Remedies Flashcards

Question

5 – Res Judicata → *Case C-168/05 Mostaza Claro v. Centro Móvil Milenium [2006] ECR I-10421; Commentary

Answer 1

Normally, you’re only allowed to appeal on points that were already raised in the trial (and that the judge got wrong). If you forget something, you shouldn’t be able to raise it again subsequently. But there is context specificity – contract of adhesion in the consumer context, inequality in bargaining power… But it is not unlimited – in Asturcom the consumer didn’t even bother discussing the point and here is the limit.

Answer 2

- Facts: a consumer had failed to argue that an arbitration clause was unfair during the course of the arbitration and raised the matter only in subsequent proceedings contesting the arbitration finding (too late as a matter of Spanish law). - CJEU: o [27] … the national court’s power to determine of its own motion whether a term is unfair constitutes a means both of achieving the result sought by Article 6 of the Directive, namely preventing an individual consumer from being bound by an unfair term, and of contributing to achieving the aim of Article 7, since if the court undertakes such an examination, that may act as a deterrent and contribute to preventing unfair terms in contracts concluded between consumers and sellers or suppliers… o [28] That power of the national court has been regarded as necessary for ensuring that the consumer enjoys effective protection, in view in particular of the real risk that he is unaware of his rights or encounters difficulties in enforcing them… o [38] The nature and importance of the public interest underlying the protection which the Directive confers on consumers justify, moreover, the national court being required to assess of its own motion whether a contractual term is unfair, compensating in this way for the imbalance which exists between the consumer and the seller or supplier.

Answer 3

- Facts: Swedish authorities obtained injunctions and initiated criminal proceedings against parties providing advertising space to Unibet (because Unibet’s actions contravened Swedish law). Because they didn’t bring actions against Unibet itself, Unibet had no possibility of raising a self-standing action for a declaration that a Swedish law is illegal for violation of Article 56 TFEU. Unibet did, however, have a right to (1) sue the authorities for damages and ask for an exception to its restrictions, and (2) challenge a refusal to grant an exception to a Swedish court. Are these remedies sufficient? - CJEU ([41]): principle of effective judicial protection is a general principle derived from the constitutional traditions of MSs, but the Treaty was not intended to create new remedies in national courts to ensure the observance of EU law other than those already laid down by national law, EXCEPT if no legal remedy existed which made it possible to ensure, even indirectly, respect for an individual’s right under EU law. - In principle, it is for national law to determine an individual’s standing and legal interest, but EU law requires that national legislation not undermine the right to effective judicial protection. - In this case, there exist various indirect legal remedies for the purpose of Unibet disputing the compatibility of national legislation, which constitute remedies that enables Unibet to ensure effective protection of the rights conferred by EU law. However, this would not be sufficient if Unibet was forced to be subject to administrative or criminal proceedings and to pay penalties as the sole form of legal remedy for disputing compatibility of national provisions. This means that the principle is not merely concerned with the possibility of securing presence in court (because possibility as a consequence of prosecution is insufficient) but requires right holders to have a possibility to bring matters before the court themselves.

Answer 4

Examines the relationship between principle of effective judicial protection and national procedural autonomy (particularly as regards to the availability of alternative national remedies. and the duty of national courts to raise points of EU law of their own motion). - In Unibet, the CJEU held that national courts had “to interpret the procedural rules governing actions brought before them … in such a way as to enable those rules, wherever possible, to be implemented in such a manner as to contribute to the attainment of the objective … of ensuring effective judicial protection of an individual's rights under [Union] law.” → national procedural autonomy was but an aspect of the broader principle of effective judicial protection, which imposes on national courts a DCI reminiscent of that in Marleasing. - The principle in Unibet (that EU law doesn’t impose the creation of a new remedy unless there is no remedy) led to difficult cases concerning the availability of alternative remedies under national law (Levez, Impact) So, is it even rational to talk about procedural autonomy?

Answer 5

- Dougan identifies three periods in the CJEU’s caselaw: deference → assertive → retreat to the limited negative approximation. However, IAO there has been no retreat, but the CJEU’s caselaw has become increasingly progressive: o It is spilling over into new areas and questions (ex. duty to reopen final decisions incompatible with EU law, to raise EU law issues of own motion…) - The test of equivalence and effectiveness internally contradicts itself and is almost impossible to conduct: the Court is really using a “sort of I-know-it-when-I-see-it effectiveness test” (that is more akin to a balancing or proportionality test) o Equivalence is “just a façade”, but it is a helpful façade because it maintains an impression of keeping the division of work provided in the Treaties, and allows the CJEU’s judgments to be universally relevant. ♣ In truth, it is impossible to compare without interpreting national regimes, and impossible to interpret without identifying the relevant suitable comparator. ♣ Sometimes no relevant comparator exists (ex. where the area is entirely harmonized in EU law, ex. Virginie Pontin v T-Comalux SA – concerning time limit for bringing an action for annulment by a pregnant worker, an area completely harmonized by an EU directive) ♣ To compare, the court must have a very detailed knowledge of the relevant national law, which the CJEU normally does not. o Effectiveness is not a legal principle so has no internal limits (impossible means impossible, but once we extend it to “excessively difficult” then there is no longer any internal limits…) ♣ Is effectiveness measured according to the protection to the particular litigant or as a whole? - There is a misunderstanding based on a part of the doctrine maintaining that there is “procedural autonomy”, when IAO there is no such thing as procedural autonomy. o If autonomy means that there are areas where MSs are free from any EU law constraints, uncontrolled by the CJEU, then there is none because (1) in the constitutional set up there is no domaine réservé of the MSs and (2) the dual requirement of equivalence and effectiveness is omnipresent. o But we can’t define it in a “softer” sense (like the primary shaping of the procedures is in the hands of the MSs) because names are not just convenience labels but also symbols. - From time to time, the Court is criticised for not safeguarding the “procedural autonomy” of the Member States. As the rules of the game now stand, however, there really is not anything it could safeguard. If anything were to change in order to favour the Member States´ competence, then it is the rules of the game themselves.

Answer 6

Discusses the CJEU’s caselaw dealing with the principle of effectiveness, both in (1) patrolling borders between EU law and other legal norms and (2) setting standards for national courts in meeting EU obligations. The principle has multi-layered roles and is the driver of constitutional evolution. - “effectiveness is an institutional mantra operative at both national and European levels in order to secure the replication of the latter style of reasoning in the former” → it can act as a principle to limit a presumption of national procedural autonomy. - But it can have wider applications: in shaping, mediating and controlling borders between competing or conflicting European legal orders (thus it is multi-functional and double-edged (in that it can also modify or recast EU obligations, not merely enlarge the penetration of EU intervention)). o [Then considers cases on incidental effect, fundamental principles…] - Effectiveness can determine both the point at which EC law intervenes and the extent of remedial action required from the national court → it is a more sophisticated and tailored mechanism for the exploration of the dynamics between national and European law than the blunt exhortation of supremacy: while the latter prescribes an outcome for conflicts between national and EU law, the former pursues reviewability of national provisions that constitute obstacles to enjoyment of Treaty protection. - Thus use of effectiveness is evidence of an increasingly porous and fluid approach to line drawing between different legal orders. It can serve multiple functions: o Interpretive tool for national courts o Instrument of review for assessing acceptable diversity in securing compliance with Treaty goals

Answer 7

- Liability in damages is a universal enforcement mechanism, which in principle could attach to any form of irregular behavior. - Faccini Dori made it clear that Community law did not possess a perfect system of enforcement: o Direct effect = requirement of sufficient precision and unconditionality + Marshall restriction in horizontal cases. Thus DCI, and also Francovich liability. - The relaxation of the Francovich conditions in Brasserie des pêcheurs (especially the requirement of serious breach where MSs have discretion) largely disabled the remedy as a method of improving compliance and protecting individual rights (Tridimas). On the other hand: o Hedly Lomas: where the Community enacted a Directive harmonizing national measures necessary to achieve the objective which previously could justify a derogation from a free movement provision, the mere infringement of Community law was sufficient to establish a sufficiently serious breach. o Dillenkofer: mere non-implementation of the Directive was sufficient to constitute serious breach. - Two further major developments: o Extension into violations of EU law by private parties (Courage) – though IAO the Courage remedy should be seen as independent from Francovich because: ♣ the Court in Courage didn’t rely on Francovich but rather returned to the argument from the creation of the EU’s own legal order (discussing the special importance of Art 101 TFEU and its horizontal effect). ♣ The national court was asked to take into account the economic and legal context of the parties’ situation, in particular their respective bargaining powers. ♣ No statement in the judgment supports the conclusion that the Court was introducing a general principle of private party liability for breach of EU law comparable to Member State liability under Francovich. o Possibility of Member State liability for a judicial breach of Union law (incorrect application or failure to apply EU law, a failure to interpret national law consistently with EU law, a failure to set aside conflicting national provisions, a failure to provide effective remedies to those whose EU rights were violated, or a failure to refer a preliminary ruling question to the CJEU): Kobler. ♣ Though bound to be rare due to the imprecise nature of the CJEU’s caselaw (absence of a “settled” caselaw will always result in a breach if failure to send preliminary reference, but the resulting incorrect application of EU law would then rarely be sufficiently serious for Francovich liability)

Answer 8

A group of employees brought proceedings against Italy for its failure to implement a Directive guaranteeing a minimum level of protection in the event of the employer’s insolvency. The remedies sought included the recovery of unpaid wages or, in the alternative, compensation.

Answer 9

- can’t enforce against Italy despite it being a vertical case, because Italy simply didn’t implement EU law (didn’t set up the insolvency fund – “shocking failure” on the part of Italian government (AG)), so no recovery of wages → question of the state’s liability in damages: the issues had to be considered ‘in the light of the general system of the Treaty and its fundamental principles’. - Fondements: o Fondement 1 – effet utile, inherent in the system of the treaty ♣ National courts must ensure that provisions of EU law take full effect and must protect the rights which they confer on individuals. ♣ ‘The full effectiveness of Community rules would be impaired and the protection of the rights which they grant would be weakened if individuals were unable to obtain redress when their rights are infringed by a breach of Community law for which a Member State can be held responsible.’ ♣ This is especially true if the full effectiveness of EU rules is subject to prior action on the part of the State and where, consequently, in the absence of such action individuals cannot enforce before national courts rights conferred by EU law. ♣ Therefore, the principle that a MS is liable for loss and damage caused to individuals as a breach of EU law is “inherent in the system of the Treaty”. o Fondement 2 – Article 4(3) TEU ♣ Under this Article MSs must take all appropriate measures to ensure fulfilment of their obligations under EU law, including the obligation to nullify the unlawful consequences of a breach of EU law. o Fondement 3 – Article 342: the EU is required to make good losses, so Member States should do so as well. - For conditions, the CJEU didn’t refer to Italy’s rules on compensation, but set out conditions in the judgment: o the granting of rights to individuals o the possibility of identifying the content of those rights on the basis of the provisions of the Directive o the existence of causal link between the state’s failure to implement and the loss or damage suffered However, while national courts cannot use additional conditions of liability, they were permitted to use national rules of liability concerning: - the designation of competent courts, detailed procedural rules ([42]) o Ex. length of limitation period (C-261/95 Rosalba Palmisani v Istituto nazionale della previdenza sociale (INPS)) - and arguably concerning the remaining substantive issues, such as the level of compensation and the sufficiency of the causal connection. o Ex. Case C-140/97 Walter Rechberger, Renate Greindl, Hermann Hofmeister and others v Republik Österreich o However, national courts could not interpret the condition of a direct causal link in such a way as to make it virtually impossible or excessively difficult to obtain compensation for the damage suffered (para 36). (Case C-94/10 Danfoss A/S and Sauer-Danfoss ApS v Skatteministeriet)

Answer 10

Later on, the Italian court decided that Francovich wasn’t a worker so couldn’t get any compensation. The CJEU, in horizontal situations, often says that no HDE of Directives is fine because the person can sue the State for damages. Though it is true that the two remedies aren’t the same thing, but still, the CJEU isn’t just saying all or nothing – there are subtleties involved

Answer 11

The case was seminal because at the time most MSs did not have a system of governmental liability for equivalent breaches of national law. There was concern that it would lead to resistance from national administrations, but a study found this to be unfounded (MP Granger) in that all MSs adopted the principle (principally through adapting tort law) and national courts have awarded substantial damages: - Example – Spanish Supreme Court in Canal Satelite Digital v State Attorney (award of 26.4 million euros for failure to comply with EU broadcasting law Exceptions are notably concerning legislative liability (i.e. Parliament passed a law contradicting EU law), where there was widespread evasion on the part of many national courts: Even in flagrant cases of non-transposition of EC law by the national legislator, many courts were uncomfortable with the idea that “the King could do wrong”, and found ways around such an admission.

