State liability notes

Origins of the principle- Francovich- the ruling established the principle of state liability to pay compensation for breach of EU law. Said it was inherent in the Treaty. Also required the provision by national courts of a damages remedy for breach of an EU measure that lacked direct effect. Represented an important additional move towards enhancing the effectiveness of unimplemented directives. Francovich only gave minimal guidance for the future. Three conditions were found for non implementation of a directive- conferral of specific rights upon the individual, content of which must be identifiable under the directive, and a causal link between the states breach and damage to the individual. 

Clarification came from Brasserie du Pecheur and Factortame. Later cases added that MS were not required to change the distribution of powers and responsibiliites between public bodies, reparation for damage cuased within federal states does not have to be provided for by the federal state law and that states are permitted, though not required, to impose liability on individual officials responsible as well as the state. After Brasserie du Pechuer the question arose whether liability to compensate for violation of EU law would be extended also to violations by private parties. Courage case said that national law must provide an action for damages against a private party for breach of the Treaty competition rules, but the extent of its application to other Treaty provisions such as free movement or discrimination is uncertain. 

Conditions for state liability- Brasserie de Pecheur elaborated on the conditions, drawing on A340 TFEU governing liability of EU institutions. Conditions under which states incur liability for breach of EU law cannot differ from those governing the liability of the EU in similar circumstances. In Fuss the fact that the breach occured 'in obvious disregard of the Courts case law' made it a sufficiently serious one. Clear that the question of causation of damage was ultimately for national courts to decide, but later cases such a Leth gave clear legal guidance on causation. Needed 'sufficiently serious breach.' Position confirmed by Kobler. 

In British Telecom the CJEU agreed the UK had mis-implemented a public procurement directive but concluded that it didnt amount to sufficiently serious breach, since the provision was not clear and precise and interpretation was in good faith. When EU law leaves considerable discretion to the national authorities, state liability will depend on a finding of manifest and grave disregard for the limits of that discretion. Lomas case found the UK liable given the lack of discretion left to the States under the directive, the clarity of the treaty provision breached and the absense of properly verified justification. 

Action for compensation is provided within the framework of domestic legal systems, with varying procedural and substantive rules on matters such as time limits, causation, mitigation of loss and assessment of damages. 

Concerning extent of reparation, Court ruled that 'reparation for loss or damage caused to individuals as result of breaches of community law must be commensurate with loss or damage sustained.' Requirement is strong and any restrictions imposed on the extent of damages must be reasonable. Rules on mitigation of loss are acceptable, but the total exclusion of loss of profits or restriction of damages to certain interests such as property would violate the effectiveness of the principle. Certain other restrictive conditions on the action for damages have been held contrary to the principle of effectiveness. 

Enforcement actions against member states- A17(1) TEU entrusts to the Commision the task of ensuring and overseeing the application of EU law 'under the control of the CoJ.' Commission must monitor MS compliance and respond to non compliance. 

TFEU provides for various enforcement mechanisms involving judicial proceedings against MS which are brough either by the commission or much less frequently, by a MS. A258 TFEU establishes the general enforcement proceedings, giving the Commission a broad power. Enforcement procedure performs several functions. Part of an elite channel for the amicable resolution of disputes involving MS without recourse to litigation, in part a channel for individuals to complain to the Commission about breaches of EU law and in part an 'objective' law enforcement tool in the hands of commission and court. 

Has been described as a forum for enhancing the accountability of the different institutional actors involved, in particular the MS and Commission, involving also the Parliament and Ombudsman. It is the court that has the final say and ultimate authority on most aspects of the process. Includes finding if there has been violation, what the penalty should be, and whether an infringement has been brought to an end. Court has dismissed complaints on a sizeable proportion of cases.

The mechanisms have come under strain due to the increasing numbers of infractions and infringement proceedings. Various initiatives were come up with to address the resulting problems of overload and delay. Environmental cases make up a large load. Most are settled without going to court. 

Under A260 TFEU the Commission can bring proceedings against a state for non compliance with a previous judgement of the court finding an infringement against that MS under A258. A260 was amended in the 1990's to enable the CJEU to impose a penalty to pay on MS that fail to comply with a judgement under A258. Commission has been criticised for under using this more efficient A260 procedure and resorting excessively to A258 proceedings. 

