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THEMIS
JUDICIAL COOPERATION IN CIVIL MATTERS: STATE LIABILITY FOR JUDICIAL BREACHES OF EUROPEAN COMMUNITY LAW STATE LIABILITY FOR JUDICIAL BREACHES OF EUROPEAN COMMUNITY LAW 1. The Introduction
The ECJ’s role in enforcement of the European Community law (hereinafter: EC law) is exercised through (i) direct procedures (annulment procedure under Article 230 of the EC Treaty; failure to act procedure under Article 232 of the EC Treaty; liability of the EC under Article 288 of the EC Treaty and enforcement procedure under Article 226 of the EC Treaty) and (ii) indirect procedures and arguments (plea of illegality under Article 241 of the EC Treaty and the preliminary ruling procedure under Article 234 of the EC Treaty). Although the individuals and legal entities have a legal standing in all the mentioned direct procedures (with the exemption of the enforcement procedure), it can be established that these procedures are relatively rarely used by them to enforce the EC law. Rather, for individuals and legal persons the game is usually played before their national courts. It was established by the ECJ in its landmark decision of Van Gend en Loos that “Community law not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage”.1 Individuals invoke these rights before the national courts, therefore it is for the national courts to apply the EC law. However, in doing so, the national courts are not left only to themselves, but can or are in certain cases obliged to consult the ECJ through a unique mechanism of preliminary ruling procedure. The judicial cooperation between national courts and the ECJ thus takes place in form of a preliminary ruling procedure. Since it can only be the judicial system of the EC as a whole that assures a proper application of EC law, effective cooperation of national courts and the courts of the EC, in particular the ECJ, is of essential importance for the individuals and legal entities as to their rights under EC law. In this paper we try to highlight the aspects of the mentioned dialogue between national courts and the ECJ. As this dialogue is not self-intended but rather aims at ensuring the effective application of the EC law, we further discuss state liability for breaches of EC law committed by national judicial authorities of last instance in view of the applicable case law, as established in Köbler2 and confirmed in Traghetti del Mediterraneo.3 2. Judicial cooperation through preliminary ruling procedure 2.1. The nature of the preliminary ruling procedure
Once the ECJ has ruled on the issues referred, it is the national court that applies the EC law to the particular case. It thus follows that in the preliminary ruling procedure the interpretation of the EC law rests with the ECJ, whereas it is for the national court to apply the so interpreted EC law. The final and decisive role of the national courts in implementing the EC law should therefore be borne in mind. A reference to the ECJ can be made on two issues,6 namely (i) the interpretation of the Treaty, the acts of the institutions of the Community, ECB and the statutes of bodies established by an act of the Council; and (ii) the validity of the acts of the institutions of the Community and the ECB. If originally, the conception of the relationship between the national courts and the ECJ was horizontal (in that the national courts and the ECJ were separate but equal) and bilateral (in that the ECJ’s rulings were delivered to a particular national court), the relationship has developed into a more vertical (while national courts have a central part in the Community-wide judicial hierarchy, the ECJ is at the apex of this hierarchy and has a superior position to that of the national courts) and multilateral one (in that the preliminary ruling decisions of ECJ are held to have either a de facto or de jure impact on all national courts).7 2.2. The obligation of the national courts to refer a question for preliminary ruling According to Article 234 (2) of the EC Treaty, the national courts generally have discretion on whether they request the ECJ to give a ruling in procedures pending before them. However, where a question concerning any of the two above-mentioned subject matters is raised in a case pending before a national court, against whose decision there is no judicial remedy under national law, that court has an obligation to bring the matter before the ECJ.8 Raison d’ętre of this provision is to prevent a body of national case law that is not in accordance with EC law from being established in any Member State.9 The national courts of last instance are by definition the last and therefore the final and decisive stage of EC law application in Member States. Taking in account the requirement that the EC law needs to be applied uniformly by national courts,10 which enables for individual rights given by EC law to be protected in the same way throughout the whole EU, the obligation to refer must be shaped in a way that assures fulfilment of this end. 2.3. Exceptions to the obligation to refer
