Opinion of Advocate General Mischo
Mr President,
Members of the Court,
Introduction
1. Rarely has the Court been called upon to decide a case in which the adverse consequences for the individuals concerned of failure to implement a directive were as shocking as in the case now before us. At the same time, the situation is far from simple from the legal point of view. The Court is asked to rule on the possible direct effect of a directive which contains particularly complicated provisions. In the alternative, we are faced with the issue of the liability of Member States for failure to implement a directive, or, more generally, for failure to comply with Community law.
2. Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer (Official Journal 1980 L 283, p. 23) provides that Member States shall take the measures necessary to ensure that guarantee institutions [to be established or designated by them] guarantee... payment of employees' outstanding claims resulting from contracts of employment or employment relationships and relating to pay for the period prior to a given date (Article 3(1)). The directive allows the Member States to choose one of three dates relating to the insolvency or the discontinuance of the employment relationship. It also gives them the option of limiting the liability of guarantee institutions.
3. In a judgment of 2 February 1989, Case 22/87 Commission v Italy [1989] ECR 143, the Court held that by failing to implement the directive by the date set, 23 October 1983, Italy had failed to fulfil its obligations under the Treaty. Indeed, even today the directive does not seem to have been implemented.
4. The facts which gave rise to the actions before the national courts are as follows.
The first question
5. The first question is worded as follows:
6. In that question the national courts clearly raise two separate issues which must be carefully distinguished; they are the following:
I — Direct effect o/Directive 80/987
7. In the Busseni case the Court summarized in the following terms the essentials of its case-law on the direct effect of directives:
8. In order for it to be possible for an employee to enforce the rights which Directive 80/987 is intended to create before implementation of the directive, the provisions concerning:
A — The identity of the persons intended to benefit
9. Several provisions of the directive assist in identifying the employees intended to benefit.
10. It is true that according to Article 1(2) the Member States may, by way of exception, exclude claims by certain categories of employee from the scope of the directive. According to point II. C in the annex to the directive, these are, in the case of Italy:
11. As to the doubts expressed by the Italian Government and the Commission on the question on whether the directive can be relied upon by Mr Francovich, since it is not clear whether his former employer is formally insolvent, it should be stated that Article 2(1) defines very clearly what is meant by state of insolvency. It is for the national court to determine whether or not that condition is met in this case.
12. It follows from all the foregoing that the provisions of the directive which determine the persons intended to benefit from it are unconditional and sufficiently precise to enable the national courts to determine whether they apply to a specific person.
B — Scope of the rights
13. According to Article 3 of the directive, the guarantee institutions must guarantee payment of employees' outstanding claims relating to pay for the period prior to a given date. That date is, at the choice of the Member States;
14. It is thus impossible to know which of those three solutions the Italian authorities would have adopted if they had implemented the directive. One might therefore be tempted to conclude that that provision is not unconditional since it requires a choice on the part of each Member State.
15. However, the plaintiffs in the main proceedings and the Commission ask the Court not to be put off by that consideration but to proceed on the basis that the Italian authorities ought at least to have adopted whichever of the three hypotheses imposes least liability on the guarantee institution.
16. However, other provisions of the directive give the Member States the option of reducing the guarantees granted to employees.
17. Secondly, Article 4(3) allows the Member States,
18. Finally, Article 10 allows the Member States to take the measures necessary to avoid abuses and to refuse or reduce the liability on the ground of the existence of special links between the employee and the employer and of common interests resulting in collusion between them.
19. The Commission stresses that all those provisions merely set out options available to the Member States and that it seems incompatible with the concept of the direct effect of directives that where a directive precisely defines the rights of individuals a Member State should be able to rely on its own failure to comply by asserting that if it had implemented the directive it could properly have set the individual's rights at a lower level.
20. What are we to make of that reasoning? It must be observed, first of all, that the Commission does not refer to the second condition laid down by the Court, that of the unconditional nature of the provisions relied upon. The question arises whether, faced with a set of provisions which both lay down a rule and make available several possibilities of restricting the scope of that rule, we are entitled to separate the rule from the rest and conclude that the rule is precise and unconditional. Or is it implied that the principle to the effect that a Member State cannot rely on its own default has the effect of making a rule in relation to which the measure expressly grants the Member State a discretion unconditional by virtue of its content? I, for one, cannot accept that reasoning.
21. In support of their views the plaintiffs in the main proceedings rely on the Marshall judgment and the Commission refers to the Becker and McDermott and Cotter judgments.
22. As for paragraph 15 of the McDermott and Cotter judgment, referred to by the Commission, it states that
23. In the present case, on the other hand, we are still at the stage where it must be determined whether the provisions of the directive which define the rights of individuals are sufficiently precise and unconditional to enable them to be relied upon in judicial proceedings. It is not a matter of the choice of the form and methods for achieving the required result but to a very large extent the definition of the result itself.
24. Even that is not possible, however, for to do so would be to disregard the extremely broad discretion which Article 4(3) leaves the Member States (the setting of a ceiling in order to avoid payment of sums going beyond the social objective of the directive). I therefore consider that it is not possible to define such a minimum obligation.
