W6 - EU liability / Damages / plea of illegality | Quizlet

EU liability rationale

Establishes a mechanism to hold the Union legally accountable for its acts or omissions; a successful action produces ex nunc effects solely between the applicant and the Union (inter partes) (Schütze/Tridimas).

art. 340(1) TFEU

Contractual liability → Governed by the lex contractus, subject to national law and national jurisdiction.

art. 340(2)(3)

Non-contractual liability →Largely shaped by ECJ case law; enables natural or legal persons to claim compensation for damage caused by the EU. Standing is broad (compared to annulment), but substantive conditions are very strict, making damages hard to obtain.

art. 41(3) CFR

Right to good administration →Receiving compensation for damages is now recognised as an individual fundamental right, though this has not yet fully materialised in case law.

ECJ jurisdiction action for damages

Art. 268 TFEU gives the ECJ jurisdiction over disputes relating to compensation under Art. 340(2)/(3);

GC jurisdiction action for damages

Art. 256 TFEU gives the General Court jurisdiction at first instance over such actions.

jursdictional exceptions action for damages

CFSP matters are excluded from jurisdiction (Art. 24(1) TEU, Art. 275 TFEU para 1), though there may be an exception to this exception if a decision is not a political/strategic choice (KS and KD — limited case law).

action for damages is an independent action

A liability action is independent of other Treaty actions; it is not necessary to first seek/obtain annulment of the EU measure (or a declaration of failure to act) causing the damage (Case 4/69, Lütticke, para. 6), though in practice they are often filed jointly (art. 263 TFEU)

joint responsibility

Occurs when conduct of both EU institutions and national authorities causes the damage — typically where the EU approves national measures incompatible with EU law, or national authorities apply illegal EU acts using their discretion. The applicant must generally first seek redress against national authorities before national courts.

action for damages limitations

- Cannot be used to nullify the effects of another action (Case 59/65, Schreckenberg)

- to circumvent the shorter limitation periods of Arts. 263/265 TFEU; if the individual was a direct addressee with standing to bring annulment but failed to do so, a damages action will be inadmissible.

steps for EU liability

1. standing

2. substantive conditions

2.1. unlawful conduct (sufficiently serious breach) / if discretion: manifestly and gravely disregarded limits of discretion

2.2. damages (actual and certain)

2.3. causal link (sufficiently direct consequence)

standing EU liability (1)

Available to any natural or legal person (regardless of nationality/establishment) who suffered damage

caused by an EU institution or body (interpreted broadly, e.g., the Ombudsman, agencies like Frontex),

directed against any act or omission (binding or non-binding) attributable to the EU.

unlawful conduct EU liability (2)

Non-contractual liability requires a "sufficiently serious breach of a rule of law intended to confer rights on individuals" (Case C-120/06 P FIAMM, para. 175) — not just any unlawful conduct; assessed case-by-case.

the EU institution has discretion --> liability arises only for conduct that manifestly and gravely disregards the limits of discretion.

EU institution did not have discretion --> Mere infringement of EU law may suffice to establish a sufficiently serious breach (e.g., failure to transpose a directive on time, Faccini Dori) - but only prima facie asumption

damages EU liability (2)

Must be actual and certain (not fictional or hypothetical); applicant must present calculations of financial loss.

Possible damages: reduction of assets, loss of profit, non-material damage, future damage (if sufficiently certain).

Damage passed on to another person is not recoverable.

Calculation aims to restore the injured party to its position absent the unlawful act; other compensation forms are possible (e.g., a Commission "gesture," Mrs. V).

causal link (2)

Damage must be attributable to the EU institution/body, must not be too remote, and must be a "sufficiently direct consequence" of the unlawful behaviour (Dumortier Frères §21).

The injured party must show reasonable diligence to avoid damage;

the link may be broken by multiple contributing causes (applicant's negligence, national authority acts, third-party conduct).

MS liability

Key difference from EU liability →MS liability is ultimately applied and granted by national courts, often via a preliminary reference (Art. 267 TFEU) to the ECJ; a MS can also incur liability under less strict conditions based on national law (Brasserie du Pêcheur and Factortame, para. 66).

MS liability national procedural autonomy

Most detailed procedural rules are left to the domestic legal system, qualified by the principles of equivalence and effectiveness (Biondi/Farley).

eg. Transportes Urbanos: Spanish law required prior exhaustion of national remedies for EU-law-based damages claims against legislation, but not for breaches of constitutional rights; since the two actions were similar, this breached the principle of equivalence. Prior exhaustion rules are not per se objectionable under effectiveness, unless they impose excessive procedural burdens or other remedies are not easily actionable.

steps for MS liability

1. conferral of rights for the protection of individuals

2. sufficiently serious breach of EU law (damages)

3. causal link

conferral of rights for protection of individuals (1)

The infringed EU rule must be intended to confer rights on individuals (including fundamental rights);

the CJEU is wary of opening the door to an actio popularis in damages, being reluctant in cases with potentially abstract/unlimited numbers of litigants.

damages MS liability (2)

The seriousness of the breach is measured against the clarity and precision of the EU provision at stake.

Sufficiently serious breach: straightforward cases

→Where the breach involves failure to implement a directive on time, or the provision is merely an administrative formality, seriousness is "automatically" satisfied.

did the EU law give discretion?

Yes --> Where EU law is ambiguous or discretionary, only breaches that "manifestly and gravely disregard the limits on discretion" qualify (Brasserie du Pêcheur and Factortame)

No --> Where EU law entails no discretion, this may automatically amount to a sufficiently serious breach, though other factors (intention, excusability of error) remain relevant.

damages attributable to MS courts

National courts are not immune from the state liability principle (Köbler)

but such claims arise only in exceptional cases where the court "manifestly" infringed the applicable law (C-173/03, Traghetti, paras 39 et seq.); this could include a national court's failure to refer a preliminary question.

Consider the level of discretion the national court had (obligation vs. option to refer — manifest error is easier to argue where there was an obligation to refer); qualifying the loss is difficult since there's no guarantee what a preliminary ruling outcome would have been.

causal link (3)

A causal link must exist between the MS breach and the damage suffered;

the CJEU generally defers to national rules on establishing causation (national procedural autonomy), subject to effectiveness/equivalence limits.

Compensation aims to restore the applicant to the position absent the unlawful act;

if losses were (or could reasonably have been) "passed on" (e.g., via price increases), the applicant is not entitled to damages.

art. 277 TFEU

Allows an individual, in proceedings initiated for another reason, to challenge the legality of a different measure; cannot be brought as an independent action and is most often invoked under Art. 263 TFEU.

plea of illegality rationalr

Fills the gap in judicial protection created by the strict direct/individual concern criteria for standing.

plea of illegality acts challengable

Can target "acts of general application" — regulations or directives under Arts. 289/290 TFEU, and possibly generic decisions (including those addressed to MS), adopted via legislative or non-legislative procedures;

decisions and directives have regularly been rejected by the Court for this purpose.

act of general application

What matters is not the form of the act but whether it produces effects similar to a regulation — applying "to objectively determined situations and producing legal effects with respect to categories of persons envisaged in the abstract." (Simmenthal)

plea of illegality required link

A link must exist between the individual act directly challenged and the general measure challenged indirectly under Art. 277 — established when the general act serves as the legal basis for the main action.

plea of illegality standing

Art. 277 TFEU places no limitations ("any party" may bring proceedings);

privileged applicants who missed the Art. 263(6) time limit could invoke it

private parties may use it (unless the act was clearly directly challengeable under Art. 263), and MS also have standing.

plea of illegality grounds

same as art. 263 grounds of review

1. lack of competence

2. infringement of essential procedural requirement

3. infringement of the treaties or rule relating to their appliccation

4. misuse of power

plea of illegality outcome

results in the CJEU declaring the general act inapplicable only for the proceedings in question (no erga omnes effect)

— it "protects an interested party against the application of an illegal regulation, without thereby calling into question the regulation itself," and the act remains valid for third parties.