Answer 12

- CJEU, Faccini Dori: “If the result prescribed by the directive cannot be achieved by way of interpretation, it should also be borne in mind that, in terms of the judgment in Joined Cases C-6/90 and C-9/90 Francovich and Others v Italy [1991] ECR 1-5357, paragraph 39, Community law requires the Member States to make good damage caused to individuals through failure to transpose a directive…”

Answer 13

``` o Brasserie du Pêcheur – A French firm that was forced to discontinue exports by virtue of a German law later found to be illegal for violation of free movement law, sued in damages for loss of profits between the time of discontinuation and time of finding of illegality. o Factortame (no. 3) – A British law imposing requirements on those wishing to fish in its waters had been declared illegal for violation of freedom of establishment. Spanish fishermen claimed for loss suffered as a result of illegal exclusion from British waters. ```

Answer 14

- The right to reparation was ‘the necessary corollary of the direct effect of the Community provision whose breach caused the damage sustained’. Creation of the Francovich remedy was legitimate as an ‘interpretation of the Treaty’. o Just as in the process of creating the ‘general principles of law’, also here the Court was invoking the fact that its jurisdiction covered the duty to ensure that law was observed, and the ‘generally accepted methods of interpretation’ permitted the Court to refer to ‘general principles common to the legal systems of the Member States’. o It found evidence to the effect that liability in damages of public institutions was indeed common to the laws of the Member States in Article 340 TFEU, which mentioned the laws of the Member States as the basis for the non-contractual liability of the Community for damage caused by its institutions. - To determine the conditions of liability, must take into account: o Principles inherent in the EU legal order (effectiveness, effective protection of rights conferred by EU law, Art 4(3) TEU) o CJEU’s caselaw on non-contractual liability on the part of the EU, which draws on the general principles of the EU, and other areas of EU law (in the absence of written rules) - The principle of state liability was held to apply to ‘any case in which a Member State breaches Community law, whatever be the organ of the State whose act or omission was responsible for the breach’, including the national legislature. o The negative effect of linking Francovich liability with Art 340 TFEU was the pressure to unify the conditions of liability applying to Community institutions and to Member States → Because the Community had immunity from liability unless its institutions manifestly and gravely disregarded the limits on the exercise of its powers, the Court introduced a similar requirement with respect to claims brought by individuals against the states. - State liability cannot (without particular justification) differ from those governing EU liability in like circumstances. The protection of the rights which individuals derive from Community law cannot vary depending on whether a national authority or a Community authority is responsible for the damage. o In Community liability, the CJEU has regard to the wide discretion available to legislative institutions because exercise of the legislative function must not be hindered by the prospect of actions for damages, whenever the general interest of the EU requires measures that may adversely affect individual interests o The Community is only liable where the institution has gravely and manifestly disregarded the limits on the exercise of its powers. - Where the MS is left with autonomy, it should be liable only where their breach was ‘sufficiently serious’: o [t]he factors which the competent court may take into consideration include the clarity and precision of the rule breached, the measure of discretion left by that rule to the national or Community authorities, whether the infringement and the damage caused was intentional or involuntary, whether any error of law was excusable or inexcusable, the fact that the position taken by a Community institution may have contributed towards the omission, and the adoption or retention of national measures or practices contrary to Community law. ♣ If breach persisted despite a judgment finding the infringement to be established, or preliminary ruling or settled caselaw of the CJEU on the matter clearly establish that the conduct is an infringement = sufficiently serious. ♣ These are the minimum conditions of the right to reparation. The state could incur liability under less strict conditions on the basis of national law, but no more onerous conditions were allowed.  Example – English courts cannot therefore use the conditions of the tort of misfeasance in public office to impose liability on the Government (especially the condition of fault) - In this case: both cases are concerned with areas of wide discretion - What items of loss are recoverable? o In principle, compensation should be commensurate with the loss or damage sustained. o However, the claimant would not obtain full compensation if some losses they incurred could have been avoided if they had acted diligently, or if they had availed themselves in time of all the legal remedies available. o Lost profits are recoverable but national rules were to regulate precisely which heads of damage should be compensated, what was required as a matter of proof, and how damages were to be calculated.

Answer 15

EXAM POINT The German government argued that Parliament (democratically elected) passed a law – why should the Court be allowed to say that the State now has to pay damages?? [This point wasn’t present in Francovich because in that case it was an executive, governmental failure, not Parliament deliberately passing a law on a point.] From a domestic perspective, the distinction is HUGE constitutionally. From a PIL perspective, it does NOT MATTER AT ALL because the government has a duty to implement EU law etc.

Answer 16

Therefore, the three conditions are: 1) Rule is intended to confer rights on the individual litigants 2) Breach is sufficiently serious: a. If no discretion → simple breach is sufficiently serious b. If discretion → manifestly and gravely disregarded the limits of discretion But in cases where provisions are capable of bearing the meaning understood by the MS (ex parte British Telecommunications) or caselaw is unsettled or extremely recent (Brasserie du Pêcheur), there will be no liability. This means that State liability is a back stop measure focused on sanctioning egregious or highly neglectful behavior rather than securing redress for litigants. This raises the question of whether it should be for the CJEU to attach punitive measures to the Treaties, not to secure individual protection, but national compliance with EU law. 3) Direct causal link between breach and loss: for national courts to establish that the illegal behavior led to loss. According to Weatherill (Values) Factortame No 3 can be treated as an exercise of applied comparative law, for each element is a familiar aspect of typical national systems governing the award of compensation in the event of loss. [MI ummmmmm… No… It’s really not…] What is striking is the CJEU’s concoction of these rules from a Treaty background completely barren to any indication that EU law shall dictate to national courts that they shall be competent to award damages for breach of EU law (nor its governing criteria).

Answer 17

- CJEU held that the UK could not be liable under Francovich because the relevant provision of the Directive in question was imprecisely worded and therefore could reasonably bear the meaning accorded to it by the UK government, especially in the light of the fact that no guidance was available in the case law of the Court on how the provision should be interpreted

Answer 18

- Under Austrian law professors were entitled to a length-of-service increment after 15 years’ service in an Austrian university. Kobler applied for it, arguing that he completed the requisite time in other Member States, and not taking them into account would constitute unjustified indirect discrimination. The Austrian Administrative Court originally referred, but then a few months later withdrew the reference on grounds that the matter had, in the interim, been settled in Kobler’s favor by the CJEU. Kobler’s claim was nevertheless dismissed because the increment was held not to be salary but loyalty-bonus. - Issue: whether the Austrian Supreme Court’s failure to make a preliminary reference could trigger Francovich liability.

Answer 19

- Under Austrian law, rules on liability of the State are governed by the Constitution, which (1) excludes liability of the highest Austrian court, and (2) gives the court of first instance in civil and commercial matters jurisdiction to hear damages claims. - [15] Since the preliminary question concerns solely the question of Supreme Courts, I will only consider SCs and not ordinary courts.

Answer 20

o Austria argued that excluding liability is justified by: ♣ Legal certainty ♣ Absence of parallel liability of the EU for acts or omissions of the CJEU o France argued that: ♣ Res judicata should prevail over the right to redress ♣ System of remedies in MSs, and preliminary ruling, are sufficient safeguards for individuals ♣ In the alternative, State liability for judicial breaches should be subject to special rules that are particularly restrictive and radically different from rules governing other State liability o UK government argue that such liability can only be envisaged restrictively because: ♣ Reputation and independence of the judiciary ♣ Nature of the relationship between the CJEU and national courts ♣ Impartiality (unless the court makes a preliminary reference, in which case the CJEU becomes a court of final appeal) o German and Netherlands government argue that liability is possible, but conditions of liability is a matter governed by existing national law and not EU law o Commission argued that the principle of State liability for any type of public authority stems from the Treaty and the CJEU’s settled caselaw o AG Léger’s answer: YES given the ♣ (1) broad scope the CJEU gave to State liability, and • Francovich – despite the “particularly pathological” situation, the CJEU expressed itself in very general terms and didn’t confine principle to any particular organ → reasoning is transposable to judicial breaches o “Where there is no possibility of an appeal against a decision of a supreme court, an action for damages alone serves - in the final analysis - to ensure that the right infringed is restored and, finally, to ensure that the effective judicial protection of the rights which individuals derive from Community law is of an appropriate level” [38] o “reinstating [the] financial content [of the individual's right] is something less, a minimum remedy compared with full substantive reinstatement, which remains the optimum means of protection” [39] • Brasserie du pêcheur – the CJEU said “whatever organ of the State”. This is for uniform application of EU law – the obligation to make good damage cannot depend on domestic rules as to the division of powers between constitutional authorities. o In international law, State liability for international commitments will be viewed as a single entity, with the unlawful activity attributed to the State. So too in the ECtHR and so too now in Brasserie – impliedly, but necessarily, extended that principle to judicial acts (in any event Supreme Courts). ♣ (2) decisive role of national courts in implementing EU law, and * Direct effect and primacy constitute instructions to the national courts ([53]), whose function is a dual obligation: interpretation (Marleasing) and disapply national law contrary to EU law (Simmenthal), the latter of which is a major obligation, comparable to an obligation to achieve a certain result. * “although the national court, like any organ of a Member State, is required to apply Community law, its mission is all the more crucial because, faced with the final stage of the rule's execution, it is the guarantor of compliance with that rule” [59]. Thus, the national judge is no longer necessarily, as Montesquieu was able to say in earlier times, the mouthpiece of the law – it is incumbent upon the court to assess the relationship between its domestic law with EU law. * The CJEU’s caselaw has played a large role in developing the function of the courts, in reinforcing their authority within the State at the expense, in certain national legal systems, of constitutional developments. * But national courts aren’t left by themselves – they are assisted by the CJEU through preliminary references. * Liability makes it possible to overcome the limits of the obligation of interpretation in conformity with Community law and of the legal scope of directives ([64])  Where a lower court has held that the Supreme Court has violated EU law, and that case gets appealed, and the Supreme Court says it hasn’t violated EU law, then who is the final arbiter???? The CJEU cannot be because it is not in its jurisdiction to decide facts!!!!!!!  Something more akin to the Civil Law “rupture d’égalité devant les charges publiques” is more appropriate to such circumstances, because if the force of res judicata is not to be set aside, so that the judgment deemed to be illegal still (in the case of common law systems) is binding precedent, then a system of “no-fault liability” is much more appropriate. We recognize that the Supreme Court didn’t apply EU law, but we say that there are good reasons for doing so, and that the public interest requires it. But it isn’t fair that the claimant in this case is bearing all the burdens of the public interest, so we compensate them with damages. ♣ (3) the state of the domestic law of MSs on State liability for acts or omissions of the judiciary • all the Member States accept the principle of State liability for judicial acts (especially for breach of fundamental rights), and only the UK and Netherlands clearly limit scope of liability to deprivations of liberty and procedural rights (not content of the judgment). Only Austria and Sweden limit liability to decisions of ordinary (≠Supreme) courts. o MI but fundamental rights = economic rights?? • Thus a comparative study shows that the principle of State liability for judicial breach of legal rules is generally acknowledged by MSs → it is a PGDUE

Answer 21

♣ Independence of the judiciary – has not prevented MSs from creating liability under domestic law, and is not threatened because the personal liability of judges is not engaged ♣ No parallel rules governing EU liability – the two sets of rules need not develop in strict parallel, and the EU cannot be rendered liable on account of CJEU’s decisions because it is the supreme court in the Community legal order.  But then what is the supreme court of the national legal orders when it comes to matters of EU law?? ♣ Res judicata – it is only applicable where the threefold identity (subject matter/legal basis/parties) is satisfied, whereas here the parties aren’t the same. ♣ Guarantees of the national courts’ impartiality – this question didn’t prevent MSs from establishing a system of State liability, and it’s not for the CJEU to determine which courts have jurisdiction in the matter, since that is within the sphere of MS autonomy. It would be “excessive” to infer that such a situation would lead the CJEU becoming a final court of appeal – it is not a question of making a reference for a preliminary ruling automatic, but rather of pointing out that such a reference is possible