The ECJ ruled that “a court or tribunal against whose decisions there is no judicial remedy under national law is required, where a question of Community law is raised before it, to comply with the obligation to bring the matter before the Court of Justice, unless is has established that [a] the question raised is irrelevant or [b] that the Community provision in question has already been interpreted by the Court or [c] that the correct application of Community law is so obvious as to leave no scope for any reasonable doubt.”12 While the first condition does not appear to be controversial, the same cannot be said for the other two. The problematic application of the second condition can be illustrated by the factual background of the Köbler judgement, which will be discussed below. The third condition, known as acte clair, however, is the most contentious one. The ECJ held that a national court adjudicating at the last instance can rely on the third condition only after having concluded that “the matter is equally obvious to the courts of the other Member States and to the Court of Justice”13, bearing in mind “the characteristic features of Community law and the particular difficulties to which its interpretation gives rise.”14 In this regard, the national court must take into account the fact that Community legislation is drafted in several equally authentic language versions;15 that specific terminology and legal concepts are used in Community law, without these necessarily having the same meaning as in the law of the various Member States;16 and finally, the EC law provisions need to be interpreted in the light of the objectives of the EC law as a whole and its state of evolution at the date of application.17 Considering that the wording of the EC law provisions is generalized, which leaves a lot of room for interpretation, it does not require much to conclude that in practice these conditions are hard to meet. However, such stringent criteria for application of the acte clair doctrine by the national courts are justified by the legitimate purpose of avoiding divergent interpretations of EC law in various Member States. Ultimately, this is also the very aim of the preliminary ruling procedure. It thus turns out that when interpreting EC law, the national courts of last instance do not have their hands as wide open as they do in the case of interpreting national law. It should be stressed that the national courts of last instance do interpret the provisions of EC law. However, their scope of interpretation is substantially reduced by the CILFIT conditions. The national courts are interpreting EC law only when they are entitled to refrain from submitting a preliminary ruling request to the ECJ, this being subject to fulfilment of one of the three CILFIT conditions. In other cases, their obligation under Article 234 (3) of the EC Treaty applies, which means that the interpretation of the EC law rests only with the ECJ, leaving the national courts of last instance with the task of applying and thus enforcing the EC law. Despite the general obligation of referral for the national courts of last instance, situations where the national court does not comply with this obligation contrary to condition set in CILFIT or where the national court does not apply the EC law or misapplies it can occur. With a view of securing an effective application of the EC law, the ECJ established the principle of state liability also for judicial breaches of EC law. 3. State liability for breaches of EC law 3.1. The principle of state liability
In Francovich, the ECJ emphasized that the full effectiveness of EC law would be impaired and the protection of the rights, which individuals derive from it, would be weakened if individuals were unable to obtain redress when their rights are infringed by a breach of EC law for which a Member State can be held responsible.20 The ECJ based the principle of state liability also on Article 10 of the EC Treaty, according to which the Member States are required to nullify the unlawful consequences of a breach of EC law.21 In Brasserie du Pęcheur, the ECJ held that the principle of state liability applies to any breach of EC law, “whatever be the organ of the State whose act or omission was responsible for the breach”.22 The ECJ slightly modified the conditions of state liability as compared to those set out in Francovich, thereby bringing them also in line with conditions for EC liability under Article 288 of the EC Treaty.23 It tied the right to a reparation to fulfilment of the following conditions: (1) the rule of law infringed must be intended to confer rights on individuals; (2) the breach must be sufficiently serious; and (3) 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.24 As to the second condition, the ECJ held that a decisive test for finding a breach of EC law sufficiently serious is whether the Member State manifestly and gravely disregarded the limits on its discretion.25 In order to determine whether this condition is satisfied, the factors to be taken into consideration are: clarity and precision of the rule breached, the measure of discretion left by that rule to the national authorities, whether the infringement or the damage caused was intentional or involuntary, whether any error of law was excusable or inexcusable, the fact that the position taken by the Community institution may have contributed towards the omission and the adoption or retention of national measures or practices contrary to EC law.26 The Brasserie du Pęcheur thus implicated that Member States can also be held liable for breaches of EC law, committed by their national courts, 27 in particular courts of last instance, which, as it has already been mentioned, are the ones having the last word in application of EC law. In this connection, as the advocate general Léger pointed out in his opinion in Köbler, the reasoning of the ECJ in Francovich, i.e. the effet utile of EC law, is fully transferable to the case of a breach of EC law by national courts of last instance. Namely, in order to obtain effective judicial protection of the rights which individuals derive from EC law, it is not sufficient for them to be entitled to invoke the EC law before the highest court in their national judicial system, for that court to be required to make a preliminary ruling reference when necessary or for the court to be required to apply EC law correctly. It is also necessary, if the court of last instance renders a decision contrary to EC law, for individuals to be in a position to obtain redress.28 3.2. State liability for breaches of Community law committed by the national courts of last instance
3.2.1. The facts of the Köbler case
3.2.2. Observations submitted to the ECJ
