lords, that court made ings and/or to claim damages and further a reference to the Court of Justice, by judgment of 18 May 1989, for a preliminary ruling on two questions concerning gave Rawlings (Trawling) Limited, the 37th the existence and scope of the jurisdiction of a national court to grant interim relief where rights conferred by Community claimant, leave to amend its statement of

On 11 October 1990, the House of Lords affirmed the interlocutory injunction 9 — Case 246/89 R Commission v Uniteti Kingdom Į1989] granted by the Divisional Court pending the determination LCR 3125. of the substantive case. 10 — Case C-246/89 Commission v Uniteti Kingdom [1991] 8 — Case C-221/89 Factortame II [1991] ECR I-3905. ECR I-4585.

7. In English law, State liability in damages is a creature of case-law. In particular, the same wrongs (individual torts) leading to civil liability have been used in so far as they lend themselves to cover conduct of the pub- lic authorities. Secondly, liability on the part of the public authorities may be claimed in the event of a breach of statutory duty. In such case, how- ever, the actual chances of obtaining damages are considerably reduced in so far as the prevalent view is that the possibility of obtaining administrative remedies designed to ensure that the law is complied with pre- cludes bringing an action for damages. 15 First, damages may be awarded where loss or Admittedly, the existence of liability in dam- damage is due to a negligent breach commit- ages for infringements of Community law ted in the exercise of administrative or legis- was affirmed in that very context, but only in lative activity (tort of negligence). 12 Since, the case of Ordinary civil actions'. 16 however, there must be a 'duty of care' on the part of the public authority and the rele- vant case-law holds that there can be no such 13 — The duty of care is confined to typical sets of circum- stances, the upshot being that liability does not attach to every harmful negligent act. However, there are decisions to be found in the less recent case-law in which the duty of care has been identified with the neighbourhood principle, 11 — Although the national court refers solely to 2 November which is essentially equivalent to neminem laedere, since 1989, the date on which the relevant law was partially liability may be incurred under that principle for harm repealed, it is pointed out that that repeal related, in accord- done to anyone where it was reasonably foreseeable that ance with the Court's order in Case 246/86 R Commission the victim might be harmed (see, for example, Donogbue v v United Kingdom, only to those provisions which were Stevenson [1932] A. C. 562). discriminatory on grounds of nationality. This means, as the applicants point out in their written observations in these 14 — See, for example, Lonhro v Tebbit [1992] 4 All ER 280. proceedings, that the statute in question ceased to have 15 — See, for example, Thornton v Kirklees MBC [1979] Q. B. harmful effects as regards the other conditions held to be 626. discriminatory (residence, domicile) which were the subject of the proceedings in Case C-221/89 Factortame II only on 16 — See Garden Cottage Foods v Milk Marketing Board [1984] 11 October 1990, when the House of Lords, following the 1 A. C. 130 HL., in which the House of Lords essentially Court's judgment in Factortame I, affirmed the interlocu- accepted, albeit in an obiter dictum (the proceedings were tory injunction requested. In this connection, sec footnote 7. concerned with an application for interim measures), the existence of liability in damages to a person who had suf- fered loss as a result of conduct in breach of Articles 85 and 12 — See, for example, Rowling v Takaro Properties [19881 A. C. 86 of the Treaty by a private citizen or also by a public 473. authority, but in the event that it acted as a private citizen.

(b) such conditions were held by the Court of Justice in Cases C-221/89 and C-246/89 to infringe Articles 5, 7, 52 and 221 of the EEC 8. The Divisional Court considers that if Treaty, English case-law were to be applied, the claimants would have no remedy in damages. Since, in addition, it is uncertain whether the principle of State liability for loss or damage caused to individuals by infringements of Community law attributable to the State, as may be inferred from Francovich, applies are those persons who were owners or managers of such vessels, or directors and/or shareholders in 17 — Bourgom ν Munster of Agriculture. Fisheries and Food vessel-owning and managing [1986] 1 Q. B. 716 A. C. companies, entitled as a matter of 18 — Kirklees Metropolitan Borough Council ν Wiches Building Supplies Į1992] 3 W. L. R. 170, in particular at 188. Community law to compensation

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by that Member State for losses (d) losses consequent on the inability of which they have suffered as a result such persons to own and operate of all or any of the above infringe- further vessels; ments of the EEC Treaty?

2. If Question 1 is answered in the affir- (e) loss of management fees; mative, what considerations, if any, does Community law require the national court to apply in determining claims for damages and interest relating to:

(f) expenses incurred in an attempt to mitigate the above losses;

In these proceedings, the Court has to estab- abstract level and in principle, the existence lish whether, on what terms and with regard of State liability in the circumstances at issue. to which classes of injury, there exists an obligation for the State to compensate indi- viduals who have suffered loss or damage as a result of the application of national laws conflicting with Community law. 19

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11. These, therefore, are the aspects which I Lastly, I shall consider the two cases before shall be considering and the questions which the Court and reply to the questions which I shall be seeking to answer. Accordingly, the gave rise to these proceedings. analysis set out below will be subdivided into three parts. The first part will deal with the principle of State liability under Com- munity law with a view to identifying its basis and scope, inter alia with respect to unlawful acts or omissions on the part of the legislature, and to assessing in particular I — The principle of State liability in Com- whether an action for damages is a residual munity law: basis and scope remedy only, in the sense that such an action may be brought only where the individual has no other means of asserting the rights conferred on him by Community law, or whether its ambit is wider.

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various ways. The extent of that limitation, for loss or damage caused by legislative which may be encapsulated, by way of initial activity of the public authorities suggests in approximation, in the well-known formula itself that it is unreasonable that they should according to which the liability in question is invariably and in any event not be liable for 'neither general, nor absolute', 21 is conse- infringements of Community law which quently related to the need to balance the have an effect on the financial situation of opposing, competing interests at stake: on individuals affected by those infringements. the one hand, the injured party's interest in obtaining at least financial restitution for the loss or damage he sustained as the result of an activity — in particular legislative activity — of the State; on the other, the State's inter- est in not having to answer invariably and in any event for loss or damage caused by the activities of its organs in performing the Consequently, in so far as at least the princi- institutional tasks entrusted to them. ple of State liability is part of the tradition of all the legal systems, 22 it must be able to be applied also where the unlawful conduct consists of an infringement of a Community

liability generally. From this point of view, that Community law is duly implemented State liability and the resulting obligation to and, in particular, to guarantee individuals make reparation have ended up by becoming that the rights conferred on them are effec- a means of penalizing unlawful and/or, in tive, it is also unquestionable that, where any event, harmful conduct and thereby of rights claimed by individuals pursuant to achieving effective protection for individuals' rights. 22 — For an essential understanding of the relevant rules in the various Member States, see Schockweiler — Wivecnes— Godart: 'Le regime de la responsabilité extra- contractuelle du fait d'actes juridiques dans la Communauté 21 — Judgment of the French Tribuna! dus Confins of 8 February européenne', in Revue trimestrielle de droit européen, 1990, 1873 in Blanco, D. 1873. 11,20. p. 27 et seq., in particular at p. 54.

24 — I would recall that, as long ago as Case 380/87 Etlichem Base and Others y Comune di Cinisello Balsamo [1989] 15. The judgment in Francovich, which is ECR 2491, an Italian court asked the Court whether 'the bound to be the starting point for any dis- administration [is] required under Community law to pay compensation where an unlawful administrative measure cussion of State liability in damages for taken by it [unlawfully] infringes a right under Community law (diritto soggettivo comunitario) winch upon its incorpo- infringements of Community law, still con- ration in the Italian legal system, while retaining its Com- stitutes the Court's most precise response in munity character, takes the form of a protected interest (interesse legittimo)' (Report for the hearing, loc. cit., at this area. The case turned on the non- 2494 et seq.). Neither the Advocate General nor the Court answered that question, since it was absorbed into the answers given to other questions. I note, however, that in their observations both the United Kingdom and Italy argued that any right to compensation should be based solely on the substantive and procedural possibilities 23 — See sections 43 to 47 below. afforded by national law.

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be relied upon directly before the national graph 33). The Court also stressed that the court in order to seek the benefit provided possibility of obtaining redress from the for them by the directive. In particular, those Member State is 'particularly indispensable provisions did not identify the person liable where, as in this case, the full effectiveness of to provide the guarantee, and the State could Community rules is subject to prior action not be considered liable on the sole ground on the part of the State and where, conse- that it had failed to take transposition mea- quently, in the absence of such action, indi- sures within the prescribed period. viduals cannot enforce before the national courts the rights conferred upon them by Community law' (paragraph 34).

