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CONCURRENT LIABILITY OF THE EUROPEAN UNION

AND THE MEMBER STATES

Monika Kawczyńska1

I. Introduction

Concurrent liability of the European Union and its Member States is the most difficult

problem in the field of European Union liability. The concept of concurrent liability refers to joint

liability of the EU and one or more Member States for damage caused to an individual. Single

damage may be caused by both: an illegal action on the part of the EU and an illegal action on the

part of a Member State. This problem arises very frequently since the application, implementation

and enforcement of EU law is carried out by national authorities.

The cases where concurrent liability may arise involve the following situations. First, the

application by a Member States of an illegal EU act, when the Member State carries out an

allegedly unlawful EU act. If the act has already been annulled or declared invalid at the time when

it is implemented by the Member State, only the Member State will be liable for damages. Second,

joint action by the EU and a Member State. The EU and the Member State act jointly where they

both contribute to the adoption of a measure through exercise of their own discretion. The model

of joint action is based on mutual cooperation of the Union and the Member States, not only on

the decentralized implementation of EU law at a national level.2 Joint liability of the EU and the

Member States may also be considered in cases of inadequate supervision of the Commission over

proper application of EU law at a national level.

The analysis will focus on the procedural rules concerning concurrent liability of the EU

and the Member States that have been developed in the jurisprudence of the EU courts over the

last 40 years. The main question is whether the rules comply with the general principles common

1 Ph.D. candidate at Jagiellonian University of Krakow, LL. M (Leuven).

2 Christopher HARDING, “Models of Enforcement: Direct and Delegated Enforcement and the Emergence of a

‘Joint Action’ Model”, in: HARDING/SWART (eds.) Enforcing European Community Rules: Criminal Proceedings,

Administrative Procedures and Harmonisation, Dartmouth 1996, p. 23.

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to the laws of the Member States and afford effective judicial protection to the individual. The

analysis will also cover shared responsibility of the EU and the Member States at international

level, with the assessment of the highly anticipated co-respondent mechanism in proceedings

before the European Court of Human Rights.

II. The appropriate forum to bring claim for damages

The complexity of the situation related to the application of EU law by national authorities

causes difficulty in determining not only the entity obliged to repair the damage, but also the

competent court to claim the damages. Further, the question concerns the possibility of bringing

single action for damages against the EU and the member state before the Court of Justice or before

national court.

According to art. 268 in conjunction with art. 274 of the Treaty on Functioning of the

European Union (TFEU) the Court of Justice of the EU has jurisdiction in disputes relating to non-

contractual liability of the EU. The jurisdiction is vested at the first instance in the General Court

(art. 256 first paragraph TFEU). Those provisions do not state expressly that EU courts shall have

exclusive jurisdiction in cases regarding compensation of damage arising from non-contractual

liability of the EU. However, we can draw a conclusion from case law that this jurisdiction is

exclusive.3 It secures the EU’s independence in so far as its acts are not reviewed in the light of

national law and constitutes the best guarantee for uniform liability of the EU in all Member

States.4 As a result, a national judge faced with a claim for damages against the EU, must declare

the case inadmissible.5

On the other hand, actions against Member States must be brought before national courts.

Under the system of remedies provided for in the Treaty, a private party may not bring direct action

against a Member State before the Court of Justice. National courts maintain jurisdiction to hear

3 ECJ, Decision of 13.2.1979 – Case 101/78 Granaria, ECR 1979, 623, para. 16; ECJ, Decision of 27.9.1988 – Case

106-120/87 Asteris ECR 1988, 5515, para. 14; ECJ, Decision of 8.4.1992 – Case C-55/90 Cato ECR 1992, ECR I-

2533, para. 16; ECJ, Decision of 20.03.2001 – Case T-18/99 Cordis , ECR 2001, II-913, para. 27. 4 Koen LENAERTS/Dirk ARTS/Ignace MASELIS (eds.) Procedural Law of the European Union, London 2006,

p. 370. 5 High Court Ireland, Decision of 21.10.2005 – Case Kearns & Anor, IEHC 2005, 324.

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claims for compensation for damages caused to individuals by national authorities in the

application of the EU law. When an applicant brings a claim for damages, national courts apply

substantive criteria of liability harmonized in the case law of the Court of Justice and national

procedural rules, observing the principles of effectiveness and non-discrimination.6 When national

courts are faced with claims for restitution of charges and duties levied by national authorities in

breach of the EU law, they adjudicate on the basis of national rules in accordance with principle

of effectiveness and non-discrimination 7, or EU law when applicable.8

In consequence, it is not possible for the claimant to bring a single action for damages

against the EU and the Member State jointly. Actions for damages against the EU can only be

brought in the Court of Justice, while proceedings against Member State must be brought before

the court of that state.

III. The attribution of an unlawful act

In cases of concurrent liability it is crucial to determine whether the unlawful conduct,

alleged in support of the application for compensation, is attributable to the EU or to national

authorities. The decision-making powers of the EU and the Member State appear to be the essential

condition. Infringement of EU law committed by a Member State which has genuine discretion in

implementation of that law must be distinguished from a merely instrumental application by a

Member State of an unlawful EU act where the Member State has no real discretion.9

When national authorities have a considerable margin of discretion in application of the

EU law, they are allowed to make different policy choices and the unlawful conduct may be

imputable to the Member State.10 The same applies when EU institutions provide national

authorities with information, opinion or other form of advice, which is not binding and does not

6 ECJ, Decision of 5.3.1996 – Case C-46/93 and C-48/93, Brasserie du Pêcheur, ECR 1996, I-1029, para. 51. 7 Allan TATHAM, “Restitution of Charges and Duties Levied by the Public Administration in Breach of Community

Law: A comparative analysis”, European Law Review, 2004, p. 146 et ss. 8 Council Regulation 2913/92/EC of 12 October 1992 establishing the Community Customs Code (OJ L 302,

19.10.1992, p. 1), art. 235-242. 9 Koen LENAERTS/Dirk ARTS/Ignace MASELIS (eds.) Procedural Law of the European Union…p. 379. 10 ECJ, Decision of 15.8.1998 – T-54/96 Oleifici Italiani, ECR 1998, II-3377, para 67.

