United Kingdom Journals

		[2000] 1 Web JCLI

State liability v Retroactive application of belated implementing measures: Seeking the optimum means in terms of effectiveness of EC law

Georgios Anagnostaras*

Ph.D. Researcher, Tutor of EU Law, University of Bristol

Member of the Thessaloniki Bar

G.Anagnostaras@bristol.ac.uk

*The author is grateful to Mr Phil Syrpis (Lecturer, University of Bristol), Professor Barry Fitzpatrick (University of Ulster), Mr Mark Hoskins (Barrister, Brick Court) and Dr Stratos Konstadinidis (Lecturer, University of Bristol) for their invaluable help at different stages of this paper.

Copyright © 2000 Georgios Anagnostaras.
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.

Summary

In the light of some interesting decisions of the Italian Corte di Cassazione and the European Court of Justice, this article attempts to explore the prospects of the recently introduced technique of the retroactive application of belated implementing measures and its suitability as a means of attaining the objectives pursued by the EC legal order and of guaranteeing the protection of individuals' EC law rights. It especially places emphasis on its relationship with the doctrine of State liability for breach of EC law and highlights the problems many national courts face in their effort to reconcile their national laws on public liability with the requirements of the EC legal order and to apply correctly certain fundamental EC law principles.

Contents

1. Introduction : Developing mechanisms for the enforcement of EC law rights
2. Retroactive application of belated implementing measures : The response of the national and EC judiciary
3. Retroactive application of belated implementing measures in the light of the effectiveness and effective judicial protection principles
4. Conclusion : Drawing the lines together

Bibliography

1. Introduction : Developing mechanisms for the enforcement of EC law rights

The unique characteristics of the European Community (EC) legal order, distinguishing it from all other legal orders created by international law, are more or less well-known. On the one hand, it pursues the attainment of a very bold objective, namely not only the establishment of a Common Market (Case 26/62, NV Algemene Transporten Expeditie Onderneming van Gend en Loos v Nederlandse Administratie der Belastingen, 1963 [ECR] 1, p. 12), but also the continuous amelioration of the social and living conditions of its citizens (Case 43/75, Defrenne v Société Anonyme Belge de Navigation Aerienne, [1976] ECR 455, para 8-12) and the forging of an "ever closer union among the peoples of Europe" (European Community Treaty (ECT) Preamble). On the other hand, and as a necessary consequence of the above described objective, the subjects of EC law are not only the Member States, but also their nationals, the latter being not only the subjects of obligations, but also addressees of rights conferred upon them (Case 26/62, Van Gend en Loos, p. 12).

At the same time, the EC legal order relies to a great extent on the assumption that the obligations imposed by EC law on its subjects shall be fully respected, in order for the attainment of the above objectives -and, indeed, the existence of the EC itself- to be rendered possible. This necessarily presupposes the existence of a system for the enforcement of the rights conferred by EC law against all those upon which that law intended to impose respective obligations. This requires the existence of effective sanctions, capable of both dissuading any potential wrongdoer from infringing his EC law obligations and providing, at the same time, for effective penalties, in case that such a breach does in fact take place. However, it is equally true that the ECT suffers from an inherent inability to guarantee the existence of a system meeting the above characteristics. While it provides for the possibility of individuals receiving a certain degree of protection in case of violations committed by the EC institutions⁽¹⁾, it hardly contains any references as concerns breaches committed by either a Member State⁽²⁾ or an individual.⁽³⁾ The problem is especially severe with regard to violations committed by the national authorities. Indeed, the breach in such a case may consist not only in the violation of a substantive EC law provision imposing a certain obligation upon the State, but also in the failure on the part of the latter to either undertake the necessary legislative action in order to ensure that the desired effect of a given provision expressly requiring the adoption of further implementing measures will be fully attained⁽⁴⁾ or to supervise properly the application of EC law in the national legal order.⁽⁵⁾

Faced with the above described legislative lacuna, the Court soon realised that the "public enforcement mechanism" provided for by Articles 169-171 [new 226-228] EC was patently insufficient as a means of guaranteeing the attainment of the objectives pursued by the EC legal order and the effective protection of individuals' EC law rights. It also understood that the existing system was manifestly incompatible with the need to involve both EC citizens and their national courts in the application and enforcement of Community legislation and to familiarise all EC law subjects with the progressively developing "new legal order" (Craig 1992). Taking thus all these into account, the ECJ started exploring alternative, judicial ways towards this direction. Through a remarkably robust case law, it introduced what is currently known as the "EC judicial liability system" (Snyder 1993), in a clear effort to ensure that an effective remedy will always be available to anybody whose EC law rights have been violated in the context of a given scenario and to guarantee that in the long run all EC law subjects will be more willing to live up to the obligations and the duties the EC legal order imposes upon them. Originally comprising of the doctrines of direct⁽⁶⁾ and indirect⁽⁷⁾ effect, this judicial mechanism has been further reinforced through the recognition to individuals, in the famous Cases C-6 & 9/90, Francovich and Bonifaci v Italy, [1991] ECR I-5357, of the right to require from the State to make good any loss the violation of its EC law obligations has caused to them.⁽⁸⁾ This development confirms the position that the control of the conduct of the national authorities is of especial interest to EC law, in view of the fact that in its current state of affairs it necessarily relies on the mechanisms provided for by the national systems in order to attain the objectives pursued by it. At the same time, it heralds a new era in the Court's case law with regard to the availability in the national courts of remedies for the protection of the rights granted to individuals by EC law. Clearly drawing inspiration from the principle of effective judicial protection introduced in Case 222/84, Johnston v Chief Constable of the RUC, [1986] ECR 1651, para 18-19, the ECJ accepts for the first time the existence of an autonomous and specific EC law course of action (Ross 1993). While theoretically reaffirming the discretion of the Member States to specify the means for the judicial protection of their citizens' EC law rights and to regulate the procedure under which this protection shall take place, the Court in fact obliges the national judges to accept the possibility of holding their public authorities liable in damages for the breach of their EC law obligations, even in circumstances when this would not be allowed under their domestic legal order.