17. What was contemplated, therefore, was the means made available in order to rein- force the effectiveness of Community provi- sions through the effectiveness of the judicial More specifically, the Court inferred that supervision of the legal interests created by principle from two fundamental elements of those provisions and likewise in order not to the Community legal order. First, it pointed leave Member States' failures to fulfil obliga- out that 'the full effectiveness of Community tions without — inter alia, tangible — con- rules would be impaired and the protection sequences. of the rights which they grant would be weakened if individuals were unable to obtain redress when their rights are infringed 25 — Case 6/60 Humblet ν Belgium [1960] ECR 559, in particu­ by a breach of Community law for which a lar at 569. In that case, the reference was to Article 86 of the ECSC Treaty, which corresponds to Article 5 of the EC Member State can be held responsible' (para- Treaty.

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18. It should not be overlooked that state- ments relating to the obligation to provide 28 — Humblet v Belgium, cited in footnote 25. That case was concerned more specifically with securing the annulment of compensation for breaches of Community a measure by the Belgian State and the restitution of sums law of various kinds are to be found in the unduly levied; but the general wording used by the Court — 'make reparation for any unlawful consequences' — can Court's case-law, if only incidentally, since sufficiently clearly cover also cases of compensation for any loss or damage sustained.

The statement that the interest in continuing the proceedings even after the cedure adopted by the authorities of a Mem- breach at issue has been remedied may consist in 'establish- ber State is contrary to Community law, that ing a basis for the liability which a Member State may incur, in particular, towards individuais as a result of the breach of Member State is obliged, by virtue of Article its obligations' is to the same effect (judgment in Case 309/84 Commission v Italy [1986] ECR 599, paragraph 18). 86 of the ECSC Treaty, to rescind the meas- That dictum appears quite frequently:

writings: Pescatore, 'Responsabilité des États membres en Member State may incur, by reason of its failure to fulfil its cas de manquement aux règles communautaires', in Foro obligations, towards those to whom rights accrue as a result Padano, 1972, p. 10 et seq.; Kovar, 'Voies de droit ouvertes of that failure': see the judgments in Case 240/86 Commis- aux individus devant les instances nationales en cas de vio- sion v Greece [1988] ECR 1835, paragraph 14, Case lation des normes et décisions du droit communautaire', in C-361/88 Commission v Germany [1991] ECR I-2567, Les recours des individus devant les instances nationales en paragraph 31, and Case C-249/88 Commission v Belgium cas de violation du droit européen, Brussels, 1978, p. 245 et [1991] ECR I-1275, paragraph 41.

27 — For this aspect, see sections 27 to 32 below.

Essentially, in Francovich the Court did not confine itself to leaving it to national law to draw all the legal inferences from the infringement of provisions of Community law, but held that Community law itself imposed on the State an obligation to make reparation vis-à-vis individuals by defining, However, the case-law makes it clear that lia­ at least as regards the case of liability at issue bility has to be made out by the national in that case, the 'Community' conditions court 'in the context of the provisions of determining liability. national law on the liability of the State'. 31 Consequently, it is to the legislation of each Member State that reference is made in prin­ ciple in order to determine whether the State 32 — This stance was further emphasized in the judgment in Granaria, where the Court held that 'the question of com­ is obliged to compensate for damage caused pensation by a national agency for damage caused to private individuals by the agencies and servants of Member States, either by reason of an infringement of Community law or by an act or omission contrary to national law, in the appli­ cation of Community law docs not fall within the second paragraph of Article 215 of the Treaty and must be deter­ 30 — Judgment in Case 00/75 Russo ν AΙΜΑ [1976] ECR 45, mined by the national courts in accordance with the paragraph 9. national law of the Member State concerned' (judgment in 31 — Judgment in Russo ν ΑΙΜΑ, cited in the preceding foot­ Case 101/78 Granaria v Hoofdproduktschap voor Akker­ bouwprodukten [1979] ECR 623, paragraph M). note, paragraph 9.

24. The German, Netherlands and Irish Governments have argued to that effect in these proceedings. They reason that the Community legislature did not intend to establish a general system of Member State liability for infringements of Community 25. I do not consider that that view can be law. This, they maintain, is borne out in par- accepted. First, it is clear from the Court's ticular by the fact that the Member States did case-law itself, which has contemplated on

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several occasions financial liability on the caused by breaches of other types, particu­ part of the State for infringements of provi­ larly since the Court itself went on to hold sions with direct effect, that the possibility of that the conditions tinder which ... liability substantive protection does not indeed pre­ gives rise to a right to reparation depend on clude financial protection. " Whilst it is true the nature of the breach of Community that in those cases the Court merely held law giving rise to the loss and damage (para­ that it was for the Member State to make graph 38). reparation, under the rules of national law, for the damage caused by it, it is also true that the questions raised by the national courts in those cases were not concerned with the specific subject of the right to com­ pensation.

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and the Member States are still the decisive for instance to remove certain barriers and protagonists in the process for the formula- not to reintroduce them, the individual's tion of Community measures. Consequently, right to the elimination of those barriers to hold that liability exists for failure to fulfil which is derived therefrom is identified and obligations is tantamount simply to increas- made relevant, with the further consequence ing the effectiveness of the system and does that that right becomes capable of being not involve any activity supplementing — let asserted before the national court with a alone supplanting — the legislature. view to its being duly protected. In this way, therefore, the right arising out of the State's obligation by which the individual would have benefited if the obligation had been implemented properly and precisely is iden- tified and enhanced.

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gations. 30. It is further significant that the Court has reaffirmed the State's obligation to make reparation in the same terms already laid down in Francovich in a case involving pre- cisely the possibility of relying, in relations between private individuals, on the direct effect of provisions of a directive which was 31. In the final analysis, the individual's pos- ition directly created by a provision with 36 — So much so that direct effect has been from the outset, and direct effect binding on the State is used in continues to be, what is termed vertical, almost, as it were, order to guarantee full, effective protection in order to reinforce the idea that, rather than an intrinsic quality of the provision, it is a remedy for preventing the States from taking advantage of a failure to fulfil their obli-

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to the rights conferred by that provision. In Community provisions and hence complete the same way, the individual's right to com- judicial protection. 38 pensation is used to guarantee protection of the rights conferred by a provision which does not have direct effect in the sense that it cannot be invoked directly before the national court, yet also places an obligation on the State, in the case of a failure to fulfil an obligation on the part of the State. It is undeniable that this is a fundamental value of any legal system, whether Commu- nity or national. It is also undeniable that respecting that value may require guarantee- ing individuals, where necessary, the right to compensation for loss or damage sustained by reason of the legislative action or inaction of the public authorities, irrespective of whether or not the individual has other means, in addition to a remedy in damages, Consequently, the concept remains the same: of asserting an infringement of the legal pos- in order to implement a provision putting ition bestowed on him by Community law. the State under an obligation, the individual's legal position is used, on the one hand, in terms of its full, substantive content, on the other, in terms of its financial content. Even the result is the same: on the one hand, the failure of the Member State concerned to ful- fil its obligations is remedied; on the other, 33. Furthermore, the — now uncontested — the individual is guaranteed effective protec- affirmation of the State's obligation to com- tion of rights claimed under Community pensate the individual in cases of failure to provisions. The upshot is that the effective- implement a directive, hence in cases in ness of the provision is reinforced and hence which the infringement of the State's obliga- that of the system as a whole. tion (infringement of Articles 189 and 5 of the Treaty) can be linked only indirectly to a breach of a correlative right of the individual, implies — a fortiori — that the same protec- tion should be available where provisions are

directly infringed which guarantee the indi- 'must be fully and uniformly applied in all vidual a legal position appertaining to him- the Member States from the date of their self and can therefore be relied on directly entry into force and for so long as they con- before the national courts. tinue in force' 39 and that 'this consequence also concerns any national court whose task it is as an organ of a Member State to pro- tect, in a case within its jurisdiction, the rights conferred upon individuals by Com- munity law'. 40 Consequently, it is quite clear that a Community provision with direct effect confers a legal position appertaining to an individual on the individual as from its In this sense, the argument that it is not pos- entry into force and for as long as it contin- sible to 'go beyond' liability for failure to ues in force, irrespective of and even despite implement directives cannot be accepted, not any pre-existing or subsequent national pro- only on the grounds set out above, but also vision which may negate that legal position. because it ignores that it is the Francovich It therefore follows that the national court is situation itself which represents possibly the under a duty to provide full, effective judicial furthest which the case-law of the Court can protection of the rights conferred on the go (and not the nearest port of call). On individual by the relevant Community pro- close inspection, the Francovicb judgment vision. conferred a remedy (at least a financial one) where the remedy provided for was that laid down in Article 169, which does not afford direct protection for individuals. On the contrary, in cases of infringement of provi- sions having direct effect, the protection already exists and a remedy may be asserted directly by the individual, with the result 34. It is unquestionable that the infringe- that it is necessary only to accompany it by ment of a provision gives rise to an imbal- that something less, which is financial pro- ance consisting in the reduction or annul- tection. Consequently, in this case not even ment of the legal situation affected, in this that 'small' logical leap has to be made case that of an individual; it is also unques- which, in contrast, has to be made in order tionable that every legal situation appertain- to move from infringement of Article 189 to ing to an individual, every 'right', if you pre- a breach of the right potentially conferred on fer, has a substantive content and a financial the individual by the directive. content, which can generally be quantified. Guaranteeing the effectiveness of judicial protection in the case of an infringement of a provision conferring a legal position on an individual means securing the reinstatement of the content of the right impaired by the

