Frankovich case established the principle of state liability which

means that the Member States are obliged to compensate the

damage caused to individuals resulting from the breach of
Community law attributable to the State
The Court of Justice also provided the conditions to determine the
civil liability of the State: 1) The result prescribed by the directive
entails the grant of rights to individuals; 2) The content of those
rights can be identified on the basis of the provisions of the
Directive; 3) There is a causal link between the violation of the
respondent state and the damage sustained by the individuals.

Other similar situation

How case law emerged after this case
Implementation of EU case law to National law
Special case these obligations have to be sufficiently serious..

Francovich, Bonifaci and others v Italy (Cases C-6 & 9/90) 1991
Italy had failed to implement Directive 80/987 on the protection of workers in the event of
insolvency. (The directive required the guarantee of payments of outstanding claims for
remuneration and the creation of guarantee institutions to meet those claims.) Italys breach was
established by the ECJ in Commission v Italy (Case 22/87). Francovich and Bonifaci had
outstanding claims against a company declared bankrupt in 1985. Unable to recover against the
company they brought actions in the Italian courts against Italy, requesting that Italy should pay
them compensation in the light of the obligation in the directive. Both national courts referred
questions to the ECJ to determine the extent of a Member States liability.
Held: (ECJ) Member States are obliged to compensate individuals for breaches of EC law for
which they are responsible if three conditions are satisfied:
(1) The objective of the directive must include the conferring of rights for the benefit of
individuals.
(2) The content of the rights must be identifiable from the directive.

(3) There must be a causal link between the breach and the damage. [1991] E.C.R. 1-5357.
The objective of the directive is centered on the rights for the benefit of individuals, the content
of which must be identifiable from the directive. However, there must be a causal link among
beach and the damage
In the Frankovich case we see the absolute efficiency of the European Commission law that
refers to individuals being unable to get compensation when their rights are violated by a
breach attributable to a Member State of the European Union. In the structure of the
Treaty we clearly see the principle of State Liability. The duty for Member States to
compensate derives from Article 10 (previously article 5), that obliges them to ensure
fulfillment of their obligations under European Commission law.
State liability in Frankovich case refers to onligations that may not be considered directly
effective and provides a remedy in the event of inadequate implementation or nonimplementation at all of the European Commission law. Thus we see the reality for the state
not being able to implement its own rule by default.
This ruling has been of great vitality and has furtherly been extended and clarified in a
number of rulings later.
Commentary
(1) The ECJ in Francovich stated that the full effectiveness of EC law would be impaired if
individuals were unable to obtain compensation when their rights were infringed by a breach
attributable to a Member State. The principle of state liability is inherent in the scheme of the
Treaty. The duty on Member States to compensate derives from Art. 10 (ex 5) which obliges
them to ensure fulfilment of their obligations under EC law.
(2) State liability under Francovich applies to obligations which may not be directly effective
and provides a remedy in the event of non-implementation (or inadequate implementation) of EC
law. Thus it prevents a state from relying on its own default in implementing EC law.
(3) The ruling has been of immense importance and has been extended and clarified in a
number of later rulings.
(4) The High Court in Three Rivers District Council v Governor and Company of the Bank of
England (1997) held that no action for state liability arose out of the First Banking Directive (the
directive at issue in Francovich) as the directive did not intend to confer rights on individuals.
This decision is hard to reconcile with that of the Italian court in Francovich;where the court
found that the directive did confer rights on the individual members of a group, but that F
himself was outside the group.

Key Principle: States are liable for breaches of EC law where the breach is sufficiently
serious.
Brasserie du Pecheur SA v Germany (Case C-46/93) and R. v Secretary of State for
Transport Ex p. Factortame Ltd (No.3) (Joined Cases C-46/93 and C-48/93) 1996
Both the Frankovich case and the Brasserie du Pecheur concerned the degree of the state liability
where theres an implemented legislation in violation of directly effective rights. This case came
about of a claim by a French brewery contrary to Germany for the harm done as an effect of the
German Beer Purity laws that had been set up by the ECJ to infringe Article 28 (ex 30) (Case
178/84).