25. With regard to Article 10 of Directive 80/987, on the other hand, I acknowledge the validity of the argument which the Commission draws from paragraph 32 of the Becker judgment. It was necessary in that case to interpret the scope of Article 13 B(d)l of the Sixth Value Added Tax Directive, which provides that
26. Nevertheless, the fact remains that the broad discretion left to the Member States by Article 4 makes it impossible to conclude that the provisions of the directive which define the scope of the rights of its beneficiaries are unconditional and sufficiently precise.
C — The identity of the person liable
27. Let us first examine what is provided by the directive. Article 3 states that:
28. In my view, it is clear from those provisions that the actual application of the directive is in any event subject to two conditions:
29. The Commission, which dealt with this issue in some detail, does not deny that the State must take all those measures, but it nevertheless does not conclude that the provisions of the directive are not applicable as they stand.
30. I do not find that reasoning convincing. There are two possibilities. Either the financing of the guarantee institution by employers is the rule and financing by the public authorities the possible alternative, in which case the Commission cannot argue here, contrary to what it said in relation to Articles 3 and 4, that in the absence of any decision on the part of the Member State to make use of the alternative possibility it is nevertheless that possibility that must be applied. Or the Member State must necessarily make a choice as to the method of financing the guarantee institution, in which case the provision in question is not unconditional. The latter hypothesis is in my view the correct one. The question whether or not the guarantee institution can be identified with the State depends on a decision which must first be taken by the latter.
31. 1 therefore propose that the Court state in reply to the first part of the first question that the provisions of Directive 80/987 are not sufficiently precise and unconditional to give rise to rights which individuals can enforce in the courts.
II — Reparation of loss and damage suffered by individuals as a result of failure to transpose Directive 80/987
32. The first questions referred by the two national courts expressly address, in the second place, the situation where the relevant provisions of Directive 80/987 are not sufficiently precise and unconditional to be relied upon directly before the national courts; the question is whether, in that event, an individual harmed by the failure of a Member State to implement the directive may claim reparation of the loss and damage which he may have suffered as a result.
33. In view of the considerable length at which it is necessary to discuss the various aspects of that problem, I shall begin, in a first section, by summarizing my conclusions and then, in a second section, set out in detail my reasoning, which is based essentially on the case-law of the Court.
A — Summary
1. Although, as Community law now stands, it is in principle for the legal system of each Member State to determine the legal procedure which will enable Community law to be fully effective, that State power is nevertheless limited by the very obligation of the Member States, under Community law, to ensure such effectiveness.
2. That is true in respect not only of provisions of Community law which have direct effect but of all provisions whose purpose is to grant rights to individuals. The lack of direct effect does not mean that the result sought by Community law is not to grant rights to individuals, but merely that these are not sufficiently precise and unconditional to be relied upon and applied as they stand.
3. In the event of failure to implement a directive or its incorrect implementation, a Member State deprives Community law of the desired effect. It also commits a breach of Article 5 and the third paragraph of Article 189 of the Treaty, which affirm the binding nature of the directive and require the Member State to take all the measures necessary for its implementation.
4. Where the breach of that obligation is confirmed by a judgment of the Court of Justice delivered pursuant to Articles 169 to 171 of the Treaty, the binding authority of a judicial decision and Article 171 of the Treaty requires the Member State, which cannot raise any obstacle whatsoever, to take all appropriate measures to make good its default and give the desired effect to Community law. In so doing it may also be required to make reparation for the loss and damage which it has caused to individuals as a result of its unlawful conduct.
5. By virtue of Community law, it must be possible for the Member State to be held liable at least in cases where the conditions are met under which the Community incurs liability as a result of the breach of Community law by one of its institutions. In the case of a directive which should have been implemented by means of a legislative measure, it is therefore sufficient that the relevant provisions of the directive should have the purpose of protecting the interests of individuals. The condition of a sufficiently serious breach of a superior rule of law must be considered to have been met where the Court has declared the Member State in default in a judgment delivered under Articles 169 to 171.
6. As Community law now stands, an action for damages brought against the Member State before the national court is subject to the rules of national law as regards other aspects, in particular the assessment of the harm suffered and the procedure, subject to the dual reservation that those rules may not be less favourable than those relating to similar claims of an internal nature and may not be so framed as to make it virtually impossible to obtain reparation for the loss and damage suffered. That means at least that the most appropriate remedies existing in the national legal system must be interpreted in such a manner as to comply with those requirements, and even that an appropriate remedy must be created if it does not exist.
7. An action for damages is different in nature from an action for payment pursuant to the provisions of a directive which have direct effect. It is not a matter of achieving through some roundabout means the same result as if the provisions of the directive had direct effect. The harm can be assessed by the national court ex aequo et bono. The provisions of the directive may, however, provide it with a point of reference.
8. In view of the uncertainty which has prevailed until now as regards the liability of Member States in the event of their failure to comply with Community law and the financial consequences which the judgment of the Court might entail in respect of past defaults, the effects ratione temporis of the Court judgment should be limited.
B — Discussion of the reasoning
34. The plaintiffs in the main proceedings and the Commission ask the Court in the alternative to rule that damages must be paid by the Italian State.