Indeed, this so-called doctrine of State liability has been clearly introduced as an EC law principle, inherent in the system of the Treaty (Francovich and Bonifaci, para 35) and it is governed by certain substantive EC law conditions. More specifically, Cases C-46 & 48/93, Brasserie du Pêcheur SA v Germany and R. v Secretary of State for Transport ex parte Factortame Ltd. and others (Factortame III), [1996] ECR I-1029, para 51, have established that the plaintiff has to show that the State against which his action is brought has committed a sufficiently serious breach of an EC law provision intending to confer rights on individuals and that there is a direct causal link between the State's violation and the loss sustained by him.⁽⁹⁾ After Cases C-178, 179, 188-190/94, Dillenkofer and others v Germany, [1996] ECR I-4845, para 23, it is clear that the same conditions apply to all kinds of EC law violations committed by the State.⁽¹⁰⁾ However, the establishment of the existence of a sufficiently serious breach will differ depending on the margin of discretion enjoyed by the national authorities in the field where the violation was committed. If the breach has taken place in an area where the State enjoys a considerable freedom of action, liability will only arise when the circumstances under which the national authorities have acted and especially the degree of clarity and precision of the provision infringed clearly point towards the direction that their conduct was intentional and thus inexcusable (Brasserie du Pêcheur/Factortame III, especially para 56 and the factors mentioned therein). On the contrary, when the violation has occurred in a field where the State enjoys little or no discretion at all, this breach will be automatically considered as a sufficiently serious one, without any further proof requirement towards this respect (Case C-5/94, R. v Ministry of Agriculture, Fisheries and Food, ex parte Hedley Lomas, [1996] ECR I-2553, para 28).⁽¹¹⁾

However, the Court has also emphatically declared that reparation will be always made "in accordance with the domestic rules on liability" (Brasserie du Pêcheur/Factortame III, para 67), provided that the same arrangements also apply to cases not involving an EC law component (the equivalence or non-discrimination principle)⁽¹²⁾ and to the extent that such rules do not render reparation impossible or excessively difficult (the effectiveness principle).⁽¹³⁾ The question of the measure of discretion the ECJ is prepared to recognise to the national legal systems in this respect is currently contested, uncertainty existing as to the extent to which the Court will be willing to strike down a given national arrangement as violating the principles of effectiveness and/or equivalence. Certain indications have been provided, however, towards this direction by certain recent judgments of the ECJ, delivered in Cases C-94 & 95/95, Bonifaci & Berto v Istituto Nazionale della Previdenza Sociale (INPS), [1997] ECR I-3969, Case C-261/95, Palmisani v INPS, [1997] ECR I-4025 and Case C-373/95, Maso & Gazzetta v INPS, [1997] ECR I-4051. All these cases concerned the extent to which a Member State should be allowed to choose the retroactive application of belated implementing measures as a remedy for the damage individuals might have sustained because of the violation of its EC law obligations, determining thus the amount of the compensation due for the period in which proper implementation had not yet taken place. It is of extreme practical and theoretical interest to examine and understand the factual background of the cases referred to the ECJ and the position the Court seems to have adopted as concerns the question of whether the retroactive transposition of belated implementing measures constitutes an effective means of securing the objectives pursued by the EC legal order and of guaranteeing the effective protection of individuals' EC law rights, the availability of which could limit or even bar the possibility of relying on the Francovich doctrine. At the same time, these cases offer an excellent example of the problems the national courts face in their effort to reconcile their national laws on public liability with the relevant case law of the ECJ and give rise to concern as regards the extent to which the national judges have fully realised the meaning of the term "national procedural autonomy" and the duties that participation in the Communities entails both for them and their national legal orders.

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2. Retroactive application of belated implementing measures : The response of the national and EC judiciary

Soon after the introduction by the Court of the doctrine of State liability for breach of EC law, Italy adopted Decreto Legislativo (Legislative Decree) 80/1992, GURI, No 36, 13 February 1992. This purported to implement in the national legal order Directive 80/987, OJ 1980 L 283, p. 23, which constituted the subject matter of the Francovich litigation and identified the National Security Institute (INPS) as the body responsible for the payment of any outstanding claims the employees covered by that Directive's scope might have against their insolvent employers. The originality of that measure consisted in the fact that by virtue of its Article 2 (7) it was made applicable to the payment not only of the claims that would arise after its entry into force, but also of the compensation individuals might be entitled to due to the belated transposition in the national legal order of Directive 80/987. It also provided that all actions against the INPS should be brought within one year from its adoption. This in practice amounted to the introduction of a without precedent legislative system, operating exclusively with regard to Directive 80/987, for the payment by a State body (and thus not the State itself) of compensation for the belated adoption of national implementing measures.

