Liability for damage caused by breach of EU law

This is a landmark decision on the liability of a Member State for damage caused by a breach of EU law involved in a decision issued by a court in the Member State. In this case, the ECJ was asked for a preliminary ruling on questions put by the supreme administrative court in Austria (the referring court) arising during a private law dispute being heard in Vienna. The responses to these questions would be fundamental to a decision on a private law dispute, being an action for damages brought by Mr Köbler for loss suffered by him as the result of a decision by the aforementioned supreme administration court in Vienna contrary to EU law

Mr Köbler, a university professor in Innsbruck, had applied for a special length-of-service increment for university professors. Under Austrian law, Mr Köbler was eligible for the increment upon completion of 15 years' service solely in Austrian universities. Although Mr Köbler had completed the requisite length of service, he had spent some of this time at universities in other countries. When applying for the benefit, he asked for the duration of his service in universities of other Member States to be taken into consideration. Upon refusal of his application Mr Köbler initiated an action before the supreme administrative court, arguing that such a requirement constituted indirect discrimination contrary to Community law.

At this point, the supreme administrative court (the court of last instance) made a reference to the ECJ. Following a judgement of the ECJ in a similar case, in which the relevant law was held to be discriminatory, the Austrian court withdrew its request for a preliminary ruling, however, it dismissed Mr Köbler’s action. Thereafter, Mr Köbler brought an action for damages in the Austrian civil courts against the Republic of Austria on the ground that the judgement of the supreme administrative court was contrary to Community law.

Although the ECJ has already had an opportunity to rule on the question of the liability of a Member State for legislative and administrative acts, the question of liability for judicial acts has hitherto remained unanswered. The ECJ confirms that the principle whereunder Member States have a duty to make compensate individuals for damage caused by infringements of Community law for which they are responsible also applies where the alleged infringement stems from a decision of a court adjudicating at last instance. In accordance with settled case law, for a Member State to be held liable for damage attributable to it, three conditions need to be fulfilled: (i) the rule of Community law infringed is intended to confer rights on individuals; (ii) the breach is sufficiently serious and (iii) there is a direct causal link between that breach and the loss or damage sustained by the injured parties.

As, for the ECJ, it is important to take into account the specific nature of the judicial function and of a legitimate requirement for legal certainty, the breach is considered sufficiently serious only when found to be manifest. It is for the legal system of each Member State to designate the court competent to rule on disputes relating to such compensation.

Consequently, should a natural person or a legal entity incur any damage as a result of a Czech court judgement that is not in compliance with EC law, it is possible under the above conditions to claim – again in front of a competent Czech court – to claim damages.