35. Leaving aside the fact that it seems to me inappropriate to speak of direct effect in relation to each of those three sets of rules taken in isolation and that it would be more correct to use the expression unconditional and sufficiently precise provision, I do not quite understand the Commission's reasoning. Even if one were to accept its premiss that in the context of this directive the scope of the rights of the creditors is determined in an unconditional and sufficiently precise manner, there is no escaping the need to decide once and for all, that is to say independently of the particular circumstances, whether Member States can incur liability for failure to implement a directive.
36. In their submissions to the Court the German Government, the United Kingdom and the Italian and Netherlands Governments ruled out the obligatory reparation by virtue of Community law of loss and damage caused not only by failure to implement a directive such as that in issue here but also by the breach of provisions of Community law which are directly applicable or have direct effect. Since they based their entire argument on the case-law of the Court of Justice on such provisions, it is that case-law that we must examine first of all.
37. With regard to such provisions it is well established that
38. That protection must, however, be effective, as the Court pointed out in its judgment in Case 179/84 Bozzetti v īnvernizzi [1985] ECR 3201, at paragraph 17, referring to its judgment in Case 13/68 Salgoil [1968] ECR 453, in which it spoke of direct and immediate protection (at page 463). It is a matter of ensuring the full force and effect of Community law, and any provision of a national legal system and any legislative, administrative or judicial practice which might impair the effectiveness of Community law or a fortiori prevent it from having full effect are incompatible with the requirements inherent in the very nature of Community law.
39. National courts must meet their obligation to ensure effective protection of the rights which individuals derive from Community law
40. Where the application of national rules contrary to directly applicable Community law has resulted in the levying of sums of money from individuals, the Member State must, in accordance with the Court's case-law on recovery of sums unduly paid, ensure reimbursement of those sums, and that obligation follows from the direct effect of the Community provision which been infringed. In other words,
41. I can see no crucial difference between an action for repayment and an action for damages, since in both cases it is a matter of making good a wrong caused by a breach of Community law. Indeed, the Court has already held that the direct effect of a provision of Community law may provide the basis for an action for damages: as an example, I would cite the judgment of the Court in Case C-188/89 Foster v British Gas [1990] ECR I-3313.
42. It follows from the foregoing that the possible compensation of an individual for loss or damage suffered as a result of the breach of a provision of Community law with direct effect has its foundation in the Community legal order itself. Of course, if other remedies capable of ensuring the full force and effect of Community are available in the national legal system they may be used, but as the Court pointed out in its judgment in Case 179/84 Bozzetti [1985] ECR 2301, paragraph 17, although it is
43. The four governments which submitted observations argued, however, that not only does the Court in its case-law, refer to national law with regard to the detailed rules to which possible actions against the State for reparation may be subject but that even the question of principle whether such actions may be brought is a matter of national law. According to those governments, if the national legal system is decisive in relation to a provision which has direct effect, it must a fortiori be decisive with regard to provisions which do not.
44. It is true that the Court referred to the provisions of national law on the liability of the State. The fact remains that it held that the State is liable to the injured party in respect of the consequences for him or her of the breach of Community law. It seems to me that the Court thus laid down the principle that the State has an obligation to make good the loss and damage caused, leaving it to national law to deal with the details. If it had wished to leave the question of principle to national law as well it would certainly have said so in clear terms, since one of the questions referred by the national court in that case sought expressly to determine whether such a principle existed in Community law (see the fifth question, [1976] ECR 47), and both the plaintiff in the main proceedings and the Commission clearly stated their views to that effect.
45. As for the other judgments to which the governments referred, in particular at the hearing, I do not think they need necessarily be interpreted in the sense argued for either. Indeed, it is significant that in their written observations the plaintiffs in the main proceedings and the Commission on the one hand and the United Kingdom and the Netherlands Government on the other all cited those same judgments in support of divergent if not contrary propositions.
46. Let us take Case 33/76 Rewe v Landwirtschafiskammer Saarland. In paragraph 5 of its judgment in that case [(1976] ECR 1989) the Court did, it is true, make the statement cited above, which some would argue shows that as Community law now stands the liability of the State for failure to comply with its Community obligations is a matter for national law alone. It is quite obvious, however, that the Court referred to the national legal system of the Member States only with regard to the designation of the courts having jurisdiction and the procedural rules, which necessarily implies a prior obligation on the part of the Member States and in particular their courts to ensure legal protection of the rights which Community law grants to individuals.
47. I do not think that that conclusion need be altered in the light of the judgment of the Court of 7 July 1981 in another Rewe case (Case 158/80 Rewe v Hauptzollamt Kiel [1981] ECR 1805). It is true that the Court stated in that judgment that the Treaty
48. Nor can any argument be derived from the reference made by the Court to the conditions concerning admissibility and procedure where it is a matter of ensuring observance of national law. First of all, problems of admissibility and procedure arise only in relation to an existing remedy. Furthermore, that reference was made in the particular context of the Rewe case (Case 158/80), after the Court had expressly observed that in the particular circumstances national law, in that case German law, granted every person affected a right of action (paragraph 40 of the judgment). The Court could thus confine itself to stating that in such a case it must be possible to exercise that right of action under similar conditions in the context of the Community legal order.