These cases both concerned the question of the extent of state liability where legislation had been
adopted in contravention of directly effective rights. Brasserie du Pecheur arose out of a claim
by a French brewery against Germany for losses incurred as a result of the German Beer Purity
laws which had been found by the ECJ to infringe Art.28 (ex 30) (Case 178/84).Factortame (see
p.5) had led to a finding that the Merchant Shipping Act 1988 infringed EC law. The Spanish
trawler owners claimed compention from the United Kingdom courts. An Art.234 reference as
made to the ECJ.
Held: (ECJ) Where a Member State acts in a field where it has wide discretion, it will be liable to
an individual for breach of EC law provided:
(1) the rule of law infringed is intended to confer rights on individuals;
(2) the breach is sufficiently serious;
(3) there is a direct causal link between the breach and the damage. [1996] 1 C.M.L.R. 889.
Commentary

Conditions in Brasserie du Pecheur show the post-correspondence of a case example after

Francovich. Still the approach of the Member States was compared with the position of the EC
institutions acting according to Article 288 (ex. 215), which proves that the EC institutions are
liable in relation to legislative procedures which are related to the adoptions of economic policy
where a rather serious breach is seen, i.e. manifest and grave approach in the
Schoppenstedt formula.

(1) The first and third conditions correspond to Francovich. However, the position of the
Member States was compared with that of the EC institutions under Art.288 (ex 215) (see Ch.6,
p.67). The EC institutions are liable in relation to legislative measures involving choices of
economic policy where the breach is sufficiently serious, i.e. when it is manifest and grave
under the Schoppenstedt formula: see Ch.6, pp.67-68.
(2) It was held that reparation may not be made conditional on fault or on a prior finding by the
ECJ and that the amount must be commensurate with the damage sustained. No temporal
restriction was placed on the effect of the judgment.
(3) The German Federal Court applied the ruling of the ECJ in Brasserie du Pecheur v
Germany in 1996. It held that there was no direct causal link between the breach of Art.28 (ex
30) and the applicants loss. It also found that the infringement in relation to additives was not
sufficiently serious. The brewers claim against the German Government thus failed.
(4) The United Kingdom Divisional Court in Factortame (No.5) held in 1997 that the trawler
owners were entitled to damages, but not to punitive damages. The House of Lords upheld the
earlier findings of fault by the British Government, namely that there had been a sufficiently
serious breach, leaving unchanged the earlier ruling on damages: R. v Secretary of State for
Transport Ex p. Factortame (Decision of October 28, 1999) HL.
Key Principle: Incorrect implementation of an imprecisely worded directive does not
necessarily give rise to state liability.
CILFIT Sri. and Lanificio di Gavardo Spa. v Ministry of Health (Case 283/81) 1982
Wool importers disputed a health inspection levy imposed by the Italian Government on wool
imported from outside the EC, arguing that wool is an animal product (for which charges could
not be imposed by regulation) and therefore not subject to such a charge. The Italian Government
claimed that the interpretation of animal product was obvious under the acte clair principle, in
which case no reference under Art.234 (ex 177) was necessary. The Italian Supreme Court
referred the question to the ECJ.

Held: (ECJ) A reference to the ECJ is not necessary where:

European Union Law
(1) the question of EC law is irrelevant;
(2) the question has already been decided by the ECJ; and

(3) the correct interpretation is so obvious as to leave no scope for doubt. [1982] E.C.R. 3415.
Commentary
(1) While the ruling in CILFIT was formulated in response to a question concerning mandatory
references under Art.234 (ex 177(3)) (see below), it applies also to discretionary references.
The acte clair doctrine derives from French administrative law: international treaties
need not be referred to the government for interpretation if the meaning is clear. The ECJ in
1996 issued Notes for Guidance to National Courts for Preliminary Rulings, to provide a
summary of advice from the caselaw of the Court on making a reference, reaffirming its
position on decisions such as CILFIT.
(2) In Bulmer v Bollinger (CA, 1974) [1974] 2 All E.R. 1226, Lord Denning drew up guidelines
for the United Kingdom courts in making Art. 177 (now 234) references. The
guidelines, though not binding, were treated as influential. Factors to be taken into account were
stated to include the existence of a previous ECJ ruling, the conclusiveness of the reference to
the judgment, the need to establish the facts, delay, the wishes of the parties and costs. Lord
Dennings guidelines have been criticised as unduly restrictive. They should not be followed
where they conflict with CILFIT. (3) The Court of Appeal ruled that three factors must be
present if a reference is to be made: the facts must be clear, the provision of EC law must be
conclusive to the determination of the case and the judge must consider whether he himself can
resolve the question of EC law with complete confidence (R. v International Stock Exchange of
the UK and the Republic of Ireland, Exp. Else [1993] 1 All E.R. 420.
Mandatory references
Key Principle: Where a question of interpretation or validity of EC Law is raised before
any court or tribunal of a Member State against whose decisions there is no judicial
remedy, that
Court or tribunal shall bring the matter before the ECJ (Art.234(3)).

