Enforcement of community law by the ECJ

To what extent is the ECJ prepared to mandate the remedies that are available to victims of breaches of substantive EC law. - Justin Santiago

Enforcement of Community law rights by individuals or legal persons (companies) mainly takes place at the national level in the national court. Initially, under the principle of national procedural autonomy the ECJ contended that the national legal system determines the primary conditions under which rights granted by EC law are to be protected. The remedies obtained in respect of Community laws are those available under national law, there is no uniform set of Community law remedies with the exception of state liability. In Rewe v Hauptzollamt Kiel it was stated that “Community law …was not intended to create any new remedies in the national courts to ensure the observance of Community law other than those already laid down by national law.”

ECJ has changed its position on victims of breaches of EC law from refusing to rule on compensation or interest Rewe-Zentralfinanz (1976)), to ruling that compensation was payable (Von Colson (1984)) but not stipulating the amount, to Marshall v Southhampton and South West Area Health Authority No. II (1993) in which it was prepared to rule on amount and interest.

The ECJ's original standpoint was that it is for the national courts to decide what remedies would be available, by applying the Community's substantive law under their own procedures. It was not in the interests of the ECJ to be seen to undermine the authority of the national courts by defining remedies as well as interpreting the law.

For the first twenty years or so of the Communities, the issue of remedies was not particularly prominent. At that time, litigants in the ECJ were primarily member states and institutions of the Communities. Whether or not the ECJ would mandate a remedy became a more pressing question in the 1970s, with the emergence of the doctrine direct effect enunciated by the ECJ in cases such as Van Gend en Loos1963 and many others, makes it clear that an individual may rely on his rights under EU law in actions against the state in the national courts.

When it became apparent that Community law created rights and duties which could be invoked in domestic courts by private individuals, it was only a matter of time before those individuals began to expect particular remedies to be available. The ECJ has expanded its jurisdiction in this area to fulfill its duty under Art. 200 to see that “the law is observed”. Thus there has been a gradual and incremental increase in the ECJ's willingness to oversee judicial remedies away from an initial refusal to grant a particular remedy to claimants.

The ECJ laid down two principles in the case of Rewe Zentralfinanz and Comet BV v Productchap namely :-

1. The principle of equivalence - remedy for the EC law right should be no less favourable than those relating to similar domestic claims

2. The principle of practical possibility – the remedy should not be rendered impossible to practice or excessively difficult

Subject to these two requirements, the procedures and remedies for breach of Community law were primarily a matter for the Member States. States were not required to provide remedies which would not be available under national law. New national remedies did not therefor have to be created although existing national remedies must not render the exercise of the right impossible in practice.

Subsequently in later cases the ECJ insisted that the remedies provided by national law must be proportionate, adequate and should have a deterrent effect in order to be effective in guaranteeing real and effective protection.

With regard to proportionality Sagulo concerned fines imposed by France and Germany on workers from other states for not applying for the appropriate residence permits, in breach of EC legislation. The ECJ held that these fines were so excessive as to amount to a barrier to free movement workers. In Von Colson a worker was found by the German courts to be a victim of gender discrimination that was unlawful under EC law. The ECJ held that the remedy offered must be adequate and must also have a deterrent effect. A nominal or token remedy would not have that effect.

While no problems existed with the priciples of proportionality and adequacy the effectiveness requirement has provided the most tension between national procedural responsibility and autonomy and the requirement that national remedies must secure the effectiveness of Community rights.

Dekker involved a discriminatory case by a company who refused to hire a pregnant woman against Directive 26/207. It was held that Dutch law required proof of not only discrimination but unjustified discrimination. It was deemed not to be effective.

The effectiveness requirement was highlighted in Factortame I in which the ECJ drawing on its earlier Simmenthal ruling based on the principle of cooperation laid down in Article 5 of the EEC Treaty ruled that any provision of a national legal system which might impair the effectiveness of Community law by withholding from the national court having jurisdiction to do everything necessary would be incompatible. The ECJ left it to the House of Lords to specify the conditions under which interim relief should be granted in a given case but made clear that a rule which prohibited absolutely the grant of interim relief would be unacceptable.