Answer 22

o If it were up to national law to determine, then there would be considerable drawbacks for coherence in the effective protection of rights derived from EU law. Therefore, there are minimum EU conditions. o As regards the second condition, there was a distinction between where the MS has no discretion and where it has broad distinction – it may be asked whether this distinction is still relevant (because recent cases apply the same criteria in both cases). Thus, it is not necessary to determine whether courts have wide discretion – the decisive factor is whether the error of law was excusable or inexcusable, depending on the clarity and precision of the legal rule, or the existence and state of CJEU’s caselaw. ♣ Example 1 – if SC gives a decision contrary to EU provisions whose meaning and scope are clear = liable. ♣ Example 2 – if SC gives decision that manifestly infringes the CJEU’s caselaw as it stands on the day of judgment = liable. ♣ Example 3 – if SC gives decision contrary to a judgment of the CJEU delivered after the national decision, when the national decision was consistent with the CJEU’s caselaw as it stood at that date, a fortiori where there was every reason to believe that the CJEU’s caselaw was stable = not liable. • MI but here has the national court really committed any breach??????? ♣ State liability cannot be prima facie precluded in the case of a supreme court's manifest disregard for its obligation to make a reference for a preliminary ruling where, for example, there is no case-law of the Court on the point of law at issue at the time when the national court gives its decision (though here direct causal link might be difficult to prove especially in the case of material damage (≠loss of chance to have case heard) – because then would have to prove that if the SC referred, it would have upheld C’s claim, whereas it would be excessive to require a national court in a damages claim to refer a question in order to know the response which it might have given if it had in fact been seized of such a question ([152]) o Should not pay particular attention to whether the breach was intentional or involuntary.

Answer 23

o difficult to accept that the Verwaltungsgerichtshof made an excusable error: ♣ Ruling that the condition (which was indirectly discriminatory) was justified by the wish to reward an employee’s loyalty to his employer ♣ Not conducting a proportionality check (difficult to see how it might be proportionate – it goes “without any doubt” beyond what is necessary to achieve the objective) ♣ Not maintaining the question referred, even if it meant supplementing it in order to obtain some clarification on the scope of [the case decided in the interim]. Applying CILFIT, it is difficult to see that the application of EU law (even if correct) was so obvious as to leave no scope for any reasonable doubt… and was equally clear to courts of other MSs and CJEU [173] o Thus inexcusable.

Answer 24

- In the light of the essential role played by the judiciary in the protection of the rights derived by individuals from Community rules, the full effectiveness of those rules would be called in question and the protection of those rights would be weakened if individuals were precluded from being able, under certain conditions, to obtain reparation when their rights are affected by an infringement of Community law attributable to a decision of a court of a Member State adjudicating at last instance, because by definition, such decisions cannot thereafter normally be corrected, so that individuals must have the possibility of rendering the State liable in order to obtain legal protection of their rights.

Answer 25

o Res judicata - Proceedings seeking to render the State liable do not have the same purpose and do not necessarily involve the same parties as the proceedings resulting in the decision which has acquired the status of res judicata. The applicant in an action to establish the liability of the State will, if successful, secure an order against it for reparation of the damage incurred but not necessarily a declaration invalidating the status of res judicata of the judicial decision which was responsible for the damage.  So the offending decision rests binding precedent, and would necessitate going all the way up to the UKSC to get it remedied (for another person in the same situation as the applicant…) Would this peron be able to sue on the basis of Francovich for losses occasioned from having to appeal all the way up?? o Independence and authority of the judiciary – ♣ Independence: the principle of liability in question concerns not the personal liability of the judge but that of the State. ♣ Authority: the existence of a right of action that affords reparation of the injurious effects of an erroneous judicial decision could also be regarded as enhancing the quality of a legal system and thus in the long run the authority of the judiciary o Difficulties of determining a competent court – it is for the Member States to enable those affected to rely on the principle of State liability by affording them an appropriate right of action. Application of that principle cannot be compromised by the absence of a competent court (MDRRRRRRRRRRRR)

Answer 26

- are the same as Brasserie du Pêcheur, but with regards to the second condition, regard must be had to the specific nature of the judicial function and to the legitimate requirements of legal certainty. - Factors to be taken into account by national courts = all the factors which characterize the situation put before it, including in particular: o Degree of clarity and precision of the rule infringed o Whether the infringement was intentional o Whether the error of law was excusable or inexcusable o The position taken by a Community institution o Non-compliance with obligation to make a reference o In any event it would be sufficiently serious if manifest breach of the caselaw of the CJEU

Answer 27

- In assessing the seriousness of breach, the CJEU itself assessed whether the breach in that case was sufficiently serious, taking into account factors like: o Community law did not expressly cover the legal point in issue and no reply could be found in the Court’s case law. o The national court’s decision arose from an incorrect reading of the judgment of the Court, and for this reason it could not be regarded as a manifest error.

Answer 28

- there was an infringement because the Austrian court had no right to consider that the point at issue (i.e. whether loyalty bonuses could be justified under EU law) was clear from the settled case-law of the CJEU. However, a mere breach is not sufficient – such a possibility should only exist in the exceptional case where the court has manifestly infringed the applicable law. - In this case, the infringement has not been sufficiently manifest ([124]) because (1) EU law gave no clear answer to the question whether a loyalty bonus could be justified, and that there was neither a reply to that question in the Court’s caselaw nor could the reply be regarded as obvious ([121]), and (2) the withdrawal of the request for preliminary ruling was done under the impression that the question had been answered. o There was an infringement: ♣ The order of reference made by the Court states without ambiguity that it considered (at the time) that under national law special length-of-service increment in question did not constitute a loyalty bonus. ♣ Then in Shoning-Kougebetopoulou the CJEU said that a measure that makes a worker’s remuneration dependent on length of service but excludes comparable periods in other MSs to be taken into account is likely to infringe Article 48. ♣ Then observed (on a provisional basis) that the subject-matter of the preliminary reference had been resolved in favor of Kobler, and then withdrew the request. ♣ Then concluded that the benefit was in fact a loyalty bonus. • This means that after dropping the preliminary ruling, the Court reviewed the classification under national law of the increment. ♣ Then dismissed the action following the reclassification, holding that from the judgment in S-K since the benefit was a loyalty bonus, it could be justified even if it was contrary to the principle of non-discrimination. • However, the CJEU did not express a view in S-K on whether and under what conditions a loyalty bonus could be justified, so the Austrian court’s inference was based on an incorrect reading of the judgment. It should therefore have maintained its request because the CJEU has not had an opportunity to pronounce on loyalty bonuses, so the point was not acte éclairé. o It was not manifest: ♣ But the fact that the Court withdrew the request on the view that the point had been resolved, owing to its incorrect reading of the S-K judgment, the infringement cannot be regarded as manifest in nature and thus sufficiently serious.  NB Wenneras argued that the Austrian court had made “not one error, but several” so should have cleared the threshold for sufficiently serious breach, and AG Léger said that it is “difficult to accept that the VwGH made an excusable error” ([170]).  Thus, some argue that the CJEU was too lenient or too deferential to MSs (Obwexer, Cabral and Chaves)  Zuckerman: “the ‘full’ protection of Community rights depends not on their content but on how far the national court is perceived by the ECJ to have blundered, in the sense of having made an obvious mistake.” The Court did not say, however, as it did in British Telecommunications with respect to an incorrect implementation of a Directive, whether the ‘incorrect’ reading was reasonably justified by the wording of the judgment.

Answer 29

- In the 13 years since Kobler only 35 Kobler actions have been reported in all MSs, and only 4 have been successful:

Answer 30

♣ The principle has found a certain acceptance by national courts who had to set aside conflicting national rules: • Austria (no liability for the acts of supreme courts); Bulgaria (exclusion of liability); • Finland (condition of prior reversal of the contested judgment or conviction or condemnation for damages of the judge); • France (no liability for final judgments); • Germany (liability only for criminal offences); • Lithuania (condition of prior declaration of unlawfulness of the final judgment); • the Netherlands (no liability for judicial acts); • Portugal (condition of prior reversal of the contested judgment); • UK (absolute immunity of courts) ♣ It means in these MSs we have duplication of liability regimes, except Belgium which made a general reversal of jurisprudence. ♣ In Sweden, as an informal way to receive damages before the Office of the Chancellor of Justice (Justitiekanslern ) existed  This is another example of where the CJEU is imposing a remedy without taking account of how MSs can already have different bases of liability! ♣ In some countries (ex. Hungarian Supreme Court) there is resistance (ex. repeated holding that it cannot reassess in a liability claim a final judgment that has gained res judicata)  Another rejection of primacy?? Is Kobler just inviting rejections of supremacy?

Answer 31

♣ Five national systems exclude liability for judicial activity in purely national cases (including Netherlands and the UK), and the importance of res judicata is a major impediment in five others (including France, Italy and Luxembourg). ♣ The prior reversal of contested judgment is a prerequisite for liability in seven national legal systems, and a declaration of unlawfulness is required in three more, and the criminal responsibility of the judge is a precondition in three others, and liability of the highest national courts is altogether excluded in one other. Thus, in 24 MSs, conditions for state liability appear overly restrictive with regard to Kobler.  But what does silence on the part of the CJEU say about this phenomenon?? Does it lend support to the contention that it was never seriously intended to be enforced in the first place? ♣ Only two MSs (Denmark and Latvia) legislation does not appear to have more restrictive conditions on Kobler actions. • (K.M. Scherr, The principle of state liability for judicial breaches: the case Gerhard Kobler v. Austria under European Community law and from a comparative national law perspective, p 168) ♣ Only in very few Member States, domestic remedial systems allow the application of the Kobler doctrine without any amendments. As remedial provisions are tightly linked to national legal traditions and are usually embodied in long-standing codes or deeply rooted case law, the doctrine has been skeptical as to whether Member States would amend their rules to accommodate the Kobler criteria. • (Harlow, ‘A Common European Law of Remedies’, in C. Kilpatrick, T. Novitz and P. Skidmore (eds.), The Future of Remedies in Europe (Hart Publishing, 2000), p. 7, 77–78) ♣ But Italy did amend in 2015 to allow wider grounds of liability for judicial breaches for EU than national law, and this is already the case for Poland.

Answer 32

♣ Retrial (in some MSs there are procedural means that allow for a case already decided by the court of final instance to be reopened by reason of incompatibility with EU law): • Manifest breach of EU (or national) law = 6 MSs (including the UK: Part 52.17 of the Civil Procedure Rules) o EXAMPLE: R (Edwards) v. Environment Agency [2010] UKSC 57 concerning the EIA Directive and Arhus Convention • This appears equally good (or even more efficient) than the Kobler remedy. ♣ Constitutional complaint = 11 MSs

Answer 33

♣ Difficulty establishing causality • Indeed in two out of the four successful Kobler claims (Finland and Bulgarian cases), the national and administrative bodies were held jointly and severally liable with the Court, and the court hearing the damages case did not identify which was at fault. • And the other two cases: one was after Traghetti, and the other was before the Office of the Chancellor of Justice not before a court (Sweden) ♣ Manifest infringement – IAO this can only be established in two situations: • Where the national court has made a mistake in the interpretation or application of the substantive EU rule, without even considering to make a reference for a preliminary ruling on a question that has not yet been clarified by the CJEU • Where the national court has deliberately deviated from the established CJEU case law

Answer 34

The applicant, a maritime transport undertaking, was forced into liquidation because its competitor charged fares well below costs. Argued that the competitor was abusing its dominant position on the market and receiving public subsidies whose legality was doubtful. Lower courts and Court of Appeal rejected the claim because they thought the subsidies were lawful and justified by the public interest. Appeal before the court of last instance, arguing that the lower courts had misinterpreted EU law, requesting a preliminary reference. The Court refused, holding that the previous judgments followed the letter of the relevant EU provisions and CJEU’s caselaw. Proceedings were subsequently brought for damages before the Tribunale di Genova.