49. It follows from the foregoing that it cannot be inferred from the judgment cited above that Community law can in no circumstances require a Member State to make remedies available to individuals which will enable them effectively to enforce the rights which they derive from Community law when similar remedies either do not exist or are not accessible under the same conditions at the national level. Indeed, the second paragraph of Article 215 of the Treaty presupposes the existence of such remedies.
50. Nor can convincing objections be derived from the two other judgments cited in particular by the German Government. In its judgment in Case 101/78 Granaria v Hoofdproduktschap voor Akkerbouwprodukten [1979] ECR 623, the Court did, it is true, hold that
51. As for the judgment of Case 199/82 Amministrazione delle Finanze dello Stato v San Giorgio [1983] ECR 3595, it is true that in that case the Court reiterated its well established case-law to the effect that the substantive and formal conditions governing the repayment of national charges levied contrary to the rules of Community law is a matter for national law, subject to the sole proviso that they may not be less favourable than those relating to similar claims of an internal nature and may not be so framed as to render virtually impossible the exercise of rights conferred by Community law. However, what seems to me to be more important in the present context is the fact that the Court observed first of all that
52. None of the judgments relied upon by the governments which submitted observations to the Court thus provides a sound basis for their view that it is the national law of each Member State alone that must determine not only under what conditions but also whether a Member State can be held liable and obliged to make good the harm caused to individuals as a result of its infringement of the rights which they derive from Community law.
(i) The lessons to be drawn from the Factortame I and Zuckerfabrik judgments
53. Furthermore, since the judgment of the Court of 19 June 1990 in Case C-213/89 Factortame /[1990] ECR I-2433, there can no longer, I think, be any doubt that in certain cases that Community law may itself directly confer on national judicial authorities the necessary powers in order to ensure effective judicial protection of those rights, even where similar powers do not exist in national law. It follows from that judgment that Community law requires national courts to suspend the operation of a national rule alleged to be contrary to Community law even where, under national law, they do not have the power to grant interim relief resulting in the suspension of national rules.
54. I should add that it follows from the judgment of the Court in Joined Cases C-143/88 and C-92/89 Zuckerfabrik Süderdithmarschen and Zuckerfabrik Soest [1991] ECR I-415 that Community law may even lay down the conditions governing the exercise of the jurisdiction which it thus confers on national courts. In that judgment the Court stated first of all that
55. It is true that the Zuckerfabrik cases concerned the suspension of the operation of a national administrative measure adopted in implementation of a Community regulation in view of the existence of doubts as to the validity of that regulation. However, in paragraph 20 of its judgment, quoted above, the Court expressly drew a parallel between that situation and that in the Factortame I case, which concerned the suspension of the application of a national statute because of the existence of doubts as to its compatibility with Community law. As we have seen, the power, or indeed the obligation, of national courts to suspend the national statute in such circumstances exists as a result of the requirements of Community law, even where an analogous power or obligation does not exist in national law in similar situations which do not involve Community law. Accordingly, it is not to be excluded that the conditions for the grant of suspension of the operation of a national administrative measure set out by the Court in the Zuckerfabrik judgment may also be applicable to the suspension of the operation of a national statute which is contrary to Community law. In any event, since the principle of the primacy of Community law applies whatever the rank of the national legislation in the hierarchy of legal rules, I consider that as a matter of principle national legislative measures should not be treated differently from national measures of a lower rank. That seems to me to be particularly true inasmuch as in determining the conditions for granting suspension of the operation of a measure the Court relies, as we have seen, on its own case-law concerning Article 185 of the EEC Treaty, which provides for the suspension of the operation of any measure challenged in proceedings before it, including a regulation within the meaning of Article 189.
56. It is also true that the case-law which I have just examined in some detail is concerned, I should reiterate, with rules of Community law which are directly applicable, and cannot therefore simply be transposed to situations where individuals cannot rely before the national courts on rights which they derive directly from a Community legal measure. It was nevertheless necessary to consider that case-law since the governments which submitted observations to the Court relied on it as a basis for their submission — an incorrect one, in my view — that Community law cannot provide a foundation for any action brought by an individual before a national court in order to obtain reparation of loss and damage caused to him by the breach by a Member State of its Community obligations, in particular failure to implement a directive. Since, however, that case-law is based on direct effect, the question remains whether, in Community law, there are other fundamental reasons which might require that national courts be given jurisdiction to deal with actions for reparation in relation to provisions which do not have direct effect.
