• In the case of Case c 173 03 Traghetti del mediterraneo 2006 ECR I 5177, it was held, national rules that render court decisions immune from Francovich liability are contrary to EU law.

Facts of the Case

  • The Italian Supreme Court requested a preliminary ruling in connection with the principle of non-contractual liability of Member States for damage caused to individuals by a breach of Community law.
  • Italy had granted direct subsidies to a competitor of a shipping company (T).
  • T brought proceedings against its competitor for damages suffered because of the competitors low fare policy.
  • The action and T’s appeal was dismissed as the subsidies were legal but T’s request that questions be referred to the European Court of Justice was not rules upon.
  • T went into liquidation and the administrator instituted proceedings against Italy for damages resulting from the errors of interpretation committed by the domestic courts.
  • The proceedings were stayed, and the court asked whether Community law precluded a Member State from excluding State liability for damage cause to individuals by a breach of Community law arising out of the exercise of judicial functions, where the breach in question was in relation to the interpretation of provisions of law or the assessment of facts and, from limiting such liability to cases of international fault or serious misconduct on the part of the court.

Issues in Case c 173 03 Traghetti del mediterraneo 2006 ECR I 5177

  • Can the Member State exclude State liability for damages done to individuals for a breach of Community law.

Held by European Court of Justice

  • Held, giving a preliminary ruling that a Member State was obliged to make good damage caused to individuals because of breaches of community law for which it was responsible.

Judge Skouris (President)

  • Held, State liability could be incurred only in the exceptional case where the national court adjudicating at last instance had manifestly infringed the applicable law.
  • To determine whether that condition was satisfied, the national court hearing a claim for reparation had to take account of all the factors which characterised the situation put before it, whether the infringement was intentional and whether the error of law was excusable. Interpretation of provisions of law formed part of the very essence of judicial activity and it was not inconceivable that a manifest infringement of Community law might be committed in the exercise of such work of interpretation. Therefore, State liability could not arise solely because an infringement arose from the interpretation of provisions on law.
  • Community law precluded national legislation which limited State liability solely to cases of intentional fault and serious misconduct on the part of the court, if such a limitation were to lead to exclusion of the liability of the Member State concerned in other cases where a manifest infringement of the applicable law was committed.
  • “Community law precludes national legislation which excludes State liability, in a general manner, for damage caused to individuals by an infringement of Community law attributable to a court adjudicating at last instance by reason of the fact that the infringement in question results from an interpretation of provisions of law or an assessment of facts or evidence carried out by that court. Community law also precludes national legislation which limits such liability solely to cases of intentional fault and serious misconduct on the part of the court, if such a limitation were to lead to exclusion of the liability of the Member State concerned in other cases where a manifest infringement of the applicable law was committed, as set out in paragraphs 53 to 56 of the Köbler judgment.” [46]

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