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restrict the Member State’s discretion. In view of the Court, it forms part of the internal cooperation

between EU institutions and national bodies and cannot make the EU liable to individuals.11 On

the other hand, when EU institutions impose obligation or prohibition on a Member State, which

has no other choice than to comply, the unlawful conduct may be attributable to the EU.12

Having in mind the principles stated above, the procedural rules developed by the Court of

Justice in cases of concurrent liability demonstrate that there is no clear connection between

division of jurisdiction and attribution of the act. Even if the wrongful conduct alleged by the

claimant is attributable solely to the EU, it may nevertheless fall within the jurisdiction of the

national court. Therefore the question of before which court and against whom the applicant must

bring action for damages must be distinguished from the issue of who bears the ultimate

responsibility.

IV. Admissibility of claims

The procedural rules regarding concurrent liability were developed in the case law of the

Court of Justice, as early as 1967. The issue first came in the Kampffmeyer case concerning the

refusal of granting import permits for grain dealers in Germany.13 The illegal conduct of national

authorities was based on the Commission’s decision that was subsequently annulled in the case of

Toepfer.14 The Court of Justice ruled that before instituting the proceedings against the EU, the

applicant must exhaust all methods of recourse, both administrative and judicial, under the national

law applicable for obtaining repayment of sums improperly paid. Only after production of such

proof is it appropriate to consider whether any damage exists which the EU should make good. It

follows that the claims for damages in cases of concurrent liability have been based on the principle

of exhaustion of national remedies. In view of the Court of Justice, such approach was necessary

11 ECJ, Decision of 18.10. 1984 – Case 109/83 Eurico, ECR 1984, 3581, para. 20. 12 ECJ, Decision of 15.1.1987 – Case 175/84 Krohn, ECR 1986, 753, para. 19. 13 ECJ, Decision of 14.7.1967 – Case 5, 7 and 13 to 24-66 Kampffmeyer, ECR 1967, 245. 14 ECJ, Decision of 1.7.1965 – Case 106 and 107-63 Toepfer, ECR 1965, ECR 405.

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in order to avoid the applicant's being insufficiently or excessively compensated because of

different assessment of two different courts applying different rules of law.

The ruling of the Court of Justice and the subsequent jurisprudence based on the principle

of exhaustion of national remedies has raised much criticism in the legal doctrine. It has been

argued that strict approach presented in the case law is contrary to the wording of art. 340 (2)

TFEU and does not follow from rules of law recognized in the legal systems of the Member

States.15 Moreover, it leads to unequal legal protection due to various national rules on damages

and does not provide effective and speedy legal remedy for the individual concerned.16

In 1984, the Court of Justice changed its approach and developed the principle of

exhaustion of effective national remedies. In the Unifrex judgement, it ruled that action for

damages brought against the EU may not be declared inadmissible on the ground that the applicant

has not made use of the legal remedies available in national law when it is not disputed that these

remedies were not capable of guaranteeing him effective protection.17 The effective national

remedies should lead to the compensation of the damage suffered by the individual. The most

apparent case where an individual may bring a claim for damages directly against the EU is when

the national court is not able to compensate the damage without prior intervention of the EU

legislature.18 The same effect is when the Court of Justice limits in time the effect of its judgment,

declaring the contested act invalid and therefore does not provide the national court with sufficient

basis for ordering compensation.19

The doctrine that has been developed in the Unifrex judgment is still a valid law that has

been applied over the next thirty years. A lot of case law has been generated in attempt to establish

under which circumstances an applicant will have to first bring a national claim before being able

15 Léontin Jean CONSTANTINESCO, „Les Problemes résultant de la responsabilité extra-contractuelle

concomitante de la Communauté et d'un Etat membre“, Collection Études n° 34, Bruxelles et Luxembourg, 1980, p.

63-66. 16 Andrew DURDAN, „Restitution or Damages: National Court or European Court?”, European Law Review, 1976,

p. 442-443; Trevor HARTLEY, „Concurrent liability in EEC Law: A critical Review of cases”, European Law Review,

1977, p. 264-265, Christopher HARDING, „The choice of court problem in cases of non-contractual liability under

EEC law”, Common Market Law Review, 1979, p. 405-406. 17 ECJ, Decision of 12.4.1984 – Case 281/82 Unifrex, ECR 1984, 1969, para. 11. 18 ECJ, Decision of 23.11.2004, Case T-166/98 Dolianova, ECR 2004, II-3991, para. 116 and case law cited therein. 19 ECJ, Decision of 30.5.1989 – Case 20/88 Roquette frères, ECR 1989, 1553, para. 18-20.

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to directly challenge the actions of the EU. The fragmentation of jurisdiction creates a complex

and inefficient situation and case law does not provide clear guidance to litigants.

V. Restitution or damages?

The most important issue relating to concurrent liability of the EU and the Member States

concerns the circumstances in which applicant is obliged to exhaust effective national remedies

and situations when he can submit the action for damages directly on the basis of art. 340 (2)

TFEU. Considering the case law of the EU courts we can distinguish five categories of cases.

Firstly, the restitution of sums unduly paid to a Member State – when the applicant has

suffered a loss for an amount unduly paid to national authorities, which requested payment on the

basis of an unlawful EU act. The amounts may take the form of customs, antidumping duties, taxes

or penalties and be imposed on the basis of any binding EU act, even implemented directive.20

According to the settled case law, in order to recover such amounts, the individual concerned must

first exhaust remedies available under national law. It is nonetheless a necessary precondition that

national remedies give effective protection to the individuals.21 EU courts seem to assume that an

action for restitution will always be available in the national law since the EU law obliges Member

States to provide for legal proceedings enabling undue amounts paid to be recovered.22

Secondly, the recovery of payments unlawfully not received from the Member State –

when national authorities refused to grant payment to the applicant on the basis of an unlawful EU

act. The payments may take the form of subsidies or grants and are to be frequently found in

Common Agricultural Policy. According to settled case law, in such circumstances the applicant

is obliged to exhaust effective national remedies before submitting the action for damages against

the EU. 23

20 ECJ, Decision of 21.6.2006 – Case T-47/02 Danzer, ECR 2006, II-1779. 21 ECJ, Decision of 13.03.1992 – Case C-282/90 Vreugdenhil, ECR 1992, I-1937; ECJ, Decision of 12.12. 1997 –

Case T-167/94 Nölle, ECR 1995, II-2589. 22 Wouter WILS, „Concurrent Liability of the Community and the Member State”, European Law Review, 1992, p.