State liability in the case of provisions which do not have direct effect
57. In this regard, we may begin, like the plaintiffs in the main proceedings and the Commission, by referring to the Court's case-law to the effect that there may still be an interest in pursuing infringement proceedings even where the default has been remedied after the period fixed in the reasoned opinion pursuant to the second paragraph of Article 169 of the Treaty; that interest may
58. Moreover, as it pointed out in its order of 28 March 1980 in Joined Cases 24 and 97/80 R Commission v France [1980] ECR 1319, paragraph 16, the Court has already held that
59. It is hard to see why such measures should not include measures intended to make good the loss and damage caused by the State's breach of its obligations under Community law. In that regard it is interesting to note first of all that when the Court held for the first time that there may be a real interest in a judgment delivered pursuant to Articles 169 or 171 of the Treaty from the point of view of establishing a basis for liability on the part of the State, it did so in order to reject an objection raised by the defendant State to the effect that the pursuit of the infringement proceedings had no object since
60. Secondly, by failing to comply with its obligations and in particular to implement a directive a Member State deprives Community law of its desired effect. That seems to me to be equally true in respect of Community law which is not directly applicable, in particular provisions of a directive which do not have direct effect. The lack of direct effect does not mean that the effect sought by the directive is not to confer rights on individuals, but solely that those rights are not sufficiently precise and unconditional to be relied upon and applied as they stand without any action on the pari of the Member State to which the directive is addressed. In that context it should not be forgotten that a directive is binding as to the result to be achieved, which may be precisely that of conferring rights on individuals.
61. Furthermore, the application of Community law differs according to whether the Member States do or do not comply with their obligations and implement the directives addressed to them. In the absence of direct effect, the fundamental requirement of the uniform application of Community law would be observed at least in part if individuals who were deprived of their rights because of the failure to implement a directive were granted approximately equivalent compensation.
62. Finally, the Court has already had occasion to state that the object of Articles of 169 to 171 of the Treaty is to achieve the practical elimination of infringements and their past and fature consequences. It is true that in its judgment in Case 70/72 Commission v Germany [1975] ECR 813, at paragraph 13, it added that
63. That, in any event, is what is to be inferred from the judgment in Case 6/60 Humbletv Belgium [1960] ECR 559, at 569, in which the Court emphasized the declaratory nature of its judgment in infringement proceedings but added that
64. No contrary argument can, it seems to me, be derived from the later judgment of the Court in Joined Cases 314 to 316/81 and 83/82 Procureur de la République v Waterkeyn [1982] ECR 4337. In that judgment the Court stressed that
65. The two last-mentioned judgments are also important in other respects. In the Waterkeyn judgment the Court was careful to state that pursuant to Article 171 of the Treaty,
66. I think it can be concluded from the foregoing that where the Court has held that a Member State has failed to fulfil its obligations by failing to implement provisions of a directive in national law, even provisions which do not have direct effect, that Member State is obliged to make available to the individuals on whom that directive was intended to confer rights appropriate judicial remedies to enforce those rights, where necessary by means of an action for damages against the State.
67. One might nevertheless ask whether, within the category of directives which do not give rise to direct effect, a distinction should be made between those whose purpose it is to impose obligations on the State and those whose purpose is to impose obligations on private undertakings, there being no liability on the part of the State in the latter case. After all, in that case the State is responsible only for the failure to implement the directive and not for the circumstances which are the direct cause of the harm suffered by the citizen, such as the nonpayment of wages, the insufficient remuneration of a woman, or the defective nature of a product.
68. I do not, however, think it is possible to make such a distinction, for the whole of the reasoning set out above is based on the principle that any failure to implement a directive ipso facto constitutes an infringement of Articles 5 and 189 of the Treaty, that is to say an unlawful act which must be made good by the State where it has caused harm to an individual.
69. Since the principle of an action for damages against a State for failure to comply with its Community obligations.thus has its source or foundation in Community law, the question of the substantive and formal conditions governing such an action remains to be examined.
(ii) The substantive and formal conditions governing the action for damages
70. In this regard I propose that the Court adopt a solution similar to that which it adopted in the Zuckerfabrik judgment, cited above. In that judgment the Court, on its own authority and in view of the fundamental requirement of the uniform application of Community law, laid down certain conditions which must be observed by national courts when they wish to grant suspension of the operation of a national measure adopted in application of a Community regulation, and for that purpose it drew inspiration from the conditions which apply when it itself is called upon to grant suspension of the operation of a Community measure pursuant to Article 185 of the EEC Treaty. Its basis for doing so was the necessary coherence of the system of interim legal protection of the rights derived by individuals from Community law, by virtue of which national courts must be able to order suspension of the enforcement of a national administrative measure based on a Community measure whose legality is contested under the same conditions as those under which the Court of Justice may order suspension of the operation of the Community measure (see paragraphs 18 and 27 of the Zuckerfabrik judgment). The Court restricted itself, however, to determining uniform conditions for the grant of suspensory relief; for the rest, that is to say the rules of procedure, it referred to national law (see paragraph 26 of the judgment).