Under A258- Lisbon Treaty changed wording to say under these treaties, rather than under this treaty to allow proceedings for violation of obliagations under TEU and TFEU. Commission initiates the procedure either in response to a complaint, or on its own initiative. Complaints are brought on the basis of information gained from diverse sources eg press, Parliament or petitions. The Commission has acknowledged that complaints from citizens constitute a significant source for its detection of infringement and suggests that A258 contributes to creating a more participatory Community. In 1999 a standard complaint form was introduced for ease of use. Commission has discretion to begin proceedings, ecompassing the bi lateral nature of proceedings but identifying the primary objective of bringing offending member states into line, rather than satisfying individuals. 

A major source of frustration for complainants has been the difficulty in obtaining documents relating to the infringement proceedings. Commission has often invoked the exceptions to the EU transparency rules governing 'inspections, investigations and audits.' Harlow and Rawlings have suggested there have been 3 phases of the infringement procedure over time: first phase of diplomacy shaped largely by the Commission, a second more judicial phase influed by the jurisprudence of the court but still dominated by the Commission negotiation approach and the third more legalised phase following enactment of a provision for pecuinary penalites against states. 

Infringement procedure has 4 distinct phases- i) the initial pre contentious stage gives the MS the opportunity to explains its position and reach an accommodation with the Commission. ii) if the matter is not resolved informally, the state will normally be notified of the infringement by means of a letter by the commission. The state is normally given 2 months to reply, except in urgency, and the Commission normally decides within the year to proceed or not. iii) if not resolved, the Commission may proceed to issue a reasoned opinion. Sets out clearly the grounds on which the infringement rests and marks the beginning of the time period within which the MS must comply, if it is to avoid the final stage. iv) the final stage is the referral of the matter by the Commission to the CoJ. The Commission has suggested that in many cases the pre litigation examination of complaints is enough to prompt the MS to put the situation right. 

Mechanisms of infringement prevention and management such as promotion of peer pressure, exchanges of information, and practise and so called package meetings with MS have been emphasised. The enforcement mechanism can be a long and time consuming process. In 2008 it took on average 50 months to close a case from the time of the reasoned opinion to the courts. In 2009 said the time had fallen to 24 months.

Important to remember that successful infringement actions dont always lead to compliance. 

A258 and 259 are merely one of several mechanisms for compliance. ECJ has ruled the proceedings brought by an individual were intended to protect individual rights in a specific case, where as commission enforcement proceedings were intended to insure the general and uniform observance of EU law. The two proceedings have 'different objects, aims and effects and a parallel may not be drawn between them.' However it is evident that the ECJ by means of preliminary rulings often effectively declares the MS in breach of EU law, leaving little scope for different conclusions on the part of the referring court. Direct effect of an EU provision provides no defence to a Commission action under A258 TFEU for failure to implement the provision. 

Commisson discretion- there is debate over its extent. One risk is that they may be excessively lenient or arbitrarily selective. The language of para 2 of A258 clearly suggests that once it has issued a reasoned opinion indicating a breach, the Commission has discretion whether to bring the matter before the CJEU. Although the para uses mandatory language, there is agreement that the Commission has discretion whether and when to issue one. The Court has repeatedly made clear that the proceedings are entirely objective, so will not examine the Commission motives for an action. According to the court the Commission acts in the general interest, and does not have specific interest because A258 isnt intended to protect that institutions own rights. 

States have had greater success in arguing that there are procedural constraints, such as reasonable time limits of the Commissions discretion. Despite initial reluctances the ECJ ruled that there were certain constraints on the Commission to bring proceedings in respect of the particular infringement concerned. Restrictions have been imposed on the Commissions discretion regarding when to refer a matter to the court, since this could also prejudice the MS's ability to exercise its right of defence. In proceedings against Ireland, the ECJ reprimanded its small time frame given to allow for compliance. However the action was admissible since they had waited for Irelands reply before continuing. (They were given 5 days.) 