Very soon, the Italian courts were called to give an answer to the question of whether the claims based on Italy's failure to implement in time the relevant Directive should be brought against the State on the basis of the Francovich doctrine or against the INPS on the basis of the Legislative Decree. Certain of them (for example, Pretura di Pistoia, 16 November 1992, Mass. giur. lav., 1993, p. 97, Pretura di Bassano del Grappa, 9 July 1992) relied on the Court's decision in Francovich. They based their reasoning on the need to establish a link between the responsibility for the belated transposition of the Directive and the resulting compensation individuals are entitled to and thus came to the conclusion that allowing a damages action against the State on the basis of Article 2043 of the Italian Civil Code would echo better the relevant jurisprudence of the ECJ. Certain others (for example, Pretura di Camerino, 13 May 1993) accepted, however, the objection put forward by the Government that by virtue of the Legislative Decree No 80 all claims had to be brought against the specified guarantee institution and not the State itself, coming, therefore, to exactly the opposite conclusions. It was only after the Italian Constitutional Court declared (Corte Costituzionale, 16 June 1993, [1993] I Il Foro Italiano, 2393 and 31 December 1993, [1994] I Il Foro Italiano, 316) that the obligation to compensate individuals for the belated transposition of Directive 80/987 could be imposed by the legislature on a State body and the Cassation Court emphatically ruled (Corte di Cassazione, No 10617, 11 October 1995 and No 401, 19 January 1996, [1996] I Il Foro Italiano, 316) in favour of the solution introduced by the Legislative Decree that the situation was finally clarified.

These decisions have to be examined in the light of the domestic arrangements on the non-contractual liability of the Italian State.⁽¹⁴⁾ The point of departure should be the distinction employed by the Italian legal order between norme di relazione (norms of relationship) and norme di azione (norms of action), the former governing the relationship between the public administration and the citizens and giving rise to the birth of subjective rights (diritti soggettivi), while the latter merely regulate the administrative function, with only protected interests (interessi legittimi) emanating therefrom. The practical importance of this distinction lies on the theory, traditionally accepted in Italy, that it is exclusively for the violation of provisions containing a subjective right that a damages action against the State is available to the affected individuals. In practice, the criterion used by the Italian jurisprudence is that of the existence or not of discretion on the part of the body responsible for the violation. It is only when such a discretion is missing that a diritto soggettivo and the corresponding right to receive damages can arise. Given that the above distinction is also applicable to cases involving an EC law component (Corte di Cassazione, No 3458, 4 August 1977, Biscotti Panettoni Colussi s.n.c.), one can easily understand the problems involved in the imposition of non-contractual liability on the Italian legislature, especially when its violation consists in the failure to implement in time a non-directly effective Directive, presupposing, by definition, a great margin of discretion as to the way it will be transposed in the domestic legal order.⁽¹⁵⁾

It is specifically this difficulty the Italian Cassation Court emphasised when called to adjudicate on the matter.⁽¹⁶⁾ Its reasoning was based on the argument that at the same time that the ECJ introduced the Francovich doctrine, it clearly reaffirmed the national procedural autonomy of the Member States, entrusting to the national courts the task of determining the existence of such liability according to their relevant domestic rules. The Corte di Cassazione interpreted this autonomy as enabling it to apply the domestic distinction between diritti soggettivi and interessi legittimi and to examine whether the Italian legal system offers any basis for the establishment of legislative liability. According to the Italian Constitution, the exercise of the legislative power belongs to the Parliament and the Government, both expressing the political power which cannot be made subject to any judicial control. It should be consequently excluded that EC law could ever give rise in the domestic legal order to a diritto soggettivo on the basis of Article 2043 of the Italian Civil Code as concerns the exercise of the legislative power. There is, accepts the Cassation Court, a clear divergence between the EC and the Italian legal system, to the extent that the latter does not permit reparation of any damages sustained due to the belated transposition of a Directive and does not therefore permit the provision of the complete and effective protection of individuals' rights required by EC law. The Legislative Decree was adopted with the specific purpose to bridge this divergence, imposing on the INPS the obligation to make good all damages sustained in the period where proper implementation had not yet taken place. According to the Corte di Cassazione, the adopted solution is compatible with the principle of national procedural autonomy and can guarantee the effective protection of individuals' EC law rights.