The main arguments supporting the application of state liability for judicial infringements of EC law were based on the need for the full effectiveness of EC law. It was argued that in order to achieve an adequate application of EC law, the liability of a Member State cannot be limited only to breaches of EC law, attributable to legislative or administrative organs of the State. Rather, state liability needs to occur whatever be the organ of the State responsible for the breach. This is all the more so in case of judicial breaches, where exclusion of liability could result in divergent outcomes for the individuals throughout the EC territory, thus weakening the judicial protection of individuals. On the other hand it was argued that implementation of EC law is not jeopardized as long as the individuals are able to rely on EC law before national courts of last instance. It was further argued that the exclusion or a restrictive approach to state liability for judicial breaches is justified taking in account the principle of legal certainty and res iudicata. While the principle of legal certainty implicates the need to bring disputes to a final conclusion, the principle of res iudicata has two aspects: (a) a formal one, meaning that once a dispute has been resolved so that all legal remedies have been exhausted, a decision can no longer be challenged by the commencement of the same type of proceedings, and (b) a material one, meaning that the reasoning of the decision is to be held as final and cannot be called into question (res iudicata pro veritate habetur). Furthermore, concerns were raised regarding the independence of the judiciary, the risk of diminishing the authority of the highest national courts and the difficulty of designating a court competent to determine disputes concerning the reparation of damage resulting from such a decision. 3.2.3. The decision of the ECJ
The ECJ rejected the objection that the principle of legal certainty and, more specifically, the principle of res iudicata would be impaired. It held that the principle of state liability for judicial decisions does not affect the decision of the national court as res iudicata, arguing that “proceedings seeking to render the State liable do not have the same purpose and do not necessarily involve the same parties as the proceedings resulting in the decision which has acquired the status of res iudicata.”31 This argumentation of the ECJ, however, does not seem very convincing. When establishing whether a state can be held liable in a particular case, the national court cannot avoid reconsidering the disputed decision and the reasoning behind it. Although the national court does not declare the disputed decision invalid, it nevertheless elaborates on the correctness of the disputed decision. While the formal aspect of res iudicata thus remain untouched, the same cannot be claimed for its material aspect. In our view it appears that the most convincing argument regarding the principle of legal certainty and res iudicata is the principle of equivalence. As the Advocate general Léger emphasized in his opinion “[…] the legal authority of a judicial decision has not prevented a number of Member States from establishing rules governing State liability for the content of judicial decisions.”32 Regarding the independence of the judiciary, the ECJ noted that the discussed principle does not concern “the personal liability of the judge, but that of the State.”33 In consequence, the risk that the independence of the court adjudicating at last instance is called in question indeed does not appear convincing.
Finally, the ECJ discarded the objection regarding the difficulties in determining the competent court to rule on state liability in case of judicial infringements with a simple statement that “it is for the internal legal order of each Member State to designate the competent courts and lay down the detailed procedural rules for legal proceedings intended fully to safeguard the right which individuals derive from Community law.”34 It seems that the ECJ did not really address the core problem inherent in this objection, i.e. that the highest national court could ultimately be judging its own decision, which may call in question its impartiality. The possible solution for the court of last instance in this situation could be to refer to the ECJ questions about both the EC rules which purportedly were infringed upon and the application of the community law requirements for state liability.”35 3.3. Conditions for State Liability for breaches of EC Law by the Judiciary
3.3.1. How the Köbler factors could be interpreted in light of the ECJ’s case law?
3.3.1.1. The degree of clarity and precision of the ruled infringed
3.3.1.2. Whether the error of law was excusable or inexcusable
3.3.1.3. Non-compliance by the national court with its obligation under Article 234 (3) of the EC Treaty
3.3.2. Assessment of the application of the “sufficiently serious breach” condition to the factual background in Köbler
4. Conclusion In Köbler the ECJ for the first time explicitly acknowledged that the principle of state liability applies also to situations where the breach of the EC law has been committed by the national judicial authorities of the highest instances. It is not disputed that thereby the ECJ in principle made a contribution to the effectiveness of the EC law, which pervades all the means the EC law system has shaped in order to secure the enforcement of the EC law to the largest possible extent. However, it is doubtful whether the application of the principle of state liability for judicial breaches in Köbler can indeed be regarded as such a means. Considering the factual outcome of the case and in particular the reasoning behind it, it appears that the principle of state liability for judicial breaches will in practice rather stay a dead letter.
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