The Court ruled that a reasonable period must be allowed, although very short periods were allowable in cases of urgency or where the MS was well aware of the Commissions views before it brought the action. A four month period was ruled allowable where the MS knew the Commissions plans three years before it was brought. A period of 7 days for a formal letter and 14 days for a reasoned opinion were allowed against Austria due to urgency. 

The ECJ has consistently refused to admit actions brought for 'failure to act' brought by non priviledged parties against the Commission under A265 TFEU which seeks to require that the Commission iniate infringment proceedings under A258. 

Although a lack of a role for individuals in the initation and conduct of enforcement proceedings has provoked adverse comment, the Commissions discretion in this respect may be justified. The Commission has a long term view and uses litigation strategically as part of its negotiation process. Has imposed restraints on its own discretion. Since 1990 it has routinely issues letters of formal notice whenver MS have no notified national measures implementing directives that are due for implementation. The supervisory role of the EP and the administrative role of the Ombudsman clearly had a positive influence on the Commissions conduct in the infringement procedure, and have strengthened the mechanisms and forms of accountability of the Commission within that process. 

Reasoned opinion- provides the MS concerned with a measure of protection. Along with the letter of formal notice, the reasoned opinion is the official means by which the Commission communicates to the state the substance of the complaint against it, and specifies the time period within which the violation of EU law must be remedied. Intended to provide the MS with a clear statement of the law against it, to 'ensure respect for the principles of natural justice' and to ensure that 'any contentious procedure will have a clearly defined dispute as its subject matter.' 

An obligation to provide reasons is enshrined in A41(2)(c) of the Charter of Fundamental Rights. 

A296 requires that legal acts state what they are based on and A258 contains a specific requirement of reasoning. Although reasoning is an 'essential procedural requirement' of EU law, breach of which constitutes a ground for annulment under A263, the Commissions opinion under A258 isnt as it lacks binding effect. The Commission is not obliged in its opinion to address or answer every argument made by the state at the pre litigation stage, nor to indicate to the states what steps should be taken to remedy the breach. The initial letter of formal notice doesnt have formal requirements. However the Commission must respond, even if the state submits it late. The Commission cant amend the substantive content of its submission when the case comes before the court, even if both parties want it to. They can change the submission to limit it, but not to expand it as this could disadvantage the MS. An extension of subject matter of the dispute to events which took place after the reasoned opinion is ok as long as they are of the same kind and constitute the same conduct as the events to which the opinion referred. 

The Commission is not prohibited from responding in Court, to arguements raised by the MS, even when it has not made those points in the opinion. MS are not bound to raise their defence during the pre litigation procedure, and may raise new points of defence before th court. 

In some cases where individuals complained and were disappointed by the Commissions...

failure to act, sought disclosure of the opinion. Neither the CJEU or the ombudsman were prepared to require disclosure. In Bavarian Lager said they could given them where the case had been closed for 6 years. Commission occasionally publishes its reasoned opinions, and press releases relating to them. Individuals may have more success gaining a reasoned opinion under freedom of information from their MS. 

Once the procedural conditions for fulfilling A258 have been fufilled, and the period laid down by the Commission for compliance has expired without an adequate response by the MS, it is no answer for the MS to assert, when the case is before the ECJ, that the breach has been remedied. The CJEU only asks if the MS was in breach at the time of the expiry of the period laid down in the reasoned opinion. This contrasts with A265 where it was held the procedure is devoid of purpose once the institution has remedied its default. There are reasons for this. 1) the Commission says it has a continued interest in the action, to prevent states from undermining the infringement procedure and possibly commencing illegal conduct again. 2) the court should be able to rule on breaches of a short duration since they may be no less serious than longer breaches and 3) in order to establish the basis for liability on the part of defaulting MS. An individuals action for redress could derive considerable assistance from a prior finding of the CJEU. 

Types of breaches by MS of EU law- A258 is very general. The Commission must simply state that a state has 'failed to fulfill an obligation under the Treaties.' May include acts and omissions. Certain kinds of breach such as non transposition of a directive are far more often the subject of infringement proceedings. 

