In Joined Cases C-46/93 and C-48/93,
REFERENCE to the Court under Article 177 of the EEC Treaty by the
Bundesgerichtshof (Case C-46/93) and by the High Court of Justice, Queen'
s Bench Division, Divisional Court (Case C-48/93) for a preliminary ruling
in the proceedings pending before those courts between
Brasserie du
Pêcheur SA
and
Federal Republic of Germany
and between
The
Queen
and
Secretary of State for Transport
ex parte:
Factortame Ltd and Others
on the interpretation of the principle of
the liability of the State for damage caused to individuals by breaches of
Community law attributable to the State,
THE COURT,
composed of:
G.C. Rodríguez Iglesias (Rapporteur), President, C.N. Kakouris, D.A.O.
Edward and G. Hirsch (Presidents of Chambers), G.F. Mancini, F.A.
Schockweiler, J.C. Moitinho de Almeida, C. Gulmann and J.L. Murray,
Judges,
Advocate General: G. Tesauro,
Registrars: H. von Holstein,
Deputy Registrar, and H.A. Ruehl, Principal Administrator,
after
considering the written observations submitted on behalf of:
°
Brasserie du Pêcheur SA, by Hermann Buettner, Rechtsanwalt, Karlsruhe,
° claimants 1 to 36 and 38 to 84 in Case C-48/93, by David Vaughan QC,
Gerald Barling QC and David Anderson, Barrister, instructed by Stephen
Swabey, Solicitor,
° claimants 85 to 97 in Case C-48/93, by Nicholas
Green, Barrister, instructed by Nicholas Horton, Solicitor,
° the 37th
claimant in Case C-48/93, by Nicholas Forwood QC and Peter Duffy,
Barrister, instructed by Holman Fenwick & Willan, Solicitors,
°
the Government of the Federal Republic of Germany, by Ernst Roeder,
Ministerialrat in the Federal Ministry of Economic Affairs, acting as
Agent, and Joachim Sedemund, Rechtsanwalt, Cologne,
° the United
Kingdom, by J.E. Collins, Assistant Treasury Solicitor, acting as Agent,
and Stephen Richards, Christopher Vajda and Rhodri Thompson, Barristers,
° the Danish Government, by J. Moelde, Legal Adviser in the Ministry
of Foreign Affairs, acting as Agent,
° the Spanish Government, by
Alberto José Navarro González, Director-General for Community Legal and
Institutional Affairs, and Rosario Silva de Lapuerta and Gloria Calvo
Díaz, Abogados del Estado, of the State Legal Service, acting as Agents,
° the French Government, by Jean-Pierre Puissochet, Director of Legal
Affairs in the Ministry of Foreign Affairs, and Catherine de Salins,
Deputy Director of the Foreign Affairs Directorate in that Ministry,
acting as Agents,
° Ireland, represented by M.A. Buckley, Chief State
Solicitor, acting as Agent,
° the Netherlands Government, by A. Bos,
Legal Adviser in the Ministry of Foreign Affairs, acting as Agent,
°
the Commission of the European Communities, by Christian Timmermans,
Assistant Director-General of its Legal Service, Joern Pipkorn, Legal
Adviser, and Christopher Docksey, of its Legal Service, acting as Agents,
having regard to the Report for the Hearing,
after hearing the
oral observations of Brasserie du Pêcheur SA, represented by H. Buettner
and P. Soler-Couteaux, of the Strasbourg Bar; claimants 1 to 36 and 38 to
84 in Case C-48/93, represented by D. Vaughan, G. Barling, D. Anderson and
S. Swabey; claimants 85 to 97 in Case C-48/93, represented by N. Green;
the 37th claimant in Case C-48/93, represented by N. Forwood and P. Duffy;
the German Government, represented by J. Sedemund; the United Kingdom,
represented by Sir Nicholas Lyell QC, Attorney General, S. Richards, C.
Vajda and J.E. Collins; the Danish Government, represented by P. Biering,
Legal Adviser in the Ministry of Foreign Affairs, acting as Agent; the
Greek Government, represented by F. Georgakopoulos, Assistant Legal
Adviser to the State Legal Council, acting as Agent; the Spanish
Government, represented by R. Silva de Lapuerta and G. Calvo Díaz; the
French Government, represented by C. de Salins; the Netherlands
Government, represented by J.W. de Zwaan, Assistant Legal Adviser in the
Ministry of Foreign Affairs, acting as Agent, and the Commission,
represented by C. Timmermans, J. Pipkorn and C. Docksey, at the hearing on
25 October 1994,
after hearing the Opinion of the Advocate General at
the sitting on 28 November 1995,
gives the following
Judgment
1 By orders of 28 January 1993 and 18
November 1992, received at the Court on 17 February 1993 and 18 February
1993, respectively, the Bundesgerichtshof (Federal Court of Justice) (Case
C-46/93) and the High Court of Justice, Queen' s Bench Division,
Divisional Court (Case C-48/93) referred to the Court for a preliminary
ruling under Article 177 of the EEC Treaty questions concerning the
conditions under which a Member State may incur liability for damage
caused to individuals by breaches of Community law attributable to that
State.