199. 23 ECJ, Decision of 12.4.1984 – Case 281/82 Unifrex, ECR 1984, 1969, para. 11.; ECJ, Decision of 23.11.2004,

Case T-166/98 Dolianova, ECR 2004, II-3991.

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Thirdly, claims for license or other administrative act refused by the Member Sate – when

the national authorities refused to issue a license or another act to the applicant on the basis of an

unlawful EU act. In such circumstances, a private party is obliged to exhaust the means of redress

offered by the national law before instituting the proceedings for damages against the EU.24

Fourthly, compensation of genuine damages suffered by the applicant – when the damage

occurred as a result of the application of an unlawful EU act by national authorities. Such kind of

damage is described in legal commentaries as “actual injury”25, “losses of another kind”26,

“damages”27 or claim in “tort”.28 It includes in particular the loss of profits or earnings, penalties

for breach of commercial contracts, moral damages related to imprisonment, losses associated with

granting State aid to competitors, cost of additional credit, losses related to insolvency or

bankruptcy proceedings.29 The applicant may not obtain compensation of such damages by filing

a claim for restitution with national courts. Therefore, according to settled case law, the action for

damages will be admissible to the General Court without the need to exhaust national remedies,

provided that the damages are attributable to the EU institutions. Since in case of genuine damages

the way to EU courts is straightforward, the applicants tend to include their loss in this category.

However the classification of damages will always lie within the competence of EU courts.30

Fifthly, ancillary damages – costs associated with aforementioned claims, i.e. bank interest,

costs of obtaining a bank guarantee or legal costs including lawyer fees. As legal commentaries

correctly indicate, the Court’s rulings on the recovery of ancillary damages are far from clear.31

24 ECJ, Decision of 29.9.1987 – Case 81/86, De Boer Buizen, ECR 1987, 3677; ECJ, Decision of 15.1.1987 – Case

175/84 Krohn, ECR 1986, 753. 25 Koen LENAERTS/Dirk ARTS/Ignace MASELIS (eds.) Procedural Law of the European Union…p. 383. 26 Wouter WILS, „Concurrent Liability of the Community and the Member State” … p. 203; Angela WARD,

Judicial Review and the Rights of Private Parties in EU law, Oxford 2007, p. 381 27 Andrew DURDAN, „Restitution or Damages: National Court or European Court?”…p. 442. 28 Trevor C. HARTLEY, „Concurrent liability in EEC Law: A critical Review of cases”…p. 263, Trevor

HARTLEY, The Foundations of European Union Law, Oxford 2010, p. 485, Andrea BIONDI, Martin FARLEY, The

Right to Damages in European Law, Alphen aan den Rijn 2009, p. 185

29 ECJ, Decision of 12.12. 1997 – Case T-167/94 Nölle, ECR 1995, II-2589; ECJ, Decision 9.7.2008 – Case T-

429/04 Trubowest ECR 2008, II-128. 30 ECJ, Decision of 5.2.2007 – Case T-91/05 Sinara Handel, ECR 2007, II-245, para. 49-52. 31Andrea BIONDI, Martin FARLEY, The Right to Damages in European Law…p. 194; Angela WARD, Judicial

Review and the Rights of Private Parties in EU law…p. 389.

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Claims for recovery of bank interest or cost of bank guarantee seem to be admissible to the EU

Courts, provided that such costs are not recoverable under national law. On the other hand, legal

costs must be claimed before national courts, since the case will not be admissible under art. 340

(2) TFEU. 32

According to the five categories of cases presented above, it is possible to describe the

model of proceedings in cases of concurrent liability before the EU courts. Firstly, the EU court

analyses whether both the EU institutions and national authorities were involved in the disputed

action or omission which caused the damage. Secondly, it examines whether the alleged action or

omission may be attributed to the Union. Even if the Court finds that a particular behaviour is the

sole responsibility of the Union, an action for damages may still be dependent on the exhaustion

of domestic remedies. Thirdly, in cases that can be defined as claims for restitution relating to

sums unduly paid, payments unlawfully withheld or administrative acts unlawfully refused by the

national authorities, the EU courts will analyse if the applicant previously exercised domestic

remedies. However, national remedies must ensure effective protection of the rights of individuals.

To this end, the EU court makes reconstruction of the claim asserted by the applicant and determine

whether the national legal remedies are effective i.e. they are able to compensate the damage. In

situations in which the applicant already exhausted domestic remedies or the Court established

that the national law does not provide for effective remedies, the case will be declared admissible

under art. 340 (2) TFEU. The same solution applies in cases relating to genuine damages. On the

other hand, claims for restitution where the applicant failed to exhaust effective domestic remedies

available to him under national law, will be declared inadmissible.

As the case law demonstrates, even in cases of parallel proceedings – where the same

damage is the subject of two actions for compensation, one against a Member State before a

national court and the other against the EU before the EU judicature, the EU courts may suspend

the proceedings and await the national judgement.33 The reasoning comes from Kampffmeyer

judgement, that suspension of the proceedings may prevent the applicant to be insufficiently or

excessively compensated. Yet this issue does not concern the admissibility of the action brought

32 ECJ, Decision of 30.5.1989 – Case 20/88 Roquette frères, ECR 1989, 1553; ECJ, Decision of 13.03.1992 – Case

C-282/90 Vreugdenhil, ECR 1992, I-1937; ECJ, Decision of 12.12. 1997 – Case T-167/94 Nölle, ECR 1995, II-2589. 33 ECJ, Decision of 13.12.2006 – Case T-138/03 É. R., O. O., J. R., A. R., B. P. R., ECR 2006, II-04923, para. 42.

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against the EU, but only the final judgment on the amount of the compensation to be granted by

the EU courts.

VI. Inadequate supervision by the Commission

Joint liability of the EU and the Member States liability may also be considered in cases of

inadequate supervision of the Commission over the proper application of the EU law at a national

level.34 Within the competences set out in art. 17 (1) TEU, the Commission shall ensure the

application of the Treaties and measures adopted by the institutions pursuant to them. Therefore,

the Commission is authorized to institute infringement proceedings against Member States, adopt

safeguard measures or exercise control over State aid. In some instances, the Commission fails to

fulfil its obligations under the Treaty and uninterrupted unlawful behaviour of the Member State

may cause damage to the individual.