In the final analysis, reinstating its financial 35. It does not seem to me that that conclu- content is something less, a minimum rem- sion may be invalidated by the fact that edy compared with full substantive reinstate- ment, which remains the optimum means of occasionally or often infringements of Com- protection. Annulment of an unlawful meas- munity law are attributable to the legislature. ure or setting aside a law which is inconsis- tent with a superior parameter of legality is necessary in a State governed by the rule of law. At times, however, this is not enough and it may be necessary, in order to render the protection real and effective, to bring I would point out in this connection that back into balance also the financial content Francovich, with which not even any of the of the right which has been impaired and States which have submitted observations in hence to ensure that the damage is made these proceedings have taken issue, makes no good. Consequently, reinstating financial distinction depending on whether the loss or balance in respect of the right which has damage ensues from an infringement attrib- been infringed is not something different or utable to omissions of the legislature or of something more, even less something novel. the executive. Certainly, that is no reason for Neither does it constitute something optional considering that a different conclusion which is sophisticated and remote in a legal should be reached as regards the circum- system which seeks and needs to be effective. stances under consideration here.

36. Admittedly, in the past the idea that the 37. It is true that when the legislature is State was not liable for acts or omissions of bound in carrying out its legislative tasks to the legislature was a widespread one. Its comply with particular limits imposed by rationale was that the sovereign could do no superior rules, there is no reason in general wrong or, according to a more modern, dem- legal theory for denying that the State may ocratic version, parliamentary sovereignty. In be bound to compensate for the damage other words, in so far as it was the highest caused by laws which exceed those limits. In expression of the sovereign power, the legis- those circumstances, liability for acts or lature fell in principle outside the general omissions of the legislature is not conceptu- rules governing liability in view, inter alia, of ally very remote or different from responsi- its democratic legitimacy. bility of the administrative authorities for legislative activity, which is upheld more or less everywhere today without difficulty.

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And that is not all. It is well known that, in State. More specifically, 'It is a principle of most legal systems, compensation is awarded international law that the breach of an in certain cases for the diminution of assets engagement involves an obligation to make sustained by individuals on account of a per- reparation in an adequate form. Reparation fectly lawful activity of the legislature, in therefore is the indispensable complement of that it was brought into being without any a failure to apply a convention and there is infringement of any enabling law: take, for no necessity for this to be stated in the con- instance, cases of nationalization and expro- vention itself. '43 priation for purposes of public utility. If, therefore, it is conceded that the sacrifice lawfully imposed on the legal and financial situation of individuals for the sake of the public interest must be accompanied by fair compensation, it would be curious, to say 39. Certainly, I am aware that, in interna- the least, not to consider that if such loss or tional law, the State's obligation to make rep- damage is produced by a legislative act aration for damage arises even where in prac- which is unlawful because it conflicts with a tice the compensation is aimed at restoring superior rule (constitutional, Community or the financial position of individuals vis-à-vis in any event prevailing over the act) there is one or more States and not, as is sought in no room for compensation. the cases now before the Court, directly vis- à-vis individuals.

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cally 'lay [ing] the foundations of an ever imposes upon individuals, the Member States closer union among the peoples of and the Community institutions. Europe', 44 inter alia through the achieve- ment of the common market. It follows that traditional instruments, those of interna- tional law in fact, prepared in order to pro- mote the due, precise fulfilment of obliga- tions on the part of the Member States have 41. It must therefore be acknowledged that, resulted and continue to result to a very in relation to the — Community — rules great extent in giving maximum, direct rele- governing the situation of individuals which vance to the legal position of individuals. are recognized as prevailing over domestic The reason for this is that the obligations of rules, a claim that there was a general the Member States and Community institu- absence of liability on the part of the tions are directed above all, in the system national legislature would be without justifi- which the Community system has sought cation. Instead, the very idea of liability of and sets out to be, to the creation of rights of the State qua legislator in relation to the individuals. This is the picture drawn by the obligations imposed by Community law, and authors of the Treaty and consolidated by hence entered into contractually by the the Community legislature. States themselves or brought into being sub- sequently by procedures laid down for the purpose, is perfectly consistent with — and hence inherent in — the fundamental and typical characteristics of the Community legal order.

fulfil the conditions defined above in pro- tedly, in cases of this type the origin of liabil- ceedings before the national courts seeldng ity is invariably to be found in unlawful con- an order against the administrative authori- duct attributable to the legislature, that is, in ties, and yet to hold that those authorities are a law incompatible with Community law. under no obligation to apply the provisions However, it is obviously for national law to of the directive and refrain from applying determine whether attributability to the provisions of national law which conflict administrative authorities is an 'indispens- with them' 46 implies in fact that even the able' procedural and/or substantive expedi- administrative authorities are under an obli- ent in order to get the legislature to answer gation to guarantee protection of rights or the correct mode of proceeding. claimed by individuals under Community provisions with direct effect.

of Community law. In this connection, moreover, it should be made very clear that the problem of determining a judicial rem- The French Conseil d'État (State Council), edy which is not already known to or per- for example, seems to have taken that mitted by the judicial systems of the Mem- approach in inferring State liability from the ber States is not insuperable or a new breach (faute 47) of the administrative problem: this is so on account of the specific authorities, at least where they exercised a factors under consideration in these proceed- discretion conferred on them by a domestic ings, and also because the problem has law contrary to Community law. 48 Admit- already been dealt with by the Court in a number of historic, uncontested passages in

Indeed, the rule often referred to is that 'toute décision illégale est en principe fautive'. In This is testified to, in particular, by cases short, in the French system the difference between respon- sabilité pour faute and responsabilité sans faute does not such as Simmenthal 49 and Factortame I, 50 in correspond so much to that between fault-based liability and strict liability, but, albeit only fairly roughly, to the dis- both of which the Court was asked whether tinction between liability for unlawful acts and liability for a particular judicial remedy, which the lawful acts.

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the national judicial system, could or had to national judicial system ·— namely the power be conferred and implemented by virtue of to suspend by interim measure a law sus- Community law. pected but not yet found to be incompatible with Community law •— such a power could be based on Community law. As in Simmen- thal, the Court ruled that an obstacle to the effective judicial protection of a right claimed under Community provisions by an individ- ual had to be removed by the national court and that hence any measure providing for that obstacle had to be set aside. 44. What was in question in Simmenthal was the Italian court's power itself forthwith to disapply a national provision conflicting with Community law without having first to obtain a prior ruling from the Constitutional Court that it was unconstitutional. By basing on Community law the national court's power/duty to disregard the provision con- 45. In the final analysis, the Member States' flicting with Community law, a power/duty autonomy in relation to judicial remedies for unknown to the national system — indeed the infringement of rights conferred by the there was express, repeated case-law of the Community system, albeit affirmed by the Constitutional Court to the contrary —, the Court, 5 1is subject to considerable deroga- Court introduced a derogation from the tions: in particular, whenever it is essential to Member States' autonomy in relation to derogate in order to ensure the proper means for the judicial protection of rights implementation of Community law and cor- conferred on individuals by Community law. rect, effective protection of the rights Moreover, it is remarkable — also for the claimed by individuals under Community present proceedings — that in Simtnenthal law. the Court considered intolerable, not the absence of protection, but even a mere delay in protection, thereby giving pre-eminence to that aspect over the advantages in terms of certainty and finality which the system based on the assessment of constitutionality as hitherto operated undoubtedly possessed.

bunal has jurisdiction to give this protection and, for this purpose, to decide how the individual position thus protected is to be 52 classified', that ambiguity disappears in Bozzetti ν Invernizzi. In that judgment, the Court reaffirmed the obligation to ensure that individual's rights are effectively pro­ tected 'in each case' and that, within those precise limits only ('subject to that reserva­ tion') 'it is not for the Court to intervene in Faced with a large variety of solutions in the order to resolve any questions of jurisdiction Member States' legal systems, the Commu­ which may arise, within the national judicial nity legislature acted, not only with regard to system, as regards the definition of certain aspects relating to substantive, hence real, legal situations based on Community law'. 5 3 protection, but also by providing for a sys­ The qualification 'subject to that reservation' tem — which was certainly novel to a good is manifestly the most relevant key to the many national systems — of damages to interpretation of this passage inasmuch as it compensate for the injury caused by unlaw­ marks out the limits to the autonomy of the fulness of contract award procedures in the national systems, and it is no accident, to my event of the absence or insufficiency of real mind, that the same qualification is set out in protection. 5 6 paragraph 42 of Francovich.

