From the foregoing, it follows that the liability of the State, of federated entities or of public law bodies arises irrespective of the nature and func- tion of the body responsible for the breach, and irrespective of the body which will ultimately be responsible to pay. Neither horizontal nor verti- cal separation of powers and division of competences matters in this respect: a right to reparation may arise for administrative, regulatory, leg- islative and judicial acts of public authorities, operating at any level in the State, whether at the federal level, the level of federated entities, decen- tralised authorities such as municipalities or provinces, but also for harm caused by public-law bodies independent of the State. It is when these main principles are combined that complex issues arise, which must in most cases be solved on the basis of national law, and the Court of Justice takes its hands off. Difficult issues arise for instance where the damage is caused by a combination of breaches of Community law, attributable to various instances within the State, both horizontally and vertically, for instance, where a directive has been incorrectly implemented, on top of that, it has been wrongly applied (either directly or indirectly by way of application of the incorrect national implementation of the directive) and the harm has not been repaired because a court has not repaired the breach, by incorrectly applying Community law to the case at hand.
In this type of situation, several questions arise: where does liability lie? Who will have to pay in ultimate analysis? Most importantly, who should the individual sue in damages? And, which test should apply:
should the test be applied in cases where there is a wide discretion? Or where the administrative authorities do not have a wide discretion, should the mere infringement suffice? Whose discretion matters? It appears that in each case, all the elements involved should be considered by the court deciding the case. The Court has lifted an edge of the veil in Brinkmann Tabakfabriken, Haim IIand Larsy.
11.6.5.1. Brinkmann Tabakfabriken
In Brinkmann Tabakfabriken,250 the relevant directive251 had not been implemented. Failure to implement a directive is a per seserious breach of Community law. However, in the case, the Danish administrative authorities had attempted to mend the breach by giving direct effect to the directive. The Court held that this attempt of the administrative authorities in the application of Community law breached the causal link between
250Case C–319/96 Brinkmann Tabakfabriken GmbH v Skatteministeriet[1998] ECR I–5255.
251Second Council Directive 79/32/EEC of 18 December 1978 on taxes other than turnover taxes which affect the consumption of manufactured tobacco, OJ 1979 L 10/8.
the breach consisting of non-implementation of the directive, and the damage suffered by the applicant. The non-implementation in itself did not accordingly give rise to liability on the part of the State. Now, the administrative authorities had not made a correct application of the direc- tive: there was, accordingly, a second breach of the directive. It must then be determined whether the incorrect application constituted a sufficiently serious breach of the directive, having regard to the degree of clarity and precision of the relevant provisions. The Court ruled252 that the breach was not sufficiently serious, as the interpretation given by the Danish authorities was not manifestly contrary to the wording of the directive.
It is striking that in this case, the Court again did not assess whether the responsible authorities had wide discretion or not, and accordingly, whether the mere breach would suffice for liability to arise or whether something more was needed. It is difficult to assess what the exact meas- ure of discretion is in a particular case, but since the Court appears to give much weight to the notion in the application of the test and the strictness of its conditions for liability, it was an important element. Where there is no or very little discretion, a mere infringement will be sufficiently seri- ous to establish liability; where there is wide discretion, something more is needed. It must be recalled where the notion comes from. It was intro- duced in the context of governmental liability in Brasserie/Factortame III, when the Court had to convincingly state the principle of state liability also for legislative acts. Since the legitimacy of its Francovich judgment had been questioned as an overly activist form of judicial law-making, and it had been criticised for applying double standards to the Member States on the one hand, and the Community institutions on the other, the Court in that case drew an analogy with liability under Article 288(2) EC.
In that context, the Court distinguishes between ‘normal’ cases of liability, and certain legislative fields where the relevant institution has a wide dis- cretion. In Brasserie, the Court had to rule on the question whether liabil- ity could also be incurred for breaches imputable to the national legislature. Francovichhad also been concerned with legislative breaches, namely the failure to implement. The difference between Brasserie and Francovichwas not that the breach was imputable to the legislature, but the measure of discretion left to the Member State. In Francovich, there was no discretion as to whether or not to implement. The normal objec- tions of a constitutional nature against liability for legislative actions or omissions carry little weight in those circumstances. The courts are not asked to interfere with the content of legislation, or with the choices made by the legislature. In Brasserie, the Court stated that the breach had been
252This should normally be the responsibility of the national court, but the ECJ held that it had all the necessary information to judge whether the facts presented were to be char- acterised as a sufficiently serious breach, at para 26.
committed in an area where the legislature did have wide discretion, to distinguish Francovichand to allign State liability with the liability of the Community institutions. But the notion of discretion would come back to haunt the Court.
11.6.5.2. Haim II
In Haim II, a legislative act was incompatible with Community law, and the public-law body had merely applied it: it did not under national lawhave any discretion in taking its decision. Would a mere infringement suffice?253 The referring court put the issue of discretion squarely before the Court.