Answer 35

- Whether lawful: o Italian rules excluding all state liability for damage caused by an infringement committed by a last instance court, where that infringement was the result of an interpretation of provisions of law or of an assessment of the facts and evidence carried out by that court. o Italian rules that limits such liability solely to cases of intentional fault and serious misconduct on the part of the court.

Answer 36

- rejected the possibility of any general exclusionary rule such as the one existing under Italian law + recalled the relevance of its own case law in determining the correct reading of Union and national law. Held that general exclusionary rules would be “tantamount to rendering meaningless the principle laid down … in … Kobler” ([36]), and that a similar restriction for assessments of facts and evidence would “amount to depriving the [Kobler] principle .. of all practical effect”, especially in the state aid sector where the protection of EU individual rights depends greatly on successive operations of legal classification of the facts.  Clearly, in rejecting the restrictions in Italian law, the CJEU does not want the requirements to be understood as an insuperable barrier.

Answer 37

- Third Question: whether Kobler liability must be interpreted as precluding a provision of national law which requires, as a precondition, the setting aside of the decision which caused the loss or damage, when such setting aside is, in practice, impossible (YES) - CJEU: again appeals to the essential role of the judiciary in protecting EU individual rights and the full effectiveness of those rules… Then recalls that once conditions of liability are satisfied, it is on the basis of national law that the State must make reparation, provided effectiveness and equivalence are satisfied. - The rule in this case may make it excessively difficult because the situations in which decisions of the last instance court may be subject to review are extremely limited. - The Portuguese government argues that the rule is based on: o res judicata, but the CJEU recalls that the Kobler principle does not in itself have the consequence of calling in question that decision as res judicata – such proceedings don’t have the same purpose nor the same parties as the decision that acquired res judicata (the applicant obtains damages but not necessarily a declaration invalidating the prior decision). ♣ The principle of State liability inherent in the EU legal order requires such reparation, but not revision of the judicial decision which was responsible for the damage. o Legal certainty, but CJEU says that it cannot frustrate the principle that the State should be liable for loss and damage caused to individuals as a result of infringements of EU law which are attributable to it (which is inherent in the system of the Treaties…)

Answer 38

- The purpose of Francovich liability is (according to the CJEU) “not deterrence or punishment but compensation for the damage suffered by individuals as a result of breaches of [EU] law by Member States” (A.G.M-Cos.MET, 17 April 2007). - If this is true, then we might expect issues about the protective scope (i.e. which legal interests EU law seeks to protect and compensate through damages) to be central to the CJEU’s discourse.

Answer 39

o Problem 1 – the intended right and breached obligation are not necessarily the same: indeed the “rule of law infringed” must be intended to confer rights (Brasserie, para 51), but in some cases, there is a distinction between the substantive right that the individual relies on, and the substantive obligation breached ♣ ex. failure to transpose a Directive (in Factortame, the substantive employees’ rights vs. failure to transpose the Directive by the relevant deadline) ♣ ex. Kobler situations (i.e. failure to make a preliminary reference vs. equal treatment) • Thus here Austria contended that Art 267 TFEU is an instrument of judicial cooperation not intended to confer any rights on individuals, whereas the CJEU said that the substantive right was the right of migrant workers to equal treatment. • But this is problematic because the substantive right to equal treatment was addressed to the authorities responsible for determining the terms and conditions for employment, not to the courts! Thus, from this, there is something greater than the sum of their individual parts: a new and autonomous right to reparation derived from but independent of both the original intended right and the original breached obligation.  MI but what kind of causation is there then? There is but-for causation (without the breach the substantive obligation wouldn’t have been violated), and it is foreseeable, but…

Answer 40

o the basic framework of Francovich liability is supplemented by rules heavily conditioned by the influence of national law (ex. causation) but rebuttable on the basis of equivalence and effectiveness and other mandatory requirements imposed by EU law (ex. right to effective judicial protection).

Answer 41

o It does not engage with the “intention to confer rights” criterion: the CJEU treats the criterion as a “tick-box” criterion that is relatively easy to satisfy. ♣ Consequence 1 – the subsequent analysis will be less clear (ex. how do you identify direct causal link when you don’t know what right exactly you’re dealing with?) ♣ Consequence 2 – shift in emphasis of the ground of liability away from the rights/interests protected towards the sufficiently serious breach requirement (and the “degree of culpability” that should be attributed to the MS). The central attention of Francovich liability shifts away from ensuring effective judicial protection of individuals to “admonishing the MS for having breached its obligations” ♣ Consequence 3 – it glosses over contested legal and moral questions about the nature and extent of rights and interests that might warrant protection through damages.

Answer 42

o : risks overlooking the difference between substantive and procedural rights, and how far C’s particular capacity to enforce EU law should translate to an entitlement also to claim reparation through the medium of the Francovich action (i.e. by holding that mere standing to enforce EU law might also provide the basis for a Francovich claim)

Answer 43

o separating public law liability from the judicial protection of private law rights. ♣ Public law remedies usually require something above fault (ex. in Francovich there needs to be a sufficiently serious breach etc.), whereas in many cases breach of a private law obligation will justify a remedy per se and without any further fault-based limitation (ex. Courage v Crehan liability is based on mere infringement). ♣ The concerns in the two types of cases are qualitatively different, and Francovich (as a public law remedy) must ask whether the dispute is of a public law character. The “intention to confer rights” criterion is inappropriate for doing so, and nor is it considered at any other stage.

Answer 44

For a thoroughly sceptical point of view, observing that little thought had been given to who paid and who benefited from state liability (because many actions were group actions, or actions by large undertakings → who is really empowered by Francovich?? - In some cases citizens are empowered (Faccini Dori, Marshall, environment cases), but this doesn’t mean that actions for damages should be the best medium to do so. There is much to be said about judicial review being the standard procedure. - In other cases, citizen enforcement is in any event a “fantasy” because most actions are brought by corporations in litigation involving economic interests. - However, compensation is not granted from some limitless budget – MSs never increase taxes to pay for liability claims, so it comes from elsewhere (esp. welfare spending). Unclear that such a distributive exercise should be done through individual litigation.

Answer 45

Argues that the CJEU’s caselaw on Francovich should make a clearer distinction between horizontal/vertical situations and between public/private law liability. Francovich should only concern public law liability.

Answer 46

- The point of Francovich seems to be to balance the private interest in obtaining reparation against the public interest in limiting liability. But there is the risk of parallel remedies because Francovich applies to provisions that have direct effect (and those that don’t because they’re not sufficiently clear and precise, but still confer rights), and here we must distinguish between public law and private law situations. o In public law situations where Francovich is available alongside restitutionary (≠compensatory) remedies, a national law requirement to exhaust alternate remedies before pursuing Francovich is probably acceptable. But the default position is that both are available – and AG Jacobs criticized this because it might allow claimants to avoid stricter procedural requirements applicable to restitutionary claims (though later he said that this might be justified because of the manifest nature of the breach) o In private law situations Francovich might be available alongside mixed public/private law remedies – the idea that Francovich might apply to vertical-yet-private-law disputes appears to have gone unnoticed (ex. AG Léger in Hedley Lomas categorized Foster as a Francovich-style case without apparently recognizing that the breach arose within a private law context, with adequate private law remedies). ♣ The possibility of overlap would mean that those who enter into private law relationships with public authorities will have the private law remedy and Francovich whereas those who enter into the same relationships with other private individuals will only have the private law remedy. ♣ Usually the private law remedy will be substantively more advantageous than Francovich, but maybe shorter time limits – is it really appropriate to use Francovich to get around these?

Answer 47

- a unified approach to conditions of liability o In Brasserie, liability can be established in two ways: ♣ If there is discretion, then manifestly disregarded the limits of the discretion (taking into account the Brasserie factors) ♣ If no discretion, then a breach suffices o However, recent cases (Haim, Larsy) suggest that in both cases of discretion and no discretion, the Brasserie factors are to be taken into account – this shows that discretion is not the only factor in limiting the liability of public authorities. There is now a genuinely unified approach to establishing the existence of a sufficiently serious breach, based on a global assessment of the Brasserie factors, including discretion.

Answer 48

- we should move away from the distinction between vertical and horizontal, towards a distinction between public law and private law. Francovich should remain in public law situations, whether vertical or horizontal.

Answer 49

- Reduces legal certainty → not because it allows the reopening of concluded cases (it doesn’t – res judicata remains unaffected) but because it allows the litigant a second chance to raise the LEGAL QUESTION apparently resolved in the primary action - Upsets the domestic legal hierarchy → potentially allows a High Court to decide whether the UKSC made an error of law, or if the second case progresses on appeal, Law Lords ruling on the judgment made by their colleagues. - Constitutional conflict within domestic legal orders → if, for example, the BVerfG refused to apply CJEU rulings, and the decision is challenged under Francovich, then a first instance judge might be forced to choose between loyalty to the final court or the CJEU In both Kobler and Traghetti, the CJEU stated that manifestly ignoring the CJEU’s caselaw or failing to make a reference would lead to judicial liability. However, this is not likely to occur in cases of widespread violation of individual rights, but where a senior national court is deeply unhappy with the CJEU’s reasoning or believes that the CJEU has overstepped its power. If this happens, then a lower court would be forced to arbitrate between the CJEU and the senior national court through the Francovich procedure. This is a bad thing.

Answer 50

Argues that the “manifest infringement” requirement is a limitation, but cannot be regarded as an insurmountable hurdle. Though Kobler might lead to the opposite conclusion, Traghetti rules that out (though the author admits that cases decided under national law after Traghetti don’t seem to be applying Traghetti but apply Kobler, which undermines this contention).

Answer 51

- Prior to Kobler/Traghetti indications of the CJEU made their outcome predictable – “whatever be the organ of the State” (Brasserie du Pêcheur), but nevertheless the CJEU in those cases took MSs’ concerns seriously by narrowing down liability to (1) last instance and (2) manifest infringement. - However, the Kobler reasoning (inherent in the protection of the rights of individuals … must have the possibility of obtaining redress… [36]) leads to the inference that the possibility of being recompensed is not merely theoretical – the full effectiveness of EU individual rights would otherwise be called into question. - In Kobler had to consider whether to transpose the same conditions for judicial breaches or use different conditions: o MSs and Commission argued for different conditions ([16]) o AG Léger said that it would not be enough to purely and simply transpose the conditions, but at the same time it’s important to maintain a certain coherence ([122]) o CJEU held that the Brasserie conditions were necessary and sufficient, but that with the second condition regard must be had to the specific nature of the judicial function. - Then Traghetti clarified that the manifest infringement condition is not to be regarded in theory or practice as an insurmountable hurdle. - Decisions of national courts in the wake of Kobler/Traghetti are more ambiguous – none expressly contradicts the CJEU’s finding that in principle it’s possible to hold the state liable, but none regarded the requirement of manifest infringement fulfilled: o France (CE, 18 June 2008, Gestas): CE held that “la responsabilité de l'Etat peut cependant être engagée dans le cas où le contenu de la décision juridictionnelle est entachée d'une violation manifeste du droit communautaire ayant pour objet de conférer des droits aux particuliers” though in this case there was no infringement at all. o Germany: first confirmed possibility in an obiter dictum (BVerfG, 6 May 200, para 27) then examined cases deciding similarly to Gestas. - NB the CJEU did not make the same distinction in judicial breach cases as regards cases where the judiciary has discretion and where it doesn’t – probably owes to the “specific nature of the judicial function” that the CJEU didn’t want a mere breach of EU law to automatically entail the obligation to pay damages. But the difference might not be that great – the Brasserie factors are almost identical to the Kobler factors (except the additional factor in Kobler of failure to reference). This will leave a lot of uncertainty especially after CILFIT.

Answer 52