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provisions is firmly tied to the result sought which liability exists and, in parallel, the by Community law. 57 individual's right to compensation.

Where Community provisions are infringed In the absence of specific Community provi- by Member States, the result which should sions governing the area, the problem lies in be attained, as far as is relevant for present defining the conditions determining State lia- purposes, for the proper operation of the bility and in actually being able to ascertain Community legal system as a whole is that when they are present. In addition, careful of ensuring, assuming that specific precondi- consideration should be given to the practi- tions are satisfied, that the same legal situa- cality of the possible solutions. tion is restored, at least in terms of its finan- cial implications, as would have obtained if the Member State had not failed to fulfil the obligation imposed upon it by Community law.

49. Certainly, Community law could very well, as some States have proposed in these proceedings, confine itself to affirming that liability exists in principle and that there is II — Conditions for the State's obligation to an obligation to compensate, whilst leaving it pay compensation to national law to determine the precondi- tions and lay down the detailed substantive and procedural rules.

which arose precisely because the applicable national law that the State is bound to make national law did not allow any compensation reparation for the consequences of the dam- to be granted in the cases before them. age caused, the Court itself identified and Again, in any event, it is only too obvious defined the conditions 'sufficient to give rise that a mere reference to national law would to a right on the part of individuals to obtain be in danger of endorsing a discriminatory reparation, a right founded directly on Com- system, in so far as for a given infringement munity law' (paragraph 41). The Member Community citizens would receive different State to which the failure to implement a protection, some none at all. directive is attributable is therefore bound in every case to make reparation for the loss or damage sustained by the individual, provided that the conditions laid down by the Court are fulfilled.

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direct effect, the conditions set out in Fran- to the manner in which those preconditions covicb may not be necessary and/or sufficient are defined and the criteria for ascertaining to give rise to a right to reparation. Never- whether they are met. theless, in such cases too, it will be necessary to identify what conditions are sufficient in order to enable an individual to obtain repa- ration. It is scarcely necessary to point out that the sufficient conditions, as is clear from the Francovich judgment itself, relate to the 54. For present purposes, therefore, it is nec- substantive preconditions for liability. essary, not so much to identify the general conditions for liability, which in point of fact are practically the same in the various legal systems, but to establish the criteria for determining whether they are met or, if you prefer, those criteria which will enable a common definition to be found of the condi- 53. A rapid appraisal of the rules in force in tions in question. the national legal systems on liability on the part of public authorities shows that it is commonly accepted at least that the principle should be that the entity to which the event which gave rise to the loss or damage is To that end, I consider that I should dwell attributable is answerable for that event, pro- initially on the conditions which the Court vided that there is causal link between the considers sufficient in cases of failure to event and the loss or damage. implement a directive in order to give rise to a right on the part of individuals to compen- sation.

Finally, there must be a causal link between the need for the right resulting from the the breach of the State's obligation and the directive to have a precise content, that is to damage suffered.' say, its subject-matter must be capable of determination, with the result that this con­ dition should again be regarded, in principle, as being satisfied by Treaty provisions with 60 direct effect. It is worth stressing at this juncture that in Francovich, as in Joined Cases C-178/94, C-179/94, C - 1 8 8 / 9 4 , A first question needs to be asked: are those C-189/94 and C-190/94 Dillenkofer and conditions necessary and sufficient also in a Others, on which I am also delivering an case where the loss or damage was caused by Opinion today, the content of the right con­ infringement of a Treaty provision having ferred on the individuals coincides exactly direct effect? and precisely with their pecuniary claims asserted by virtue of that same right under the relevant Community provisions and hence with the loss for which damages may 61 be payable. Of course, this does not mean that the condition in question has to be 56. Leaving aside for the moment the ques­ interpreted as meaning that whether damages tion of the causal link, which is compulsory may be awarded in respect of the damage for tortious liability, I would observe ini­ sustained by the individual is dependent on tially that the first condition, to the effect whether the exact content of the pecuniary that the result prescribed by the directive loss sustained by the individual is capable of should entail the grant of rights to individu­ being identified on the basis of the actual als, is concerned with identifying the legal provision infringed. In contrast, it is enough position of the individuals whose infringe­ for the infringement of the provision in ment may give rise to compensation. Having question, which confers on the individual a regard to the relevant case-law, it must be right whose subject-matter can be precisely considered that the Court intended by those identified, to have affected the injured par­ words to refer generally to all individual ty's financial interests. If this were not so, in legal positions protected by Community law; fact, only claims in cases in which the aim of hence — by definition — this condition is the provision infringed was precisely to con­ always met in the case of provisions having fer a 'pecuniary' right on the individual direct effect. would sound in damages.

To that end, it is worth examining the rea- sons which prompted the Court to confine Accordingly, in those circumstances, since itself to those conditions and not also to the Court had first found that the directive specify, for instance, the criteria for holding could not be relied on directly by individuals that the relevant infringement of Commu- before the national courts, it merely indi- nity law involves unlawful conduct such as cated that, for the purposes of the obligation to cause the State to incur liability. In Fran- to make reparation of the Member State in covicb, as I have already said, the Court breach of its obligations, it must be possible referred expressly to only one of the classic to identify a precise, exact right on the part preconditions for liability: the causal link. In of the individuals. contrast, it provided no further clarification about the unlawfulness of the conduct of the perpetrator of the loss or damage and the actual existence of the loss or damage, the national court not having been asked to carry out any review in that regard.

It does not seem to me that this was the result intended by the Court or by Commu- nity law. Moreover, it would not actually be In the final analysis, the fact that the criteria reasonable, given that, as I have already men- required by Community law in order for the tioned, in all the legal traditions liability for State to incur liability are not clearly defined legislative activity on the part of the public in Francovich is closely connected with the authorities is limited in various ways. What particularly straightforward nature of that is more, the Court's own case-law on the case. The Court's very statement that the non-contractual liability of the Community conditions under which State liability gives institutions on account of their legislative rise to a right to reparation depend ‘on the activities takes a different line. nature of the breach of Community law giv- ing rise to the damage’ should therefore be construed as meaning not only that the gen- eral conditions for liability to be incurred vary according to the type of breach, but also that the particular characteristics of a specific type of breach, such as failure to implement a directive within the prescribed period, may be such as not to require 2. The case-law on the second paragraph of detailed consideration as to whether one or Article 2D more of the conditions in question are present.

That point of view does not seem completely 63. To that end, I would call to mind as a baseless, bearing in mind, first, that the sec- preliminary point that the Court has consis- ond paragraph of Article 215 refers, for the tently held that 'the liability of the Commu- purposes of the reparation of damage caused nity on account of its legislative powers by Community institutions in the perfor- depends on the coincidence of a set of con- mance of their duties, to the general princi- ditions as regards the unlawfulness of the act ples common to the laws of the Member of the institution, the fact of damage and the States and, secondly, that consequently that existence of a direct link in the chain of cau- case-law could and should constitute, regard sality between the act and the damage com- being had to the absence of uniform rules in plained of'. 64 As can be seen, the substantive this field, a useful frame of reference for preconditions are the same — indeed could common rules on State liability. not be different — also in the case of liability on the part of the Community institutions.

62. The Court does not seem — or at least not at first sight and unlike that which However, the case-law has identified — in particular with regard to the unlawfulness of Advocate General Mischo proposed in his the conduct imputable to the institutions — Opinion in Francovich — to have intended conditions which are so restrictive as to to make State liability hinge on the same make it extremely difficult actually to obtain restrictive conditions required by the case- damages against a Community institution. 65 law in order for the Community to incur lia- bility.