Actors:
Francovich
Vs
Italy
Type of case:
Preliminary ruling concerning the principle of state liability in European Union law.
Description of the case:
Under the Insolvency Protection Directive 80/987 (now 2008/94/EC) EU member states were
expected to enact provisions in their national law to give a minimum level insurance for
employees who had wages unpaid if their employers went insolvent. Mr Francovich, who had
worked in Venice for CDN Elettronica SnC, was owed 6 million Lira after his company, Gaia
Confezioni Srl, had gone bankrupt. The Directive was meant to be implemented by 1983, but
five years later he had been paid nothing, as the company liquidators had informed him that no
money was left. He brought a claim against the Italian state, arguing that it must pay damages to
compensate for his losses instead, on account of a failure to implement the Directive.
If an employer becomes insolvent, it is obviously important that the employees entitlements
should be well-protected. The EU has acted to consolidate and improve employee rights in this
field.
The EU Directive (2008/94/EC) ensures payment of employees outstanding claims in the
event of employer insolvency.

Court sentence:
For the Court, the principle of State liability for damage caused to individuals by violation of
Community law attributable to the State itself, it is inherent in the system of the Treaty since it is
based on Article 10 TEC.
Article 10 TEC:
Member States shall take all appropriate measures, whether general or particular, to ensure
fulfilment of the obligations arising out of this Treaty or resulting from action taken by the
institutions of the Community. They shall facilitate the achievement of the Community's tasks.
They shall abstain from any measure which could jeopardise the attainment of the
objectives of this Treaty.

Therefore, Community law imposes the principle that Member States are obliged to
compensate the damage caused to individuals resulting from the breach of Community law
attributable to the State, as Member States are required to eliminate the illegal consequences
on the basis of the failure to implement a directive.
The Court of Justice also provided the conditions to determine the civil liability of the State:
1) The result prescribed by the directive entails the grant of rights to individuals;
2) The content of those rights can be identified on the basis of the provisions of the Directive;
3) There is a causal link between the violation of the respondent state and the damage sustained
by the individuals.
Joint Cases C-46/93 and C-48/93, Brasserie du pcheur
Actors:
Brasserie du pcheur SA
Vs
Federal Republic of Germany
Type of case:
Preliminary ruling concerning the principle of state liability in European Union law for
damage caused to individuals by infringements of Community law attributable to the State.
Description of the case:
Brasserie du Pcheur SA, the appellant in the main proceedings in Case C-46/93, is a French
brewery based at Schiltigheim (Alsace). Until 1981, it exported beer to the Federal Republic of
Germany. In late 1981, however, it was forced to discontinue the exports because the German
authorities objected that the beer it produced did not comply with the German Reinheitsgebot
(purity requirement) laid down in the Biersteuergesetz (Law on Beer Duty). In the Commissions
view, certain provisions of the Biersteuergesetz were contrary to Article 30 of the EC Treaty, and
the Commission brought an action under Article 169 of the Treaty against the Federal Republic
of Germany for failure to comply with its obligations under the Treaty. By a decision of March
12, 1987, the Court of Justice held that the German prohibition on marketing beers imported
from Member States which did not comply with the Biersteuergesetz was incompatible with
Article 30 of the Treaty. Brasserie du Pcheur consequently brought an action against the Federal
Republic of Germany for reparation of the loss suffered by it between 1981 and 1987 as a result
of that import restriction, seeking damages. The action was dismissed by the trial court, and then
appealed by Brasserie du Pecheur to the Bundesgerichtshof (Federal Court of Justice). Then, the
Federal Court of Justice referred to the ECJ for a preliminary ruling.

Court sentence:
In the Brasserie du Pcheur, the Court of Justice stated that: "the right of individuals to rely
before national courts the provisions of the Treaty which have direct effect is only a
minimum guarantee and is not sufficient in itself to ensure the full application of the
Treaty. This faculty, designed to give precedence to the application of rules of Community law
than the national standards, it is not appropriate for securing in each case to the individual rights
under Community law and, in particular, to prevent the occurrence of damage result of a breach
of Community law attributable to a Member State. However, (...) the full effectiveness of
Community rules would be impaired if individuals were unable to obtain redress when
their rights were infringed by a breach of Community law". A Member State may also be
responsible for failure or improper implementation of detailed guidelines. However a Member
State can be condemned only if there is a "sufficiently serious breach" and the quantification
of damages should be referenced appropriately to the damage suffered by the city.
The Court of Justice also stated that the national court must determine whether the injured party
has demonstrated reasonable diligence to avoid the damage or limit its extent, and in particular
whether it has in time of all legal remedies available to him.

