Compensation for damages by the State for infringement of EU law: the European Commission refers Spain to the Court of Justice for its rules on the compensation for damages incurred by private parties

madrid

Edificio Metropoli, Gran vía – Madrid, Spain, Madrid, España (Jorge Fernández Salas, Unsplash)

This article is brought to you in association with the European Commission.


Today, the European Commission decided to refer Spain to the Court of Justice of the EU regarding Spanish rules on compensation for damages caused by the State when adopting legislation contrary to Union law.

Following complaints received about certain Spanish provisions regulating the compensation for damages caused by legislative acts that are in breach of Union law, the European Commission initiated an infringement procedure on 14 June 2017, considering that these provisions are in breach of the principles of effectiveness and/or equivalence. These principles limit the procedural and substantive autonomy of the Member States when they set the conditions for liability in case of breaches of Union law.

Firstly, the Spanish legislation makes compensation conditional on a number of cumulative conditions: there has to be a judgment of the Court of Justice of the European Union declaring a Spanish legislative act to be in breach of Union law; the injured party needs to have obtained, at any instance, a final judgment dismissing an appeal against the administrative decision which caused the damage; and the injured party needs to have alleged the breach of Union law during that appeal procedure. Following established case-law, these conditions make the award of damages by the State for breaches of Union law excessively difficult and thereby violate the principle of effectiveness.

Secondly, the Spanish rules establish less favourable conditions for the liability of the State resulting from a breach of Union law than for the liability resulting from breaches of the Spanish Constitution. This is a violation of the principle of equivalence.

Background

The Spanish authorities, in their reply to the Commission’s 2017 letter of formal notice, considered that their system of State liability was in conformity with Union law. Given that this reply was not satisfactory, on 26 January 2018, the Commission issued a Reasoned Opinion reiterating its arguments. The Spanish authorities replied on 26 March and sent a complementary reply on 21 December. Further contacts and exchanges between the Spanish authorities and the Commission followed, but to date they have not resulted in any progress. The Commission has therefore decided to refer Spain to the Court of Justice under Article 258 Treaty on the Functioning of the European Union.

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