2 The questions were raised in two sets of proceedings between,
on the one hand, Brasserie du Pêcheur SA and the Federal Republic of
Germany and, on the other, Factortame Ltd and others (hereinafter
"Factortame") and the United Kingdom of Great Britain and Northern
Ireland.
Case C-46/93
3 Before the national court, Brasserie du
Pêcheur, a French company based at Schiltigheim (Alsace), claims that it
was forced to discontinue exports of beer to Germany in late 1981 because
the competent German authorities considered that the beer it produced did
not comply with the Reinheitsgebot (purity requirement) laid down in
Paragraphs 9 and 10 of the Biersteuergesetz of 14 March 1952 (Law on Beer
Duty, BGBl. I, p. 149), in the version dated 14 December 1976 (BGBl. I, p.
3341, hereinafter "the BStG").
4 The Commission took the view that
those provisions were contrary to Article 30 of the EEC Treaty and brought
infringement proceedings against the Federal Republic of Germany on two
grounds, namely the prohibition on marketing under the designation "Bier"
(beer) beers lawfully manufactured by different methods in other Member
States and the prohibition on importing beers containing additives. By
judgment of 12 March 1987 in Case 178/84 Commission v Germany [1987] ECR 1227, the Court held that the prohibition on marketing beers imported from
other Member States which did not comply with the provisions in question
was incompatible with Article 30 of the Treaty.
5 Brasserie du Pêcheur
consequently brought an action against the Federal Republic of Germany for
reparation of the loss suffered by it as a result of that import
restriction between 1981 and 1987, seeking damages in the sum of DM 1 800
000, representing a fraction of the loss actually incurred.
6 The
Bundesgerichtshof refers to Paragraph 839 of the Buergerliches Gesetzbuch
(German Civil Code, "the BGB") and Article 34 of the Grundgesetz (Basic
Law, "the GG"). According to the first sentence of Paragraph 839 of the
BGB, "If an official wilfully or negligently commits a breach of official
duty incumbent upon him as against a third party, he shall compensate the
third party for any damage arising therefrom." Article 34 of the GG
provides that "If a person infringes, in the exercise of a public office
entrusted to him, the obligations incumbent upon him as against a third
party, liability therefor shall attach in principle to the State or to the
body in whose service he is engaged."
7 If those provisions are read
together, it appears that, in order for the State to be liable, the third
party must be capable of being regarded as beneficiary of the obligation
breached, which means that the State is liable for breach only of
obligations conceived in favour of a third party. However, as the
Bundesgerichtshof points out, in the case of the BStG the task assumed by
the national legislature concerns only the public at large and is not
directed towards any particular person or class of persons who could be
regarded as "third parties" within the meaning of the provisions mentioned
above.
8 In this context, the Bundesgerichtshof has referred the
following questions to the Court for a preliminary ruling:
"1. Does
the principle of Community law according to which Member States are
obliged to pay compensation for damage suffered by an individual as a
result of breaches of Community law attributable to those States also
apply where such a breach consists of a failure to adapt a national
parliamentary statute to the higher-ranking rules of Community law (this
case concerning a failure to adapt Paragraphs 9 and 10 of the German
Biersteuergesetz to Article 30 of the EEC Treaty)?
2. May the national
legal system provide that any entitlement to compensation is to be subject
to the same limitations as those applying where a national statute
breaches higher-ranking national law, for example where an ordinary
Federal law breaches the Grundgesetz of the Federal Republic of Germany?
3. May the national legal system provide that entitlement to
compensation is to be conditional on fault (intent or negligence) on the
part of the organs of the State responsible for the failure to adapt the
legislation?
4. If Question 1 is to be answered in the affirmative and
Question 2 in the negative:
(a) May liability to pay compensation
under the national legal system be limited to the reparation of damage
done to specific individual legal interests, for example property, or does
it require full compensation for all financial losses, including lost
profits?
(b) Does the obligation to pay compensation also require
reparation of the damage already incurred before it was held in the
judgment of the European Court of Justice of 12 March 1987 in Case 178/84
Commission v Germany [1987] ECR 1227 that Paragraph 10 of the German
Biersteuergesetz infringed higher-ranking Community law?"
Case C-48/93
9 On 16 December 1988 Factortame and others, being individuals and
companies incorporated under the laws of the United Kingdom, together with
the directors and shareholders of those companies, brought an action
before the High Court of Justice, Queen' s Bench Division, Divisional
Court (hereinafter "the Divisional Court"), in which they challenged the
compatibility of Part II of the Merchant Shipping Act 1988 with Community
law, in particular Article 52 of the EEC Treaty. That act entered into
force on 1 December 1988, subject to a transitional period expiring on 31
March 1989. It provided for the introduction of a new register for British
fishing boats and made registration of such vessels, including those
already registered in the former register, subject to certain conditions
relating to the nationality, residence and domicile of the owners. Fishing
boats ineligible for registration in the new register were deprived of the
right to fish.
