Challenging Legality

The EU treaty provides that the parties may claim in proceedings before the European courts that measures are invalid under the treaty for the reasons set out. The grounds for invalidity are as follows:

  • lack of competence i.e. lack powers,
  • infringement of essential procedural requirement,
  • infringement of the treaty or rule of law,
  • misuse of powers
  • breach of the Charter of Fundamental Rights

The same criteria as may be evoked in an action by a state, institution etc. to nullify an action is also applicable in the above circumstances in proceedings to which a private party is a party.

The matter will almost by definition be of direct and individual concern to the parties concerned if it arises in a litigation. The detailed criteria for annulment of European Union measures set out in the separate chapter are applicable in these circumstances.

Unlike the position with other challenges, there is no time limit.  However, where a direct individual act has been addressed to an individual who has not challenged the same within the two-month time limit, the provision may not be used to circumvent the time limit.

The challenge may relate to a measure or to an individual decision. There is no right to go to court simply to challenge the validity of a measure.  It may only be raised in in legal proceedings with a separate basis in the party’s interests.

The provision applies to regulations adopted by the European Parliament and Council or regulations of the Council, Commission or of European Central Bank.  It is potentially applicable in respect of all measures of general application capable of producing effects similar to a regulation.

The challenge may be made in a European Union Court.  National courts may not declare an EU act void.  They may refer the matter to the court of first instance (now the General Court) to determine the validity or otherwise of the measure if the national court believes there are grounds for challenge.

If the challenge is successful, the measure is deemed inapplicable to its case.  The parent measure remains in force.  In contrast, in the other procedure, the parent measure would be nullified.

Challenging Failure to Act

Where an EU institution has an obligation to take action and it fails to do so there is jurisdiction for the EU Courts to compel action.  The action is allowed if the institution has been first called upon and within two months of being called upon, has not defined its position.  An entity may under the condition set out, complain to the courts of the EU that the institution has failed to do any legal act other than a recommendation or opinion.

The proceeding is similar to the public law order of mandamus to compel a public body/party under domestic law to fulfil a duty. There are three categories of applicants.  The states and the EU institutions are privileged applicants.  They may apply where an institution has failed to act across a wide range of EU duties.  The European Parliament, States, and other institutions are eligible applicants.  The European Court of Auditors and the European Central Bank have status in relation to areas within their jurisdiction.

Other parties may complain if an institution or the community has failed to address to that person any act other than a recommendation or opinion.  In broad terms, it will be generally a decision. A natural or private person may take action to compel an EU institution to adopt a regulation or directive only if the measure would be of direct and individual concern to that applicant.

The first phase of the action requires the institution to be called upon to perform its act.  The applicant should call upon the institution to take specified measures. There is no time limit on initiating this process although the courts take the view it must be instituted within a reasonable time.  The institution must define its position.

The definition of position by the institution does not necessarily mean taking the requested action.  The decision may be to take no action.  The institution may have a discretion as to whether or not to take action.  In this case, there is no legal entitlement to the action.

If the applicant is not satisfied with the decision, he or she or it may take proceedings to annul the decision adopted.  The action must be taken within two months.

If the institution does not define its position within two months, an application may be made to the EU Courts to commence legal proceedings.  This must be limited to the points raised in the initial complaint.

Where the European Court of Justice declares that the institution has failed to act, the body shall take necessary measures to comply with the judgment of the court within a reasonable time.

Wrongs by EU and its Agents

The EU courts have exclusive jurisdiction over alleged civil wrongs and liability of the EU.  The General Court deal with actions by individuals.  The Court of Justice deals with actions by states.  In the case of non-contractual liability, the Treaty requires that the EU hall in accordance with general principles of law make good damage caused by the institutions or by its employees in the performance of their duty.

The purpose of the action is to make good damage caused by the institution in the course of its functions.  It is not subject to the general two months’ time limit.  This does not apply if the effect of the action for damages is in substance an action for annulment.