71. In this case it would seem appropriate that the grant of damages by a national court for breach of Community law by a Member State should be subject to the same conditions as the grant of damages by the Court of Justice for infringement of that same Community law by a Community institution. That would make it possible to avoid a situation where, pursuant to Community law, a Member State might incur liability for breach of Community law by one of its authorities in circumstances where the non-contractual liability of the Community for breach of Community law by one of its institutions would not arise. That seems to me to be particularly necessary inasmuch as the rules laid down in this regard by the Court on the basis of the second paragraph of Article 215 of the Treaty are said to flow from the general principles common to the laws of the Member States. I think it is legitimate, moreover, to regard the Court's remarks in paragraph 18 of its judgment in Asteris, cited above (Joined Cases 106 to 120/87 [1988] ECR 5515), as an expression of such a solution; it stated that a judgment of the Court holding that the Community is not liable in damages under the second paragraph of Article 215 of the Treaty in respect of the illegality of an act of one of its institutions
72. I should make it clear that although, in accordance with the approach I recommend, a national court could not be obliged to hold the State liable in damages for breach of Community law in cases in which the noncontractual liability of the Community for breach of Community law by one of its institutions would not arise, it could nevertheless hold the State liable under more liberal conditions if that were possible under national law. In other words, the national court must hold the State liable in damages at least in the circumstances in which the Community is so liable.
73. In that regard the Court stated in its judgment in Case 4/69 Liitticke v Commission [1971] ECR 325, at paragraph 10, repeatedly confirmed since then (see in particular the judgment in Case 281/84 Zuckerfabrik Bedburg v Council and Commission [1987] ECR 49, paragraph 17) that
74. Is this unlawful conduct on the part of the State sufficient to make it liable in damages? In its recourse to the concepts of illegality and fault, there has been some development in the case-law of the Court, in respect of which I should like to refer you to the article by Judge Schockweiler. The most recent step in that development is clearly to be found in the judgment in Case C-63/89 Les Assurances du Crédit v Council and Commission [1991] ECR I-1799, where the following remarks are made in paragraphs 12 and 13:
75. I think it may be inferred from that passage that in the eyes of the Court the concepts of unlawfulness and fault, or wrongful conduct, are synonymous in the case of normative measures. It follows that even where the law of a Member State requires, in addition to illegality, the proof of fault, the national court need not (in relation to normative measures) seek to determine whether such fault exists and need merely consider whether the other conditions laid down by the case-law of the Court are met.
76. Where the failure to implement a directive or to implement it correctly has been confirmed by a judgment of the Court of Justice in infringement proceedings, ascertaining whether those conditions are met should not pose insurmountable problems for a national court. Such a judgment should be sufficient to enable them to find a sufficiently serious breach of a superior rule of law, since any incorrect implementation of a directive constitutes an infringement of the fundamental Treaty rules laid down in Article 5 and the third paragraph of Article 189 of the Treaty, which requires the Member States to take all the measures necessary for the correct implementation of directives in national law. (In the case of a directive which requires the Member States to provide benefits, a failure to implement it also constitutes a breach of those obligations.)
77. Let us now turn to the condition to the effect that the rule of Community law which has been breached must be a rule for the protection of the individual. That condition must necessarily be assessed in relation to the relevant provisions of the directive which have not been correctly implemented. In general, it is hard to imagine situations in which an individual might be able to show that he had suffered loss or damage as a result of the infringement of a rule of law if the purpose of that rule was not to protect his interests. Furthermore, in this case there can be no doubt that the purpose of the relevant provisions of Directive 80/987 is to protect the interests of individuals, that is to say, as its title and the first recital in its preamble indicate, those of employees in the event of the employer's insolvency.
78. As we have seen, in relation to formal or procedural conditions it is the rules laid down in the various systems of national law that must be observed. Such a reference to national law, which was in issue in the Russo judgment, will of course sometimes give rise to divergencies, for example as regards time limits for bringing proceedings. But in the absence of any Community legislation laying down uniformly applicable conditions, which might possibly be adopted on the basis of Articles 100 to 102 and 235 of the Treaty, those drawbacks must be tolerated in the same way as those resulting from the application of national law in relation to procedures for repayment of money unduly paid. In order to restrict them to an acceptable minimum, the application of the formal and procedural rules of national law should be made subject to the same reservations developed by the Court in relation to the substantive and procedural rules concerning the repayment of improperly levied national charges, that is to say that they
79. As regards the disputes in the main proceedings, it may be concluded from the foregoing that the Italian State is obliged under Community law to make good, in accordance with national rules of procedure, the loss and damage suffered by individuals as a result of the failure to implement the directive in Italian law.
80. Is there a contradiction between that conclusion and the fact that I have stated elsewhere that the provisions of the directive which determine the rights of employees leave the Member States some discretion and are therefore not unconditional or sufficiently precise?
81. In this case that task will be facilitated by the fact that the Italian legislature has meanwhile stated which of the options provided for by the directive it wishes to adopt. At the hearing before the Court, the Agent of the Italian government stated that Law No 428 of 29 December 1990, referred to as Community law 1990, delegated power to the Italian Government to adopt, within the year following entry into force of that law, a legislative decree for the full implementation of Directive 80/987. Article 48 of that law defines certain criteria with which the Italian Government must comply. If I have correctly understood the matter, it provides that the guarantee institution which will be responsible for meeting the obligations resulting from the directive (and will be financed exclusively by employers without any State contribution) will be required to cover outstanding claims relating to pay for the last three months of the employment relationship occurring within a period of six months preceding the date of the onset of the employer's insolvency.