Unquestionably, it would be more correct to apply different rules on liability depending The application of that approach, however, on whether the activity in question was more in a good few cases has made for perplexity. particularly legislative or in the nature of executive activity, given that, in principle, the discretion available to the Community insti­ tutions differs significantly in the two cas­ es. 6 8 More generally, the requirement for vir­ tually arbitrary conduct in order for non­ contractual liability on the part of the 65. The limits of Community liability are Commission to arise is justified where the relied upon and applied not only in relation Community has a broad discretion — as in to legislative measures which presuppose the the field of agricultural policy —, but is not existence of a broad discretion on the part of justified where, in contrast, the conditions the relevant institution, but also in relation for the exercise of the discretion conferred to measures which fall within the ambit of on the institution are clearly and precisely implementing legislation (typically Commis­ defined. 6 9 In the latter case, the infringement sion implementing regulations). 6 7 Essen­ tially, the Court has applied the restrictive criteria formulated in assessing the Commu­ 68 — See Advocate General Biancarelli's Opinion in Case T-120/89 Stahlwerke Peine-Salzgitter ν Commission [1991] ECR II-279, at II-340, in which he stated that, as far as lia­ bility was concerned, what was important was ' — essentially — the margin of appreciation available to the 66 — Judgment in Joined Cases 83/76 and 94/76, 4/77, 15/77 and Commission when it adopts its decision and the more or 40/77 HNL ν Cornial and Commission [1978] ECR 1209, less complex economic context in which the decision is paragraph 5. adopted'. 67 — See, for example, the judgment in Joined Cases 194/83 to 69 — This issue was recently raised and discussed before the 206/83 Asteris ν Commission [1985] ECR 2815, paragraphs Court of First Instance in an anti-dumping case in which 21 and 22, in which the Court held that the Community the applicant argued that the question of Community liabil­ had incurred no liability for the erroneous fixing by the ity should be assessed differently depending on whether the Commission pursuant to a Council regulation of aid for infringement imputed to the institution was attributable to tomato concentrates. See also the judgment in Case a breach of the rules inherent in the assessment of complex C-152/88 Sofrimport ν Commission [1990] ECR I-2477, in economic facts or, as in that case, to a breach of procedural which the Community was held hable on account of an rules binding on the institutions. The Court, however, dis­ essentially individual Commission regulation implementing agreed, confining itself to the lapidary statement that anti­ another Commission regulation which in turn implemented dumping measures constitute legislative action involving a Council regulation, and the rigid criteria used for legisla­ choices of economic policy (judgment of 18 September tive measures involving choices of economic policy were 1995 in Case T-167/94 Nolle ν Council and Commission applied. [1995] ECR II-2589, paragraphs 44 to 52).

66. In sum, whilst, according to Francovich, loss or damage caused by a provision of national law incompatible with a Commu- nity provision must be held to be amenable to an action for damages, it is not easy to understand why damages should be recover- 67. In the light of the foregoing, I consider able for the loss or damage ensuing from a that there is no reason for applying different Community measure which is incompatible criteria — naturally in like situations — with the same Community provision only if depending on whether the infringement of the restrictive conditions laid down by the Community law in question is attributable Court (until now) are satisfied. 71 Moreover, to a State or a Community institution. Con- in a Community governed by the rule of law, versely, different situations can and must lead which aims to pay increasing attention and to different conclusions as regards the crite- to be increasingly sensitive to the protection ria employed to find whether the precondi- of individuals, also from the point of view of tions for liability are satisfied, whether the compensation, at least equal attention should alleged liability be on the part of the Mem- be paid — as a number of parties have ber States or the Community institutions. argued —• to cases in which the loss or dam- age suffered by the citizen arises out of an unlawful act or omission attributable to the Community institutions themselves. 72

69. The appraisal set out below will there- Conversely, Member States should be more fore take into consideration, as the point of readily held liable, as in the case of the Com- reference for determining the obligation on munity institutions, wherever the infringe- Member States to make reparation, inter alia ment is not coupled with the exercise of a the conditions identified by the Court in its broad discretion. case-law on Article 215. Of course, this will not involve a 'blind' transposition of those (restrictive) conditions to the sector under consideration here. I am not overlooking that, in applying Community law, the Mem- ber States generally have very limited discre- tion, with the result that the conditions in question relating to this situation are likely 68. In the final analysis, what should be to cause liability more readily to be incurred. attained is a system of differentiated liability At the same time, I consider that it cannot be depending on whether or not the Commu- ruled out that any lack of precision of the nity institutions (and the national authori- obligation on the Member State may be such ties) have a broad discretion. To my mind, as to necessitate the application of those this is the most correct and consistent man- same restrictive criteria, even though it does ner of bringing about the essential harmoni- not have a significant margin of discretion in zation of the preconditions for liability, in so the sector in question. far as it would be strange, to say the least, to hold Member States liable, on equivalent facts, for infringements of Community law on different (less strict) conditions than those which the Court applies to liability on the part of the Community institutions.

71. Defining the limits of liability is prima- rily and essentially linked with the definition of the unlawful conduct. It is undisputed that the harmful conduct — here the legisla- tive measure — must conflict with the rules of the system. In order, however, for such unlawfulness to give rise to liability, and at the same time damages, the individual States employ differing concepts, 74 whose meaning does not always correspond exactly and whose practical application may therefore result in different solutions being applied in respect of the infringement of a given provi- 72. In the Court's case-law on non- sion. This confirms, if confirmation was contractual liability it has been consistently needed, that it is necessary — particularly as held that if the damage complained of results regards the event which gave rise to the dam- from a legislative measure involving choices age — to establish the criteria which will of economic policy, the fact that the measure enable a common definition to be achieved. in question is invalid is not sufficient to cause the Community to incur liability. In the case of measures of this kind, 76 Community lia- bility cannot arise unless a sufficiently serious breach of a superior rule of law for the pro- tection of the individual has occurred. 77

As regards legislative activity of the public authorities, a first attempt has been made by 75 — Recommendation R (84) 15 of 18 September 1984. 76 — But, as I have already said, under the case-law in question it is as if all Community legislative measures involved choices of economic policy. 74 — To take įust a few systems, suffice u ίο mention illecito in 77 — Sec, in particular, the judgments in HNI. v Council and Italian law, the French faute, the German Verschulden and Commission, cited in footnote 66, paragraph 4, and in the English concepts of breach of a duly of care or misfca- Joined Cases C-101/89 and C-37/90 Mulder and Others v Sitnce in public office. Council and Commission [1992] ECR I-3061. paragraph 12.

73. Having said that, I would point out that all the States which submitted observations As I have mentioned, in the relevant case-law in these proceedings ruled out an exact that criterion is defined in the following match between the reasons for the invalidity terms: 'In the context of Community provi- of the measure and the preconditions for lia- sions in which one of the chief features is the bility, arguing that not every breach of Com- exercise of a wide discretion indispensable munity law is capable of causing the State to for the implementation of the common agri- incur liability and, as a result, of giving rise cultural policy, the Community can incur to an obligation in damages in favour of liability only in exceptional cases, namely individuals. where the institution concerned manifestly and gravely disregarded the limits on the exercise of its powers', 78 provided of course that the breach in question was of a superior rule of law for the protection of the individ- ual.

In my view, when it comes to Treaty provi- sions with direct effect, which is what we are concerned with here, some additional speci- fication is needed. In particular, it must be made clear that the fact that such provisions are occasionally or often designed to protect other — ex hypothesi general — interests as 77. Indeed, if the standpoint of the injured well cannot be regarded in itself as prevent- party is taken, it is only too obvious that any ing them from being for the protection of infringement of a Community provision individuals. which confers a legal position on him as an individual must be capable of giving rise to compensation. Consequently, infringement of a provision of a regulation cannot result for the individual in consequences differing from those arising out of an infringement of a Treaty provision; it seems to me even less appropriate to draw distinctions between actual provisions of the Treaty by deciding, 76. Next, as regards the requirement that the for example, that only breaches of some of provision infringed should be a superior rule, them, that is to say, the fundamental provi- it is scarcely necessary to point out that if a sions and not the others, are capable of caus- legislative measure is unlawful, this means — ing the Member State in question to incur by definition — that it conflicts with a liability.79 higher-ranking provision. Admittedly, that expression is used in the case-law on Article 215, not to penalize every breach of limits imposed by superior rules, albeit for the pro- 79 — It would still be necessary to specify which provisions also warrant protection in damages on the ground of their scope tection of individuals, but solely breaches of and in order to secure their effectiveness: is the prohibition of discrimination on grounds of residence, which is indubi- general principles of the legal system and tably fundamental for the purposes of ensuring effective hence, in the final analysis, to categorize the freedom to supply services, as fundamental as or less fun- damental than the prohibition of discrimination on grounds breach in question as serious. of nationality?