10 In answer to questions referred by the Divisional
Court, the Court held by judgment of 25 July 1991 in Case C-221/89
Factortame II [1991] ECR I-3905 that conditions relating to the
nationality, residence and domicile of vessel owners and operators as laid
down by the registration system introduced by the United Kingdom were
contrary to Community law, but that it was not contrary to Community law
to stipulate as a condition for registration that the vessels in question
must be managed and their operations directed and controlled from within
the United Kingdom.
11 On 4 August 1989 the Commission brought
infringement proceedings against the United Kingdom. In parallel, it
applied for interim measures ordering the suspension of the abovementioned
nationality conditions on the ground that they were contrary to Articles
7, 52 and 221 of the EEC Treaty. By order of 10 October 1989 in Case
246/89 R Commission v United Kingdom [1989] ECR 3125, the President of the
Court granted that application. Pursuant to that order, the United Kingdom
adopted provisions amending the new registration system with effect from 2
November 1989. By judgment of 4 October 1991 in Case C-246/89 Commission v
United Kingdom [1991] ECR I-4585, the Court confirmed that the
registration conditions challenged in the infringement proceedings were
contrary to Community law.
12 Meanwhile, on 2 October 1991, the
Divisional Court made an order designed to give effect to this Court' s
judgment of 25 July 1991 in Factortame II and, at the same time, directed
the claimants to give detailed particulars of their claims for damages.
Subsequently, the claimants provided the national court with a detailed
statement of their various heads of claim, covering expenses and losses
incurred between 1 April 1989, when the legislation at issue entered into
force, and 2 November 1989, when it was repealed.
13 Lastly, by order
of 18 November 1992, the Divisional Court gave Rawlings (Trawling) Ltd,
the 37th claimant in Case C-48/93, leave to amend its claim to include a
claim for exemplary damages for unconstitutional behaviour on the part of
the public authorities.
14 In that context, the Divisional Court
referred the following questions to the Court for a preliminary ruling:
"1. In all the circumstances of this case, where:
(a) a Member
State' s legislation laid down conditions relating to the nationality,
domicile and residence of the owners and managers of fishing vessels, and
of the shareholders and directors in vessel-owning and managing companies,
and
(b) such conditions were held by the Court of Justice in Cases
C-221/89 and C-246/89 to infringe Articles 5, 7, 52 and 221 of the EEC
Treaty,
are those persons who were owners or managers of such vessels,
or directors and/or shareholders in vessel-owning and managing companies,
entitled as a matter of Community law to compensation by that Member State
for losses which they have suffered as a result of all or any of the above
infringements of the EEC Treaty?
2. If Question 1 is answered in the
affirmative, what considerations, if any, does Community law require the
national court to apply in determining claims for damages and interest
relating to:
(a) expenses and/or loss of profit and/or loss of income
during the period subsequent to the entry into force of the said
conditions, during which the vessels were forced to lay up, to make
alternative arrangements for fishing and/or to seek registration
elsewhere;
(b) losses consequent on sales at an undervalue of the
vessels, or of shares therein, or of shares in vessel-owning companies;
(c) losses consequent on the need to provide bonds, fines and legal
expenses for alleged offences connected with the exclusion of vessels from
the national register;
(d) losses consequent on the inability of such
persons to own and operate further vessels;
(e) loss of management
fees;
(f) expenses incurred in an attempt to mitigate the above
losses;
(g) exemplary damages as claimed?"
15 Reference is made to
the Report for the Hearing for a fuller account of the facts of the main
proceedings, the procedure and the observations submitted to the Court,
which are mentioned or discussed hereinafter only in so far as is
necessary for the reasoning of the Court.
State liability for acts and
omissions of the national legislature contrary to Community law (first
question in both Case C-46/93 and Case C-48/93)
16 By their first
questions, each of the two national courts essentially seeks to establish
whether the principle that Member States are obliged to make good damage
caused to individuals by breaches of Community law attributable to the
State is applicable where the national legislature was responsible for the
infringement in question.
17 In Joined Cases C-6/90 and C-9/90
Francovich and Others [1991] ECR I-5357, paragraph 37, the Court held that
it is a principle of Community law that Member States are obliged to make
good loss and damage caused to individuals by breaches of Community law
for which they can be held responsible.
18 The German, Irish and
Netherlands Governments contend that Member States are required to make
good loss or damage caused to individuals only where the provisions
breached are not directly effective: in Francovich and Others the Court
simply sought to fill a lacuna in the system for safeguarding rights of
individuals. In so far as national law affords individuals a right of
action enabling them to assert their rights under directly effective
provisions of Community law, it is unnecessary, where such provisions are
breached, also to grant them a right to reparation founded directly on
Community law.
19 That argument cannot be accepted.
20 The Court
has consistently held that the right of individuals to rely on the
directly effective provisions of the Treaty before national courts is only
a minimum guarantee and is not sufficient in itself to ensure the full and
complete implementation of the Treaty (see, in particular, Case 168/85
Commission v Italy [1986] ECR 2945, paragraph 11, Case C-120/88 Commission
v Italy [1991] ECR I-621, paragraph 10, and C-119/89 Commission v Spain
[1991] ECR I-641, paragraph 9). The purpose of that right is to ensure
that provisions of Community law prevail over national provisions. It
cannot, in every case, secure for individuals the benefit of the rights
conferred on them by Community law and, in particular, avoid their
sustaining damage as a result of a breach of Community law attributable to
a Member State. As appears from paragraph 33 of the judgment in Francovich
and Others, the full effectiveness of Community law would be impaired if
individuals were unable to obtain redress when their rights were infringed
by a breach of Community law.