Any doubts around the position that the ECJ might adopt with regard to the compatibility with EC law of this Legislative Decree were considerably relaxed after the Court had the opportunity to deal with the matter in certain cases decided by it in July 1997 (Bonifaci & Berto, Palmisani, Maso & Gazzetta. For a more detailed discussion of these cases, see Odman 1998). Arguing on the basis that the Francovich doctrine is one more substitute for the correct implementation of EC law (Opinion of Advocate General Cosmas in Bonifaci & Berto, at point 55), it declared that, provided that the Directive had been properly transposed, the retroactive application in full of the belated implementing measures would in principle remedy the loss suffered by individuals due to the violation by the State of its obligations under Article 189 (3) [new 249 (3)] EC. It accepted, however, that any further damage, arising from the inability of the intended beneficiaries to enjoy at the appropriate time the rights EC law wished to confer upon them, should also be made good (Bonifaci & Berto, para 51-54, Maso & Gazzetta, para 39-42). As concerns the one year limitation period for the institution of any proceedings against the INPS, the Court came to the conclusion that it does not violate the effectiveness principle (Palmisani, para 29), while the question of its compatibility with the principle of equivalence was left open in the absence of sufficient information on the matter, especially with regard to the nature and operation of Article 2043 of the Italian Civil Code. It was, however, clarified that the said time-limit could in any case apply if the national court could not make an appropriate comparison with a domestic provision governing the institution of similar actions against the public authorities for breach of national law (Palmisani, para 32-39). At the end of the day, the Court's decisions seem to accept the compatibility with EC law of the introduced solution by Italy that all actions had to be brought against the INPS on the basis of the national implementing legislation and not against the State on the basis of the Francovich doctrine, with a possible exception of actions for the recovery of any extra damages and only to the extent that the Legislative Decree would not provide a basis for their institution against the INPS.

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3. Retroactive application of belated implementing measures in the light of the effectiveness and effective judicial protection principles

The answers given by the Court to the questions referred to it by the Italian courts seem to confirm the tendency arising from its case law⁽¹⁷⁾ to treat Francovich as a complementary remedy, the availability of which is guaranteed as a matter of EC law only to those individuals whose rights are not effectively protected in the national courts by alternative legal means (Anagnostaras 1999). Its decisions can be hardly considered as surprising, given the clear EC interest in the reinstatement of substantive rather than merely financial legality (Opinion of Advocate General Tesauro in Brasserie du Pêcheur/Factortame III, at point 34). Certainly, a successful damages action against the State enables the plaintiff to at least enjoy the financial content of his infringed right. However, it only exceptionally produces effects going beyond the parties involved in a given dispute and it does not cure the anomaly the violation gives rise to, in the sense that it cannot guarantee that the addressees of the infringed provision will actually enjoy the rights or will have to comply with the obligations the EC legal order intended to confer or impose upon them respectively. This does not only prevent EC law from producing its desired effect, but it also creates uncertainty as to the exact scope of the rights and obligations under which the various legal subjects have to operate, the affected individuals being called to meet the extra burden of knowing both the exact content of the right the EC legal order intended to confer upon them and the means available to them for its protection in the national courts under the relevant case law of the ECJ (Opinion of Advocate General Cosmas in Bonifaci & Berto, at point 54). The conclusion that arises from the above seems, therefore, to be that, given that the EC interest in the reinstatement of substantive legality is better served through the retroactive application of the belated implementing measures,⁽¹⁸⁾ a Member State should not be precluded in principle⁽¹⁹⁾ from giving priority to it over the Francovich doctrine, provided that individuals' EC law rights will receive an at least equal measure of protection.

This should also be so for the further reason that, given the sensitivity national courts naturally have in holding their own States liable in damages, especially when the case concerns a breach committed by the legislature, allowing the domestic legal systems to promote other remedies over the Francovich principle when this would not affect the measure of protection offered to either the objectives pursued by EC law or individuals' EC law rights, could provide a practical way of reducing the danger of certain national judges refusing to apply the doctrine of State liability. Such a rebellion on the part of the national courts needs to be avoided, since it would undermine the spirit of co-operation that should govern the relationship between the national and the EC judiciary and would create dangerous precedents in view of the sensitive role national judges have been entrusted with in terms of enforcement and supervision of the proper application of EC law towards the transformation of the EC into a true Union of States and peoples.

However, one cannot help noticing that it is only in exceptional cases that it will be possible for a State to reinstate substantive legality through the retroactive application of domestic legislation (in the same direction, Tesauro 1996, p. 34). Whereas this will usually be possible in case of provisions imposing on the State or one of its emanations the obligation to confer a certain financial benefit on a certain category of persons, the same will not be normally so when the right conferred on individuals is of a substantive, rather than of a pecuniary, nature, in which case only the retroactive reinstatement of its financial content will be conceivable. It is equally remarkable that the arrangement introduced by the Italian Legislative Decree entails a reverse application of the Foster jurisprudence of the ECJ⁽²⁰⁾ (Case C-188/89, Foster and others v British Gas plc, [1990] ECR I-3313), actually providing for the transfer from the central State to one of its emanations, the activities of which are financed by employers' contributions, of any obligation to make good the loss sustained by individuals (in the same direction, Zampini 1997, p.1052). There is the suspicion that, if this case is used as a precedent for the possibility of retroactively transferring any kind of liability from the shoulders of the principally responsible for a certain breach national legislature to those of an allegedly State emanation upon which the substantive provisions of the belatedly implemented EC law measure intended to impose obligations, the end result might be a substantial weakening of the operation of the Francovich doctrine as a potential means of providing a further incentive to the national Governments to be more responsible in the exercise of the duties imposed upon them by the EC legal order. It is for this reason that the relevant declarations of the ECJ should be seen in their context, the argument being that the position might have been different, had the retroactive application of the belated implementing measures led to the imposition of respective obligations not on a State emanation, but rather on a private party.⁽²¹⁾ The Francovich principle performs not only a compensatory but also a dissuasive function, the latter consisting in the imposition on the public authorities of an indirect pressure to live up to their EC law obligations, in the knowledge that they may be otherwise called to make good any loss their violation causes to individuals. This is especially so with regard to measures which, subject to the adoption of national implementing legislation, intend to impose obligations not on the Member States but rather on private parties. Under such circumstances, the availability of a Francovich action practically means that the failure of the national authorities to undertake the required legislative action may result in their obligation to reinstate the substantive content of an obligation addressed not to themselves but to a third party. It could be, therefore, argued that the Court would be very hesitant to accept any solution which, by providing absolute immunity to the defaulting national legislature, would undermine the dissuasive function of the doctrine of State liability. One should also keep in mind that the Court's policy with regard to the retroactive application of Community measures seems to be that recourse to it should be kept to the absolute minimum and only to the extent that individuals' legitimate expectations are fully respected (Case 98/78, Firma A. Racke v Hauptzollamt Mainz, [1979] ECR 69, para 84-86). Since Case 14/86, Pretore di Salo v X, [1987] ECR 2545, it is clear that a directive cannot be used in a way as to retroactively impose or aggravate criminal liability not provided for by national legislation and it could be argued that the same goes with regard to the imposition of civil liability (see the Opinion of Advocate General Van Gerven in Case C-106/89, Marleasing SA v La Commercial Internacionale de Alimentacion SA, [1990] ECR I-4135, at point 8).