According to settled case law, the Commission is under no obligation to initiate

infringement proceedings under Article 258 TFEU. Refusal to initiate such proceedings lies within

discretionary powers of the Commission and it cannot give rise to non-contractual liability on the

part of the EU.35 The same reasoning must be applied to proceedings under art. 260 TFEU.

Therefore, the action for damages based on the Commission’s failure to institute proceedings under

art. 258 TFEU or art. 260 TFEU will be declared as inadmissible. In any case, it would be hard to

establish the rule of law for the protection of the individual following from those provisions or

direct causal link between the Commission inaction and damage, since the judgment is simply

34 Such concept is not common in legal writings with noticeable exception of Peter OLIVER, „Joint Liability of the

Community and the Member States”, in: Heukels/McDonnell (eds.), The Action for Damages in Community Law, The

Hague, 1997, p. 299-302 and Maartje DE VISSER, „The concept of concurrent liability and its relationship with the

principle of effectiveness a one-way ticket into oblivion?”, Maastricht Journal of European and Comparative Law,

2004, p. 53-55. 35 ECJ, Decision of 23.5.1990 – Case C-72/90 Asia Motor France, ECR 1990, I-02181, para. 12-15; ECJ, Decision

of 29.11.1994 – Case T-479/93 and T-559/93 Bernardi, ECR 1994, II-01115, para. 36-40; ECJ, Decision of 3.7.1997

– Case T-201/96 Smanor, ECR 1997, II-01081, para 30-31; ECJ, Decision of 14.1.2004 – Case T-202/02 Makedoniko

Metro, ECR 2004, II-00181, para 43-44. However in some cases reasoned opinion may be vitiated with illegality

giving rise to damages: ECJ, Decision of 18.12.2009 – Case T-440/03, T-121/04, T-171/04, T-208/04, T-365/04 and

T-484/04 Arizmendi, ECR 2009, II - 4883, para. 68.

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declaratory.36 Therefore, only the Member State who violates the EU law will be liable towards

the individual.

The Commission is also empowered to take safeguard measures: anti-dumping or anti-

subsidy duties, which protect European production against international trade distortions. In some

instances, the Commission may authorize the Member State to take the unlawful act on the basis

of safeguard measure, which was subsequently declared invalid. The perfect example was seen in

the Kampffmeyer and Toepfer cases. Therefore, we can draw a conclusion that in cases of safeguard

measures applied by the Member States, the rules on concurrent liability, described in point V

above, will apply.

Moreover, the Commission is in charge of ensuring that State aid complies with EU rules.

Aid measures can only be implemented after approval by the Commission, which also has the

power to recover incompatible State aid. The claimant, whose market position is significantly

affected by the State aid, may challenge the Commission’s refusal to take action against the

contested aid measures. Consequently, he may claim damages under art. 340 (2) TFEU37. In some

cases also the beneficiary of the aid may challenge the unlawful behaviour of the Commission or

unlawful joint action of the Commission and the Member State. The first example formed basis

for the case Bouychou38 and second for the case Nuova Agricast39. In both cases the General Court

refused to hold the Commission liable for damages. Accordingly, we can conclude that in cases of

unlawful joint action of the Commission and the Member State in State aid proceedings, the rule

of exhaustion of effective domestic remedies does not apply. The claimant may institute the action

for damages against the Commission and the Member State independently in the competent courts.

VII. Validity of the contested act

36 Maartje DE VISSER, „The concept of concurrent liability and its relationship with the principle of effectiveness

a one-way ticket into oblivion?”… p. 54. 37 ECJ, Decision of 28.01.1999 – Case T-230/95 Bretagne Angleterre Irlande, ECR 1999, II -123. 38 ECJ, Decision of 19.07.2007 – Case T-344/04 Bouychou, ECR 2007, II-91. 39 ECJ, Decision of 2.12.2008 – Case T-362/05 and T-363/05 Nuova Agricast, ECR 2008, II-297.

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Action for damages prescribed in art. 340 (2) TFEU is an autonomous form of action

independent form action for annulment. However, in cases of concurrent liability, the validity of

EU act plays an important role.

It must be reminded that every act which is brought into force in accordance with the Treaty

must be presumed to be valid so long as a competent court has not made a finding that it is invalid.

Therefore, the national authorities responsible for the implementation of the UE act, even having

doubts to its validity, are obliged to apply it as long as the act has not been declared null and void.

The legislative and administrative organs have no power to address the Court of Justice with

question relating to the validity of the act under art. 267 TFEU. However, they still may be liable

for damages caused to an individual resulting from the application of EU act subsequently declared

invalid.

The national court has no jurisdiction to declare an EU act invalid. However, in most cases

relating to concurrent liability of national authorities and the EU, only the annulment of the EU

act may form the sufficient basis to satisfy the claim for restitution or damages. The easiest way

for the applicant is to bring the claim before national court when the EU act has already been

declared invalid in proceedings instituted by him or by other party. This situation has occurred in

the Kampffmeyer case, where the Court of Justice already annulled the Commission’s decision

permitting German authorities to refuse to grant import permits in the earlier case of Toepfer. It is

more difficult to bring a claim before national court and request referral of the preliminary question

on the validity of contested act. In such cases the applicant may face some problems.

Firstly, in the preliminary ruling procedure the Court of Justice may not establish the liability

of the EU. In the Granaria case, the Court stated that the question relating to the application of the

second paragraph of art. 340 cannot be determined in proceedings under art. 267 of the Treaty.40

The underlying motive is that the preliminary ruling procedure does not guarantee the adequate

right of defence to the EU institution concerned. Moreover, in such cases the Court of Justice acts

as the court of law, not the court of fact. 41

40 ECJ, Decision of 13.02.1979 – Case 101/78 Granaria, ECR 1979, 623, para. 10. 41 Peter OLIVER, „Joint Liability of the Community and the Member States”…p. 293.