21 This will be so where an individual
who is a victim of the non-transposition of a directive and is precluded
from relying on certain of its provisions directly before the national
court because they are insufficiently precise and unconditional, brings an
action for damages against the defaulting Member State for breach of the
third paragraph of Article 189 of the Treaty. In such circumstances, which
obtained in the case of Francovich and Others, the purpose of reparation
is to redress the injurious consequences of a Member State' s failure to
transpose a directive as far as beneficiaries of that directive are
concerned.
22 It is all the more so in the event of infringement of a
right directly conferred by a Community provision upon which individuals
are entitled to rely before the national courts. In that event, the right
to reparation is the necessary corollary of the direct effect of the
Community provision whose breach caused the damage sustained.
23 In
this case, it is undisputed that the Community provisions at issue, namely
Article 30 of the Treaty in Case C-46/93 and Article 52 in Case C-48/93,
have direct effect in the sense that they confer on individuals rights
upon which they are entitled to rely directly before the national courts.
Breach of such provisions may give rise to reparation.
24 The German
Government further submits that a general right to reparation for
individuals could be created only by legislation and that for such a right
to be recognized by judicial decision would be incompatible with the
allocation of powers as between the Community institutions and the Member
States and with the institutional balance established by the Treaty.
25 It must, however, be stressed that the existence and extent of
State liability for damage ensuing as a result of a breach of obligations
incumbent on the State by virtue of Community law are questions of Treaty
interpretation which fall within the jurisdiction of the Court.
26 In
this case, as in Francovich and Others, those questions of interpretation
have been referred to the Court by national courts pursuant to Article 177
of the Treaty.
27 Since the Treaty contains no provision expressly and
specifically governing the consequences of breaches of Community law by
Member States, it is for the Court, in pursuance of the task conferred on
it by Article 164 of the Treaty of ensuring that in the interpretation and
application of the Treaty the law is observed, to rule on such a question
in accordance with generally accepted methods of interpretation, in
particular by reference to the fundamental principles of the Community
legal system and, where necessary, general principles common to the legal
systems of the Member States.
28 Indeed, it is to the general
principles common to the laws of the Member States that the second
paragraph of Article 215 of the Treaty refers as the basis of the
non-contractual liability of the Community for damage caused by its
institutions or by its servants in the performance of their duties.
29
The principle of the non-contractual liability of the Community expressly
laid down in Article 215 of the Treaty is simply an expression of the
general principle familiar to the legal systems of the Member States that
an unlawful act or omission gives rise to an obligation to make good the
damage caused. That provision also reflects the obligation on public
authorities to make good damage caused in the performance of their duties.
30 In any event, in many national legal systems the essentials of the
legal rules governing State liability have been developed by the courts.
31 In view of the foregoing considerations, the Court held in
Francovich and Others, at paragraph 35, that the principle of State
liability for loss and damage caused to individuals as a result of
breaches of Community law for which it can be held responsible is inherent
in the system of the Treaty.
32 It follows that that principle holds
good for 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.
33 In addition, in view of the fundamental requirement of the
Community legal order that Community law be uniformly applied (see, in
particular, Joined Cases C-143/88 and C-92/89 Zuckerfabrik
Suederdithmarschen and Zuckerfabrik Soest [1991] ECR I-415, paragraph 26),
the obligation to make good damage caused to individuals by breaches of
Community law cannot depend on domestic rules as to the division of powers
between constitutional authorities.
34 As the Advocate General points
out in paragraph 38 of his Opinion, in international law a State whose
liability for breach of an international commitment is in issue will be
viewed as a single entity, irrespective of whether the breach which gave
rise to the damage is attributable to the legislature, the judiciary or
the executive. This must apply a fortiori in the Community legal order
since all State authorities, including the legislature, are bound in
performing their tasks to comply with the rules laid down by Community law
directly governing the situation of individuals.
35 The fact that,
according to national rules, the breach complained of is attributable to
the legislature cannot affect the requirements inherent in the protection
of the rights of individuals who rely on Community law and, in this
instance, the right to obtain redress in the national courts for damage
caused by that breach.
36 Consequently, the reply to the national
courts must be that the principle that Member States are obliged to make
good damage caused to individuals by breaches of Community law
attributable to the State is applicable where the national legislature was
responsible for the breach in question.
Conditions under which the
State may incur liability for acts and omissions of the national
legislature contrary to Community law (second question in Case C-46/93 and
first question in Case C-48/93)
37 By these questions, the national
courts ask the Court to specify the conditions under which a right to
reparation of loss or damage caused to individuals by breaches of
Community law attributable to a Member State is, in the particular
circumstances, guaranteed by Community law.