In the final analysis, I consider it sufficient, 79. This means that, even in the case of pro- from the point of view of the aspect consid- visions with direct effect, the State may be ered so far, that the provision infringed guilty of breaches which, not by reason only should confer on the individual a right of their having direct effect, must be catego- whose content is capable of determination rized as manifest and serious. I shall explain and precise. It is hardly necessary to add that what I mean using an example based on two the same should be true of liability on the provisions having direct effect. The prohibi- part of the Community institutions. tion of discrimination on grounds of nation- ality (Article 6) identifies precisely and exactly the individual's right, which is ·— very simply and without any possible alter- native — the right not to be discriminated against. The same cannot be said of the pro- vision prohibiting quantitative restrictions and measures having equivalent effect (Arti-

nity law itself. The upshot is that the State unlawfulness into liability, the discretion fac- measure in question, which is in principle tor can and must be the decisive element, incompatible with Community law, may irrespective of the rank of the provision well be taken outside the scope of Article infringed (Treaty or secondary legislation, at 30 or fall within the exceptions provided for any rate a provision which takes precedence in Article 36. To this end — and it is scarcely over national law) and of the measure (legis- necessary to stress this — it may be neces- lative or executive) which infringes it.

portant. The upshot is that in such cases the limits set to the action of the States are not Furthermore, it is worth pointing out that, clearly defined for that very reason, with the for present purposes, it is not decisive in result that the situation is not very different itself whether or not the States have a wide substantively from that in which the States discretion in a given sector, but rather what have a significant margin of discretion. is decisive is the breadth of the margin of

81. Where, in contrast, Member States have 80. If the question is seen in those terms, it a more or less wide discretion or the Com- has to be acknowledged that there will be munity obligations imposed on them are not State liability in principle whenever the State clearly and precisely defined, the same solu- is constrained under Community law to tion will have to be adopted only where the achieve a precise result. This is precisely the limits set to their action have been manifestly case, as already held by the Court in Fran- and gravely disregarded. Obviously, this will covich, where there is a failure to implement be the case where the provision assumedly a directive within the prescribed period, pro- infringed is clear, perhaps in the way vided, of course, that the other conditions set described in CILFIT81 or because it has out by the Court are fulfilled. But this is also already been interpreted by the Court with the case with all other provisions, including regard to identical or, in any event, similar those of the Treaty, that are confined to facts 82 no matter whether the interpretation imposing on the Member States precise, was given in a preliminary ruling or in a clearly identified obligations to refrain from judgment pursuant to Article 169. some conduct (suffice it to mention the pro- hibition on the introduction of new customs duties laid down by Article 12 and, more generally, all the standstill clauses) which concurrently give rise to a right for individ- uals.

these proceedings, there is no reason for Consequently, in such cases the individual malting an action for damages dependent continues to have the possibility of relying upon the Court's having made a prior decla- on the substantive protection of the legal ration that the State in question has failed to position which may be conferred upon him fulfil its obligations. In this connection, by the provision in question. Of course, in regard must be had to the Commission's dis- the event that the Member State does not cretion in deciding whether or not to initiate remedy reasonably quickly the infringement infringement proceedings, which would which has been found in the meantime, the reduce, without any review, the ability of injured party may indeed bring an action for individuals to obtain compensation. More- damages. over, as the Court itself has held 'the rights accruing to individuals derive, not from that judgment [declaring that the Member State failed to fulfil its obligations], but from the actual provisions of Community law having direct effect in the internal legal order.' 83

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84. In the final analysis, I consider that, for mental or psychological factor, which char- our purposes, there can be considered to acterizes — as being at fault or negligent or have been a manifest and serious breach in any sense traditionally attributed to the where: expression fault ·— the conduct of the entity to which the infringement and, with it, liabil- ity is attributed. From this angle, fault is therefore a factor which is added to the infringement of the enabling provision as a subjective element, by categorizing the con- (a) obligations whose content is clear and duct which results in the breach, but not precise in every respect have not been directly the breach as such or the legislative complied with; measure giving rise to the damage.

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86. Despite this, it must be acknowledged legality which those authorities are bound to that most national legal systems still refer to observe, has ended up by losing every sub- fault as the basis for liability, 86even where, jective connotation. 89 essentially, it is equated precisely with the unlawfulness of the measure. I am thinking, in particular, of the French system, in which the ruling principle is that 'toute illégalité constitue par elle-même une faute' (any ille- gality constitutes fault per se) 87and of the approach of the Italian Corte di Cassazione 87. To put it another way, the search for (Court of Cassation), according to which 'as fault has shifted from the perspective of a far as unlawful measures are concerned, fault person to that of the 'organization', with the may be found in the infringement per se of result that even where it does not coincide the provisions which was brought about by simply with the unlawfulness of the measure, the adoption and implementation of the it is in any event connected with the content measure'. 88 of the provision infringed, inasmuch as it attributes relevance to those rules of conduct with which the administration is bound to comply in performing its institutional tasks. In particular, importance attaches to the fact that the action of the administration is con- strained by the limits of legality imposed on it.

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criteria. 9 1In sum, inthe Member States 89. To my mind, it is obvious that if the themselves fault liability ends up being enabling provision in question is one allowed in only by virtue of a series of intended to achieve a particular result, there devices; in any event, it is becoming increas- is no room for making the emergence of a ingly objectified, that is to say, it is decreas- situation of liability depend on the existence ingly or not at all coupled with a subjective of a subjective connotation of the conduct of component. the State which may be described as fault in the sense defined earlier. The infringement — the unlawful act — crystallizes at the time at which the State failed to achieve the result sought by the provision. There will then be liability on the part of the State, that is to say, strict or no-fault liability or whatever term one wishes to employ.

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I would therefore reiterate my conviction, as In my view, those conditions should be described earlier, that the conduct of the regarded as irrelevant for present purposes, State in breach of Community law must be even though they have often been applied in assessed in the light of objective factors for the Court's case-law on non-contractual lia­ the purposes of the obligation to make repa­ bility. 9 3 ration.

93. Whilst it is true that under the law of (b) Existence of the damage some Member States there are cases in which the right to reparation depends, among other things, on the seriousness of the damage, on its abnormally serious nature and on the spe­ cial nature of the damage in regard to the injured parties, it is also true and worth stressing that that approach is employed for compensation for damage caused by lawful acts. 9 4 Accordingly, the terms of the prob­ 91. The damage must be real, that is to say, lem are not, and could not be, the same as certain and actual. Moreover, those are the those arising in this case. requirements generally insisted upon by the national legal systems, and it will be for the national court to find whether they are satis­ fied in the actual case.

ited size. I consider therefore that the idea of of the individual, as to the reasons for which exempting liability for minor loss or damage the person with the right to compensation in this case would be a bad one. should be given satisfaction on the basis of the number of other persons with the same right which has been breached. 95

94. In this connection, I would first observe that the argument against accepting the crite- rion of the seriousness of the financial dam- age is that an unlawful measure involving a manifest and serious breach contrary to a provision of the system and with the rights of the individual guaranteed thereby, must 95. In short, it does not seem possible to me give rise to compensation in order to restore to ignore the fact that liability for unlawful the balance altered by the unlawful act or measures and compensation for lawful mea- omission, irrespective of the scale of the sures are two radically different creatures. It damage. Moreover, if a common approach to is certainly not without significance that the liability for unlawful acts or omissions of the condition regarding the seriousness and the public authorities emerges from the laws of special nature of the damage was laid down the Member States, that approach consists in in the French case-law only for damage aris- not making compensation depend on the ing out of lawful legislative measures. scale of the damage.

96 — Judgment of 23 March 1984 in Alivar, AJDA, 1984, p. 396, including a note by Genevois. This case was concerned with a claim for damages for failure to grant an export licence for potatoes introduced by a general administrative measure, which the Court of Justice subsequently held to be contrary to the prohibition of quantitative restrictions on exports set out in Article 34 of the Treaty. The Conseil d'État held that all that there could be in that case was responsabilité sans faute, upholding the judgment at first Obviously, it will be for the national court to instance, which accepted the damages claim without even establish whether this condition is fulfilled. inquiring whether the damage was abnormal or special, but found that there was liability on account of an unlawful act For present purposes, however, I am minded (pour faute). See, in addition, the Opinion of Commissaire du Gouvernement Laroque in the judgment of the Conseil to make a few observations with regard to a d'État of 28 February 1992 in Arizona Tobacco Products, cited in footnote 48, in which it is considered that infringe- break in the chain of causation from two ments of Community —and international —provisions points of view. First, it is worth examining give rise to a third system of liability which, unlike respon- sabilité sans faute, does not require the damage to be excep- whether it is possible to consider that under tional in order for a right to compensation to arise. Community law the causal chain may be 97 — See on this subject Simon, 'Le Conseil d'État et les direc- broken by contributory causes or by negli- tives communautaires: du gallicanisme à l'orthodoxie?', in Revue trimestrielle de droit européen, 1992, p. 265 et seq. gent conduct on the part of the injured 98 — This conclusion is also borne out by the Council of party; secondly, this matter raises, albeit Europe's recommendation of 18 September 1984, to which I have already referred. Principle 11(1) of that recommenda- under various guises, the question of the tion expressly covers reparation of damage caused by lawful acts by stating that 'reparation should be ensured if it ancillary nature of a damages claim in rela- would be manifestly unjust to allow the injured person tion to other national judicial remedies. alone to bear the damage, having regard to the following circumstances: the act is in the general interest, only one person or a limited number of persons have suffered the damage and the act was exceptional or the damage was an exceptional result of the act'. For a different view, see Advocate General Léger's Opinion, cited earlier, of 20 June 99 — Indeed, it would appear from the judgment in Mulder and 1995 in Case C-5/94 Lomas, judgment of 23 May 1996, Others, cited in footnote 77, that the Court has already ECR I-2553. revised, albeit impliedly, its case-law on this point.

