No 3 (April 96/Avril 96/April 96)

The rights of individuals and companies to seek financial compensation from Member States for losses arising from breaches of Community law (including Single Market rules) were clarified in a key ruling handed down by the Court of Justice on 5 March 1996. This clarification is likely to make it easier for individuals and companies to challenge breaches of Community law before national courts and obtain damages. The ruling, which concerned two joined cases (Brasserie du Pêcheur - C-46/93 - and Factortame - C/48/93), represents a significant step forward to ensuring the full effectiveness of Community rules, and to protecting the rights of individuals and companies.

Breaches of primary Community law

The Court of Justice had already established in its ruling on the Francovich case (19 November 1991) that Member States have to make good loss and damage caused to individuals and companies by breaches of Community secondary legislation (Directives) which have not been transposed into national law. The latest ruling makes clear Member States can also be liable to make good damages arising from breaches of primary Community law, in other words rules laid down in the EC Treaty itself, which are directly applicable without implementing legislation. The new ruling also makes clear that Member States may be liable for breaches of Community law attributable to legislative as well as executive bodies, and that Member States must ensure that legal means of redress exists for breaches of Community law under conditions no less favourable than for breaches of national law. Finally, the Court clarifies that the State can be liable for financial compensation for loss or damage without the plaintiff having to prove that the State body responsible for a violation of Community law was negligent or acted intentionally.

The 5 March ruling concerned damages for breaches of two EC Treaty rules essential for the functioning of the Single Market, namely the prohibition of non-tariff barriers to the free movement of goods (Article 30) and the right of establishment (Article 52).

In the `Brasserie du Pêcheur' case, a French brewery was seeking damages from Germany, which according to a 1987 judgement of the Court in case 178/84, had infringed Article 30 by insisting that imported beers respect its purity laws for beer, irrespective of whether they were legally manufactured and/or marketed in other Member States. In the `Factortame' case, a series of Spanish companies operating fishing vessels were seeking damages after the Court had ruled in 1991 in case C-221/89 that the UK had violated Article 52 by refusing these companies the right to establish themselves in the UK. Both cases concerned questions referred to the Court of Justice by national courts.

In its 5 March judgement, the Court ruled that the State is liable to make good the loss and damage caused to individuals if three conditions are met:

1) the rule of Community law which has been infringed shall entail the granting of rights to individuals
2) the infringement is sufficiently serious
3) there is a direct causal link between the breach of the State's obligation under Community law and the loss and damage suffered by the injured parties.

The Court considered that Articles 30 and 52 of the EC Treaty clearly entail the grant of rights to individuals and therefore fulfil the first condition for State liability. With regard to the second condition, that the infringement must be sufficiently and manifest, the EU Court stated that it was up to the national courts to establish the facts of the cases and assess the seriousness of the infringements, but nevertheless established some guidelines. For example, in the fishing vessels case, the Court of Justice suggested that the High Court, which had referred the questions, should take into account a number of factors such as the legal controversies arising from the Common Fisheries Policy and the Commission's opinion, but that the nationality requirement to register fishing vessels under the Merchant Shipping Act constituted a discrimination directly contrary to Community law.

The Court held that an infringement is always sufficiently serious when the Community rule in question has been the object of a Court of Justice decision on an infringement, a preliminary ruling or well-established case law on the matter. However, it also ruled that a serious and manifest infringement could also exist in the absence of a specific ruling by the EU Court, depending on the degree of clarity and precision of the EC rule in question, the nature of the State's infringement and the existence of Community measures which may have contributed to the infringement.

With regard to the third condition for State liability, the Court ruled that it was for the national courts to verify whether a direct causal link existed between the breach of the State's obligation and the loss and damage suffered by the injured party.

Financial compensation

Financial compensation for damages which the individual suffers as a result of the breach of Community law must ensure efficient protection of the individual's rights, the Court ruled. In the absence of Community law in this field, it is for the national legal order to establish the criteria to determine on what basis compensation is awarded to the plaintiff.

These conditions must not be less favourable for breaches of Community law than in cases where actions are brought under national law, and must not make the recovery of damages for injuries suffered impossible or excessively difficult. That said, the Court indicated that the national court could take into account whether the plaintiff has taken reasonable measures to avoid or mitigate his losses, and in particular whether he has invoked all legal means of redress. On the other hand, the Member State may be obliged to compensate the plaintiff for his loss of profit during the period of the infringement (for example, as a result of being unfairly excluded from a market).

La Cour de Justice a rendu le 5 mars 1996 un arrêt très important qui clarifie le fait que des particuliers ou des entreprises peuvent obtenir des dommages et intérêts de la part d'un Etat membre qui a violé les droits qui leurs sont conférés par la législation communautaire. Grâce à cette clarification, il sera désormais plus facile pour les particuliers et les entreprises de porter plainte devant les tribunaux nationaux et d'obtenir une juste réparation des dommages causés par une violation du droit communautaire, qu'il s'agisse d'une directive ou des règles générales du Traité CE. En l'occurence, l'arrêt concerne deux affaires jointes qui portent toutes deux sur des violations des règles du marché unique, à savoir la libre circulation des marchandises et la liberté d'établissement. Cet arrêt représente une avancée significative vers une meilleure application du droit communautaire et, partant, vers une meilleure protection des droits conférés aux particuliers et aux entreprises.

Am 5. März 1996 hat der Gerichtshof ein wegweisendes Urteil erlassen, dem zufolge Privatpersonen oder Unternehmen von einem Mitgliedstaat, der ihnen nach dem Gemeinschaftsrecht zustehende Ansprüche verletzt hat, Schadenersatz verlangen können. Dank dieser Klarstellung wird es für Privatpersonen und Unternehmen von nun an ein-facher sein, Klage vor den nationalen Gerichten zu erheben und einengerechten Ersatz des durch einen Verstoß gegen das Gemeinschaftsrecht - Richtlinie oder allgemeine Vorschriften des EG-Vertrags - verursachten Schadens zu erhalten. Im vorliegenden Fall handelte es sich um zwei verbundene Rechtssachen, die beide Verstöße gegen die Binnenmarktregeln, und zwar gegen den freien Warenverkehr und die Niederlassungsfreiheit, betrafen. Dieses Urteil ist ein wesentlicher Schritt auf dem Weg zu einer besseren Anwendung des Gemeinschaftsrechts und damit zu einem besseren Rechtsschutz für Private und Unternehmen.

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