- Issue: whether a party to a contract liable to restrict or distort competition within the meaning of Article 101 TFEU could rely on the breach of that provision before a national court to obtain ‘relief’ from the other contracting party (in this case the right to compensation enforceable against another private party in situations where under English law the claim would be barred by the defence of illegality). - CJEU: The full effectiveness of Article 85 (101 TFEU) of the Treaty and, in particular, the practical effect of the prohibition laid down in Article 85(1) would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition.

Answer 53

Extension into violations of EU law by private parties (Courage) – though according to Lecykiewicz the Courage remedy should be seen as independent from Francovich because the Court in Courage didn’t rely on Francovich but rather returned to the argument from the creation of the EU’s own legal order (discussing the special importance of Art 101 TFEU and its horizontal effect): - The right to compensation enforceable against the claimant’s contracting party was created because it ‘strengthens the working of the Community competition rules and discourages agreements or practices, which are frequently covert, which are liable to restrict or distort competition’. That case involves the enforcement of the Treaty competition rules … although be careful about making assumptions about how generally applicable such conclusions are beyond the specific provisions (here, the Treaty’s rules on Competition) involved.

Answer 54

Causes of alarm concerning Francovich liability: - The caselaw promises an imbalance in the control of violations of EU law because rules that affect commercial interests with access to deep pockets are more likely to be sanctioned than those that affect diffuse interests (consumers, environment) → ex. requirement of an identifiable “right” is more likely to be satisfied in the first case. - Over-deterrence that may inhibit worthwhile legislative intervention, which can be insulated against by strict interpretation of the “sufficiently serious” criterion. - Compensation rules at EU level undermines settled law at national level, since national rules governing compensation are typically the product of long-term evolution, involving the reconciliation of the need for individual protection and wider public interest. - Destabilize the allocation of scarce resources to protection of collective interests. - German objection in Brasserie that a general right to compensation could be created only be legislation and judicial creation is incompatible with the allocation of competences in the Treaty. CJEU rejected this (unsurprisingly, since Francovich was decided five years earlier) holding that it was merely interpreting the Treaty.

Answer 55

suggests a ‘core’ narrative of the ECJ’s jurisprudence: (i) early period (until mid 80s) — characterised by an emphasis on national procedural autonomy; (ii) middle period (until 1993) — the most ambitious, interventionist, period; (iii) late period (from 1993) — ECJ seems to encounter a crisis of confidence, backing down from its interventionist stance.

Answer 56

• principle of effectiveness was altered to require that national procedural rules should not make it “virtually impossible or excessively difficult” to exercise/protect EU law rights and seemed to require a new remedy be available in national law by ruling that the right to repayment of charges levied in breach of EU law must be available in principle. These developments were based on Art. 4(3): “pursuant to the principle of sincere cooperation… MS shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union.”

Answer 57

Tightening of Requirements I: Remedies Tightening of the Requirements II: Equivalence Tightening of the Requirements III– Effectiveness

Answer 58

No new remedies rule rejected and emphasis placed on full effectiveness of EU law: • Factortame I [1990]: Spanish fishermen were prevented from registering their vessels by UK law. Cs argued that the Merchant Shipping Act 1988 breached EU law and sought interim relief before UK courts. HL interim relief was prevented by a CL rule that an injection could not be granted against the crown. CJEU: interim relief must be available as a matter of EU law, but left it to HL to determine conditions in which relief would be available. They restated the principle of national procedural autonomy, but stated the “full effectiveness of Community law would be impaired if a rule of national law could prevent a court… from granting interim relief.” Emphasis on effectiveness / judicial protection I Factortame contrasts emphasis on national procedural autonomy in Comet and Rewe. Zuckerfabrik [1991] and Atlanta [1995] (see preliminary ref. notes) establish that national courts may suspend EU acts / implementing national legislation while the validity of the act is being determined under the preliminary ref. procedure. • The issue: in these cases, the ECJ laid down criteria for the availability of such relief and, in Zuckerfabrik, emphasised that interim protection must be governed by the same rules regardless of whether an individual contests EU law (Zuckerfabrik) or national law (as in Factortame) — thus, in laying down conditions for the grant of interim relief, the ECJ further eroded national procedural autonomy in favour of the uniformity / effectiveness of EU law. • The ECJ retreated from this position in Unibet [2007]: distinguished two cases: o Case concerns compatibility of a national law with EU law: the national court must be able to grant interim relief (as in Factortame), but the conditions for the grant of such relief are to be determined by national law, not EU law (as long as compliant with equivalence/effectiveness). o Case concerns validity of EU secondary legislation: here interim relief is an EU law right, the substantive conditions of which are exhaustively determined by EU law (as in Z and A).

Answer 59

Equivalence asks what causes of action in domestic / EU law are sufficiently similar to require equivalent treatment in terms of remedies / procedure. Levez [1998] C wanted to assert her EU law right to equal pay before a tribunal, but under UK law was time barred from doing so. ECJ: was for national courts to decide whether the two-year time limit breached the principle of equivalence but it probably did: “The principle of equivalence requires that the rule at issue must be applied without distinction, whether the infringement alleged is of [EU] law or national law, where the purpose and the cause of action are similar.” In determining the equivalent national law proceedings, the court has to take a context-driven balancing approach — e.g. need to look at the most similar cause of action and see if additional barriers apply in bringing the EU law action, including whether it is more expensive / lengthy to bring EU law action. • Likely outcome (ECJ does not decide cases on the facts): two-year limitation breached the principle of equivalence as the most similar UK action (for salary arrears) did not have a two year limit. Williams (lectures): the application of the principle of equivalence involves value judgments, depends on what factors the court thinks is most important.

Answer 60

If used intensively, effectiveness may operate as a harmonisation measure. Now provided for in Treaty: • Art 19(1) TEU: MS shall provide remedies sufficient to ensure effective legal protection in the fields governed by EU law. San Giorgio [1983] principle of effectiveness was altered to require that national procedural rules should not make it “virtually impossible or excessively difficult” to exercise EU law rights.

Answer 61

Van Schijndel [1995]: introduced a context-specific balancing exercise between the principle of effectiveness and the principle of national procedural autonomy. The judgment is made in light of the aim and function of the national rule. Each national rule is tested for effectiveness on a case-by-case basis, leading to different results in various cases (see table). Note, for example, the different results reached in Mostaza and Asturcom, both involving very similar national res judicata rules. Since the original cases of Comet and Rewe the effectiveness of EU law has been confirmed as a GP of EU law (Art. 47 of the Charter) and has been used strongly in Factortame, Zuckerfabrik, Francovich, and Grundig where it operated to harmonise national procedural rules.

Answer 62

• Grundig v Italiana [2002]: Italian government sought to retrospectively apply a shorter limitation period on claims for reimbursement of tax payments made contrary to EU law. ECJ: reducing the limitation period from 3-5 years, with only 90-day transition period, violated effectiveness. Although reducing the limitation period was not “incompatible with the principle of effectiveness” such changes must be “reasonable” and there must be “transitional arrangements allowing an adequate period… for lodging claims for repayment which persons were entitled to under the original legislation.” o The retrospective change would have been valid with a longer transition period (min. 6 months).

Answer 63

where such rules prevent individuals enforcing EU law rights before national courts. The tension is clear in Lucchini [2007] and Falimento Olimpiclub [2009] — both cases concerned the same Italian res judicata rule, but very different facts, and in both cases effectiveness triumphed over national procedural autonomy and certainty. Two interpretations of these cases: 1. They illustrate national res judicata rules often have to give way to the principle of effectiveness. 2. They can also be read as highly fact specific: o Lucchini: concerned the finality of an Italian CA decision on the payment of state aid to a company in breach of EU law. ECJ decided res judicata did not apply because the Italian CA (following Foto Frost) did not have the jurisdiction to rule on the validity of the payment. o Fallimento: ECJ emphasised the fact-specific nature of Luccini and that “the rules implementing the principles of res judicata are a matter for the national legal order” but found that, here, effectiveness prevented the rule applying. Again, it was an unusual application of a res judicata rule, under which findings whether transactions were fraudulent in relation to one tax year prevented consideration of whether they were fraudulent relating to another tax year.

Answer 64

Both concern the Unfair Contract Terms Directive • Mostaza Claro [2006]: a national rule held C could not have an arbitration award invalidated under UCTD because C had not raised the issue in the course of arbitration proceedings. ECJ: rule could not prevent a finding the agreement was void under UCTD, to find otherwise would undermine the effective protection of weak bargaining power of consumers under UCTD — this intrusion into procedural autonomy was justified by “the nature and importance of the public interest underlying the protection… of consumers.” o ECJ effectively imposes a new procedural rule on national courts, requiring them to consider whether a contract is void for an unfair term of their own motion (not dependant on the consumer raising the issue in arbitration proceedings). Far reaching infringement on national autonomy. • Asturcom Telecomm [2009]: C sought to set aside an arbitration award on the basis of the UCTD, but did not raise the issue within the two-month limitation period allowed by national law. ECJ: res judicata rule was valid — distinguished from Mostaza in that C did not bring an action for annulment and took no positive action against the agreement. “The need to comply with the principle of effectiveness cannot be stretched so far” although it can allow a consumer who is unaware of his rights [as Mostaza] to set aside an agreement, it cannot “make up fully for the total inertia of a consumer.” o The total inertia of the consumer meant that the principle of national procedural autonomy and legal certainty triumphed over the effectiveness of EU consumer protection law.

Answer 65

• C promoted internet betting in Sweden, but his actions attracted criminal law proceedings. In a separate administrative action, C sought a declaration that Swedish law was contrary to EU Treaty provisions on free movement of services — court held that he could only make such a challenge during the criminal proceedings against him. ECJ: o Principle of effectiveness does not require there to be a separate self-standing action in national law to review legislative measures for compatibility with EU law, sufficient that such measures can be challenged indirectly in the course of enforcement proceedings. o Following the principle of national autonomy, EU Treaties were not intended to create new remedies in national courts, unless national law provided no remedy to protect an EU law right. o Thus, if C could only challenge the validity of the national law in proceedings brought against him by the state, that would not be sufficient and would violate effectiveness. ♣ Unibet evidences a balanced approach: national law cannot provide that the only way for an individual to challenge the validity of a national law is in criminal or administrative proceedings brought against him (pro-effectiveness), but a freestanding action to challenge the validity of national law for compliance with EU law is not required (national procedural autonomy). And see above on interim relief.

Answer 66

U explicitly recognised that EU law may sometimes require the creation of new remedies in national courts, emphasising it’s overriding consideration is the effective protection of EU law rights. However, it is consistent with the increased sensitivity to the principles underlying national procedural rules in modern ECJ cases; represents a middle way between the extremes of its earlier case law, allowing a better balance to be struck between national autonomy and effective protection of EU law rights.

Answer 67

Did German restrictions on legal persons (companies) obtaining legal aid violate the principle of effective judicial protection in Art. 47 of the Charter? CJEU: “the principle of effective judicial protection… must be interpreted as meaning that it is not impossible for legal persons to rely on that principle” however, “it is for the national courts to ascertain whether the conditions for granting legal aid constitute a limitation on the right of access to the courts which undermines the very core of that right.”

Answer 68

• Cs were charged fees for telecom licences contrary to EU law, but were time-barred from challenging them. CJEU: national law was compatible with effectiveness. “In accordance with the principle of legal certainty, Community law does not require that administrative bodies be placed under an obligation, in principle, to reopen an administrative decision which has become final upon expiry of reasonable time-limits.” o ECJ finds favour of national autonomy in Arcor but, as Weatherill notes “context matters” in such finality cases: “ECJ’s receptiveness to the preservation of legal certainty and the insulation of national procedures from intervention is noticeably weaker where consumers wishing to rely on EU law find themselves prejudiced by national procedural law.”

Answer 69

although DEB v Germany, and Unibet show a balanced approach. It seems the majority of cases still come down on the side of effectiveness rather than national procedural autonomy, particularly given the fundamental nature of the national rule struck down in Factortame I and the importance of finality / res judicata rules struck out in Lucchini, Fallimento Olimpiclub and Mostaza Claro.