The possible consequences of a judgment following the proposed approach
82. It remains to be. considered whether a judgment following the proposed approach would have such far-reaching consequences that it is necessary to restrict them rattorte temporis.
83. I should point out first of all that it is regrettable that the Community legislature has not itself established a system of liability on the part of Member States for failure to comply with Community law, as the Court proposed as early as 1975 in suggestions which it submitted to Mr Tindemans. It is not in any event too late to do so.
84. Formally speaking, the Court has been called upon only to rule on a specific directive in respect of which a judgment has been delivered by it in infringement proceedings against the Member State where the issue has been raised. At first sight one might therefore think that if the Court were to reply as I have proposed to the specific question referred to it, that would have financial consequences at most for the Italian State; those consequences, however, would go no further back than 23 October 1983, the date on which the directive should have been implemented. Moreover, it would be easy for all the Member States to avoid finding themselves in a similar situation in the future; they need merely implement directives within the prescribed periods.
85. However, the scope of the reasoning which I have proposed in order to deal with that question goes beyond the particular features of this case.
86. For that reason, I think the Italian Government's alternative submission that the effects of the Court's judgment should be limited rattorte temporis should be upheld. It was reasonable for the Member States to consider that they could incur liability for infringement of a rule of Community law only on the basis of the provisions of national law, and that they could not incur such liability in respect of failure to implement a directive which did not give rise to direct effect. In those circumstances, overriding considerations of legal certainty preclude legal situations which have exhausted all their effects in the past from being called into question where that might have very considerable financial consequences for the Member States. In other words, I propose that the Court should declare that the principles (which may be) laid down in its judgment shall not apply to loss and damage suffered prior to that judgment. There should, however, be an exception for persons who initiated legal proceedings or submitted an equivalent claim before the date of the judgment.
87. On the basis of all the foregoing considerations, I propose that the Court reply as follows to the second part of the first question referred by the two Italian courts:
The second and third questions
88. The second and third questions are worded as follows:
89. Since I have concluded that the provisions of the directive are not such as to give rise to direct effect, those two questions no longer have any significance.
90. Before concluding, let me make one further observation of a general nature concerning directives which are not implemented within the prescribed period. Some observers may consider that the whole legal construction proposed above is much too complicated and that it would be better to accept that a directive which has not been implemented may always be relied upon by individuals before the national courts, even if its provisions are not sufficiently precise and unconditional, and even if the directive places obligations on private undertakings or other private parties (horizontal effect).
91. As regards the latter point, however, I think that it would be inconsistent with the terms of Article 189 to hold in substance that with effect from the date on which it should have been implemented the directive is binding on every natural or legal person upon whom it obliges the Member States to impose duties or obligations.
92. The power which I propose that the national courts should have to assess damages ex aequo et bono, relying as much as possible on the provisions of the directive, even where those provisions leave some discretion, makes it possible to temper the severity of the condition of direct effect. Furthermore, the fact that those damages are payable by the State makes it possible to give at least approximate satisfaction to the persons intended to benefit from the rights without infringing the principle that a directive which has not been implemented cannot be binding on private, natural or legal persons. Finally, the proposed approach has the great advantage of providing strong encouragement for the Member States to implement directives within the prescribed periods.
Conclusion
93. On the basis of all the foregoing considerations, I propose that the Court reply as follows to the three questions referred:
1 Original language: French.
2 Judgment in Case C-221/88 ECSC v Banem [1990] ECR I-495, paragraph 22.
3 Judgment in Case 152/84 Marsball v Southampton and South-Wat Hampshire Health Authority [1986] ECR 723.
4 Judgment in Case 8/81 Becker v Finanzamt Münster-Innenstadt [1982] ECR 53.
5 Judgment in Case 286/85 McDermott and Cotterv Minister for Social Welfare and Attorney General [1987] ECR 1453.
6 Judgment in Joined Cases C-100/89 and C-101/89 Kaefer and Procacci [1990] ECR I-4647, paragraph 26.
7 Sec in particular the judgement in Case 33/76 Rewe v Landwirstschaftskammer Saarland [19761 ECR 1989, paragraph 5, and Case 45/76 Cornel v Produklschap voor Siergewassen [1976] ECR 2043, paragraphs 12 and 13.
8 See the judgment in Case C-213/89 Factoname I [1990] ECR I-2433, at paragraphs 20 and 21, and the judgement in Case 106/77 Amministrazione delle Finanze dello Stato v Simmenthai [1978] ECR 629, paragraph 22.
9 See the judgment in Case 106/77 Simmenthal, cited above, paragraph 21.
10 See in particular the judgment in Case 240/87 Deville v Administration des Impôts [1988] ECR 3513, paragraph 11.
11 See in particular the judgment in Case 309/85 Barra v Belgium [1988] ECR 355.
12 According to Mr Russo, the principle of the obligation to make reparation is established in this case, while the rules for effecting reparation must continue to fall within the competence of the national court([1976] ECR 50, beginning of the right-hand column).
13 According to the Commission, national law must provide procedures for the protection of rights arising from Community rules and the principles of efficiency and of the uniform application of Community law require that this protection should be appropriate and effective, without prejudice to the neutral stance of Community law with regard to the procedure chosen ([1976] ECR 52, third paragraph of the left-hand column and top of the right-hand column).