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What is more, the national court may refuse to refer the question on the validity in the

preliminary ruling procedure. Such a decision lies solely within the competence of the national

court. In some instances, arbitrary decision of the national court may lead to the violation of the

right to effective remedy or may form the basis for a constitutional complaint.42 However, the

applicant may not raise such a plea in the context of action for damages. The General Court in case

Danzer, stated that it may not assess, in the context of an action for damages, the appropriateness

of the national court’s decision regarding refusal to institute proceedings under art. 267 TFEU. In

view of the General Court it would undermine the very principle of judicial cooperation underlying

the preliminary reference procedure.43 It must be emphasized that in cases of concurrent liability,

refusal of a national court to submit the question for preliminary ruling in principle, leaves the

individual without effective domestic remedy.

VIII. Recovery of the sums paid to the applicant

According to the rule of exhaustion of domestic remedies, the applicant shall recover

damages primarily from national authorities. It is regardless of the fact if the EU is fully or partially

liable for the damage caused to the applicant. Therefore, the Member State shall be entitled to

recover from the EU the sums paid to the applicant in order to compensate for the damage. It would

definitely be against the duty of loyal cooperation enshrined in art. 4 (3) TEU if the Member State

was obliged to bear the financial burden of compensation for damages caused by the EU. In the

Eurico case, the Court of Justice held that financial burden for errors of EU institutions must

ultimately be borne by the European Union.44

In order to recover the damages from the EU, the Member State needs to satisfy two conditions.

Firstly, the action or omission must be partially or wholly attributable to the EU. Secondly, the

judgment of a national court granting damages must be compatible with EU law.45 It must be

emphasized that only the national court has the jurisdiction to make decision concerning the

43 ECJ, Decision of 21.6.2006 – Case T-47/02 Danzer, ECR 2006, II-1779, para. 39. 44 ECJ, Decision of 18.10. 1984 – Case 109/83 Eurico, ECR 1984, 3581, para. 19. 45 Peter OLIVER, „Joint Liability of the Community and the Member States”… p. 295

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liability of the Member State. It is not possible for a EU court to rebut a national judgment. In the

Krohn case, the Court of Justice stated that the EU courts may not decide in action for damages in

which part the Member State is liable, since the national courts retain sole jurisdiction to order

compensation for such damages.46

In legal writings and according to opinions of the Attorneys General, the possible legal bases

for the recovery of the sums paid by the Member States to the applicant are twofold47: the Council

Regulation No 1150/2000 implementing Decision 2007/436 on the system of the EU' own

resources48 and Council Regulation No 1290/2005 of 21 June 2005 on the financing of the common

agricultural policy.49

However, in some instances, EU institutions may refuse to refund the sums paid by a Member

State to an applicant. Therefore, the question is in what procedure may the Member State demand

the recovery of the amounts due. The Attorney General Darmon in his opinion in case Vreugdenhil

suggests that it could be action for annulment (art. 263 TFEU) against Commission decision

refusing compensation.50 On the other hand, Oliver proposes that it could be action for failure to

act (art. 265 TFEU) against Commission in the event of withholding of sums due to Member

States.51 Action for damages could also be considered since art. 340 (2) TFEU does not limit the

subjects who may bring action for damages. Nevertheless, it follows from the Krohn case that the

EU courts are not competent to decide on the share of liability of the Member State.52 No claim

can be brought in the preliminary ruling procedure, since in the Granaria case, the Court of Justice

decided that the liability of the EU cannot be determined in proceedings under art. 267 of the

Treaty.53

46 ECJ, Decision of 15.1.1987 – Case 175/84 Krohn, ECR 1986, 753, para. 18. 47 Peter OLIVER, „Joint Liability of the Community and the Member States”…p. 294, Andrea BIONDI, Martin

FARLEY, The Right to Damages in European Law…p. 196, Opinion of A.G. Mancini of 19.11.1985 – Case 175/84

Krohn, ECR 1986, 753, at 761. 48 Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 (OJ L 130, 31.5.2000, p. 1) amended by

Council Regulation (EC, Euratom) No 105/2009 of 26 January 2009 (OJ L 36, 5.2.2009, p. 1). 49 Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ

L 209, 11.8.2005, p. 1–25) 50 Opinion of A.G. Darmon of 16.01.1992 – Case C-282/90 Vreugdenhil, ECR 1992, I-1937, para 18. 51 Peter OLIVER, „Joint Liability of the Community and the Member States”… p. 295 52 See supra note 46. 53 See supra note 40.

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Recovery of the sums paid to the applicant may also be considered in opposite cases, when the

EU compensates for the damage instead of the Member State. However this situation is unlikely

to occur due to the requirement of prior exhaustion of national remedies and suspension of the

action for damages before EU courts in case of parallel proceedings.

IX. Are the rules on concurrent liability common to the laws of the Member States?

The drafters of the Treaty left the establishment of a regime for non-contractual liability of

the EU to the Court of Justice. Art. 340 (2) TFEU does not specify substantive or procedural

criteria for liability but requires they shall comply “with the general principles common to the laws

of the Member States”. It is questionable whether the rules on concurrent liability settled in the

case law of EU courts are in fact common to the laws of the Member States.

Interpreting the mandate prescribed in art. 340 (2) TFEU Attorney Generals advised that

the Court of Justice should be guided by the most characteristic provisions of the systems of

domestic law, but it must ensure that it adopts a solution appropriate to the needs and specific

features of the EU legal system.54 In other words, the Court has the task of drawing on the legal

traditions of the Member States in order to find the answers to similar legal questions arising under

EU law that both respect those traditions and are appropriate to the context of the EU legal order.

From that point of view, even a solution adopted by a minority may be preferred if it best meets

the requirements of the EU legal system. But what happens if the solution adopted by the Court of

Justice is not to be found in any national legal system or even international law?

In 1980 L.J. Constantinesco conducted comparative research law relating to the liability of

the European Community and its six Member States. He established that rule of prior exhaustion

of legal remedies, especially in cases of concurrent liability of public authorities, is not common

to the national legal systems.55 Therefore the Court ruling in Kampffmeyer was not decided in

54 Opinion of A. G. Roemer of 13.07.1976 – Case 5/71 Zuckerfabrik Schöppenstedt, ECR 1971, 975, at 989; opinion

of A.G. Poiares Maduro delivered of 20.02.2008 – Case C-120/06 P and C-121/06 P. FIAMM and Fedon, ECR 2008,

I-6513, para 55. 55 Léontin J. CONSTANTINESCO, „Les Problemes résultant de la responsabilité extra-contractuelle concomitante

de la Communauté et d'un Etat membre“...p. 70.