Answer 70

As Ross notes, the key rationale for state liability is the effectiveness of EU law and Francovich illustrates the constitutionalising mission of the ECJ — it is not afraid to dictate how EU law will interact with and be dealt with by national courts. State liability gives EU law rights teeth and strengthens the effectiveness of EU law in that individuals can become enforcers of EU law in national courts (threat of damages will encourage MS compliance). NB: serious breach requirement means direct effect will be a preferable route (where possible) with Francovich damages a back-stop where direct effect is not available.

Answer 71

It is very difficult to sue the State, as it has deep pockets and political reasons to resist for as long as it can. Unlike Francovich itself, the majority of state liability actions are brought by large commercial enterprises seeking to hinder national law which it disagrees with; individuals will very rarely have the resources to bring an action for state liability. Francovich is constitutionally startling: it involved the ECJ dictating to national courts how it shall handle the tort liability of the State. It can be seen to violate the principles of national procedural autonomy and subsidiarity, as it is arguably not necessary for the EU to set out the substantive conditions for state liability as it did in Factortame/Brasserie (although it is fairly easy to argue that the principle of state liability itself satisfies subsidiarity, as it may be impossible for Member States to achieve a system of state liability for breach of EU due to constitutional rules e.g. Parliamentary sovereignty in the UK, UK courts cannot themselves set up a system for challenge an act of parliament for violation of EU law).

Answer 72

* A constructive relationship between the EU and the Member States requires dialogue and understanding rather than demand and sanction as in Francovich. * The rationales supporting Francovich liability are all flawed: o The EU is a dependent legal order in that it relies for its enforcement on national legal orders. State liability is enforced by national courts. But so long as the procedure for enforcing state liability remains in the national courts, States will always have room for manoeuvre, as shown by the fact that Strasbourg has condemned a number of states for excessive delay in complying with state liability rulings. No system of state liability can ever be truly mandatory. Unenforceable EU rulings bring the EU legal system into disrepute so the ECJ introduced damages liability rather than just declaratory judgments. But the introduction of damages liability involves a greater slur on Member States than a mere platonic declaration of breach, so causing the risk of State recalcitrance to escalate. o The rationale for Francovich liability could be deterrence but this is flawed in that state liability often will not have a deterrence effect. State liability imposed on national governments will not have a deterrence effect when the breach has been committed by regional authorities or the courts. In the majority of cases of State failure to implement a Directive, the failure is based on inadvertence, given the fact that EU legislation is often voluminous, obscure, complex, inaccessible and subject to unpredictable interpretation by the ECJ. State liability will not deter such inadvertent failures. o Francovich liability could alternatively be justified on the basis of giving full effectiveness to individuals’ EU law rights but this is flawed. A rights-based system of state liability in the EU is problematic in that EU fundamental rights law is based on economics e.g. the four fundamental freedoms, and have a primarily economic character. Conflicts could arise between EU rights and Member States’ economic and welfare policies; it is difficult to justify state liability interfering in Member States’ economics and welfare policies in such cases. Strasbourg is reluctant to order States to pay damages for breach of Convention rights. A better approach would have been to develop a discrete, equity-based remedy at EU level for breach of EU law rights, under which individuals should only be compensated for loss for which equity demands compensation, not for loss which is an ordinary risk of commercial life involving dealing with the EU. * The fault lines between national and EU liability systems have been violently disrupted and redrawn in the wrong place by Francovich. Member States liable under Francovich might turn against their own local authorities responsible for a breach of EU law or against the EU institutions, could sue them for negligent advice. * Member States are currently suffering from a flood of private law claims putting pressure on their legal systems and Francovich will make this worse. * Variant procedural rules and standards on state liability between Member States can be exploited by litigants who are multinational corporations, through forum-shopping, litigants can choose the best location to give their claim the best chance of success. * There is a strong tendency in private law to extend liability to the party with the deepest pockets even if it is remote from the central incident, and so the State becomes the most desirable target, can become everyone’s insurer under Francovich. * The public/private divide on which Francovich is based is flawed because privatisation has inextricably tangled the public and private sectors (but see Courage) * The floodgates problem of economic loss is key to Francovich, has led the ECJ to be cautious in the area of state liability. This caution is correct: onerous compensation provisions hamper the ability of public authorities to engage in public works etc, limit public bodies’ measures of economic planning and impinge upon core governmental functions. Private parties should not be able to transfer the costs of the normal risks of dealing with the EU to the State through state liability. * Francovich can be viewed more favourably as a step towards harmonisation of state liability rules, but if such harmonisation is desirable, it must be implemented much more consciously rather than through unpredictable ECJ judgments. * Law is a key part of Member States’ cultures, it embodies political beliefs, so the clash of EU and national law under state liability could produce a particularly strong whiplash effect/recalcitrance in Member States. * Francovich state liability has generated excessive litigation e.g. Factortame cases. * The complexity of EU law and policy means that patient negotiation with Member States rather than obedience under Francovich is required for successful outcomes.

Answer 73

* Francovich is better suited to public law actions against the State e.g. failure to implement a Directive, not to private law actions against the State e.g. breach of EU equality rules in its capacity as an employer. Francovich liability should only apply to the former not the latter type of action. * The problem of parallel remedies illustrates this point: where Francovich applies to breach of directly effective EU laws, there could be a double remedy though Francovich liability and an action against the state based on the directly effective EU law. In public law situations, this is effectively resolved through rules of exhaustion of alternative remedies, no such rules solve this problem in relation to private law actions. * When the State is acting in a private law capacity e.g. as an employer, Francovich liability serves no purpose as the State is not acting in the general interest and the individual does not expect a remedy under EU law. * Allowing Francovich liability in private law actions against the State would unfairly discriminate between the levels of effective judicial protection offered to citizens in private law relationships with the State e.g. employment compared with individuals in a comparative private law relationship with a private body. * The sufficiently serious breach test is too high a threshold for liability to be applied to the State in a private law action for breach of EU law; State should be liable per se for purely operational breaches of EU law by Member States in relation to its ordinary private law obligations. Francovich distorts effective judicial protection by inserting an inappropriate sufficiently serious breach fault requirement into private law actions against the state without any general interest to justify a higher standard of liability. * A mature system of effective judicial protection needs to move beyond seeing the whole of EU law in terms of vertical and horizontal disputes. Francovich applies to all horizontal disputes and so obscures the fundamental policy behind the sufficiently serious breach test, i.e. giving public bodies the protection necessary to perform their public functions, by applying this test to actions against the State for breach of private law obligations. Public bodies must not be able to evade their private law obligations through the sufficiently serious breach test. * Wse should therefore move away from an institutional view of Francovich liability towards a functional view: public law disputes against the State should be resolved under Francovich but private law disputes should not be.

Answer 74

As above, it could be argued that the principle of the effectiveness of EU law and effective judicial protection of EU law rights needs to be balanced more expressly against subsidiarity and the cultural and social value of national procedural rules and remedies e.g. in Factortame. The ECJ’s approach to the balance between effectiveness and national procedural autonomy could be seen as nuanced and effective, or as reactive, ad hoc and haphazard. It is argued e.g. by Snyder that a more systematic, procedurally legitimate and carefully considered approach should be taken to the effectiveness of EU law and the creation of an EU system of procedures and remedies. But such harmonisation may be very difficult, incremental developments by the ECJ may be better. The restrictive standing rules under Art 263 can support an argument in favour of greater harmonisation of domestic law on procedure and remedies for breach of EU law, i.e. greater weight to effectiveness over national procedural autonomy. Under the Art 263 standing test, it is very difficult for an individual to bring a direct challenge to the validity of an EU act. But such a challenge can take place indirectly if an individual challenges national measures implementing that EU act before the national courts prompting the national court to make a preliminary reference to the validity of the EU act to the ECJ. In order for the preliminary reference procedure to operate in this way as an effective backup to ensure that individuals are able to challenge EU acts, it must be possible/easy for individuals to challenge the effectiveness of national implementing measures before the national courts. The principle of effectiveness is therefore important in striking down national procedural rules that make it more difficult for an individual to take advantage of this indirect method of challenging the validity of EU acts. Van Schijndel (effectiveness) and Levez (equivalence) illustrate the ECJ’s highly context-specific balancing approach, which requires the importance of the EU right to be weight against the scope and purpose of the national rule taking account of all of the particular circumstances of the case, making it difficult to track clear trends or lines of authority, and generating substantial ongoing litigation

Answer 75

The ECJ jurisprudence on remedies for national breaches of EU is seen as divided into three phases (commentators include Dougan): 1. The non-interventionist stage – Primarily Rewe Zentralfinanz, Comet, and Rewe Handelsgesellschaft. 2. The more interventionist stage in the 1990s – San Giorgio, Factortame 1, Francovich. 3. The modern, less interventionist, more nuanced approach, whereby the ECJ still wants to increase and uphold the effectiveness of EU law but accepts that this must be balanced against good reasons in favour of national procedural autonomy: van Schijndel, Factortame/Brasserie introducing sufficiently serious breach requirement for Francovich liability; Unibet. 4. Tridimas argues that there is now a fourth stage marking a return to an increasingly interventionist approach by the ECJ.

Answer 76

cases which appear to be highly interventionist are in fact not so and are followed by subsequent cases which reign in their scope e.g. Francovich appeared to be a major interventionist decision but the case was followed by the restrictive sufficiently serious breach requirement in Brasserie/Factortame; Factortame 1 was followed by Unibet refusing to lay down EU law conditions for grant of interim relief against national legislation which violates EU law. Rather than seeing the case law as overall phases, we should see each new development e.g. Francovich, Factortame 1 separately, containing a series of developments each of which might change the balance between effectiveness and national procedural autonomy in either direction. Bobek also argues that national procedural autonomy does not in fact exist at all in that the Treaties provide no limits on the remedies which the ECJ can use or require national courts to make available, and does not specify any areas of procedural law in which Member States alone have autonomy free from ECJ intervention.

Answer 77

* The non-interventionist model – EU law simply holds that national law must do something to redress the damage to an individual caused by breach of EU law rights, but it is entirely up to national law to decide how to effect such redress. * The EU cause of action model – The EU defines the cause of action which the national law must operate to give the individual redress e.g. Francovich; EU law defines the remedy, national courts merely operate that remedy.

Answer 78

The EU cause of action model may be preferable in that it can make the law much clearer if the ECJ defines the cause of action and tells the national courts what rules to apply. But if competence for causes of action and remedies for breach of EU law is to be held by the ECJ not national courts under the EU cause of action model, then responsibility for maintaining coherence and a conceptual structure is held by the ECJ and the variety of different results in the case law show that the ECJ has not engaged in this kind of coherent and principled reasoning. It is evident from cases e.g. Francovich and Factortame 1 that competence is increasingly moving to EU level to define what used to be thought of as national causes of action in relation to breach of EU law, but this has not yet been accompanied by the same level of detailed thought and principled reasoning which accompanied development of those causes of action at national level. As well as subsidiarity and the cultural and political value of national procedural rules and remedies, the ECJ should take more account of the need for a coherent approach to procedures and remedies for breach of EU law when considering the balance between national procedural autonomy and effectiveness.

Answer 79