Actions may be taken by any persons, including states which have lost as a result of the wrongful action.  Associations may take action if they establish an interest separate from their members or if the right to the compensation has been assigned to them by their members.

The action is taken against the EU institutions, generally the Commission or Council.  Actions may also be taken against the other principal institutions.

The action must be initiated within five years after the date the damage has materialised.  This may occur later than the event.  The time stops running by the commencement of actions before the EU Courts or in some cases by a preliminary request to the institution concerned within the requisite time limit.

The liability of communities for the acts and omissions of its employees is based on their fault.  The general concept of vicarious liability is applicable if the action is outside the scope of the employee’s duty, the community is not liable.

If the civil wrong or omission was committed in the course of the employee’s duties,  proceedings should be taken before the EU court and EU law will determine the matter.

State and EU Liability

In some cases, the state performs actions and functions on behalf of European institutions. Where a member state has wrongfully or carelessly implemented EU acts, an action for damages is brought before the national Courts in accordance with national procedure and rules. Where member states have correctly applied and implemented an unlawful EU, the EU is liable. States have jurisdiction, subject to exceptions.

If the European Courts hold a measure void, national courts may award compensation for loss caused to by the claimant.

The applicant may apply to the European courts where the wrongful act is entirely attributable to the EU institution, where it exercises the power of decision without the national authorities being involved or where they have no discretion.

Where the state and EU are jointly liable, the applicant must proceed firstly, in the national courts.  The court may refer the matter to the European Court of Justice, which will annul the measure if it finds it unlawful.  In this instance, the national court will assess only the member state’s liability and award damages against national authority.  The applicant may apply to the General Court to determine the liability of the EU.

Basis of Liability

The determination of liability is on the basis of the general principles of law of the states.  In broad terms, liability is based on unlawful conduct on the part of the EU institutions causing damage to the applicant.  There must be a cause or link between the action and the damage alleged.

The Court of Justice has provided for liability in some case relating to the failure of the administration to exercise discretionary powers. In considering liability, the court will assess the degree of discretion on the part of the institution whether administrative or legislative.  It will consider whether the act was a general or individualised act.

There must be a breach of a fundamental principle of law.  It may be a specific provision or measure or a general principle of EU law.  The rule must be fundamental in nature.  The general principles include proportionality, acquired rights, reasonable expectations, principles of sound administration, principles of equal treatment.

The rules must confer rights on individuals.  The breach must be manifest and in grave disregard of the limits of its discretion.  It is relevant how flagrant or marginal the breach is.  It is relevant whether the breach was intentional or negligent.  The degree of discretion and the complexity of the situation will be taken into account.  Difficulties of interpretation in relation areas of law will be considered and given weight.

The institutions may be made liable for lawful acts in some limited cases.  The damage must be of an unusual and special nature.  This must exceed the normal limits of liability and risk which a person accepts in operating the relevant business.  It must have a special monetary effect on the particular class of traders or operators in a disproportionate way, by comparison with other.

Damages and Loss

Damage must be real and measurable.  It may be present and future.  It cannot be speculative or hypothetical.  The fact that it may be difficult to quantify damages does not affect the principle that it may be granted. In order to claim damages, the unlawful conduct must cause real and certain damage if the requisite cause would have a connection.

Where the damage is caused by a lawful act, it must be unusual and special in nature.  Unusual implies that it exceeds the normal risks carried by persons in the area concerned.  Special means that it must be over and above that applicable to the population generally.  It must affect a relatively limited defined group, disproportionately relative to others in the same sector.

There is a duty to mitigate or minimise loss.  Damages may be reduced where the applicant, the claimant could have taken steps to reduce the loss suffered but did not do so.

The concept of contributory negligence is recognised in European Union law. If the claimant has contributed to its own loss, there would be a proportionate reduction in the level of damages.

Causation must be proved.  The institutions are not obliged to compensate for all loss flowing from a breach. Principles of remoteness apply in the same way as in respect of an ordinary civil wrong claim.

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