Judicial Protection through the Use of Article 288(2)EC

EUROPEAN MONOGRAPHS Judicial Protection through the Use of Article 288(2)EC Jill Wakefield KLUWER LAW INTERNATIONAL THE HAGUE / LONDON / NEW YORK

Table of Contents Introduction Acknowledgements xv xxiv Chapter 1: The Non-Contractual Liability of the Communities 1 Mechanisms for Protecting the Individual against Illegality and Wrongful Conduct on the Part of the Community Institutions 1 Availability of Compensation under Community Law 2 Seeking Redress under the ECSC Treaty 4 Articles 33-35 CS 4 Article 40 CS 6 Seeking Redress under the EC Treaty 7 Articles 230-232 EC 1 The Protection under Article 288(2) EC 8 The Function of Article 288(2) EC 11 The Elements of A rticle 288(2) EC 11 General Principles Common to the Laws of the Member States 12 An Act or Omission in the Performance of Duties 12 Damage 13 The Causal Link 14 The Duty to Mitigate 14 Other Essential Conditions 15 Infringement of a Right through Breach of a Protective law 15 Illegality and Wrongful Conduct 16 The Conditions of Liability under Article 288(2) EC in a Legislative Context 17 The Test of Discretion 18 The Member State Responsibility to make Reparation 19 Concluding Remarks 20 Chapter 2: Creating a Jurisprudence for Non-Contractual Liability 22 The Foundations of Non-Contractual Liability in Community law 22 The Facts of the Vloeberghs Case 23 The Facts of the Plaumann Case 24 An Autonomous Form of Action 25 The Application of Article 34 CS Conditions to Article 40 CS claims 26 The Contribution of Member State Law as Referred to in Article 288(2) EC: the Measure of Responsibility 29 vn

The Nature of the Remedy: Restricting the Reach of the Remedy to One of Administrative law 32 Illegality Insufficient to Found an Action in Compensation: the Necessity of the Element of Fault 32 Annulment and Illegality 33 Discretionary Power and Serious Fault 34 Achieving the Objective of the Treaty and the Duty to be Performed 34 The Nature of the Damage Evidencing Fault 36 Special Harm and Damage 36 A Rule for the Protection of the Individual 38 The Defence of Excusable Error Found from Subjective Investigation 39 Adopting the Roemer Solution: the Methodology of the Compensation Action 40 The Plaumann Legacy 40 The Compensation Action and its Links to the Annulment Action 43 Administrative Liability under the Kampjfmeyer Ruling 44 The Lutticke Conditions of Liability 45 Extending the Right of Compensation to Actions Founded on Legislative Acts 45 The Schoppenstedt case and Economic Policy Measures Al The Manifest and Grave Disregard of the Limits on Power 50 The Completion of the Jurisprudence of Non-Contractual Liability 52 Concluding Remarks 52 Chapter 3: Admissibility, the Basis of Claim and the Application of the Conditions of Responsibility 54 The Act Giving Rise to the Damage 55 Admissibility of Claims Based on Legally-Binding Political Acts 56 Admissibility of Claims Based on Legally-Binding Normative Acts 59 The Susceptibility of Normative Acts to the Compensation Action 61 Regulations to be Amenable to Claims in Compensation 61 Directives to be Amenable to Claims in Compensation 62 Legally-Binding Administrative Acts Amenable to Claims in Compensation 64 The Conduct of the Community Institutions to be Amenable to Claims in Compensation 65 The Right Giving Rise to the Claim 65 The Act Determining the Conditions of Liability Applied by the Courts 68 The Classic Application of the Schoppenstedt conditions according to the Nature of the Act 70 The Nature of the Activity determining the Application of the Schoppenstedt Conditions 76 The Application of the Schoppenstedt Conditions to Decisions having Legislative Nature 78 The Lutticke Situations which Attract the Schoppenstedt Test for Establishing Liability 82 A Failure to Act 82