100. If the damage could be avoided by the Consequently, the injured party is under a injured party by means of domestic judicial duty to act diligently, a duty which consists remedies (for example, by contesting the in taking steps so as to avoid the damage or, prejudicial measure incompatible with Com- at any rate, to reduce its scale. 101 munity law by invoking vis-à-vis the public authorities a right conferred by a provision having direct effect embodied in a directive), it is permissible to ask whether failure to have recourse to such remedies does not break the necessary chain of causation between the breach and the damage. 99. Moreover, this is the purport of the Council of Europe's aforementioned recom- mendation of 18 September 1984, Principle III of which reads as follows: 'If the victim has, by his own fault or by his failure to use legal remedies, contributed to the damage, the reparation of the damage may be reduced In other words, the question arises as to accordingly or disallowed'. whether or not failure to use in time reme- dies challenging the contested measure pre- cludes the possibility of claiming that the State 'in breach of its obligations' is liable. In 100 — Judgment in Mulder and Others, cited in footnote 77, this sense, apart from being a condition for paragraph 33. 101 — Por an application of that principle in the case-law on liability, the prior initiation of substantive Article 215, see, inter aha, the judgment in Joined Cases remedies could well — equally properly — 5/66, 7/66 and 13/66 to 24/66 Kampffineyer ν Commission [1967] ECR 245, in particular at 265 et seq.; sec also the constitute a requirement for the admissibility judgment in Case 238/78 Ireks-Arkady ν Council and Commission [1979) ECR 2955, paragraph 14. of the action for damages.

101. That problem is resolved in different imposed in view of the specific objective ways in the various Member States, on thereof’.1 0 6 the basis of three discernible different approaches. The first consists in making the various possible actions completely autono­ mous and hence in leaving it to the interested party to choose the one which he deems most appropriate in order to protect his interests. 1 0 2 The second makes an action for damages dependent on bringing an action for 102. Those dicta show, in particular, that the annulment. 1 0 3 The third is more closely con­ autonomous nature of the action for dam­ nected with the causal link, in so far as it ages satisfies needs by way of guarantee, allows the administration not to answer for which needs are connected with the various such damage as the person concerned could requirements relating to locus standi for have avoided by employing substantive rem­ bringing an action for annulment as opposed edies, in particular an action for annul­ to an action for damages. Under the system ment. 1 0 4 of protection provided for in the Treaties, individuals may not challenge acts of a gen­ eral nature and it is very difficult for them to obtain a ruling that the Community institu­ tions have failed to act. The fact that the action for damages has been held to be autonomous therefore enables that to be obtained by means of damages which is not obtainable or, in any event, has not been able As we know, after initially taking the view to be obtained by means of an action for that the action for damages was ancillary, 1 0 5 annulment. subsequently the Court's case-law on non­ contractual liability firmly adopted the stance that such actions were autonomous and could be brought irrespective of the availability to the applicant of other judicial remedies. In particular, the Court has held that ‘the action for damages under Article 178 and the second paragraph of Article That this is the rationale of holding that the 215 of the Treaty was established as an action for damages is autonomous is borne autonomous form of action with a particular out by the fact that it is not available in those purpose to fulfil within the system of actions few cases in which private persons can actu- and the exercise of it is subject to conditions

103. Essentially, the criterion underlying the 104. This means, as far as it is relevant to case-law laying down the rules on actions for these proceedings, that the Member States non-contractual liability has remained con- cannot reasonably be debarred from malung sistent, apart from the formulas adopted actions for damages dependent on a previous from time to time with regard to domestic action for annulment having been brought, if remedies (preliminary reference on validity and in so far as the aforementioned con- in connection with a challenge to the domes- dition is also prescribed for similar domestic tic implementing measure) or direct chal- claims. lenges (action for annulment or for failure to act). The aim is to prevent actions for dam- ages from being utilized in order to pursue the same result which could — effectively, of course — have been attained by means of a different action. Hence, an action for dam- ages cannot be the means of neutralizing the effects of a harmful measure where that objective could also be achieved through a normal action for annulment, whether direct Moreover, the idea that the action for dam- or national via a reference for preliminary ages is ancillary in the case of loss or damage ruling on validity to the Court. This is sub- caused by infringements of Community law ject to the sole reservation that the (in partic- seems — at least at first sight — to have ular, national) judicial remedy must in any already received the Court's seal of approval. case be capable of securing effective protec- In Wagner Miret, the action for damages was tion. portrayed as the individual's last resort, that is to say, the route to take when it is impos- sible otherwise to attain a worthwhile result, 107 — Sec cite judgment in Case 175/84 Krohn v Commission not even through the interpretation of the [1986] ECR 753, in which the Court held that an applica- national provisions in question by the tion is inadmissible 'where an application for compensa- tion is brought for the payment of an amount precisely national court in conformity with the rele- equal to the duty which the applicant was required to pay vant Community provisions. 109 under an individual decision, so that the application seeks in fact the withdrawal of that individual decision' (para- graph 33). 108 — See, for instance, the ludgments in Case 346/87 Bossi v Commission [1989] ECR 303 and in Case T-27/90 Latham v Commission [1991] ECR II-35. 109 — Judgment cited in footnote 37, paragraph 23.

The interpolation 'subject to that reserva­ tion' manifestly means that, in relation to the rules on the reparation which is due under Community law itself and arises on the con­ ditions laid down by Community law, the 107. In that connection, the Court in Fran­ relevant rules of national law are applicable covich emphasized a principle which it had only in so far as they are necessary in order already repeatedly expressed in general to govern the other conditions relating to the terms, 1 1 1 namely that 'the substantive and reparation. It is therefore the detailed rules procedural conditions for reparation of loss for effectuating the individual's right to rep­ and damage laid down by the national law of aration which are governed by national law, the Member States concerning reparation of in particular the procedural conditions. 110 damage must not be less favourable than those relating to similar domestic claims and must not be so framed as to make it virtually 110 — Thus, for example, in Italy an ad hoc measure was adopted impossible or excessively difficult to obtain by Legislative Decree N o 80 of 27 January 1992 (GURI, reparation' (paragraph 43). 13 February 1992, p. 246) in order to give effect to the Francovich judgment; that measure lays down the rules and the limiti as regards reparation for failure to imple­ ment the directive on insolvency of employers. The rules provide in particular that the action for damages should be brought against the INPS (Istituto Nazionale di Previ­ 111 — See in particular the judgment in Case 33/76 Rewe ν denza Sociale), that the magistrate acting as an employ­ Landwirtschaftskammer Saarland [1976] ECR 1989 and, ment court is to have jurisdiction and that the limitation most recently, that in Case C-410/92 Johnson [1994] ECR period for bringing the action is one year. I-5483, paragraph 21.

109. Lastly, and still with regard to the other conditions of the rules on reparation, there was a discussion in these proceedings in par- ticular of the types of damage or loss for 108. More specifically, the limit to national which compensation could be granted and of treatment, in the sense that judicial protec- the quantum of damages. In this connection, tion must at least be equal to that available given that those questions should in princi- for similar legal positions created by national provisions, may at times turn out to be com- pletely worthless.

In addition, legal systems in question. What is doubtless the adequacy of judicial protection has been linked with more relevant and determinative, on account providing a statement of reasons on which administrative measures are based, in the sense that the individual must of its potential, is the limit consisting in the be enabled to decide whether or not to initiate judicial proceedings to protect his rights; hence the need that the fact that the national legal system must not choice should be made in full knowledge of the facts (judgment in Case 222/86 UNECTEF v Heylens [1987] be such as to make it virtually impossible to ECR 4097, paragraph 15). There is also the judgment in exercise the rights which the national courts Dekker, in which the Court stated that, where the sanc- tion chosen by the Member State for infringement of the are bound to protect by virtue of Commu- principle of equal treatment laid down by a directive is contained within the rules governing an employer's civil nity law. liability, any breach of the prohibition of discrimination determines the employer's overall liability, 'without there being any possibility of invoking the grounds of exemp- tion provided by national law' (Case C-177/88 Dekker [1990] ECR I-3941, paragraph 25).