A breach of obligation of sincere co-operation under A4(3) TEU- the court ruled that once the Commission has produced sufficient evidence to show that the MS appeared to be violating the Community law, it is incumbent on the state not to simply deny the allegations, but to contest the information produced in a substantive way. Even though the burden of proof lies with Commission, they dont need to show the harmful effects of transposition. If an MS isnt willing to respond at the pre litigation stage, it will be difficult for them to ascertain if there has been a breach or not. The Commission response to this impasse is to initiate separate enforcement proceddings on the basis of the breach of the obligation of co-operation. This obligation has positive obligations as well such as preventing others from frustrating the treaty. eg French Farmers. The obligation will be breached if a MS fails to penalise those who infringe union law, the same way that it penalises those who break national law and in a way that is 'effective, proportionate, and dissuasive.' 

Inadequate implementation of EU law- not often the complete failure to transpose, but rather inadequate implementation. A288 provides the manner and form of implementation of a directive is for the MS to decide, but this has not prevented the CJEU form reviewing the adequacy of the chosen method. A further objection to state reliance on 'whimsical' administrative practise, is that they lack the appropriate publicity to constitute adequate implementation. However the CJEU has not always condemned MS which fail to adopt any specific measures to implement. Where some national legislation has been the subject of different judicial interpretations, some of which are consistent and others not, the ECJ has ruled that such legislation is unsufficiently clear to comply with EU law. 

Breaches which interfere with EU external relations- concerns conduct by MS which violates international agreements binding on the EU, or which otherwise violates the obligation of sincere co-operation by jeopardising EU objectives in the external relations field. 

Systematic and persistent breaches of central practises- even when properly implemented a state may be held in breach if an administrative practise infringes EU law. Ms failure to fulfill obligtaions can be established only by means of 'sufficiently documented and detailed proof of the alleged practise of the national administration or courts.' 

It is up to the State to challenge in detail the evidence provided and the consequences flowing from it. 

Actions by the courts of a MS- failure by a judiciary has never formed the basis of an A258 judgement, even though the actions of a national court is often implicated in the breach. CJEU has ruled that states are responsible for the action and inaction of their courts, and Kobler said that a state may be liable in damages to individuals for breaches of EU law committed by national courts of final appeal. In 2004 they issued a reasoned opinion against Sweden for failure of the SC to make a reference to the CoJ under A267 but the case didnt proceed to judgement as Sweden acted and changed it. 

State defences in proceedings- court has rarely been receptive to justification. Nothing to prohibit MS from raising new defences in court. However no new plea can be introduced unless it is 'based on matters of law or fact which come to light in the course of the procedure.' Absense of harm or that the breach had 'no adverse effects' is not a defence. Can have a successful defence of force majeure. The state cannot say that an action of one of its institutions constitutes this as 'whatever the agency of the state whose action or inaction is the cause of the failure to fulfil its obligation, even in the case of constitutionally independent institutions, or in the case of a fraudulent individual.' 

MS have sometimes argued that other MS are in breach, however this has been rejected. Another defence is that the EU measure on which the infringment is based is illegal or invalid. Against Greece in 1988 they said 'a MS cannot plead the unlawfulness of a decision addressed to it as a defence.' The rationale is that if they want to plead this the state had an opportunity to bring direct action for annulment under A263 within two months. May allow illegality to be pleaded in exteme cases where the decision infringes a principle of constitutional nature. Happened in Digital Rights Ireland.

Consequences of an A258 ruling- all court can do is fine a violation, even after the new penalty payment procedure. The CJEU cannot order to adopt of any specific measures, nor dictate the consequences of its judgement in those proceedings. One possibility raised by the MS is that the CJEU might rule that the retroactive effect of its judgement will be limited. 

A259- provides a means for any MS to initate an action against another state which it considers to be in breach. The MS bringing the action doesnt have to contact the other MS. The matter must be initially brought by the complainant state before the Commission. The procedure is similar to A258 but in 259 each state must be heard and given the chance to make oral and written submissions before the Commission's reasoned opinion. 

The complainant state can take it to the CJEU even if the Commission doesnt think there is a breach. Rarely used as likely to cause tension. Spain brought an action against the UK in 2000 and the Commisison declined to give a reasoned opinion due to the 'sensitivity of the underlying bilateral issue.' Still took to court and found against Spain. 