At the same time, the Court seems to consider in some respects the claims against the INPS concerning the period before the adoption of the Legislative Decree as being not of a compensatory nature but rather directed towards the payment of a guarantee required by the law. It appears, therefore, sometimes to use as a measure of comparison for the determination of the extent of the obligations of the INPS with regard to claims arising for the period before the adoption of the implementing legislation not the amount of compensation individuals would have been entitled to under the Francovich doctrine, but rather the provisions of Directive 80/987. While it recognises the plaintiffs' right to receive any extra damages sustained due to Italy's belated compliance with its obligations under Articles 189 (3) [new 249 (3)] and 5 [new 10] EC (Bonifaci & Berto, para 53, Maso & Gazzetta, para 41), its answer to the question of whether it is permissible to impose on the basis of Article 4 (3) of the Directive⁽²²⁾ a retroactive upper limit on the payable guarantee and, consequently, on the amount of the compensation individuals are entitled to is much more equivocal than the one given by its Advocate General (Opinion of Advocate General Cosmas in Bonifaci & Berto, at point 109 and Maso & Gazzetta, at point 18), accepting in substance that this is possible, provided that the loss sustained is remedied in an appropriate way (Maso & Gazzetta, para 39-42). In the same direction, while it declares (Bonifaci & Berto, para 51-54, especially para 52) that reparation can be made on the basis of any of the three options under Article 4 (2) of the Directive,⁽²³⁾ it does not clarify whether it shares the position of its Advocate General that the exercise of this discretion is subject to the absence of more favourable national rules for the calculation of the compensation due (Opinion of Advocate General Cosmas in Bonifaci & Berto, at point 106 and footnote no 85), a proviso clearly applicable in the field of State liability under Francovich (Francovich, para 43, Brasserie du Pêcheur/Factortame III, para 83). It is not clear whether this approach can be explained on the basis of the facts of the cases in issue or whether it could be possibly seen as the provision of one more incentive to the Member States to proceed, where possible, to the adoption of even belated implementing measures, when this would serve the evident EC interest in the reinstatement of substantive legality. It seems, however, probable that the Court will be called to provide further clarification in the future on the exact relationship between the Francovich doctrine and the retroactive application of national implementing measures, especially with regard to the issue of the time-limit within which applicants should institute their actions for claims concerning the period before the proper transposition of a given EC law measure in the domestic legal order.

It should, however, always be kept in mind that the said Legislative Decree received the Court's seal of approval only because and merely to the extent that its existence was considered compatible in the context of a certain factual background with the objectives pursued by EC law, namely those of the effectiveness of the EC legal order and the effective protection of the rights the latter intended to confer on individuals. This should not be, however, interpreted to imply that the ECJ also agrees with the reasoning employed by the Corte di Cassazione in order to defend the adopted legislative mechanism and to direct all actions based on the belated transposition of Directive 80/987 against the INPS. On the contrary, and to the extent that the Italian court shows a tendency to introduce precedents of wide application and to accept absolute legislative immunity for breaches of EC law, its decisions prove a considerable misunderstanding or even disregard of many of the fundamental principles upon the respect of which the existence of the EC legal order is based. Indeed, in an evident effort to create the least possible political vibrations in its national legal order in view of the revolutionary effects the introduction of the Francovich doctrine has had on the domestic system of non-contractual public liability, the Corte di Cassazione has actually accepted that, unless the legislature expressly provides otherwise, its action or inaction with regard to individuals' EC law rights will be immune from any financial liability.