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pie be left to the law of the Member States, I to be 'such as to guarantee real and effective shall confine myself to some brief observa- judicial protection. ... It follows that where a tions. Member State chooses to penalize the breach of the prohibition of discrimination by the award of compensation, that compensation must in any event be adequate in relation to the damage sustained'. 116

First, it is all too obvious that reparation of damage may not be merely symbolic, but must correspond to the damage suffered. This requirement, which is linked to the very Further, in Marshall II, the Court held that, raison d'être of the action for damages, con- where a Member State elects to impose a sists precisely in ensuring that the financial sanction for discrimination in the form of situation of the injured party is restored. compensation, 'such compensation must be Moreover, the relevant national case-law, the full and may not be limited a priori in terms Community case-law on Article 215 1 14and of its amount'. 117 the case-law on international relations 115 support this view.

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each State to deal with this in accordance occurred. The same solution must be with the criteria laid down in this regard in adopted where the provision infringed had its own national law. already been clarified by the case-law at the time when the harmful event occurred. In other cases, where a doubtful legal situation is involved, it will not be until after the national court and/or the Community Court has clarified the matter that the State 'in In the final analysis, what is important for breach' can be obliged to make reparation Community law is that compensation must for the damage, naturally in so far as it does be real and effective and hence that the situ- not repair the breach reasonably quickly and ation which would have obtained if the only in respect of damage arising after the infringement had not taken place should be courts have clarified the situation. restored, at least in terms of its financial con- tent.

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viduals may rely on the right to reparation — in order for the right to reparation to for the damage sustained. arise it is sufficient that the provision assumedly infringed is precise in all respects and unambiguous, which will be the case, for example, where a Member State fails to fulfil a precise obligation to achieve a result or where it fails to take account of established case-law; III — Replies to the national courts' ques- tions

— the criteria relating to the quantification of the damage continue to be governed by national law, provided that they are not less favourable than those applying to similar domestic claims and are not such 114. Before making more specific observa- as to make it excessively difficult or virtu- tions on the cases presently before the ally impossible to obtain full compensa- Court, I think it is worth recalling the con- tion for the loss or damage arising as a clusions which I have reached so far: result of the infringement in question;

— the obligation to make reparation arises at the time when the event which gave — in order to secure real, effective protec- rise to the damage occurred in the case of tion of rights claimed by individuals a manifest and serious breach as defined under Community law, that law requires above; otherwise it will not arise until that reparation be guaranteed to individ- there has been a determination by the uals for the loss or damage sustained by national court or the Community Court, them as a result of infringements of in the latter case by means of a prelimi- Community law attributable to the State; nary ruling or a judgment given pursuant to Article 169.

namely Article 30, which is attributable to Dijon' judgment, 118 hence since February the legislature in so far as it failed to amend 1979, it has been clear that Article 30 prohib- the BiStG to accord with that provision. The its, not only discriminatory measures, but appellant in the main proceedings is seeking also measures which are applicable without compensation for damage sustained by it distinction and unjustified by imperative between 1981 and 1987, that is to say, from requirements. O n top of this, by judgment the time at which it was no longer able to of 9 September 1981, 1 19which therefore was export beer of its manufacture to Germany delivered more or less at the same time as the because, it alleges, that beer did not satisfy appellant in the main proceedings was the requirements of the BiStG, until the date obliged to stop exporting beer to Germany, of the judgment in which the Court held, by the Court found that national legislation judgment pursuant to Article 169, that that restricting the designation 'vinegar' to wine law was incompatible with Article 30. vinegar was incompatible with Community law. Certainly, there is no ground for consid- ering that a different view had to be taken with regard to the BiStG in so far as it restricted the description 'beer' to beer pro- duced using the ingredients mandatorily pre- scribed by that law.

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law. 120 If the damage complained of by the renew the distribution contract with its appellant is connected rather with this sec- (German) sole importer, which meant that it ond aspect of the national legislation in ques- was substantively impossible for it to chal- tion, a different solution cannot therefore be lenge any measure. Consequently, it is man- ruled out. ifestly for the national court to ascertain whether the appellant was actually precluded from being able in any way to rely on Arti- cle 30 directly before the national courts.

117. One final observation. I have already mentioned that a Member State is entitled — for the purposes of the right to reparation (b) Case C-48/93 (Factortame III) and provided that it lays down the same con- ditions for similar domestic claims — to require the injured party to show diligence and hence to set in train such mechanisms as may obviate or at least reduce the damage.

118. In contrast, in the Factortame case the national court has to ascertain whether the infringement which has been found of Arti- cles 7, 52 and 221 of the Treaty and is attrib- utable to the legislature for having passed a It appears from the documents in the case national law incompatible with those articles, that it does not seem that the appellant has may be regarded as a manifest and serious taken any such steps. Admittedly, as the breach in the sense defined above. appellant showed in these proceedings, it stopped exporting because of failure to

BRASSERIE DU PÊCHEUR A N D FACTORTAME

119. Whilst it is true, as the United King- tas and hence could not even be regarded as dom has shown, that the Member States have being justified on that ground. a certain margin of discretion in adopting measures relating to the common fisheries policy, it is also true that that discretion is normally exercised under the constant super- vision of the Commission, to which the Member States are obliged to communicate 120. In the final analysis, I do not consider measures adopted by them. In this case, as that there can be any doubts as to the mani- transpires from the documents in the case, fest and serious nature of the breach in ques- the Commission informed the United King- tion and hence as to the right to compensa- dom in good time that the nationality, resi- tion of individuals who suffered damage as a dence and domicile conditions laid down by result of it. the Merchant Shipping Act 1988 for the reg- istration of fishing vessels in the new ship- ping register had to be regarded as incompat- ible with Community law.

121. As far as the national court's second question is concerned, it is scarcely necessary 121 — Judgment in Case C-3/87 The Queen ν Ministry of Agri­ to recall in the light of my earlier observa- culture, Fisheries and Food, ex parte Agegate [1989] ECR I-4459, paragraphs 22 to 26. Whilst, admittedly, that judg­ tions that the determination of the types of ment was delivered after the Merchant Shipping Act entered into force, equally it antedated the judgment in loss or damage for which damages may be Factortame II, following which the House of Lords awarded and the quantification of the dam- upheld the interim measures requested by the applicants. Moreover, in that case what was involved was a condition ages continue to be governed by national imposed so that fishing vessels could count their catches against the national fishing quotas, whereas in the instant law, but must, in any event, be such as to case that which is at issue is a measure simply preventing make full reparation for the loss or damage the registration of fishing boats and hence the actual exer­ cise of freedom of establishment. suffered by the injured parties.

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However, the applicants also claim exem- may not be less favourable than those apply- plary damages, as provided for by national ing to similar domestic claims, a Member law for unconstitutional conduct on the part State is bound to grant that type of damages of the administrative authorities, and this to the individuals concerned where the pre- warrants separate consideration. Suffice it to conditions laid down by the relevant observe in this connection that, in accord- national rules are satisfied; this is so, there- ance with the principle that the conditions fore, even where the head of damages in imposed by national rules in order to protect question is completely unknown to the legal legal situations created by Community law systems of the other Member States.

BRASSERIE DU PÉCHEUR AND FACTORTAME

3. The obligation on the part of the State to make reparation may not be made to depend on finding a subjective component (fault or intention) accompanying the infringement of the provision, if the breach was manifest and serious in the sense explained above.

4. (a) It is for the national legal system to determine the types of injury for which reparation may be awarded and the criteria for quantifying the loss or dam- age, provided that the requirements laid down to that end are not less favourable than those applying to similar domestic claims and are not such as to make it excessively difficult or virtually impossible for the individual to obtain full reparation for the loss or damage suffered; this would be the case where national law limited the scope of the obligation to legal interests, such as property, yet excluded any possibility of obtaining reparation for lost profits.

(b) The obligation on the Member State to make reparation for loss or damage occasioned to individuals arises at the time when the event which caused the damage occurred if the provision infringed is clear in the sense speci- fied above or, where the legal situation is doubtful, at the time when it was clarified by Community case-law, either by a preliminary ruling or by a judgment pursuant to Article 169.'

(b) Case C-48/93 (Factortame III):

'1. A Member State is bound to make reparation for the loss or damage occa- sioned to individuals as a result of infringements of Community law attribut- able to that State, even where the infringement consists in the fact that the leg- islature passed a national law incompatible with Community law, provided that the obligation imposed on the State from which the individual's right is derived is, as in the case at issue, precise in every respect or has been clearly specified by the relevant case-law.