* U took a restrictive approach to the principle of effectiveness in relation to conditions for the grant of interim relief suspending a national law alleged to be contrary to EU law — in finding the Z criteria do not apply, U introduced two separate schemes, contrary to the thrust of Z which emphasised the need for harmonisation in this area. U was based on national procedural autonomy but may introduce discrepancies into the measure of interim protection provided; the onus is on national courts to interpret the principle of effectiveness in determining conditions for interim relief, but few preliminary refs. will be made (given the urgency of such protection) so the ECJ will not have opportunities to develop a consistent line of case law on effectiveness in this context — to the detriment of legal certainty and effective judicial protection. * U is difficult to reconcile with the extensive harmonisation of conditions for Francovich state liability. Both are based on the rationale of effective judicial protection of EU law rights — but in Francovich this has prompted harmonisation, not the case in relation to interim relief in U. This might be because MS laws regarding state liability were more diverse and therefore in greater need of harmonisation. * Difference in regimes under Z and U is not warranted. U is a concession to national procedural autonomy in an area where it is of little practical importance because domestic law was not in need of harmonisation.

Answer 80

C was party to a contract with D that violated Art. 101 TFEU as an anti-competitive agreement. C sued D for loss suffered under the illegal contract, but was barred by the rule in Tinsley v Milligan (would have to rely on own illegality to prove claim against D). ECJ: effectiveness would preclude a national rule which barred C from recovery “on the sole ground that C is a party to that [illegal] contract,” but not a national law barring recovery where C must rely on his own unlawful actions where it is established that C bears significant responsibility for distortion of competition. This case can be read in two ways: (i) a simple application of the default rule of procedural autonomy subject to the requirements of effectiveness and equivalence; (ii) Dougan argues it intends to establish the existence, in principle, of an EU remedy in damages for private conduct which infringes anti-competitive rules, supported by ECJ’s emphasis on the fundamental importance of Art. 101, importance of protection against anti-competitive agreements takes precedence over national procedural autonomy

Answer 81

it recognises national procedural rules may reflect deep-seated cultural and ethical values and should not be set aside lightly. The extent to which the ECJ has been willing to interfere with national procedural autonomy has varied; Unibet and Impact show greater restraint, but it seems clear that effectiveness is superior to national autonomy: • In Factortame and Francovich, the ECJ gave effective protection of EU law rights clear priority over national procedural autonomy. Unibet represents a new era of judicial restraint, departing from the Zukerfabrik emphasis on uniform application of EU law. • This trend is also reflected in Impact (on indirect effect) which took a more restrained approach to the interpretive obligation (in contrast to Pfeiffer).

Answer 82

if the ECJ prioritises effectiveness and sets out firm guidance on procedural rules and remedies then decisions are being taken at a central level; particularly concerning as legal rules are a key part of MS culture and can embody political beliefs. Further, as Harlow notes, ECJ’s decisions are not subject to national parliament’s subsidiarity monitoring under Protocol 2. Arguable that in cases involving major intrusions into national systems of remedies / procedures (e.g. Factortame, where key constitutional principle of parliamentary sovereignty was undermined, and Francovich) more account should be taken of subsidiarity. Note: conferral issues are more convincing that subsidiarity issues as stringent enforcement of effectiveness is essentially harmonising laws, a function which cannot be taken at a lower level (e.g. by national courts). Further, could be argued that bright-line rule setting by the ECJ can improve subsidiarity because it reduces the need for preliminary references to the ECJ, meaning that for more individuals in more cases, the decision on their case is made by a national court in a language they are familiar with — even if the remedy / procedure applied is one harmonised by the ECJ.

Answer 83

* For example, it was used in Francovich to justify a novel principle that had no textual foundation in the Treaty (although it was claimed that state liability was inherent in the Treaties based on effectiveness). In such cases, the stable and entrenched principle is used to camouflage novel developments. * Doctrines of indirect effect, incidental effect, and HDE of general principles in Mangold show that effectiveness is used as a handy device for achieving best results instrumentalism, rather than the creation of principled judicial authority. Pfeiffer is a clear example, with effectiveness essentially triumphing over impossibility by requiring a contra legem interpretation. * However, effectiveness is problematic when it comes to conflicts between it and other principle because it is an amorphous principle that is easily misapplied — e.g. indirect effect clashes with legal certainty and non-retroactivity. Concerning given it is at the heart of EU constitutionalism.

Answer 84

Francovich liability fails to provide an effective course of action for individuals who have suffered monetary loss as a result of MS action to recover their losses. This partly stems from the restrictive nature of the three conditions established in Francovich, developed in Brasserie du Pecheur and Factortame III. Further, while subsequent cases clarified that the scope of Francovich liability extends to losses flowing from legislative and judicial breaches of EU law, the courts have opted for a narrow interpretation of the Brasserie conditions which makes recovery almost impossible. Finally, the course of action is prohibitively expensive. Consideration of Courage v Crehan, which seemingly extends Francovich liability to breaches by individual parties, is beyond the scope of this essay which is concerned with MS action. In light of the ineffectiveness of State liability, a move to private law, calling for the enforcement of horizontal direct effect, is proposed.

Answer 85

Francovich provides the genesis of state liability and sets out three specific conditions which must be met be satisfied to give rise to damages for failure to implement a directive. First, the result prescribed by the directive must involve the grant of rights to individuals; second, those rights must be identifiable according to the provisions of the directive and third, there must be a causal link between the breach of the state’s obligation and the harm suffered by the injured parties. These conditions were reformulated in Brasserie du Pecheur and Factortame III. In Brasserie, the claimants sought damages after Germany stopped exporting beer in light of its beer purity laws. In Factortame III, Spanish fishermen sought £30 million damages for the lost time they could not fish in British waters due to the Merchant Shipping Act. The fact that these cases concerned illegal action, rather than inaction, did not create an obstacle to recovery. Noting that ‘the protection of rights which individuals derive from Community law cannot vary depending on whether a national authority or Community authority is responsible for the damage’, the CJEU proceeded to set out the conditions for state liability: (i) the rule infringed must have been intended to confer rights on individuals; (ii) a manifest and serious breach has occurred; (iii) there must be a direct and causal link between the breach of the obligation by the State and the damage suffered by the injured parties. The CJEU applied this new criteria in Dillenkofer v Germany and held that Francovich established that non-transportation of a directive within the prescribed time limit itself amounted to a sufficiently serious breach. As such, the development in the conditions can be regarded as one of form, not substance. On the other hand, Brasserie du Pecheur and Factortame expanded (or at least clarified) the scope of protection afforded to individuals who had suffered monetary loss, as they could recover loss for any legislative breach of EU law, subject to meeting the stringent conditions.

Answer 86

One overarching curtailment of Francovich liability is the restrictive nature of the conditions. The requirement for a manifest and serious breach has been interpreted in subsequent case law as requiring a ‘manifest and grave disregard of the limits on the exercise of its power’ (Bayerische HNL). Crucially, what constitutes a ‘manifest and grave disregard’ varies depending on the nature of the infraction. While it is extremely difficult for an applicant to recover damages from a Community institution, since the EU institutions regularly legislate in highly discretionary field i.e. common agricultural policy, it is comparatively easier for an applicant to effectively recover damages from a MS’s infraction of EU law. This is due to the comparatively lesser degree of discretion afforded to MSs. For example, failing to implement a directive is a flagrant breach of EU law: the State has no discretion as to whether it enforces a directive, only as to the way it does so. Liability in such instances should therefore be less exceptional. AG Van Gerven, writing extra-judicially, thought that the ‘manifest and serious breach’ condition was likely to lead to the ‘virtual immunity for any kinds of conduct on the part of the legislature which does not fly in the fact of Community Law.’ AG Van Gerven’s concern has proven correct. Although an applicant has comparatively more effective course of action against a MS than a Community institution, MSs nonetheless enjoy ‘virtual immunity’ due to the stringent Francovich conditions.

Answer 87

The first category of cases which illustrate this point concern the incorrect implementation of a directive. In Ex p British Telecom, the UK mis-implemented a public procurement directive just like the other states did. The CJEU held hat this did not amount to a ‘sufficiently serious breach’ since the provision was not clear and precise. More specially, the UK’s interpretation was made in good faith and in keeping with the aims and wording of the directive, and no previous CJEU rulings gave any guidance on the matter. Therefore, the UK did not have to compensate BT for its monetary loss (the important point is whether the MS had discretion in implementing the measure. In other words, was it sufficiently precise or, on the contrary, too vague?) Similarly, in Denkavit International, there was no existing case law on the complex tax directive concerned and almost all states adopted the same (but wrong) interpretation. Consequently, Denkavit could not recover for its loss. (You could give a counter-example: Ex Parte Synthon BV should probably be mentioned). Further, while the aforementioned case of Dillenkofer illustrates that failure to implement a directive gives rise to a course of action, the majority of infractions would not be a complete failure to implement the directive, but incorrect implementation (incorrect implementation might give rise to liability if the directive was sufficiently clear..) Therefore, most applicants are precluded from the Francovich course of action in the vast majority of cases in which they incur loss due to the MS’s transgression.

Answer 88

A second category of cases entails liability from judicial breach of EU law. In the seminal case Kobler v Osterreich, it was held that liability for judicial breach of EU law could only be incurred ‘in the exceptional case where the court has manifestly infringed the applicable law’. In Kobler, both infractions (wrongly holding that a bonus scheme did not breach Article 45 TFEU and failing to make a preliminary reference under Article 267 TFEU) were insufficient to give rise to liability and permit Mr Kobler to recover his losses. Therefore, save for the exceptional circumstances in which a court deliberately refuses to follow EU law, the Court’s current commitment to effective judicial protection is in fact ‘illusory’ (Dougan). The weight of this claim is not weakened by Traghetti del Mediterraneo. In this case, Italian legislation sought to restrict state liability for damage caused by a breach of EU law by a national court adjudicating at last instance to cases where the court’s infringement of EU law was the result of an interpretation of law or an assessment of facts or evidence, and by limiting liability solely to cases of intentional fault and serious misconduct by the court. The ECJ held that this legislation was incompatible with EU law. The decision leaves open the possibility for recovery of monetary losses where there is manifest disregard of the CJEU case law on the subject. However, as Leczykiewicz notes, the absence of a ‘settled’ caselaw will always result in a breach if failure to send preliminary reference, but the resulting incorrect application of EU law would then rarely be sufficiently serious for Francovich liability

Answer 89

Finally, various practical limitations apply to affect the reality of the ability for the individual victims to successfully recover damages. In the UK, for example, the prospect of an individual personally funding a public law action or, without retaining legal representation, presenting such a case is a practical impossibility. Trades unions and some public bodies do fund State Liability claims, but these are relatively rare and, in 2012, in the UK, only 2.6 million workers were union members engaged in the private sector. (Department of Business Innovation & Skills (2012) ‘Trade Union Membership 2012 Statistical Bulletin May 2013). Such private sector workers lack the protection of availing themselves of a (vertical) direct effect claim against their employer, they may face the problems of enforcing the law through indirect effect, and while these workers may have the financial and legal support of their union to pursue a remedy of State Liability, clearly the overwhelming majority of workers in both public and private sectors are not trade union members I recall you made a similar claim in one of your essays on judicial review. While the cost of legal action could indeed be a ‘real-world’ argument, on which you may want to incidentally rely in an essay, here these developments might appear quite superfluous. Therefore, the majority of workers are less likely to possess the funds to bring their own, individual action for State Liability.

Answer 90