14 See the judgment in Case 199/82 Amministrazione delle Finanze dello Stato v San Giorgio [1983] ECR 3595, for the plaintiffs in the main proceedings, the judgment in Case 101/78 Granaria v Hooļdproduktschap voor Akker- bouwprodukten [1979] ECR 623, for the Commission and the Netherlands Government; and the judgment of Case 158/80 Rewe v Hauptzollamt Kiel [1981] ECR 1805, for the United Kingdom.
15 See, to thai effect Simon, D. and Barav, A. Le Droit Communautaire et la Suspension Provisoire des Mesures Nationales — Les Enjeux de l'Affaire Factortame, Revue du marché commun, No 340, October 1990, page 591 at 596. See also Curtin, D. Directives: The Effectiveness of Judicial Protection of Individual Rights, Common Market Law Review, 27, 1990, 709 at 735.
16 That approach would in any event address the issues left open by the Court's silence in the Factortame I judgment as to the conditions under which the power held to exist in that case is to be exercised. See, in that regard, the abovementioned article of D. Simon and A. Barav, in particular at page 597.
17 See, most recently, the judgment in Case C-249/88 Commission v Belgium [1991] ECR I-1275, paragraph 41.
18 See also the judgment in Case 48/71 Commission v Italy [1972] ECR 527, paragraph 7. It should be observed that in that judgment the Court expressly noted that Italy had eliminated its default with effect from the beginning of the infringement (see paragraph 11 of the grounds of the judgment and point 1 of the operative part).
19 Judgment in Case 52/75 Commission v Italy [1976] ECR 277, paragraph 14.
20 See, in addition to the judgment in Case 6/64 Costa v ENEL [1964] ECR 585, at 594, in particular the judgment in Case 11/70 Internationale Handelsgesellschaft v Einfuhrund Vorratsstelle Getreide [1970] ECR 1125, paragraph 3: the law stemming from the Treaty, an independent source of law, cannot because of its very nature be overridden by rules of national law, however framed, without being deprived of its character as Community law and without the legal basis of the Community itself being called in question. Therefore the validity of a Community measure or its effect within a Member Slate cannot be affected by allegations that it runs counter to either fundamental rights as formulated by the constitution of that State or the principles of a national constitutional structure.
21 According to R. Kovar, the liability of the State in its legislative capacity is a necessary consequence of the primacy of Community law. National legal systems must therefore be amended so as to provide full protection of the rights granted to Community nationals (see Voies de droit ouvertes aux individus devant les instances nationales en cas de violation des normes et decisions du droit communautaire, in Le recours dei individus devant les instances nationales en cas de violation du droit européen, Brussels, Larder, 1978, o 245 ai 274). The author applies the same considerations to liability in respect of the judiciary and considers that where the Court of Justice finds that a national judgment which has become definitive is contrary to Community law it must be possible for the harm which may have resulted to be made good (page 275).
22 Judgment in Case 30/72 Commission v Italy [1973] ECR 161, paragraph 11.
23 Sec, to that effect, Joliét, R. Le Droit Institutionnet des Communautés Européennes — Le Contentieux, Liège, 1981, p. 259.
24 Le Regime de la Responsabilité Extraconlraciuelle du fail d'Actes Juridiques dans la Communauté Européenne, by F. Schockweilcr, with the assistance of G. Wivenes and J. M. Godan, Revue Trimestrielle de Droit Européen, January-March 1990, p. 27 at p. 54 et seq.
25 See, in relation to a legislative context characterized by a wide margin of discretion, in particular the judgment in Case 20/88 Roquette v Commission [1989] ECR 1553, paragraph 23.
26 In Community law it is sufficient for a simple interest to be affected, and not the rights of the person harmed. See, in addition to the VIoebergbs and Kampfjmeyer judgments cited by the Commission (see page 17 of the Report for the Hearing), R. Joliét, Le Droit Institutionnel äes Communautés Européennes — Le Contentieux, Liege, 1981, p. 268, and M. Waelbroeck in J. Mégret, Le Droit de la Communauté Economique Européenne, Volume 10 part 1 Brussels, 1983, p. 292.
27 See, to that effect, as regards actions for the repayment of national charges levied contrary to Community law, the judgments in Case 33/76 Rewe v Landwirtschaftskammer Saarland [1976] ECR 1989, paragraph 5, and Case 45/76 Comet v Produktscbap voor Siergewassen [1976] ECR 2043, paragraph 14.
28 As Judge Schocksveiler correctly noted ¡n a recent article (Le Dommage causé par suite d'une Violation du Droit Communautaire par l'Autorité Publique et sa Réparation en Droit Luxembourgeois, in Pasicrme luxemkourgeoue, 1990, No 2, p. 35 at p. 40),that last condition might lead the Member States, where appropriate, to amend or adapt their rules governing the liability of public authorities.
29 Bulletin of the European Communites, Supplement 9/75 p. 19.
30 Sec, most recently, the judgment in Case C-262/88 Barber [1990] ECR I-1889 at I-1955.