• In the case of Case C-48/93 Factortame No 3 Brasserie du Pêcheur [1996] ECR I-1029, it was established that, upon considering the liability of the State, the Francovich liability shall only arise in situations whereby there was a sufficiently serious breach due to the grave disregard of limits on State discretion.

Facts of Case C-48/93 Factortame No 3 Brasserie du Pêcheur [1996] ECR I-1029

  • French company Brasserie du Pêcheur sought damages against Member State Germany for a loss they suffered from a restriction on beer by Germany (found to be incompatible with Article 30)
  • UL company Factortame, with others, sought damages for the loss of registration of fishing boats by the United Kingdom (found to be incompatible Article 52)
  • In connection with both cases, the Cs were bringing actions against Member States for breach of EU law;
  • The relevant courts sought a preliminary ruling by the European Court of Justice as to the conditions where a Member State may incur the liability for reparation to individuals due to a breach by the State

Issues in Case C-48/93 Factortame No 3 Brasserie du Pêcheur [1996] ECR I-1029

What were the conditions under which a Member State may incur liability for damages caused to individuals by breach(es) of Community law, by that State?

Held by the European Court of Justice

The three conditions laid out by the CJEU, where a right to reparation is conferred [51]:

  1. The law infringed was intended to confer rights on individuals;
  2. The breach was sufficiently serious;
  3. There was a direct causal link between: the breach of the obligation resting with the State, and the damage sustained by the individual(s)

Findings of the Court

To decide whether the Member State committed a sufficiently serious breach of Community law, the CJEU established “the decisive test” for such occurs where the State “manifestly and gravely disregarded the limits on its discretion” [4]

Having laid down the conditions required, the court justified their existence as

  • “those conditions satisfy the requirements of the full effectiveness of the rules of Community law and of the effective protection of the rights which those rules confer.” [52]

Further, the conditions set out were in line with existing community law, providing certainty:

  • “those conditions correspond in substance to those defined by the Court in relation to Article 215 in its case-law on liability of the Community for damage caused to individuals by unlawful legislative measures adopted by its institutions.” [53]

Persistence of breach after judgments, preliminary rulings, and settled case law can clearly show a breach being of sufficient severity [57]. But the CJEU believed the conditions set out “will be helpful to indicate a number of circumstances which the national courts might take into account.” [58]