Brasserie du Pêcheur v Germany; R v Secretary of State for Transport, ex parte Factortame Joined Cases C-46/93 and C-48/93, [1996] ECR I-1029

Brasserie du Pêcheur, a French brewer, sought compensation for losses caused by German restrictions which prevented it selling beer in Germany. Those restrictions had been found incompatible with Community law. In the joined UK proceedings, Factortame and other fishing businesses claimed losses resulting from nationality and residence requirements in the Merchant Shipping Act 1988. The national courts asked when breaches attributable to a state legislature could generate a right to damages. The proceedings required the European Court to develop the state liability principle beyond the failure to implement a directive addressed in Francovich.

When must a Member State compensate individuals for losses caused by legislation that breaches EU law, and how should a court determine whether the breach is sufficiently serious?

The Court held that state liability was an inherent part of the Treaty system and could arise from legislative breaches, including breaches of directly effective provisions. In the circumstances considered, three conditions governed the EU right to compensation: the infringed rule must confer rights on individuals, the breach must be sufficiently serious, and there must be a direct causal link between breach and loss. Where a state enjoyed broad discretion, seriousness depended on a manifest and grave disregard of its limits. Relevant factors included the rule’s clarity, the discretion available, whether an error was excusable, and persistence despite authoritative rulings. National courts applied those standards to the claims. Domestic compensation rules remained subject to equivalence and effectiveness; the preliminary judgment did not itself fix damages for either claimant.

EU state liability can arise from legislative action. The relevant rule must confer individual rights, the breach must be sufficiently serious, and it must directly cause the loss. Seriousness depends on context, including the discretion available and the clarity of the obligation; illegality and liability are distinct questions.

The joined judgment supplies the central framework for analysing damages against a Member State for breach of EU law. It makes clear that direct effect does not exhaust the remedies available to an individual and that a legislature is not immune because of its constitutional position. Later cases apply the framework to other organs, including courts in Köbler. UK claims require separate attention to the temporal restrictions and savings governing EU-derived state liability after withdrawal; the historic test should not be presented as an unrestricted current domestic remedy.