At its essence HDE will enable individuals to gain access to their EC law rights and hold Member States accountable by not allowing them to withhold rights through opaque or inaccessible enforcement mechanisms. HDE would provide a benefit to the State by affording access to the relevant laws which had been denied to workers. As the Member State will obviously want to transpose the Directive on time or correctly then they should welcome individuals to assist them in ensuring the domestic law adheres with its EC law parent. If on the other hand the Member State did in fact not want to transpose the Directive or deliberately did so to incorporate the provisions incorrectly or not on time, then HDE would act as a safeguard to ensure the appropriate rights were available until the government fulfilled its obligations and enacted or altered the law. (Ok – but note that Francovich liability is not limited to claims dealing with the incorrect implementation of a Directive.) The private law remedy is a further answer when the empirical evidence is analysed, and its implications are considered against the problems of State Liability. Recent studies into the knowledge and awareness of various EC-based employment rights of workers in the UK has demonstrated that there are significant gaps in their awareness (Marson 2002, Meager et al. 2002). The source of these workers’ rights has been found to be largely influenced by the employer (Marson 2002) and a report by the Blackburn and Hart (2002) has discovered that employers often have little knowledge of the full extent of employment rights themselves. Therefore, their ability to pass this information on to their workers is limited. The general lack of awareness of EC rights is due in part to the problems of enforcing these laws in the private sphere and a method of making these available and accessible would assist in the advancement of employment protections as required under EC law

Answer 91

The current scope of Francovich liability means there is limited hope of recovering money for losses incurred by a MS’s breach of EU law. Therefore, a more accessible remedy, closer to enabling the use of rights is necessary. The CJEU has already stated that MSs should not be able to benefit from their own breach of the law. Yet, the limited scope of Francovich liability means this is inevitable. As such, recognising horizontal direct effect should be considered as a possible alternative.

Answer 92

he ECJ’s judgment in the case of Associação Sindical dos Juízes Portugueses (Case C-64/16) is noteworthy for two reasons. First, it is arguably the most important judgment since Les Verts as regards the principle of the rule of law in the EU legal system. Secondly, it comes close to being the EU equivalent of the US Supreme Court case of Gitlow as regards the principle of effective judicial protection (Gitlow led to the progressive application of the US federal Bill of Rights to all state norms even when the states act within their own sphere of competence: see AG Sharpston here for a brief account). The Court’s ruling in Case C-64/16 may be understood as the Court’s answer to the worrying process of ‘rule of law backsliding’ first witnessed in Hungary and now being seen in Poland. This judgment essentially establishes a general obligation for Member States to guarantee and respect the independence of their national courts and tribunals. What is particularly noteworthy is that the Court has done this solely based on Article 19(1) TEU read in light of Article 2 and Article 4(3) TEU. This reasoning should hopefully lead the Polish government to stop repeating the ludicrous claim that it can introduce whatever judicial ‘reforms’ it sees fit as the organisation of national judiciaries falls outside EU competence. (In any event, the Irish courts have just decided to ask the ECJ whether European Arrest Warrants issued by Poland must be executed, in light of rule of law concerns; see also this review of the recent ECJ case law on EAWs and human rights).

Answer 93

In 2014, the Portuguese legislature introduced a temporary reduction in the remuneration paid to the persons working in the Portuguese public administration, including judges. The Associação Sindical dos Juízes Portugueses (ASJP), acting on behalf of members of the Tribunal de Contas (Court of Auditors), decided to challenge the salary-reduction measures on the main ground that that they would infringe ‘the principle of judicial independence’ enshrined, not only in the Portuguese Constitution, but also in EU law, in the second subparagraph of Article 19(1) TEU (‘Member States shall provide remedies sufficient to ensure effective legal protection in the fields covered by Union law’) and Article 47 of the EU Charter of Fundamental Rights (Right to an effective remedy and to a fair trial). This issue was then subsequently referred by the Portuguese Supreme Administrative Court to the ECJ for a preliminary ruling. What is particularly noteworthy is that the ECJ focused exclusively on Article 19(1) TEU, which the Court described as giving ‘concrete expression to the value of the rule of law stated in Article 2 TEU’ having previously recalled that mutual trust between national courts ‘is based on the fundamental premiss that Member States share a set of common values on which the European Union is founded’. On the basis of a combined and powerful reading of Articles 2, 4(3) and 19(1) TEU, the Court underlines, more than ever before, the duties of national courts under the EU Treaties and in particular, their duty to ensure ‘that in the interpretation and application of the Treaties the law is observed’ while repeatedly observing that in order for the EU legal system to operate efficiently and for individuals to continue to benefit from the principle of the effective judicial protection of their EU rights, it is essential that national courts remain independent. Whilst the outcome of the case itself is not surprising, it is the Court’s approach which is particularly noteworthy. Before concluding that the ‘salary-reduction measures at issue in the main proceedings cannot be considered to impair the independence of the members of the Tribunal de Contas’, the Court referred to a number of criteria which must guide national courts should they have to review measures which are alleged to infringe judicial independence: Are the measures specific to judges? Are the measures justified by an overriding reason of public interest? Can they be considered to weaken their independence? In the present case and on the basis of these criteria, the Court convincingly concluded that ‘the second subparagraph of Article 19(1) TEU must be interpreted as meaning that the principle of judicial independence does not preclude general salary-reduction measures, such as those at issue in the main proceedings, linked to requirements to eliminate an excessive budget deficit and to an EU financial assistance programme, from being applied to the members of the Tribunal de Contas’.

Answer 94

The principle that national courts must be independent is not new in EU Law (see for instance Article 47 of the EU Charter of Fundamental Rights ‘CFR’ hereinafter). What makes the Court’ ruling in this case particularly significant is the way the Court exclusively relies on Article 19(1) TEU having emphasised early on in its judgment that this provision may be relied upon in national situations irrespective of whether the Member States are implementing EU law within the meaning of Article 51(1) CFR. This is a welcome but nonetheless ground-breaking interpretation. In a nutshell, this interpretation of Article 19(1) TEU gives the principle of effective judicial protection a much wider scope of application that it would have on the basis of Article 47 CFR which is subject to Article 51(1) CFR. Article 19(1) TEU (added to the EU Treaties via the Lisbon Treaty) may therefore be ‘triggered’ in a much broader set of national situations than Article 47 CFR and in areas where there is very little to no EU acquis. It may be worth briefly recalling at this stage that EU Law cannot be relied upon in every national legal procedure. For instance, in ‘purely internal situations’, where no links with EU law can be established, the ECJ lacks jurisdiction. The scope of application of the EU Charter is similarly limited by its Article 51(1). While the ECJ did adopt a broad interpretation of the notion of ‘implementation’ of EU law by Member States, the Court has also established that where ‘a legal situation does not come within the scope of European Union law, the Court does not have jurisdiction to rule on it and any provisions of the Charter relied upon cannot, of themselves, form the basis for such jurisdiction’ (C-617/10, para 22). The issue of whether the salary reductions of the Portuguese judges constitutes a purely internal situation is therefore key. As there is no EU rule governing the remuneration of national judges, one may have concluded that the ECJ lacked jurisdiction in this case. The temporary reduction in the amount of public sector remuneration was however based on mandatory requirements imposed on the Portuguese Government by the EU to reduce the Portuguese State’s excessive budget deficit in 2011 in order to receive financial assistance. To that extent and as in the case of Florescu (EU Charter applies to national measures adopted to meet the conditions attached to the financial assistance granted by the EU to a Member State), one could have retorted that the salary-reduction measures had to trigger the application of EU Law. Had the Court gone down that route, Article 47 CFR would have been available to review the compatibility of these measures with EU law, including the principle of judicial independence. Yet, the Court chose another route without much explanation, or even no explanation at all, whereas the Article 47 CFR may also have been applied in the present case. The fact that the Court relied exclusively on Article 19(1) TEU to protect judicial independence at Member State level may be understood as an implicit answer to the increasing and sustained attacks on national courts by ruling parties in countries such as Poland (see section 4). By exclusively relying on Article 19(1), the Court has enabled natural and legal persons to challenge a broader set of national measures. Indeed, the notion of ‘fields covered by Union law’ mentioned in Article 19(1) is broadly interpreted by the Court and should now be understood as being wider than the notion of ‘implementation’ laid down in Article 51(1) CFR. The Court has gone therefore beyond the limited functional necessity of national remedies sufficient to ensure the application of EU law and now requires that Member States guarantee and respect the fundamental requirements of justice as defined by EU law and the ECJ itself, failing which they can be sued directly on the basis of Article 19(1) TEU. To give an example, Member States must ensure that national courts can exercise their ‘judicial functions wholly autonomously, without being subject to any hierarchical constraint or subordinated to any other body and without taking orders or instructions from any source whatsoever’. Any national measures which infringes this standard may now be found incompatible with the principle of judicial independence on the sole basis of Article 19(1). What is yet to be determined is how much broader is the scope of Article 19(1) TEU in comparison to the scope of Article 47 CFR. In other words, how should the notion of fields covered by EU Law be understood compared to the notion of situations covered by EU Law (Fransson)? At the very least, the present ruling now makes it possible for national litigants to rely on the principle of judicial independence in situations where the Charter may not be applicable by relying on Article 19 TEU. This new approach means for example that in cases such as Torralbo Marcos the ECJ would now probably accept jurisdiction to review whether national measures are compatible with the principle of effective judicial protection. We would further argue that the Court’s present ruling must be understood as making Article 19(1) TEU a relevant standard for reviewing national measures irrespective of whether the situation is connected or not with EU law. Article 19(1) TEU may from now on be relied upon to challenge any national measure which may undermine the independence of any national court which may hear ‘questions concerning the application or interpretation of EU law’ (para. 40). The key ‘test’ is therefore whether the relevant national court has jurisdiction (or not) over potential questions of EU law. If this understanding is correct, the Court’s approach may be viewed as ground-breaking as most if not all national courts are, at least theoretically, in this situation. In establishing a general obligation for Member States to guarantee and protect judicial independence on the basis of a combined reading of Articles 2, 4(3) and 19(1) TEU, irrespective of whether the situation falls within the scope of EU law, the Court’s ruling is reminiscent of the 1925 US judgment of Gitlow v New York, in which the Supreme Court held that the Fourteenth Amendment to the US Constitution had extended the reach of certain limitations on federal government authority set forth in the First Amendment to the governments of the individual states. In the present case, one may argue that the ECJ has essentially made the EU principle of effective judicial protection (including the principle of judicial independence) a federal standard of review which may be relied upon before national courts in virtually any situation where national measures target national judges who may hear actions based on EU law.

Answer 95

The ECJ, by making Article 19(1) a stand-alone provision, has drastically increased the number of situations where litigants (for instance, a trade union representing judges) may challenge national measures which undermine judicial independence. In doing so, the Court has answered the appeal from some scholars to ‘operationalise’ Article 2 TEU by connecting it to other provisions of the TEU such as Article 4(3) and Article 19(1) TEU. In 2016, building up on the scholarship of Professor Scheppele, Professor Kochenov and one of the present authors argued for instance for the combined use of these Treaty provisions so to enable the review of national breaches of the rule of law happening beyond the areas covered by the EU’s acquis: By establishing, on the basis of Articles 2, 4(3) and 19(1) TEU, that Member States must ensure that their national courts meet ‘the requirements essential to effective judicial protection’, the Court has taken a most welcome stance on the existential threat which Hungary and Poland’s descent into authoritarianism poses for the EU’s interdependent and interconnected legal system. A number of statements may be understood as subliminal warnings to would-be autocrats in these two countries but also elsewhere: EU institutions and key actors must wake up to the existential dangers raised by increasing rule of law backsliding within the EU. Following this welcome development in Luxembourg, it is to be hoped that the Commission will stop hesitating about whether to rely on Article 19(1) TEU in its infringement actions (see this post by Professor Taborowski for a critique of the Commission’s moving and excessively cautious legal position in the context of the pending infringement case against the Polish law on the organisation of ordinary courts). One may only hope also that the Commission will aim to think more strategically about rule of law backsliding. It was disappointing in this respect to see the Commission raising the inadmissibility of the request for a preliminary ruling in the present case or failing to initially think of requesting from the Court the imposition of a penalty payment in the Białowieża Forest infringement case when the Polish government so defiantly refused to comply with a previous order of the Court. The time for dialogue has past. The time for action (and sanction) is now.