The Court insisted that the same conditions applied to all cases, but that they must be applied according to each type of situation.254 The Court then reiterated the distinction between cases in which there is only con- siderably limited or no discretion, where a mere infringement may suf- fice, and cases where there is wide discretion and something more is needed. It then continued to explain the notion of discretion saying: ‘The discretion referred to (..) above is that enjoyed by the Member State concerned.Its existence and its scope are determined by reference to Community law and not by reference to national law. The discretion which may be conferred by national law on the official or the institution responsible for the breach of Community law is therefore irrelevant in this respect’,255and ‘It is also clear from the case-law cited (..) above that a mere infringement of Community law by a Member State may, but does not necessarily, constitute a sufficiently serious breach’.256In order to determine whether an infringement constitutes a sufficiently serious breach, all factors which characterise the situation as a whole must be taken into account. The Court left the application of these principles to the case at hand for the national court – it was a difficult case, given that there had been a dual breach, by the German legislature which had adopted the law and the public law body which had applied it. Whose discretion was relevant? That of ‘the State’ taken as a whole; but how should the respec- tive discretion of the legislature and the Vereinigungbe measured: should
253The test in itself is the same: the three conditions mentioned in Brasserie/Factortame, as came to the fore in Dillenkofer. But the intensity of the test differs, depending on whether there was no discretion (mere infringement suffices, Hedley Lomas) or not (more is required to make up a qualified breach, e.g. clarity of the norm infringed, previous case law of the ECJ etc).
254‘Those three conditions must be satisfied both where the loss or damage for which reparation is sought is the result of a failure to act on the part of the Member State, for example in the event of a failure to implement a Community directive, and where it is the result of the adoption of a leg- islative or administrative act in breach of Community law, whether it was adopted by the Member State itself or by a public-law body which is legally independent from the State’, Case C–424/97 Salomone Haim v Kassenzahnọrztliche Vereinigung Nordrhein (Haim II)[2000] ECR I–5123, at para 37.
255Case C–424/97 Haim II, at para 40.
256Above, at para 41.
they be added up? The Court only drew attention to the fact that when the legislature adopted the law and the Vereinigungapplied it, the Court had not yet handed its decision in Vlassopoulou.257But even with the explana- tion of the Court, the question of discretion remains difficult to apply;
what would have been the correct answer, for instance, had the law been adopted before Vlassopoulou, but had the Vereinigungapplied it thereafter?
The Court also made a small correction to the system, when it held that a where there is only limited discretion, a mere infringement maysuffice to establish liability; even in this type of cases, the mere infringement may not always lead to a right to compensation.
11.6.5.3. Final Remarks
Governmental liability for breach of Community law before the national courts is trapped between international law and national law. It has in common with State liability under international law that the liability arises irrespective of which organ was responsible for the breach.
Whether or not particular action or inaction, or rather ‘situation’, is unlawful is to be decided from the point of view of Community law. Also the strictness of the applicable test will be decided looking at the wrong- ful situation as a whole. Decisive is not the identity, the nature or consti- tutional position of the organ or organs responsible for the breach, but their discretion from the point of view of Community law.
On the other hand, the system of governmental liability is also fully dependent on national law, with respect to the question of which enitity, central, federated, decentralised, or which public body is to be held liable to pay compensation; to indicate the competent court, and to define the conditions of causal effect and so forth. Community law remains impor- tant to patrol the Reweand Cometminumum conditions.
The system of governmental liability for breach of Community law is very complex and requires the national courts to ‘step out’ of their national legal order and to judge the ‘unlawful situation’ taken as a whole from the perspective of Community law, in order to decide the strictness of the test. They must then step in again and decide which organ or insti- tution will be liable to actually pay compensation and so forth. The Community rules governing governmental liability for breach of Community law and their intertwinement with national law result in a system that leaves a lot to the national courts, asking them to behave as Community law courts, and to relinquish some of the most fundamental principles of national constitutional law. This cannot be an easy task for the national courts.
257Case C–340/89 Irène Vlassopoulou v Ministerium für Justiz, Bundes- und Europaangelegenheiten Baden-Württemberg[1991] ECR I–2357.
11.7. LIABILITY OF THE STATE: THE NATIONAL ANSWER
In analysing the national answer to Francovichand its progeny, the focus will be on constitutional questions, mainly the liability of the legislating State, and the allocation of liability within the State. A preliminary remark concerns the method. The research is limited to cases which have been published or which have at the least been recounted in scholarly writing.
A good – though not complete – source of cases is the annual survey of the Commission on the application of Community law by national courts, which is published as an annex to the Annual report on monitoring the application of Community law.258One of the traditional questions in the questionnaireis whether there were any decisions applying the rulings of the Court of Justice in Francovich, Factortameand Brasserie du Pêcheur. The discussion will be fairly extensive, since there is not yet, in the literature, an overall account of the national case law on the topic.