38 Although Community law
imposes State liability, the conditions under which that liability gives
rise to a right to reparation depend on the nature of the breach of
Community law giving rise to the loss and damage (Francovich and Others,
paragraph 38).
39 In order to determine those conditions, account
should first be taken of the principles inherent in the Community legal
order which form the basis for State liability, namely, first, the full
effectiveness of Community rules and the effective protection of the
rights which they confer and, second, the obligation to cooperate imposed
on Member States by Article 5 of the Treaty (Francovich and Others,
paragraphs 31 to 36).
40 In addition, as the Commission and the
several governments which submitted observations have emphasized, it is
pertinent to refer to the Court' s case-law on non-contractual liability
on the part of the Community.
41 First, the second paragraph of
Article 215 of the Treaty refers, as regards the non-contractual liability
of the Community, to the general principles common to the laws of the
Member States, from which, in the absence of written rules, the Court also
draws inspiration in other areas of Community law.
42 Second, the
conditions under which the State may incur liability for damage caused to
individuals by a breach of Community law cannot, in the absence of
particular justification, differ from those governing the liability of the
Community 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.
43 The system of rules which the Court has worked out with regard to
Article 215 of the Treaty, particularly in relation to liability for
legislative measures, takes into account, inter alia, the complexity of
the situations to be regulated, difficulties in the application or
interpretation of the texts and, more particularly, the margin of
discretion available to the author of the act in question.
44 Thus, in
developing its case-law on the non-contractual liability of the Community,
in particular as regards legislative measures involving choices of
economic policy, the Court has had regard to the wide discretion available
to the institutions in implementing Community policies.
45 The strict
approach taken towards the liability of the Community in the exercise of
its legislative activities is due to two considerations. First, even where
the legality of measures is subject to judicial review, exercise of the
legislative function must not be hindered by the prospect of actions for
damages whenever the general interest of the Community requires
legislative measures to be adopted which may adversely affect individual
interests. Second, in a legislative context characterized by the exercise
of a wide discretion, which is essential for implementing a Community
policy, the Community cannot incur liability unless the institution
concerned has manifestly and gravely disregarded the limits on the
exercise of its powers (Joined Cases 83/76, 94/76, 4/77, 15/77 and 40/77
HNL and Others v Council and Commission [1978] ECR 1209, paragraphs 5 and
6).
46 That said, the national legislature ° like the Community
institutions ° does not systematically have a wide discretion when it acts
in a field governed by Community law. Community law may impose upon it
obligations to achieve a particular result or obligations to act or
refrain from acting which reduce its margin of discretion, sometimes to a
considerable degree. This is so, for instance, where, as in the
circumstances to which the judgment in Francovich and Others relates,
Article 189 of the Treaty places the Member State under an obligation to
take, within a given period, all the measures needed in order to achieve
the result required by a directive. In such a case, the fact that it is
for the national legislature to take the necessary measures has no bearing
on the Member State' s liability for failing to transpose the directive.
47 In contrast, where a Member State acts in a field where it has a
wide discretion, comparable to that of the Community institutions in
implementing Community policies, the conditions under which it may incur
liability must, in principle, be the same as those under which the
Community institutions incur liability in a comparable situation.
48
In the case which gave rise to the reference in Case C-46/93, the German
legislature had legislated in the field of foodstuffs, specifically beer.
In the absence of Community harmonization, the national legislature had a
wide discretion in that sphere in laying down rules on the quality of beer
put on the market.
49 As regards the facts of Case C-48/93, the United
Kingdom legislature also had a wide discretion. The legislation at issue
was concerned, first, with the registration of vessels, a field which, in
view of the state of development of Community law, falls within the
jurisdiction of the Member States and, secondly, with regulating fishing,
a sector in which implementation of the common fisheries policy leaves a
margin of discretion to the Member States.
50 Consequently, in each
case the German and United Kingdom legislatures were faced with situations
involving choices comparable to those made by the Community institutions
when they adopt legislative measures pursuant to a Community policy.
51 In such circumstances, Community law confers a right to reparation
where three conditions are met: the rule of law infringed must be intended
to confer rights on individuals; the breach must be sufficiently serious;
and there must be a direct causal link between the breach of the
obligation resting on the State and the damage sustained by the injured
parties.
52 Firstly, those conditions satisfy the requirements of the
full effectiveness of the rules of Community law and of the effective
protection of the rights which those rules confer.
53 Secondly, those
conditions correspond in substance to those defined by the Court in
relation to Article 215 in its case-law on liability of the Community for
damage caused to individuals by unlawful legislative measures adopted by
its institutions.
54 The first condition is manifestly satisfied in
the case of Article 30 of the Treaty, the relevant provision in Case
C-46/93, and in the case of Article 52, the relevant provision in Case
C-48/93. Whilst Article 30 imposes a prohibition on Member States, it
nevertheless gives rise to rights for individuals which the national
courts must protect (Case 74/76 Iannelli & Volpi v Meroni [1977] ECR
557, paragraph 13). Likewise, the essence of Article 52 is to confer
rights on individuals (Case 2/74 Reyners [1974] ECR 631, paragraph 25).