15

accordance with art. 340 (2) TFEU. In 2004 W.V. Horton Rogers prepared a comparative report

on cases regarding multiple tortfeasors in legal systems of eleven Member States. He concluded

that some of the legal systems provide for certain procedural constraints in cases of joint liability.

They do not, however, concern the decision of the claimant to direct proceedings against a

particular tortfeasor.56

European Group on Tort Law in Principles of European Tort Law drafted chapter 9

concerning multiple tortfeasors. According to art. 9:101, liability is solidary where the whole or a

distinct part of the damage suffered by the victim is attributable to two or more persons. Where

the persons are subject to solidary liability, the victim may claim full compensation from any one

or more of them, provided that the victim may not recover more than the full amount of the damage

suffered by him. As specified in the commentary, solidary liability is deeply embedded in

European legal systems.57

Study Group on a European Civil Code in Draft Common Frame of Reference included Book

VI on non-contractual liability arising out of damage caused to another. According to art. VI-

6:105, where several persons are liable for the same legally relevant damage, they are liable

solidarily. This provision expresses a rule which is part of every Member State’s legal system and

is also to be found in EU Law primarily in Council Directive 85/374/EEC on liability for defective

products. 58

From comparative reports and rules on European tort it follows that the rule of prior

exhaustion of remedies is not the rule which is common to the laws of the Member States. In

national liability regimes, when damage is caused by concurrent action of a number of tortfeasors,

the main rule is solidary liability (in common law: joint and several liability). In such cases the

claimant may demand compensation from any one of the parties, or from any and all of the parties

in various amounts until the damage is paid in full.

56 William V.H. ROGERS, „Comparative report on multiple tortfeasors”, in: ROGERS (eds.) Unification of tort

law: multiple tortfeasors, The Hague 2004, s. 271-311. 57 William V.H. ROGERS, „Multiple Tortfeasors, in: The European Group on Tort Law, Principles of European

Tort Law. Text and Commentary, Wien, 2005, p. 144. 58 Christian VON BAR/Eric CLIVE/Hans SCHULTE-NÖLKE (eds.) Principles, Definitions and Model Rules of

European Private Law, Draft Common Frame of Reference (DCFR), Munich 2009, p. 3599.

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X. Shared responsibility of Member States and international organisations

Having in mind the rules developed in the jurisprudence of the European courts the question

is whether the rules concerning concurrent liability of the EU and the Member States will also

apply in international law. First, the analysis will focus on general rules relating to the liability of

the Member States for wrongful acts of international organisations. Next, the analysis will include

specific rules concerning shared responsibility of the EU and its Member States for acts

incompatible with international law.

One of the most difficult issues in this context is whether Member States bear secondary or

concurrent liability to third parties for acts of an international organization. The most important in

this respect is the Resolution on the legal consequences for member states of the non-fulfilment by

international organizations of their obligations toward third parties, adopted by the Institute of

International Law (IIL) in 1995.59 Art. 2 (b) of the Resolution defines two different forms of

liability. Concurrent liability means liability that allows third parties having a legal claim against

an international organization to bring their claim, at their choice, against either the organization or

its members. Subsidiary liability means liability by which third parties having a legal claim against

the international organization will have a remedy against States members only and when the

organization defaults. According to art. 5 of the Resolution, in particular circumstances, members

of an international organization may be liable for its obligations in accordance with a relevant

general principle of international law, such as acquiescence or the abuse of rights. In addition, a

member State may incur liability to a third party through undertakings by the State or if the

international organization has acted as the agent of the State, in law or in fact. Art. 6 of the

Resolution clearly indicates that save as circumstances specified in art. 5, there is no general rule

of international law whereby States are, due solely to their membership, liable concurrently or

subsidiarily, for the obligations of an international organization of which they are members. Also

in legal writings the prevailing view is that there is also no general rule in international law that

59 Yearbook of the Institute of International Law 1995, 66-II, p. 445.

17

the member states retain international legal responsibility for acts of their international

organisations endowed with separate legal personality.60

In 2011, International Law Commission (ILC) adopted the final Draft Articles on

international responsibility of international organizations. 61 It also contains a set of rules on the

attribution of conduct to the organization and additional rules on the organization’s responsibility

in connection with the act of a State. In 2004, the European Commission expressed its views

relating to special features of the European Union.62 It argued that different rules of international

responsibility shall apply towards the EU in respect of the division of competences between the

EU and its Member States and the attribution of conduct when Member States act in the execution

of EU law. The ILC did not comply with the European Commission’s suggestions.63 Nevertheless,

in 2009 the ILC adopted the lex specalis rule allowing the exemption form general rules enshrined

in the Draft if the relations within the international organization are governed by special rules of

international law, including internal rules of the organization.64

The rules concerning shared responsibility of the EU and its Members States at an

international level differ in practice in the fields of trade, law of the sea and the protection of human

rights.

A great number of mixed agreements concluded by the EU and the Member States include

“declarations of competence”. Such declarations reflect a separate responsibility of the EU and its

Member States in accordance with their respective competencies towards third parties. In

situations where no specific declaration of competence has been made, the issue of responsibility

of the EU and its Member States is subject to different views: joint and several responsibility for

60 Karl WELLENS, Remedies Against International Organizations, Cambridge 2002, p. 46; Chittharanjan F.

AMERASINGHE, „Liability to third parties of member States of international organizations: practice, principle and

judicial precedent”, International and Comparative Law Quarterly, 1991, p. 280. 61 Official Records of the General Assembly, Fifty-sixth session, Supplement No. 10 (A/56/10). 62 Documents of the General Assembly, Fifty-sixth session, Responsibility of international organizations: comments

and observations received from international organizations (A/CN.4/545), p. 5, 18 63 Giorgio GAJA, Second report on responsibility of international Organizations, 2004, A/CN.4/541, p. 6. 64 Art. 64 of the Draft, Giorgio GAJA Seventh report on responsibility of international Organizations, 2009,