First of all, there are many objections with regard to the notion of "national procedural autonomy", as the Corte di Cassazione seems to understand it. This principle exists in the absence of procedural EC law and reaches its limits when it comes to the need to ensure the complete and effective protection of individuals' EC law rights, only operating to the extent that the existing domestic arrangements can indeed guarantee the attainment of the specific objectives pursued by the EC legal order (Kakouris 1997). It is, indeed, a long time since the ECJ was setting as the only limits of this "autonomy" the respect of the principles of equivalence and practical possibility (Case 33/76, Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaftskammer für das Saarland (Rewe I), [1976] ECR 1989, p. 1997) and was declaring the absence of the obligation to create new remedies in the national courts, other than those already provided for by national law (Case 158/80, Rewe-Handelsgesellschaft Nord mbH v Hauptzollamt Kiel, [1981] ECR 1805, para 44). Through an increasingly bold case law, the Court progressively limited this principle's scope of application, reaching the point of requiring the setting aside of the sole obstacle preventing the availability in a certain case of a remedy already provided by a given domestic legal order (Case C-213/89, R. v Secretary of State for Transport, ex parte Factortame Ltd. and others, [1990] ECR I-2433) and, lately, the creation for the first time of a specific damages action, inherent in the system of the Treaty (Francovich and Bonifaci v Italy). In the light of these developments, it seems impermissible to invoke the principle of national procedural autonomy in order to deprive individuals of their required judicial protection under EC law, for the sole reason that a certain right conferred upon them would be classified in the context of the Italian legal order as a simple protected interest. It is, indeed, true that the ECJ has not yet explicitly condemned the consequences the distinction between interessi legittimi and diritti soggettivi entails for the protection of individuals' EC law rights,⁽²⁴⁾ but there is little doubt that they do not fit well in its recent case law, increasingly strong indications pointing towards the direction that State liability can arise even for the violation of simple protected interests (Opinion of Advocate General Mischo in Francovich and Bonifaci, at point 77 and footnote no 25, Opinion of Advocate General Jacobs in Case 380/87, Enichem Base and others v Commune di Cinisello Balsamo, [1989] ECR 2491, at point 19).

The reasoning employed by the Corte di Cassazione also infringes, always under the pretext of Italy's procedural autonomy, the core of the Francovich principle (also see Biondi 1996, p. 487), namely the imposition of non-contractual liability for breaches of EC law committed by any organ of the State, including the legislature, regardless of whether such a possibility exists or not under the domestic legal order (Brasserie du Pêcheur/Factortame III, para 33-34). Although its judgments were delivered before the Court's decision in Brasserie du Pêcheur/Factortame III which expressly accepted the possibility of imposing State liability for a breach committed by the national legislature, this conclusion arose indirectly -and yet clearly- from the factual background of the Francovich litigation, concerning such a legislative failure to live up to its EC law obligations. The language used by the Italian court testifies its intention to establish the legislative immunity for breach of EC law as a general principle, applicable far beyond the facts of the cases before it. Whereas the existence of the Legislative Decree offered it an alternative route and enabled the satisfaction of individuals' claims arising from the belated implementation of Directive 80/987, the question remains what the situation would have been in the absence of such a national arrangement, in view, on the one hand, of the clear and unequivocal reasoning of the Corte di Cassazione and the need, on the other hand, to guarantee the effective judicial protection of individuals' EC law rights (Zampini 1997, p. 1054). The answer to this question may be given much sooner than expected: It will be recalled that the ECJ accepted the solution introduced by the Decreto Legislativo under the condition that any extra damages individuals may have sustained due to the belated adoption by Italy of implementing legislation will also be made good. If the Legislative Decree does not provide the basis for the recovery of such damages, then, presumably, the relevant actions will have to be brought against the State on the basis of the Francovich doctrine. It will be then interesting to see how the Italian courts will manage to reconcile the legislative immunity suggested by the Corte di Cassazione with the requirements of the EC legal order.

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4. Conclusion : Drawing the lines together

It is, indeed, correct that the retroactive application of belated implementing measures can offer, in the exceptional cases where it will be possible, the measure of protection to individuals' rights required by EC law, serving, at the same time, the EC interest in the reinstatement of substantive legality. When this will be so, Member States should not be in principle prevented from reserving the application of the doctrine of State liability exclusively to cases where this would be necessary to supplement the measure of protection offered by the implementing national legislation to individuals' EC law rights, something which would be in line with the indications provided by the Court as to the subsidiary nature of the Francovich remedy with regard to other available legal means in the national courts. At the same time, however, the danger arises that this technique might give in certain cases the opportunity to the Member States to transfer, to bodies the status of which as State emanations is highly contested or even to private individuals, the liability they should incur, because of their failure to adopt in time the measure required by a certain EC law, weakening thus the possibility of Francovich operating as a potential tool of making national Governments more responsible in the exercise of their duties under the EC legal order. In any case, it should be always kept in mind that any solution comparable to the one adopted in Italy can apply only to the extent that it is found to be compatible with the objectives pursued by EC law and is considered as capable of serving them in a satisfactory way and not because it is justified by the principle of the national procedural autonomy Member States are supposed to enjoy. There is little doubt that many national legal systems face serious problems in the recognition of the State's non-contractual liability, especially as concerns breaches committed by the legislature. However, accession to the Communities entails a voluntary limitation of national sovereignty and any violation concerns obligations freely undertaken by the States through their representatives in the Council. Therefore, there is little justification for national courts to refuse the application of the Francovich case law, under a reasoning showing a manifest misunderstanding or even disregard of fundamental EC law principles and a willingness to subordinate the effectiveness of the EC legal order and the effective protection of the rights the latter intends to confer on individuals to the satisfaction of national interests.