Case C-224/01 Kbler

Actors:
Gerhard Kbler
Vs
Austrian Republic
Type of case:
Preliminary ruling concerning responsibility of the national court for breaches of EU law.
Description of the case:
Mr. Kbler, who completed a 15-year period as a professor in Austria and other Member States,
applied for a length-of service increment for university professors in Austria. The national law
required the 15-year period to be completed in Austria only. Mr. Kbler claimed that such
requirement constitutes indirect discrimination that is contrary to the right of free movement of
workers under Article 48 (now 39) of the EC Treaty and Regulation (EEC) No 1612/68 of the
Council on freedom of movement for workers within the Community. The Austrian Supreme
Court first referred a preliminary ruling question to the ECJ but then withdrew it and dismissed
Mr. Kblers claim for obtaining the increment. Subsequently, Mr. Kbler claimed damages
against Austria, alleging that the Supreme Court judgement infringed directly applicable
provisions of EC law. When seized with the matter, the supreme court of Austria decided to stay

the proceedings and asked for a preliminary ruling on, inter alia, whether a state can be held
responsible for judicial breaches of EC law and under what conditions.
Court sentence:
In its judgement in Kbler the ECJ ruled that liability of a Member State for breaches of EC
law committed by national courts adjudicating at the last instance is governed by the same
conditions as those establishing liability of a Member State for other breaches of EC law.
Accordingly the following three conditions have to be met in order for a State liability for
judiciary breaches to arise:
(1) The rule of law infringed must be intended to confer rights on individuals;
(2) the breach must be sufficiently serious;
(3) there must be a direct causal link between the breach of the obligation incumbent on the State
and the loss or damage sustained by the injured party.
However, it follows from the judgement that in case where the breach of EC law has been
made by a court adjudicating as last resort general conditions on State liability for
breaches of EC law are not to be applied in the same manner as in case where an
infringement of EC law has been committed by the legislative and administrative authority
respectively. At least this holds true for the second condition the one requiring that a breach
must be sufficiently serious. With regard to the application of the second condition the ECJ ruled
that regard must be had to the specific nature of the judicial function and to the legitimate
requirements of the legal certainty and emphasised that State liability for an infringement of
Community law by a decision of a national court adjudicating at last instance can be
incurred only in the exceptional case where the court has manifestly infringed the
applicable law.
Actors:
Brasserie du pcheur SA
Vs
Federal Republic of Germany
Type of case:
Preliminary ruling concerning the principle of state liability in European Union law for
damage caused to individuals by infringements of Community law attributable to the State.
Description of the case:
Brasserie du Pcheur SA, the appellant in the main proceedings in Case C-46/93, is a French
brewery based at Schiltigheim (Alsace). Until 1981, it exported beer to the Federal Republic of
Germany. In late 1981, however, it was forced to discontinue the exports because the German
authorities objected that the beer it produced did not comply with the German Reinheitsgebot

(purity requirement) laid down in the Biersteuergesetz (Law on Beer Duty). In the Commissions
view, certain provisions of the Biersteuergesetz were contrary to Article 30 of the EC Treaty, and
the Commission brought an action under Article 169 of the Treaty against the Federal Republic
of Germany for failure to comply with its obligations under the Treaty. By a decision of March
12, 1987, the Court of Justice held that the German prohibition on marketing beers imported
from Member States which did not comply with the Biersteuergesetz was incompatible with
Article 30 of the Treaty. Brasserie du Pcheur consequently brought an action against the Federal
Republic of Germany for reparation of the loss suffered by it between 1981 and 1987 as a result
of that import restriction, seeking damages. The action was dismissed by the trial court, and then
appealed by Brasserie du Pecheur to the Bundesgerichtshof (Federal Court of Justice). Then, the
Federal Court of Justice referred to the ECJ for a preliminary ruling.
Court sentence:
In the Brasserie du Pcheur, the Court of Justice stated that: "the right of individuals to rely
before national courts the provisions of the Treaty which have direct effect is only a
minimum guarantee and is not sufficient in itself to ensure the full application of the
Treaty. This faculty, designed to give precedence to the application of rules of Community law
than the national standards, it is not appropriate for securing in each case to the individual rights
under Community law and, in particular, to prevent the occurrence of damage result of a breach
of Community law attributable to a Member State. However, (...) the full effectiveness of
Community rules would be impaired if individuals were unable to obtain redress when
their rights were infringed by a breach of Community law". A Member State may also be
responsible for failure or improper implementation of detailed guidelines. However a Member
State can be condemned only if there is a "sufficiently serious breach" and the quantification
of damages should be referenced appropriately to the damage suffered by the city.
The Court of Justice also stated that the national court must determine whether the injured party
has demonstrated reasonable diligence to avoid the damage or limit its extent, and in particular
whether it has in time of all legal remedies available to him.