In The Case of Non

'In the case of non-contractual liability, Article 340 TFEU requires the EU to make good any
damage caused by its institutions. Unfortunately, this provision has been interpreted so
restrictively that individual applicants face almost insurmountable difficulties in establishing
EU liability.'
In the light of this statement, critically discuss the interpretation and application of Article
340 (and its predecessor, Article 288 EC) by the Court of Justice.
Elements of liability
 You should begin with the TFEU provision: '. . . the Union shall, in accordance with
the 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'.
 According to Lütticke, to succeed in a damages claim the applicant must establish

three elements: a wrongful or illegal act, damage, and causation.
 The three elements should be discussed in turn, with reference to the relevant
authorities. Make comment on interpretation and application by the Court of
Justice.
Wrongful or illegal act
 Wrongful or illegal acts may be administrative, in which case liability can be

established on the basis of illegality alone, for instance negligence on the part of an
EU institution (Adams)
 By contrast, a more rigorous test has been applied to 'general legislative measures
involving choices of economic policy'. There must be a 'sufficiently flagrant violation
of a superior rule of law for the protection of the individual' (Schöppenstedt).
 The Court has defined 'general legislative measures involving choices of economic
policy' broadly and many applicants have faced a considerable challenge in seeking
damages under Article 340.
 Applying Schöppenstedt in subsequent cases, the Court of Justice included within

the scope of 'superior rule of law' Treaty articles and general principles of law, such
as equality, proportionality, legal certainty, and legitimate expectation.
 According to Schöppenstedt, not only must the applicant establish a breach, but that
breach must be a sufficiently flagrant violation of superior rule of law for the
protection of individuals. Where the institution concerned acted with a wide
discretion, the applicant must show that the institution manifestly and gravely
disregarded the limits on its powers.
 In HNL, the Court's assessment was based upon the effect of the measure. The Court
found that the regulation affected very wide categories of traders, so its effect on
individual businesses was lessened. Further, the regulation had only limited impact
on the price of feed, by comparison with the impact of variations in world market
prices. Consequently, the breach was not manifest and grave.
 Sometimes, the Court of Justice has focused on the nature of the breach and applied
an even more rigorous test: liability would arise only where the conduct of the
institution was 'verging on the arbitrary'. This test has proved to be an
insurmountable difficulty for some applicants. In Amylum, for instance, despite the
very serious impact of the measure, the action failed.
 In laying down and applying such restrictive tests, the Court of Justice has sought to
ensure that the risk of successful damages claims by individuals did not hinder the
legislative function. Consequently, such actions rarely succeeded.
 However in Bergaderm, the Court adopted a different approach by drawing on the

principles applied to state liability in Factortame III. The right to reparation would
arise where the rule of law infringed confers rights on individuals, the breach is
sufficiently serious and there is a direct causal link between the breach and the
damage sustained.
 According to Bergaderm, the decisive test for a sufficiently serious breach is the
degree of discretion accorded to the institution, rather than the arbitrariness of the
act or the seriousness of the damage caused. This represents an easing of the very
restrictive Schöppenstedt test. It is likely that the additional factors set out in
Brasserie du Pêcheur will be applied: the clarity of the rule breached, whether the
error of law was excusable or inexcusable, and whether the breach was intentional
or voluntary.
Damage
 The damage must be quantifiable and exceed the loss arising from the normal
economic risks inherent in the business. Steps must be taken to mitigate the loss. On
occasions the Court of Justice has interpreted these requirements very restrictively.
In HNL, for instance, the Court held that the loss did not go beyond the economic
risks inherent in the business, despite the fact that it had previously held the
regulation concerned to be void, as discriminatory and disproportionate.
Causation
 The damage must be a sufficiently direct consequence of the institution's breach.
 Establishing causation is not without difficulty. Compensation is not available for

every harmful consequence, however remote. In Dumortier, the reduced sales,
financial problems, and factory closures were not a sufficiently direct consequence
of the unlawful conduct, even if the Council's actions had exacerbated the
applicant's difficulties.
Concurrent liability
 A potential applicant must exhaust all possible national causes of action before
Article 340 proceedings can be brought in the Court of Justice, provided that the
national action is capable of resulting in compensation for the alleged damage. This
constitutes yet a further hurdle for individuals.
Time limit
 Finally, unlike the short time limit of two months for bringing annulment
proceedings under Article 263, the time limit of five years under Article 340 is
generous.
Conclusion
Whilst Bergaderm introduced a new and more generous approach to damages claims under
Article 340 than had been previously adopted by the Court of Justice under Schöppenstedt, it
is still the case that applicants face serious challenges in establishing liability in respect of
acts of the EU institutions.

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In The Case of Non

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'In the case of non-contractual liability, Article 340 TFEU requires the EU to make good any

 According to Lütticke, to succeed in a damages claim the applicant must establish

Wrongful or illegal act

 Wrongful or illegal acts may be administrative, in which case liability can be

 Applying Schöppenstedt in subsequent cases, the Court of Justice included within

 However in Bergaderm, the Court adopted a different approach by drawing on the

 The damage must be a sufficiently direct consequence of the institution's breach.

 Establishing causation is not without difficulty. Compensation is not available for

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