A260 TFEU- the pecuniary penalty- introduced by the Maastrict Treaty. Intended to give reason for MS to comply with rulings against them. Before this all they could do was bring the state before the court again for another ruling. Amended by the Lisbon Treaty in 2009. Two big changes- 1) Commission no longer obliged to bring a reasoned opinion before bringing an MS before the CJEU for non compliance with A258. Amendment likely to make penalty procedure speedier. 2) introduced para 3 which provides the Commission may move directly to seek a pecuniary penalty against an MS where the state has failed to notify measures transposing an EU directive. Takes possibility of penalty payment beyond A258. Para 3 also says that the court, in imposing a penalty for non transposition, may not exceed an amount specified by the Commission. Failure to notify is a vague concept, creating uncertainties as to whether A258  or A260(3) is necessary to use. Widens Commissions discretion. Theres no official mechanism of getting the money. No upper limit to penalty as long as doesnt exceed Commission.

Commission makes relatively frequent use of the procedure for proposing pecuniary penalties. In 2013 the Commission said that no less than 113 judgements under A258 had still not been fully complied with by the MS's. Many cases are closed by the Commission when the MS complies. Repeated referrals are sometimes needed, 9 out of the 113 in 2013. Penalties should be a deterrent and never symbolic. Daily penalty should be decided on three criteria- i) seriousness of the infringement ii) duration and iii) the need to ensure the penalty is a deterrent. Calculation should involve a flat rate amount per day of delay to penalise the violation of the principle of legality, multiplied by the factors reflecting seriousness and duration. Court not bound by Commission advice.

Court is more proportionate and takes into consideration the type of breach. In Commission v France the ECJ said that financial penalties should be decided upon 'according to the degree of persuasion needed in order for the MS in question to alter its conduct.' Commission amended its guidelines to refer to the desirability of a lump sum where the MS has considerably avoided paying. Indicated that it would henceforth propose at least a minimum lump sum payment to the court in every 260 case to reflect the principle 'that any case of persistent non compliance in itself represents an attack on the principle of legality.' The Commission proposed to allow for adjustment of sanctions to reflect partial or gradual compliance and for yearly periods, as well as daily. 

The court appears to have done so in several cases since. Court says it still has a discretion on whether to apply a lum sum. They have generally imposed lower sums than Commission and AG's have suggested. More sharp and legal than A258. Even though MS's GDP and ability to pay is taken into account this issue has been sharpened by the Euro crisis, highlighting the importance of considering changes in the state. 

Interim measures- Under A278 and 279 the CJEU has the power to prescribe interim measures which it considers necessary in a case. Particularly useful for the Commission to seek at the same time as proceedings under A258. Under A258 when a breach is found, the court says the MS has failed to meet its obligations and its ruling has no effect on the national provision. Indeed actions before the CJEU do not have suspensory effect. A278 says the CJEU may suspend acts if they want. And A297 says they can prescribe any interim measures. They may not be ordered unless there is circumstances giving rise to urgency, as well as factual and legal grounds which establish a prima facie justification for granting the measure sought. Serious and irreparable harm to the applicant must be threatened. 

Conclusions- some of the main criticisms of the enforcement procedure over the years, including its lack of bite, absense of a role for individuals, and the elite and unresponsive attitude...

of the Commision, have gradually been addressed, at least in part. A260 TFEU was introduced to sharpen the coercive effect of proceedings and the pressure from the Ombudsman and EP have had the effect of encouraging the Commission to follow somewhat more regular and transparent administrative procedures including its dealings with individual complainants. 

The overall enforcement mechanism continues to comprise of a mixture of approachs- parts of it to operate in bilateral and diplomatic dispute resolution mode, parts of it according to a more formal, judicially monitored sanction procedure, and parts of it as a quasi administrative complaints procedure. 

The risk of overload led the Commission to propose an array of preventative, alternative and supplementray mechanisms, including a pilot procedure for dealing with complaints are an early stage. The pilot procedure in particular seems to result in many complaints being addressed at national level without much Commission involvement. 

There has been gradual growth in recourse to the penalty payment procedure, although its effectiveness in inducing compliance has been questioned, and the provision which was introduced in the Lisbon Treaty to extent penalty payment procedure for failure to nofity the transposition of directives has no yet been tested.