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Bibliography

Anagnostaras, G (1999) "The doctrine of State liability in the context of the legal means available for the protection of individuals' EC law rights in the national courts : How independent can an autonomous remedy be ?" Presented in the 5th EU/International Forum, The Future of Remedies in Europe, Bristol, May 1999 (not yet published).

Beatson, J & Tridimas, T (eds) (1998) New Directions in European Public Law (Oxford: Hart Publishing).

Biondi, A (1996) `The Corte di Cassazione and the proper implementation of Community law' 21 European Law Review 485.

Craig, P (1992) `Once Upon a Time in the West : Direct Effect and the Federalisation of EEC law' 12 Oxford Journal of Legal Studies 453.

Craig, P & de Burca, G (1998) EU Law, 2nd edition (Oxford: Oxford University Press).

Kakouris, C (1997) `Do the Member States possess judicial procedural "autonomy"?' 34 Common Market Law Review 1389.

Odman, N (1998) 35 Common Market Law Review 1395.

Ross, M (1993) `Beyond Francovich' 56 Modern Law Review 55.

Siciliano, A (1999) `State Liability for Breaches of Community Law and its Application within the Italian Legal System' 5 European Public Law 405.

Snyder, F (1993) `The Effectiveness of European Community Law : Institutions, Processes, Tools and Techniques' 56 Modern Law Review 19.

Temple Lang, J (1990) `Community Constitutional Law : Article 5 EEC Treaty' 27 Common Market Law Review 645

Temple Lang, J (1997) `The duties of national courts under Community Constitutional Law' 22 European Law Review 3

Tesauro, J (1996) `Responsabilité des Etats Membres pour Violation du Droit Comminautaire' Revue du Marché Unique Européen 15.

Vandersanden, G and Dony, M (eds) (1997) La Responsabilité des Etats Membres en cas de Violation du Droit Communautaire: études de droit communautaire et de droit national comparé (Bruxelles : Bruylant) 289.

Zampini, F (1997) `Responsabilité de l'Etat pour Violation du Droit Communautaire : L'Example de l'Italie' 13 Revue Francaise de Droit Administratif .

(1) The provisions for the judicial review of EC acts or omissions (Articles 173-176 [new 230-233] and 184 [new 241] EC) and the system of EC non-contractual liability for breach of EC law (Article 215 (2) [new 288 (2)] EC).

(2) Articles 169-171 [new 226-228] EC and certain other provisions, such as Article 93 (2) [new 88 (2)] EC.

(3) For example, Articles 85-90 [new 81-86] EC.

(4) This is basically the case as concerns directives which always require the adoption of further national implementing measures by virtue of Article 189 (3) [new 249 (3)] EC, regardless of whether their substantive provisions impose obligations on the State or on private parties. Note, however, that the same holds true with regard to certain Treaty articles, requiring the adoption of further legislative action on the part of the Council (see, for example, Case 2/74, Reyners v Belgium, [1974] ECR 631, concerning Article 52 [new 43] EC, providing for the adoption of implementing Directives under Articles 54 [new 44] and 57 [new 47] EC).

(5) Such an obligation is imposed on the basis of Article 5 [new 10] EC. On the operation of this provision, see Temple Lang 1990, especially pages 645-654, and Temple Lang 1997.

(6) Introduced in Case 26/62, NV Algemene Transporten Expeditie Onderneming van Gend en Loos v Nederlandse Administratie der Belastingen, [1963] ECR 1, with regard to EC provisions and progressively extended to other EC law measures, it enables individuals to rely directly before the national courts upon provisions meeting certain minimum requirements of clarity, precision and unconditionality and to require the protection of the rights contained therein.

(7) Originally introduced in Case 14/83, Von Colson and Kamann v Land Nordrhein-Westfalen, [1984] ECR 1891, and further elaborated in Case C-106/89, Marleasing SA v La Comercial Internacionale de Alimentacion SA, [1990] ECR I-4135, it imposes on the national courts the obligation to interpret "as far as possible" their national legislation in the light of the wording and purpose of a relevant EC law measure, in order to attain the objectives pursued by the latter.

(8) Francovich and Bonifaci concerned the non-implementation by Italy of Directive 80/987, OJ 1980 L 283, on the protection of employees in case of their employer's insolvency. Italy had not set up the body that would be responsible for the payment of the employees' outstanding claims and so the applicants brought an action against the Italian State on the basis that the latter should be required to make good any loss they had suffered because of that omission.

(9) In Brasserie du Pêcheur a French brewery had been forced to discontinue the export of beer to Germany in the period 1981-1987 due to the application of Articles 9 and 10 of the Reinheitsgebot (the German beer purity law), prohibiting the import of beers containing additives and reserving the use of the name "Bier" only to beers produced according to a certain method. An action for damages was brought in the German courts on the basis of the violation by Germany of Article 30 [new 28] EC.

In Factortame III the problem concerned the application of the Merchant Shipping Act 1988. In order for a fishing vessel to register as a British one and to be able to fish against the British fishing quota, it was necessary that its owner could satisfy certain conditions of nationality, domicile etc. On the basis of the violation of Article 52 [new 43] EC certain Spanish fishermen brought a damages action in the UK courts for the reparation of any loss suffered by them during the application of the said legislation.

