Taxing questions of European law
In the latest instalment of a continuing series, we offer advice on the issues which face solicitor-advocates
European Union law is still sometimes considered to be the preserve of specialists.
But exceptions to this rule are growing.
Already lawyers practising in fields such as employment, tax, environment and product liability law are familiar with EU law.
Two areas - competition law and public law - will increasingly give advocates opportunities for using ordinary litigation skills in proceedings based on EU law.
In both cases the principle is that where a case is brought in the national court on the basis of EU substantive law, national rules of procedure and remedies apply.
There are two qualifications.
The national rules must not discriminate between the EU and similar national law claims, and must not make it difficult or impossible to obtain an effective remedy for infringements of directly effective community law.
Competition law damages claims
The hot topic for advocates is the availability of damages for breach of EU competition law following the judgment of the European Court of Justice (ECJ) in Courage v Crehan.
This case confirmed that damages should be an available remedy for breach of EU competition rules.
Competition law will impact further on the advocate once the Enterprise Bill becomes law.
It will criminalise EU and UK competition law, with prison sentences available for company managers involved in price-fixing and market-sharing cartels.
The Competition Act 1998 mirrors EU competition law and provides specifically that relevant European Court case law should be followed in the context of UK competition law.
Q What sort of questions must I answer when I am instructed to sue a multi-national for damages alleged to be caused by a price fixing cartel?
A If your client has suffered losses in this way he will need your advice on competition law damages claims.
You will need to answer procedural, evidential and remedy questions that may arise in the context of tortious claims for breach of statutory duty and/or restitution.
Questions of standing, and limitation, as well as unjust enrichment, passing-on defences and exemplary/ punitive damages will have to be addressed (tactics may involve preliminary issues of law, strike-out applications and references to the ECJ).
English case law supports the conclusion that the appropriate cause of action for breach of article 81(1) EC Treaty is the tort of breach of statutory duty.
It follows that the principles of English law applicable to that tort will apply to a claim for breach of article 81(1), subject to the provisos above.
To establish liability for breach of article 81(1) you must prove:
l A breach of statutory duty (section 2(1) European Communities Act) owed to the relevant class of persons but subject to European Court case law on the interpretation of article 81(1) (for example, Crehan establishes that article 81 imposes duties not to breach its terms and suggests that those duties create directly effective rights which may be enforced by all individuals);
l The breach of duty must have caused the claimant damage in order to satisfy the requirement that there must be an economic or personal interest before an individual can bring a claim for damages.
Evidence must be adduced to establish the causal link between the breach and the damage.
The usual tortious defences will be available.
Crehan established that the in pari delicto/ex turpi causa defence is not always available.
The burden of proof is the normal one placed on the claimant in civil proceedings.
The national rules on remedies apply, subject to the two overriding community law principles (non-discrimination and effective protection).
The measure of damages will be the normal tortious measure and the normal rules on quantum and interest apply.
If the conditions of English law are satisfied, exemplary and/or aggravated or punitive damages can be sought.
This will be a question of fact and evidence.
If the defence of 'passing on' is available for a breach of UK competition law it should be available to limit the amount of damages that can be claimed.
Public law - state damages claims
Q How may I sue the government for failing to implement a directive? Can I sue for damages for failing to comply with obligations under a directive, even where that directive has been implemented into English law?
A Recent European Court case law establishes that damages are available against the state and the emanation of the state in the form of public authorities exercising statutory powers and performing statutory duties.
In the Factortame cases , the ECJ established that damages must be made available by a national court against the state or an emanation of the state when certain conditions are satisfied.
In particular, the rule of law alleged to be infringed must be designed to protect individuals, there must be a causal link between that infringement and the damage suffered by the individual and the infringement must be sufficiently serious in the sense that the state or authority must have manifestly and gravely disregarded its legal obligations.
The Factortame cases and subsequent case law on damages against the state derive from the principles first established by the ECJ in the Francovich case.
Recently, the House of Lords in Three Rivers District Council v Bank of England has applied the ECJ principles to claims by individuals for infringement of EC Directive rights and obligations by a national authority.
In the age of class actions, higher court advocates should not be surprised by clients raising questions about their rights to claim damages from a public authority for breach of obligations arising under a directive.
The following questions must be answered:
l Does the directive entail the grant of rights to the individuals affected?
l Is the content of those rights identifiable on the basis of the provisions of the directive?
l Is there a causal link between the breaches of the obligations and the loss and damage suffered?
The answer to these questions will depend on detailed consideration of the relevant directive and factual background.
These were the questions dealt with by the House of Lords in the Three Rivers case in the context of the first EC banking directive in a case brought by the BCCI depositors against the Bank of England to recover sums lost as a result of BCCI's collapse.
The claimants unsuccessfully alleged failures by the bank in its licensing and supervision of BCCI.
The sort of questions in the fields of, for example, environmental protection or financial services, which the Advocate may have to deal with include:
l Is the authority concerned an emanation of the state for the purposes of the directive?
l Was it the relevant supervisory authority for the purposes of the directive at all material times?
l Does the directive impose specific obligations on the authority concerned? And if so, were these obligations breached and was any alleged breach sufficient to amount to a manifest and grave disregard by the authority of obligations under the directive?
Further court decisions on these issues are expected before long.
This column is prepared by committee members of the Solicitors' Association of Higher Court Advocates.
For details of SAHCA or for a membership application form, contact Sandra Dawson, tel: 020 7837 0069.
E-mail your advocacy questions to: sandra@admin4u.org.uk
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