55 As to the second condition, as regards both Community liability
under Article 215 and Member State liability for breaches of Community
law, the decisive test for finding that a breach of Community law is
sufficiently serious is whether the Member State or the Community
institution concerned manifestly and gravely disregarded the limits on its
discretion.
56 The 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.
57 On any
view, a breach of Community law will clearly be sufficiently serious if it
has persisted despite a judgment finding the infringement in question to
be established, or a preliminary ruling or settled case-law of the Court
on the matter from which it is clear that the conduct in question
constituted an infringement.
58 While, in the present cases, the Court
cannot substitute its assessment for that of the national courts, which
have sole jurisdiction to find the facts in the main proceedings and
decide how to characterize the breaches of Community law at issue, it will
be helpful to indicate a number of circumstances which the national courts
might take into account.
59 In Case C-46/93 a distinction should be
drawn between the question of the German legislature' s having maintained
in force provisions of the Biersteuergesetz concerning the purity of beer
prohibiting the marketing under the designation "Bier" of beers imported
from other Member States which were lawfully produced in conformity with
different rules, and the question of the retention of the provisions of
that same law prohibiting the import of beers containing additives. As
regards the provisions of the German legislation relating to the
designation of the product marketed, it would be difficult to regard the
breach of Article 30 by that legislation as an excusable error, since the
incompatibility of such rules with Article 30 was manifest in the light of
earlier decisions of the Court, in particular Case 120/78 Rewe-Zentral
[1979] ECR 649 ("Cassis de Dijon") and Case 193/80 Commission v Italy
[1981] ECR 3019 ("vinegar"). In contrast, having regard to the relevant
case-law, the criteria available to the national legislature to determine
whether the prohibition of the use of additives was contrary to Community
law were significantly less conclusive until the Court' s judgment of 12
March 1987 in Commission v Germany, cited above, in which the Court held
that prohibition to be incompatible with Article 30.
60 A number of
observations may likewise be made about the national legislation at issue
in Case C-48/93.
61 The decision of the United Kingdom legislature to
introduce in the Merchant Shipping Act 1988 provisions relating to the
conditions for the registration of fishing vessels has to be assessed
differently in the case of the provisions making registration subject to a
nationality condition, which constitute direct discrimination manifestly
contrary to Community law, and in the case of the provisions laying down
residence and domicile conditions for vessel owners and operators.
62
The latter conditions are prima facie incompatible with Article 52 of the
Treaty in particular, but the United Kingdom sought to justify them in
terms of the objectives of the common fisheries policy. In the judgment in
Factortame II, cited above, the Court rejected that justification.
63
In order to determine whether the breach of Article 52 thus committed by
the United Kingdom was sufficiently serious, the national court might take
into account, inter alia, the legal disputes relating to particular
features of the common fisheries policy, the attitude of the Commission,
which made its position known to the United Kingdom in good time, and the
assessments as to the state of certainty of Community law made by the
national courts in the interim proceedings brought by individuals affected
by the Merchant Shipping Act.
64 Lastly, consideration should be given
to the assertion made by Rawlings (Trawling) Ltd, the 37th claimant in
Case C-48/93, that the United Kingdom failed to adopt immediately the
measures needed to comply with the Order of the President of the Court of
10 October 1989 in Commission v United Kingdom, cited above, and that this
needlessly increased the loss it sustained. If this allegation ° which was
certainly contested by the United Kingdom at the hearing ° should prove
correct, it should be regarded by the national court as constituting in
itself a manifest and, therefore, sufficiently serious breach of Community
law.
65 As for the third condition, it is for the national courts to
determine whether there is a direct causal link between the breach of the
obligation borne by the State and the damage sustained by the injured
parties.
66 The aforementioned three conditions are necessary and
sufficient to found a right in individuals to obtain redress, although
this does not mean that the State cannot incur liability under less strict
conditions on the basis of national law.
67 As appears from paragraphs
41, 42 and 43 of Francovich and Others, cited above, subject to the right
to reparation which flows directly from Community law where the conditions
referred to in the preceding paragraph are satisfied, the State must make
reparation for the consequences of the loss and damage caused in
accordance with the domestic rules on liability, provided that the
conditions for reparation of loss and damage laid down by national law
must not be less favourable than those relating to similar domestic claims
and must not be such as in practice to make it impossible or excessively
difficult to obtain reparation (see also Case 199/82 Amministrazione delle
Finanze dello Stato v San Giorgio [1983] ECR 3595).
68 In that regard,
restrictions that exist in domestic legal systems as to the
non-contractual liability of the State in the exercise of its legislative
function may be such as to make it impossible in practice or excessively
difficult for individuals to exercise their right to reparation, as
guaranteed by Community law, of loss or damage resulting from the breach
of Community law.
69 In Case C-46/93 the national court asks in
particular whether national law may subject any right to compensation to
the same restrictions as apply where a law is in breach of higher-ranking
national provisions, for instance, where an ordinary Federal law infringes
the Grundgesetz of the Federal Republic of Germany.