Wrongful conduct 83 Legislative Acts not Involving Choices of Economic Policy 83 Non-Discretionary Rules of Administration 83 The Administrative Act Attracting the Lutticke Conditions 85 Individual Acts of No General Application 85 Concluding remarks 86 Chapter 4: Illegality 88 The Powers of Legislation: the Obligation of the Legislators 89 Prior Ruling of Illegality 91 Prior Ruling of Invalidity 93 Intrusion into the Executive Sphere through the Compensation Action 94 The Grounds of Illegality and Invalidity 96 The Effect of Failure to Bring an Action for Review to Challenge the Legality or Validity of an Act on an Action for Compensation 97 Illegality and the Lutticke Conditions 99 The Schoppenstedt and Bayerische HNL Requirements in Respect of Illegality 100 A Legislative Measure which Involves Choices of Economic Policy 101 A Rule for the Protection of the Individual 101 The Breach of a Superior Rule of Law 103 Procedural Illegality Constituting a Breach of a Superior Rule of Law: Misuse of Powers 105 Substantive Illegality Constituting a Breach of a Superior Rule of Law 108 The Limits on the Superior Rules of Law 109 Sufficiently Serious Breach or Sufficiently Flagrant Violation 110 The Level of Importance of the Rule Infringed 112 The Degree of Blame to be Attributed to the Author of the Measure 113 The Lack of Justification for the Adoption of the Disputed Measure 114 The Extent of Loss Suffered 117 Tlie Requirement of Manifest and Grave Breach 117 The First Approach: Identifying a Manifest and Grave Breach from the Effects on the Claimant 118 The Second Approach: Identifying a Manifest and Grave Breach from an Abuse of Power 120 Conduct Verging on the Arbitrary 123 The Effects Must Exceed the Bounds of the Economic Risks Inherent in the Activities of the Sector Concerned 124 Sufficiently Serious Breach: Failure to Comply with the Order of the Court 125 Merging the Approaches of Justification and Effects 126 Overriding Public Interests in the Adoption of Legislation 128 The Public Interest and the Individual Interest 129 The Standard for Engaging Liability for Legislative Breach 130 The Overriding Public Interest 130 The Reach of the Schoppenstedt Conditions 134 IX

A Consistent Application of the Schoppenstedt Conditions 137 The Breach of Obligation Engaging Responsibility 139 The Breach of Obligation 140 The Sufficiently Serious Breach 142 Concluding Remarks 142 Chapter 5: Wrongful Conduct and Fault 145 The Ability to Found an Action Based on Conduct 147 Public Liability and Fault 147 Fault in a Legislative Context 148 Fault in an Administrative Context 149 A Unified Concept of Fault 149 Fault under Article 288(2)EC 150 Fault: An Objective or Subjective Concept? 152 Wrongful Conduct and Administrative Activity: Maladministration 154 Faute Personnelle 154 Faute De Service 157 The Nature of the Activity 159 Managing an Activity 160 Exercising a Supervisory Duty 161 The Object of the Activity 164 The Proper Operation of the Duty 165 The Duty To Follow Correct Procedures 166 The Duty in the Conduct of Correct Procedures 166 The Duty to follow a General Rule of Conduct - Administrative Negligence 167 Duty of Care Inherent in a Proper Operation of a Function 168 Limitation on Operational Responsibility of the Administration 169 The Contributory Conduct of the Claimant: Foreseeability and the Prudent Trader 171 The Subjective Defence of Excusable Error to a Claim of Maladministration 173 Wrongful Conduct and Legislative Activity 173 Conduct Referable to a Political Act as the Basis of Claim 177 Claims Arising from Acts Adopted Pursuant to Obligations at International Law: the Overriding International Interest 178 Claims Arising from Acts of International Law 179 The Standard of Conduct Engaging the Responsibility of the Community to Compensate 183 The Standard of Conduct in a Legislative Context 183 The Standard of Conduct in an Administrative Context 184 A Standard of Conduct in an Administrative Context in Respect of Non-Binding Rules 186 The Argument for No-Fault Liability 193 Conduct Referable to a Valid Legislative Act as the Basis of Claim 194 The Risk Factor 195