A/CN.4/610, p. 13

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execution of the agreement65 or responsibility for those parts of the agreement which fall within

respective competences of the EU and the Member States.66

In disputes within the World Trade Organization (WTO) against the EU and its Member

States, the prevailing view is that the wrongful conduct of the Member States’ organs applying EU

law shall be attributed to international organizations.67 The dispute resolution organs accepted that

the EU bears sole responsibility for the Member States’ actions when implementing Union

regulations in areas of exclusive Union competence.68 The same view was taken by the

International Tribunal of the Law of the Sea (ITLOS) in a case against the European Union

concerning fishing swordfish on the High Seas by the Spanish vessels.69

A different approach is taken in cases decided by the European Court of Human Rights

(ECHR). At present the EU is not the party to the European Convention on Human Rights and

Fundamental Freedoms (Convention), therefore only the Member States, either collectively or

individually, may be challenged before the ECHR. In view of the ECHR, the member States, by

transferring their powers to the EU, could not evade their own responsibility under the

Convention.70 The State is responsible for all acts and omissions of its organs regardless of whether

the act or omission in question was a consequence of domestic law or of the necessity to comply

with international legal obligations.71. In Matthews and M.S.S., the United Kingdom and Greece

were found liable for violation of the Convention while applying the obligations imposed by EU

65 ECJ, Decision of 2.03.1994 – Case C-316/91 European Parliament v. Council, ECR 1994, I-625, para. 29; opinion

of A.G. Tesauro of 16.06.1998 – Case C-53/96 Hermès, ECR 1998, I-3603, para. 14, opinion of A.G. Jacobs of

10.11.1993 – Case C-316/91 European Parliament v. Council, ECR 1994, I-625, para. 69. 66 Opinion of A.G. Mischo of 27.11.2001 – Case C-13/00 Commission v. Ireland, ECR 2002, I-2943, para. 29. 67 WTO Panel Report of 15.03.2005 – Case Protection of Trademarks and Geographical Indication for Agricultural

Products and Foodstuffs, (WT/DS174/R), para. 7.725; WTO Panel Report of 29.09.2006 – Case Measures Affecting

the Approval and Marketing of Biotech Products (WT/DS291/R, WT/DS292/R and WT/DS293/R), para. 7.101. 68 Frank HOFFMEISTER, „Litigating against the European Union and Its Member States - Who Responds under

the ILC's Draft Articles on International Responsibility of International Organizations?”, European Journal of

International law, 2010, p. 734. 69 Case No. 7, Chile v. European Union (conservation and sustainable exploitation of swordfish stocks in the South-

Eastern Pacific Ocean). 70 ECHR, Decision of 18.02.1999 – Case 26083/94, Waite and Kennedy, para 67. 71 ECHR, Decision of 30.06.2005 – Case 45036/98, Bosphorus, para. 153.

19

law.72 Nonetheless, the approach of the ECHR may substantially change after the accession of the

EU to the Convention.

The final version of the draft agreement on the accession of the European Union to the

Convention was adopted in April 2013.73 The draft agreement introduces the possibility of the

Union and its member States becoming co-respondents to proceedings by decision of the ECHR

in the circumstances set out in Article 3. On the one hand, where an application is directed against

one or more member States, the EU may become a co-respondent if it appears that the alleged

violation calls into question the compatibility of a provision of primary or secondary EU law with

the Convention rights at issue (Article 3 (2) of the draft agreement). On the other hand, where an

application is directed against the European Union, the member States may become co-respondents

if it appears that the alleged violation calls into question the compatibility of a provision of primary

EU law with the Convention rights at issue (Article 3 (3) of the draft agreement).

The co-respondent mechanism is a unique solution within the Convention legal order, which

noticeably differs from a third-party intervention. The co-respondent becomes a party to the

proceedings so that the judgment is also binding on it. The key difference to the status of an

ordinary respondent is that the applicant does not need to exhaust the domestic remedies in the co-

respondent’s legal order.74

According to the explanatory report, the co-respondent mechanism is not a procedural

privilege for the EU or its member States, but a way to avoid gaps in participation, accountability

and enforceability in the Convention system75. However, the main gap in the system is that co-

respondent mechanism is not obligatory either to the EU or the Member States. To that end the EU

made a special declaration contained in Appendix II to the draft agreement. The EU declared that

it would ensure that it would request to become a co-respondent to the proceedings or accept an

72 ECHR, Decision of 18.07.1999 – Case 24833/94, Matthews v. the United Kingdom; ECHR, Decision of

21.01.2011 – Case 30696/09, MSS v. Belgium and Greece. 73 Final report to the CDDH (47+1(2013)008rev2), Strasbourg 10 June 2013. 74 Tobias LOCK, End of an Epic? The Draft Agreement on the EU’s Accession to the ECHR, Yearbook of European

Law, 2012, 162 ss. 75 Draft Explanatory report to the Agreement on the Accession of the European Union to the Convention for the

Protection of Human Rights and Fundamental Freedoms (47+1(2013)007) Strasbourg, 2 April 2013, para. 33.

20

invitation by the ECHR where the conditions set out in Article 3 (2) of the accession agreement

were met. Unfortunately, the explanatory report states that on the basis of the relevant case law of

the ECHR, it can be expected that co-respondent mechanism may be applied only in a limited

number of cases. 76

If the ECHR establishes the violation of the Convention by a respondent and a co-respondent,

they shall be jointly held responsible for that violation (art. 3 (7) of the draft agreement).

Consequently, the ECHR may not decide on the distribution of the responsibility between the EU

and its Member States. Apportioning responsibility separately to the respondent and the co-

respondent would entail the risk that the ECHR would assess the distribution of competences

between the EU and its member States.77 The execution of the judgments will be decided by

national authorities and EU institutions. Therefore, the EU and the Member States would need to

develop their own procedures concerning co-operation in proper execution of the ECHR

judgments. Hopefully they will not be as strict and complicated as the rules applied in cases of

concurrent liability of the EU and the Member States. However, in cases of disagreement relating

to the division of liability between the EU and the Members States, it is possible that we may see

first actions for damages instituted by the Member States under art. 340 (2) TFEU.

XI. Conclusion

When analyzing the rules relating to concurrent liability of the EU and its Member States

developed in the jurisprudence of the EU courts, it must be concluded that they do not guarantee

effective judicial protection of individuals.