In subsequent cases, the ECJ used the principle of effectiveness not only to dictate the form of the remedy, but also to make detailed pronouncements on the amount of compensation payable. In Marshall v Southhampton and South West Area Health Authority No. II (1993) the ECJ was prepared to rule on amount and interest.

Here the ECJ was not merely mandating an effective compensation, it was involving itself in determination of whether a particular amount was effective or not and marks a high point of the ECJ’s interventionist approach to the amount of compensation awarded by national courts, a striking departure from earlier cases.

However note the case of R v Secretary Of State For Social Security Ex Parte Sutton, where the ECJ appears to confine the Marshall II decision almost to its particular facts and the case of Steenhorst-Neerings which was justified on the basis of satisfying the twin conditions of equivalence and practical possibility (one year time bar was within limits) denying the claimant an action for retrospective payment of several years of disability benefits during the period when the Directive on sex discrimination in social security had not been properly implemented into Dutch law although the facts of the case was similar to Emmot where the ECJ ruled that where an individual sought to rely on the provisions of an unimplemented directive, the time limit for bringing proceedings should not start to run until the Directive had been properly implemented otherwise it would be impossible to make the claim.

Over time the ECJ has developed a detailed balancing approach which requires the importance of the Community right to be weighed against the scoep and purpose of the national rule taking into account all the circumstances of the case. The ECJ generally acknowledges the legitimacy of diverse national rules and the primary role of the national court in assessing these.

The requirement of “effectiveness” additionally forced the member state to create an entirely new remedy despite the no new remedies rule in Rewe-Handelgesellschaft. In Francovitch the claimants had suffered financial losses when their employer became insolvent, which they would not have suffered had the Italian state implemented a directive intended to protect employees against this occurence.

In this case the ECJ recognized a specific liability in damages on the part of the state for breaches of Community law and held the Member State liable for those losses for non-implementation of the directive. In Francovitch, the ECJ stated three conditions that had to be satisfied for the state to be held liabile for losses following from non-implementation of a directive:-

- the directive had to create rights for individuals
- those rights had to be ascertainable from the text of the directive
- there had to be a causal link between the non-implementation and the claimant's loss

In fact, the decision is potentially wider than this, as it describes any breach of EC law by the state as creating a cause of action including implementing a directive improperly, although only non-implementation is discussed in detail.

The rationale behind this decision was that member states liability was inherent in the scheme of the EC Treaty and in the member states’ obligations under Article 10. In addition to ruling that an individual could take action against the state for non-implementation, the ECJ stipulated that the successful litigant should be awarded damages.

The principle was clarified and extend in the joined cases of Brasserie du Pecheur and Factortame III. In these two cases the ECJ located the principle of state liability in the context of the Treaty provisions on the Community’s liability under Article 288 – the Coummunity shall in accordance with the general principles common to the laws of the Member States make good any damage caused by its institutions or by its servants in the performance of their duties – intended to legitimize the development of the principle of state liability.

Drawing on international law principles and on its case law under Art 226, the ECJ ruled that the State is liable whichever of its organs is responsible for the breach and regardless of the internal division of powers between consititutional authorities. In Kobler the principle of state liability applies even to violations of EC law by national courts of last instance.

In neither Factortame III or Brasserie du Pecheur, decided at the same time, did the ECJ attempt to quantify the damages that would be awarded. It refered instead to its earlier decisions on remedies, indicating that the award must be equivalent to one that would be obtained if there were a similar breach of national law, and effective to ensure that EU law was observed. There was no objection, in principle, to member states' imposing limitations on damages, or rules about mitigation of losses, or time limits within which actions should be started. The member states’ argument is that there should be procedural autonomy of national legal systems and it ought to be for the national courts to determine the remedy.