(10) Dillenkofer and others concerned the non-implementation by Germany of Directive 90/934, OJ 1990 L 158 p. 59, on package holidays. A damages action was brought on the basis that the plaintiffs would have been protected against the insolvency of their tour operator had the Directive been implemented in time.

(11) In Hedley Lomas, the UK was refusing to issue licenses for the export of live animals to Spain for slaughter between 1990 and 1993 on the basis of information that Spanish slaughterhouses did not conform with Directive 74/577, OJ 1974 L 316 p. 10, on stunning of animals before slaughter. An action for damages was brought by such a Spanish slaughterhouse on the basis that the UK refusal contravened Article 34 [new 29] EC and did not fall within the exception of Article 36 [new 30] EC.

(12) The equivalence or non discrimination principle was originally introduced in Case 33/76, Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaftskammer für das Saarland (Rewe I), [1976] ECR 1989. It provides that the same means available for the protection of domestic law rights should be also made available for the protection of comparable EC law rights.

(13) The effectiveness principle originates from the principle of practical possibility introduced in Rewe I, ibid. It requires that the application of domestic rules and procedures does not render the protection of individuals' EC law rights practically impossible or excessively difficult. In case of conflict between the equivalence and the effectiveness principles, the latter should prevail.

(14) For more on this issue, see Merola/Beretta in Vandersanden/Dony (eds.) 1997, pp. 289-349, Zampini 1997, pp. 1039-1055.

(15) One could make, however, a distinction between two kinds of discretion. Firstly, with regard to the adoption or not of a certain measure. Secondly, with regard to the form a measure that must be obligatorily adopted should take. Given that directives oblige the Member States to transpose them in the domestic legal order, giving them discretion only as to the way such an implementation will take place, it could be argued that the Italian courts could (or, indeed, should) have easily interpreted any directive as giving rise to subjective rights. Indeed, the EC legal order does not leave to the discretion of the national authorities the decision as to whether individuals will enjoy or not the rights conferred upon them by their provisions! [I am grateful to Dr Stratos Konstadinidis (Lecturer, University of Bristol) for giving me the incentive to think on this point].

(16) For a more detailed analysis of those decisions, Tesauro 1996, pp.30-34, Biondi 1996.

(17) Case C-334/92, Wagner-Miret, [1993] ECR I-6911, para 23, Case C-91/92, Faccini Dori v Recreb, [1994] ECR I-3325, para 27, Opinion of Advocate General Mischo in Case 6 & 9/90 Francovich and Bonifaci v Italy, [1991] ECR I-5357 at point 42, Opinion of Advocate General Tesauro in Cases C-46 & 48/93 Brasserie du Pêcheur SA v Germany and R. v Secretary of State for Transport ex parte Factortame Ltd and others, at points 100-104, Opinion of Advocate General Léger in Case C-5/94, R v Ministry of Agriculture, Fisheries and Food, ex parte Hedley Lomas, [1996] ECR I-2553, at points 193-201, Opinion of Advocate General Jacobs in Case 2/94, Denkavit Internationaal and others v Kamer van Koophandel en Fabrieken voor Midden-Gelderland and others, [1996] ECR I-2827, at point 80. Also see the Opinion of Advocate General Cosmas in Case C-94 & 95/95 Bonifaci & Berto v Istituto Nazionale della Previdenza Sociale, [1997] ECR I-3969 at point 71.

(18) Note that in his Opinion in Francovich (ibid, at point 59), Advocate General Mischo emphasised the need to introduce the doctrine of State liability as a means of providing a partial remedy for the impossibility of giving retroactive effect to the measures by which the defaulting State attempts to comply with its EC law obligations.

(19) With a possible exception as concerns cases where such a retroactive application would lead to the transfer of any obligation on the shoulders of a private party, undermining the dissuasive function of the Francovich doctrine (see the relevant discussion, infra).

(20) This jurisprudence has been developed in the context of directives' direct effect. In Case 152/84, Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching), [1986] ECR 723, para 48, the ECJ declared that their provisions can only be invoked directly against the State. Naturally, this gave rise to the question of what constitutes the State or an emanation thereof. The Court has not yet provided a conclusive test, the closest it ever came to doing so being Case C-188/89, Foster and others v British Gas plc., [1990] ECR I-3313, para 20. The common denominator of its case law seems, however, to be that it is the central State that undertakes the responsibility for the actions of bodies that can be somehow linked to it. A similar reasoning seems to be followed in the field of enforcement proceedings under Articles 169-171 [new 226-228] EC.

(21) For example, an employer upon which the belatedly implemented non-directly effective directive imposed the obligation to pay a certain financial benefit to a specific category of employees. It could be argued, however, that in practice the possibility of imposing retroactively on a private party an obligation on the basis of a belatedly implemented Directive might prove a very remote one. Indeed, in such a case one would expect the reaction of those upon which the obligation is retroactively imposed, this necessarily entailing an often heavy political cost for the Government that would try to apply this policy.

(22) Article 4 (3) provides for the possibility of the imposition on the part of the Member States of an upper limit on the amount of the guarantee due, in order to avoid the payment of sums going beyond the social objective of the Directive.

(23) Article 4 (2) permits the restriction of the liability of the guarantee institutions to payment of outstanding employees' claims for certain periods of employment, providing three options to the Member States for the determination of these periods.

(24) For more on this issue, see Merola/Beretta 1997, pp. 325-330.