Obtaining a full compensation consumes a considerable period of time, since the applicant

needs to bring separate actions for damages in two different jurisdictions. The EU courts have

exclusive competence to decide on the liability of the EU, whereas national courts have the sole

jurisdiction to decide on the liability of national authorities. As the Kampffmeyer case illustrates.

it took 20 years for the claimants to recover full compensation. A large majority of applicants are

76 Idem, para. 44. 77 Idem, para 54.

21

traders and medium-sized companies and they cannot wait for their money for a long period of

time. A judgment offering full compensation is of no use when the company has already gone

bankrupt.78

The very important issue linked with the length of the proceedings is the observation of the

limitation period for action for damages. According to art. 46 of the Statute of the Court of Justice,

proceedings against the Union in matters arising from non-contractual liability shall be barred after

a period of five years from the occurrence of the event giving rise thereto. The period of limitation

may be interrupted only if proceedings are instituted before EU courts or if prior to such

proceedings an application is made by the aggrieved party to the relevant institution of the Union.

There is no interruption of the limitation period when proceeding are instituted before national

courts. The only exception established in the case law is the patent infringement where the

limitation period starts to run from the date when a national court issued judgment establishing

infringement.79 Thus, even where the applicant obtains compensation in the national court, his

claim under art. 340 (2) TFEU may be inadmissible on the grounds that it has been time barred. It

may lead to the denial of justice.

Another problem arises when the EU courts make reconstruction of the claim and determine

whether the national legal remedies are effective. To this end the EU courts analyze national legal

systems and undertake hypothetical considerations regarding the proceedings before the national

courts. In some cases the national courts may not accept the assumptions of the EU courts

concerning the availability or the effectiveness of national remedies.

The very important issue is also the validity of the contested act. Where the claimant considers

that he has been injured by the application of the EU act implemented by the national authorities,

he may request the national court to refer the question on the validity of the act to the Court of

Justice. Nevertheless, the decision lies within the discretion of the national court and cannot be

challenged before the EU courts. The refusal to institute the preliminary ruling procedure may

78 Maartje DE VISSER, „The concept of concurrent liability and its relationship with the principle of effectiveness

a one-way ticket into oblivion?”… p.52. 79 ECJ, Decision of 5.9.2007 – Case T-295/05 Document Security Systems, ECR 2007, II-02835, para. 75.

22

leave the national court without sufficient basis for ordering compensation and deprive the

claimant of effective remedy.

In cases of concurrent liability of the EU and the Member States’ legal writers the most

common terms are „concurrent liability”80 and „joint liability81”, less frequently „shared

liability”82 and „joint and several liability”83. Those expressions do not comply with the rules

developed in the jurisprudence of the EU courts. Having in mind the case law described above, the

most appropriate term shall be “subsidiary liability” of the EU. Rules developed by the EU courts

do not represent principles common to the laws of the Member States and are far from the general

principles of international law.

The justification of the strict approach of the EU courts to the issue of concurrent liability of

the EU and the Member State seems to be twofold.

Firstly, it protects the EU financial interests. Therefore the initial payment of compensation

from Member States resources rather than from EU resources is more convenient. It is also in cases

where the EU is solely liable for damages where the Member States have no discretion in

application of the EU law. The situations requiring prior exhaustion of the national remedies

appear in restitutionary claims where the money (customs duties, agricultural duties, taxes) has

mostly been paid to the EU treasury. The Member State may subsequently reclaim the money paid

to the applicant from EU institutions, however the rules regarding the recovery are not completely

clear.

80 Maartje DE VISSER, „The concept of concurrent liability and its relationship with the principle of effectiveness

a one-way ticket into oblivion?”… p. 47, Trevor C. HARTLEY, „Concurrent liability in EEC Law: A critical Review

of cases”… p. 251, idem, Foundations of EC law, London 2007, p. 481, Koen LENAERTS/Dirk ARTS/Ignace

MASELIS (eds.) Procedural Law of the European Union…p. 377, Andrea BIONDI, Martin FARLEY, The Right to

Damages in European Law… p. 163, Wouter WILS, „Concurrent Liability of the Community and a Member State”

… p. 200, Constantin STEPHANOU, Helen XANTHAKI, A legal and political interpretation of Article 215(2) [new

article 288(2)] of the Treaty of Rome, Ashgate, Dartmouth, 2000, p. 130. 81 Peter OLIVER, „Joint Liability of the Community and the Member States”… p. 285, Jo SHAW, Law of the EU,

London 2010, 339, Alexander TÜRK, Judicial Review in EU law, London 2009, p. 246, Lisa ANTONIOLLI,

„Community liability”, in: KOZIOŁ/SCHULZE, Tort Law of the European Community, Vienna, New York, 2008, p.

223. 82 Henry G. SCHERMERS/Denis F. WAELBROECK, Judicial protection in the European Union, The Hague 2001,

531. 83 Andrew D. E. LEWIS, „Joint and Several Liability of the European Communities and National Authorities”,

Current Legal Problems 1980, p. 99.

23

Secondly, it constitutes protection against an overload of EU courts with a massive flow of

cases. According to annual reports from 2000 to 2012, applicants filed 212 claims for damages,

which constituted only 6, 6% of all direct actions with the General Court, whereas at the same

period of time, applicants submitted 2888 claims for annulment, which constituted 89, 5 % of all

direct actions. Consequently, actions for damages constitute only an insignificant share of the

judicial activity in the EU courts.

In cases of concurrent liability of the EU and its Member States, the best solution is to allow

private parties to choose the order of redress, as in cases of solidary liability in national legal

systems or concurrent responsibility in international law. The claimant shall have the possibility

of examining procedural rules under domestic and EU jurisdiction, calculate the duration and costs

of the proceedings and choose the proper forum of redress. The national legal systems do not offer

uniform judicial protection to the individuals since procedural and substantive rules may vary,

especially in claims for restitution. Moreover, allowing the applicant to institute proceedings

before General Court without exhausting domestic remedies prevents the expiration of the

limitation period to claim damages under art. 340 (2) TFEU. This solution corresponds to the

general principles common to the laws of the Member States and offers effective judicial protection

to the individual.