70 While the
imposition of such restrictions may be consistent with the requirement
that the conditions laid down should not be less favourable than those
relating to similar domestic claims, it is still to be considered whether
such restrictions are not such as in practice to make it impossible or
excessively difficult to obtain reparation.
71 The condition imposed
by German law where a law is in breach of higher-ranking national
provisions, which makes reparation dependent upon the legislature' s act
or omission being referable to an individual situation, would in practice
make it impossible or extremely difficult to obtain effective reparation
for loss or damage resulting from a breach of Community law, since the
tasks falling to the national legislature relate, in principle, to the
public at large and not to identifiable persons or classes of person.
72 Since such a condition stands in the way of the obligation on
national courts to ensure the full effectiveness of Community law by
guaranteeing effective protection for the rights of individuals, it must
be set aside where an infringement of Community law is attributable to the
national legislature.
73 Likewise, any condition that may be imposed
by English law on State liability requiring proof of misfeasance in public
office, such an abuse of power being inconceivable in the case of the
legislature, is also such as in practice to make it impossible or
extremely difficult to obtain effective reparation for loss or damage
resulting from a breach of Community law where the breach is attributable
to the national legislature.
74 Accordingly, the reply to the
questions from the national courts must be that, where a breach of
Community law by a Member State is attributable to the national
legislature acting in a field in which it has a wide discretion to make
legislative choices, individuals suffering loss or injury thereby are
entitled to reparation where the rule of Community law breached is
intended to confer rights upon them, the breach is sufficiently serious
and there is a direct causal link between the breach and the damage
sustained by the individuals. Subject to that reservation, the State must
make good the consequences of the loss or damage caused by the breach of
Community law attributable to it, in accordance with its national law on
liability. However, the conditions laid down by the applicable national
laws must not be less favourable than those relating to similar domestic
claims or framed in such a way as in practice to make it impossible or
excessively difficult to obtain reparation.
The possibility of making
reparation conditional upon the existence of fault (third question in Case
C-46/93)
75 By its third question, the Bundesgerichtshof essentially
seeks to establish whether, pursuant to the national legislation which it
applies, the national court is entitled to make reparation conditional
upon the existence of fault (whether intentional or negligent) on the part
of the organ of the State to which the infringement is attributable.
76 As is clear from the case-file, the concept of fault does not have
the same content in the various legal systems.
77 Next, it follows
from the reply to the preceding question that, where a breach of Community
law is attributable to a Member State acting in a field in which it has a
wide discretion to make legislative choices, a finding of a right to
reparation on the basis of Community law will be conditional, inter alia,
upon the breach having been sufficiently serious.
78 So, certain
objective and subjective factors connected with the concept of fault under
a national legal system may well be relevant for the purpose of
determining whether or not a given breach of Community law is serious (see
the factors mentioned in paragraphs 56 and 57 above).
79 The
obligation to make reparation for loss or damage caused to individuals
cannot, however, depend upon a condition based on any concept of fault
going beyond that of a sufficiently serious breach of Community law.
Imposition of such a supplementary condition would be tantamount to
calling in question the right to reparation founded on the Community legal
order.
80 Accordingly, the reply to the question from the national
court must be that, pursuant to the national legislation which it applies,
reparation of loss or damage cannot be made conditional upon fault
(intentional or negligent) on the part of the organ of the State
responsible for the breach, going beyond that of a sufficiently serious
breach of Community law.
The actual extent of the reparation (question
4(a) in Case C-46/93 and the second question in Case C-48/93)
81 By
these questions, the national courts essentially ask the Court to identify
the criteria for determination of the extent of the reparation due by the
Member State responsible for the breach.
82 Reparation for loss or
damage caused to individuals as a result of breaches of Community law must
be commensurate with the loss or damage sustained so as to ensure the
effective protection for their rights.
83 In the absence of relevant
Community provisions, it is for the domestic legal system of each Member
State to set the criteria for determining the extent of reparation.
However, those criteria must not be less favourable than those applying to
similar claims based on domestic law and must not be such as in practice
to make it impossible or excessively difficult to obtain reparation.
84 In particular, in order to determine the loss or damage for which
reparation may be granted, the national court may inquire whether the
injured person showed reasonable diligence in order to avoid the loss or
damage or limit its extent and whether, in particular, he availed himself
in time of all the legal remedies available to him.
85 Indeed, it is a
general principle common to the legal systems of the Member States that
the injured party must show reasonable diligence in limiting the extent of
the loss or damage, or risk having to bear the damage himself (Joined
Cases C-104/89 and C-37/90 Mulder and Others v Council and Commission
[1992] ECR I-3061, paragraph 33).
86 The Bundesgerichtshof asks
whether national legislation may generally limit the obligation to make
reparation to damage done to certain, specifically protected individual
interests, for example property, or whether it should also cover loss of
profit by the claimants. It states that the opportunity to market products
from other Member States is not regarded in German law as forming part of
the protected assets of the undertaking.
87 Total exclusion of loss of
profit as a head of damage for which reparation may be awarded in the case
of a breach of Community law cannot be accepted. Especially in the context
of economic or commercial litigation, such a total exclusion of loss of
profit would be such as to make reparation of damage practically
impossible.