Shifting the Question of Conduct to the Applicant: Fault and Foreseeable Risk 199 Concluding Remarks 199 Chapter 6: Damage and Causation 202 Damage 202 Restitution and Reparation 204 Immediate Financial Loss 206 Consequential Economic Loss 207 Non-Financial Loss 208 Interest 210 The Duty to Mitigate 212 Remoteness of Damage 213 Causation 214 Proof of Causation 215 Immediate Causation 216 Direct Causation 216 Direct and Exclusive Causation 217 Sufficiently Direct Causation 219 Causation and Contributory Conduct 220 Breaking the Chain of Causation 222 Causation and Fault 223 The Function Performed and the Causal Link 223 The Weakness of the Rules of Causation Exposed 224 Causation and the Public Interest 226 Concluding Remarks 227 Chapter 7: Harmonisation of the Conditions of Responsibility Between the Treaties 229 The Stahlwerke Peine-Salzgitter Case 230 The Appeal to the Court of Justice 233 Divergence or Convergence under the Treaties? 234 Concluding Remarks 236 Chapter 8: The Member State Breach of Obligation Giving Rise to a Responsibility to Make Reparation 238 The Nature of the Member State Obligation 239 The Lack of a Damages Provision against the Member State under the EC Treaty 239 The Nature of the Member State Obligation under the Treaty 241 The Obligation of Compliance with Community law by the Member States 243 Adoption 243 Implementation or incorporation 243 Application 244 Enforcement 245 The Nature of the Member State Obligation under a Regulation 246 XI

The Nature of the Member State Obligation under a Directive 248 The Nature of the Member State Obligation under a Decision 251 The Nature of the Member State Obligation under Community law when Exercising National Competences: the Doctrine of Pre-emption 251 The Member State Obligation to Protect the Individual 253 The Nature of the Member State Obligation to Uphold Community Law 254 The Nature of the Member State Obligation following a Ruling of the Court of Justice Article 226 or 227 EC 255 The Nature of the Member State Obligation Imposed on the National Courts following a Ruling of the Court of Justice under Article 234 EC 256 The Member State Obligation under Article 10 EC 259 The Member State Obligation under the Principle of Effectiveness 262 The Nature of the Member State Obligation to Provide Remedies: Overriding the Rule on National Remedies 264 Amending Judicial Procedures within the Member State Legal System so that Community Law may be Upheld 267 The Right of Reparation 269 Concluding Remarks 269 Chapter 9: Harmonising Responsibility 272 The Sufficiently Serious Breach of Obligation which will Engage Member State Responsibility to Make Reparation 272 The Francovich Conditions of Responsibility 21A Breach of Obligation Sufficient to Engage the Liability of the Member State in Damages 276 The Principle of State Liability for Damages 111 Introducing the Bayerische HNL Conditions to Member State Responsibility 278 The Nature of the Breach Giving Rise to a Responsibility to Make Reparation 279 Member State and Community Liability to Compensate to be Engaged on the Same Conditions 280 Manifest and Grave Disregard of the Limits of Discretion 282 Francovich or Brasserie and Factortame Conditions? 284 The Sufficiently Serious Breach Engaging Responsibility 287 The Defences of Justification and Excusable Error 289 Manifest and Grave Breach of Community Law: Imprecise Community Law 291 Resisting a Claim of Sufficient Seriousness under the Unified Conditions 293 Harmonisation of the Sufficiently Serious Breach? 296 The Breach of Administrative Rules Giving Rise to Responsibility 296 The Breach of Administrative Rules Giving Rise to Legislative Breach 297 The Omission to Act Giving Rise to Legislative Breach 297 The Legislative Breach Giving Rise to Responsibility 298 Satisfying the Other Conditions Necessary to Engage Member State Responsibility 299 xn

Fault Causation and Contributory Conduct Damage The Argument for Uniform Rules on Causation and Damages The Duty to Mitigate Concluding Remarks Chapter 10: What is the Nature of the Non-Contractual Liability Claim? The Nature of the Remedy The Accountability of the Institutions A Law of Tort International Obligations Delict Principles Obligations Conclusions Bibliography Table of Cases Index 299 301 303 304 305 305 308 308 311 312 316 318 320 321 323 331 339 349