88 As for the various heads of damage referred to in the
Divisional Court' s second question, Community law imposes no specific
criteria. It is for the national court to rule on those heads of damage in
accordance with the domestic law which it applies, subject to the
requirements set out in paragraph 83 above.
89 As regards in
particular the award of exemplary damages, such damages are based under
domestic law, as the Divisional Court explains, on the finding that the
public authorities concerned acted oppressively, arbitrarily or
unconstitutionally. In so far as such conduct may constitute or aggravate
a breach of Community law, an award of exemplary damages pursuant to a
claim or an action founded on Community law cannot be ruled out if such
damages could be awarded pursuant to a similar claim or action founded on
domestic law.
90 Accordingly, the reply to the national courts must be
that reparation by Member States of loss or damage which they have caused
to individuals as a result of breaches of Community law must be
commensurate with the loss or damage sustained. In the absence of relevant
Community provisions, it is for the domestic legal system of each Member
State to set the criteria for determining the extent of reparation.
However, those criteria must not be less favourable than those applying to
similar claims or actions based on domestic law and must not be such as in
practice to make it impossible or excessively difficult to obtain
reparation. National legislation which generally limits the damage for
which reparation may be granted to damage done to certain, specifically
protected individual interests not including loss of profit by individuals
is not compatible with Community law. Moreover, it must be possible to
award specific damages, such as the exemplary damages provided for by
English law, pursuant to claims or actions founded on Community law, if
such damages may be awarded pursuant to similar claims or actions founded
on domestic law.
Extent of the period covered by reparation (question
4(b) in Case C-46/93)
91 By this question, the Bundesgerichtshof asks
whether the damage for which reparation may be awarded extends to harm
sustained before a judgment is delivered by the Court finding that an
infringement has been committed.
92 Following from the reply to the
second question, the right to reparation under Community law exists where
the conditions set out in paragraph 51 above are satisfied.
93 One of
those conditions is that the breach of Community law must have been
sufficiently serious. The fact that there is a prior judgment of the Court
finding an infringement will certainly be determinative, but it is not
essential in order for that condition to be satisfied (see paragraphs 55,
56 and 57 of this judgment).
94 Were the obligation of the Member
State concerned to make reparation to be confined to loss or damage
sustained after delivery of a judgment of the Court finding the
infringement in question, that would amount to calling in question the
right to reparation conferred by the Community legal order.
95 In
addition, to make the reparation of loss or damage conditional upon the
requirement that there must have been a prior finding by the Court of an
infringement of Community law attributable to a Member State would be
contrary to the principle of the effectiveness of Community law, since it
would preclude any right to reparation so long as the presumed
infringement had not been the subject of an action brought by the
Commission under Article 169 of the Treaty and of a finding of an
infringement by the Court. Rights arising for individuals out of Community
provisions having direct effect in the domestic legal systems of the
Member States cannot depend on the Commission' s assessment of the
expediency of taking action against a Member State pursuant to Article 169
of the Treaty or on the delivery by the Court of any judgment finding an
infringement (see, to this effect, Joined Cases 314/81, 315/81, 316/81 and
83/82 Waterkeyn and Others [1982] ECR 4337, paragraph 16).
96
Accordingly, the reply to the national court' s question must be that the
obligation for Member States to make good loss or damage caused to
individuals by breaches of Community law attributable to the State cannot
be limited to damage sustained after the delivery of a judgment of the
Court finding the infringement in question.
The request that the
temporal effects of the judgment should be limited
97 The German
Government requests the Court to limit any damage to be made good by the
Federal Republic of Germany to loss or damage sustained after delivery of
judgment in this case, in so far as the victims did not bring legal
proceedings or make an equivalent claim before. It considers that such a
temporal limitation of the effects of this judgment is necessary owing to
the scale of its financial consequences for the Federal Republic of
Germany.
98 It must be borne in mind that, were the national court to
find that the conditions for liability of the Federal Republic of Germany
are satisfied in this case, the State would have to make good the
consequences of the damage caused within the framework of its domestic law
on liability. Substantive and procedural conditions laid down by national
law on reparation of damage are able to take account of the requirements
of the principle of legal certainty.
99 However, those conditions may
not be less favourable than those relating to similar domestic claims and
must not be such as in practice to make it impossible or excessively
difficult to obtain reparation (Francovich and Others, paragraph 43).
100 In view of the foregoing, there is no need for the Court to limit
the temporal effects of this judgment.
Costs
101 The costs incurred by the
Danish, German, Greek, Spanish, French, Irish and Netherlands Governments,
the United Kingdom and the Commission of the European Communities, which
have submitted observations to the Court, are not recoverable. Since these
proceedings are, for the parties to the main proceedings, a step in the
proceedings pending before the national courts, the decision on costs is a
matter for those courts.
On those grounds,
THE COURT,
in
answer to the questions referred to it by the Bundesgerichtshof, by order
of 28 January 1993, and by the High Court of Justice, Queen' s Bench
Division, Divisional Court, by order of 18 November 1992, hereby rules:
