State liability for judicial breaches under the EEA Agreement: The Köbler doctrine in EEA law

Abstract

This article delves into the principle of State liability for judicial breaches under the EEA Agreement. The European Court of Justice (ECJ) has established that Member States can be held liable for violations of EU law by their courts of last instance. The article examines the differences between the EU and EEA legal orders and explores how these differences may influence the application of the State liability doctrine in EEA law. It argues that the level of effective judicial protection in the EFTA pillar of the EEA Agreement should be on par with that in the EU, and therefore State liability for judicial breaches should be recognized in EEA law. Such liability also serves as a preventive tool, providing an incentive for domestic judges to uphold their European mandate and adhere to the principle of sincere cooperation.

1. Introduction

This article delves into the scope and reach of the general principle of State liability for judicial breaches under the EEA Agreement. The possibility for individuals to seek damages from the State for violations of EEA law is considered an essential fundamental rights guarantee, in that it ensures effective judicial protection of the entitlements deriving from EEA law. ¹ The EFTA Court has repeatedly stated that effective judicial protection constitutes a general principle of EEA law. ² This article provides a case study on how effective judicial protection may be ensured in the EFTA pillar of the EEA Agreement, despite constitutional and institutional asymmetries between the EU and EEA legal orders. ³

The scope and content of the State liability doctrine in EEA law have been extensively discussed in scholarly publications, and opinions vary as to whether there exists an EEA-specific version of the State liability principle or if the principle directly mirrors the EU doctrine. ⁴ In this contribution, I will focus on a specific aspect of this controversy: whether the State liability doctrine under EEA law extends to alleged infringements stemming from decisions of last-instance national courts.

In its landmark Francovich ruling, the European Court of Justice (ECJ) established that Member States can be held liable for damages caused to individuals due to infringements of EU law. ⁵ It deemed the principle of State liability to be ‘inherent in the system of the Treaty’. The justification for such liability was found to lie in fundamental principles relating to the effective protection of Union rights, the full effectiveness of Union law and the obligation of sincere cooperation (now) laid down in Article 4(3) TEU. ⁶

In Sveinbjörnsdottir, the EFTA Court extended the principle of State liability to EEA law, stating that the principle constitutes an ‘integral part’ of the EEA Agreement. ⁷ The EFTA Court based this finding on the homogeneity objective, the objective of establishing the right of individuals and economic operators to equal treatment and the principle of sincere cooperation laid down in Article 3 EEA. ⁸ While the EEA principle of State liability has been reaffirmed in the EFTA Court’s subsequent case-law, a caveat has been raised with regard to the content and application of the principle in the EEA context. The EFTA Court has stressed that, since that principle has a different legal basis in the EEA and the EU, ‘the application of the principles may not necessarily be in all respects coextensive’. ⁹

Under EU law, the principle of State liability applies not only to legislative and executive acts but also to infringements committed by national courts adjudicating at last instance. In Köbler the ECJ held that Member States can be held liable for breaches of EU law by their courts of last instance, provided that EU law has been ‘manifestly infringed’. ¹⁰ The relevance of the Köbler doctrine to the EEA Agreement has been the subject of some debate. ¹¹ Both the Icelandic and Norwegian States reject the notion that State liability for judicial breaches forms part of EEA law. The arguments supporting this view relate to the special characteristics of the EEA Agreement as compared to the EU. ¹² The matter has recently been brought before the EFTA Court in a request for an Advisory Opinion made by Eidsivating Court of Appeal. ¹³

The EEA Agreement integrates the EEA EFTA States into the internal market, creating a ‘homogenous European Economic Area’. ¹⁴ The Agreement is of a sui generis nature, constituting a ‘distinct legal order of its own’. ¹⁵ The EEA legal order differs from the EU legal order in several respects, giving rise to elements of disconnection between the two legal regimes. The objectives of the EEA Agreement are more modest, and the depth of integration is less far-reaching than under the EU Treaties. The EEA legal order also differs from the EU legal order in terms of constitutional maturity. There are also important differences in the legal architecture of the EEA Agreement, in particular with respect to the required degree of penetration in the domestic legal orders of the Contracting States. ¹⁶ This begs the question of whether these elements lead to a difference in the level of effective judicial protection in the EFTA pillar of the EEA Agreement, or whether these asymmetries can be bridged by elements of connection. The legal significance of such elements will be examined, in particular, from the perspective of considerations of homogeneity, loyalty and mutual trust. As will be seen, the application of the Köbler doctrine in EEA law depends largely on the scope and boundaries of the homogeneity principle. The crucial question is whether certain specific features of the EEA Agreement warrant non-application of State liability in cases of infringements resulting from judicial acts.

The present article is structured as follows: in section 2, I shall canvas briefly the well-established case-law on State liability for judicial breaches of EU law and explore the role of this remedy within the decentralized enforcement system. Then, in section 3, I shall take a closer look at the rationale underlying State liability in EEA law and examine whether there are differences between the EU and EEA legal systems warranting different State liability standards for acts committed by courts of last instance. In section 4, I shall analyse and discuss the implications arising from the inclusion of the Köbler doctrine in EEA law, including both the obligation to provide a legal avenue for such claims and the extent to which the Contracting States may offer alternative remedies in lieu of damages. Lastly, in section 5, I shall summarize my findings and offer some conclusions.

2. State liability for acts of the judiciary in EU law

The principle of State liability has been established and further developed through the case-law of the ECJ. That court has affirmed that a Member State can be held liable for any breach of EU law ‘whatever be the organ of the State whose act or omission was responsible for the breach’. ¹⁷ As to the conditions to be satisfied, the ECJ has held that the rule infringed must be intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach and the damage sustained. ¹⁸

The principles of effective judicial protection, effectiveness and sincere cooperation have laid the foundation for the ECJ’s finding of State liability, including for infringements stemming from decisions of courts of last instance. In Köbler the ECJ echoed the reasoning from its previous case-law, but underscored the critical role played by national courts in the application and enforcement of EU law:

In the light of the essential role played by the judiciary in the protection of the rights derived by individuals from Community rules, the full effectiveness of those rules would be called in question and the protection of those rights would be weakened if individuals were precluded from being able, under certain conditions, to obtain reparation when their rights are affected by an infringement of Community law attributable to a decision of a court of a Member State adjudicating at last instance. ¹⁹

The ECJ further stressed that a court adjudicating at last instance is the ‘last judicial body before which individuals may assert the rights conferred on them by Community law’. ²⁰ For that reason, the ECJ held, individuals cannot be deprived of the possibility of rendering the State liable in order to obtain legal protection of their rights.

Member State liability for damage caused to individuals as a result of judicial activity may be incurred only where that decision is made by a court adjudicating at last instance. ²¹ Furthermore, due to the specific nature of the judicial function and the requirements of legal certainty, the threshold for liability is set high. In, inter alia, its ruling in Traghetti, the ECJ has held that State liability for an infringement of EU law by a decision of a national court adjudicating at last instance can therefore be incurred ‘only in the exceptional case where the court has manifestly infringed the applicable law’. ²²

The State liability doctrine – and, in particular, liability for acts or omissions of the judiciary – must be viewed against the backdrop of the division of competences between the Union and the Member States and, in particular, the system of decentralized application and enforcement. This division of competences was designed to follow the logic of a system of ‘executive federalism’, under which the EU lays down the rules, and the Member States implement, apply and enforce them. ²³ Since the application and enforcement of substantive EU norms lies largely in the hands of the Member States, they must ensure that individual rights are protected and that the effectiveness of Union law is guaranteed. ²⁴

The Member States’ obligations to ensure effective judicial protection of Union rights and provide adequate remedies are now codified in Article 19 TEU and Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’). ²⁵ The obligation on Member States to ‘take all the measures necessary to guarantee the application and effectiveness of [EU] law’ stems from the duty of loyal cooperation as enshrined in Article 4(3) TEU. ²⁶ The right to effective judicial protection has been considered by the ECJ as a concretization of the rule of law. ²⁷ Moreover, the ECJ has held that the effective application of EU law constitutes ‘an essential component of the rule of law’. ²⁸

The principles of effective judicial protection, effectiveness and loyal cooperation place on the Member States an obligation to remedy the unlawful consequences of a breach of EU law. ²⁹ The maxim ubi ius ibi remedium – where there is a right there must also be a remedy – is inherent in the Union legal order. ³⁰ The State liability doctrine can consequently be seen as a reflection of the general principle that every breach of an EU right ‘must carry with it an effective level of redress’. ³¹ State liability is a secondary remedy arising from an infringement of EU law, which aims at restoring the infringed right. ³² The remedy of State liability is a means to ensure effectiveness and protection of Union rights in the system of decentralized implementation and enforcement of Union law.

The ECJ has held that the purpose of State liability ‘is not deterrence or punishment but compensation for the damage suffered by individuals as a result of breaches of [EU] law by Member States’. ³³ Although penalizing the defaulting Member State is not an end in itself, effectiveness considerations still have a role to play. The State liability principle serves a dual rationale, covering both rights protection and effectiveness. ³⁴ A State liability action serves not only the individual but is also a means of enhancing Member State compliance with their obligations under EU law. ³⁵ As the ECJ held as early as in Van Gend en Loos, ‘the vigilance of individuals concerned to protect their rights amounts to an effective supervision’ of Member States. ³⁶ Private enforcement serves an end going beyond the protection of rights of individuals, by also ensuring compliance by Member States with their obligations under EU law. Private parties become ‘part of the implementation process’, contributing to the overall effectiveness of Union law at the domestic level. ³⁷

Since the application of EU law takes place largely in the courts of the Member States, national courts occupy a central role in the Union’s shared legal order. The Union legal order grants rights that must be protected through legal proceedings before domestic courts. ³⁸ The ECJ has stated that, together with the Court itself, the Member States’ courts are the ‘guardians of [the] legal order and the judicial system of the European Union’, and they need to ensure the full application of EU law and judicial protection of individual EU rights, ³⁹ due to the system of decentralized private enforcement, in which national court have become ‘functional Union courts’. ⁴⁰ In the words of Halberstam:

Member State courts … act as the frontline courts of the Union, which means that the ‘effectiveness’ of EU law is largely in their hands. Accordingly, for the system as a whole to function, national courts must work under the duty to ensure that EU law is, indeed, effective on the ground. ⁴¹

The courts are fully bound by EU law, and the ECJ has viewed the remedy of State liability as a necessary consequence of the duties placed on national courts. In Köbler, the ECJ underlined the point that all State authorities are bound by EU law, and stressed the important role played by the national judiciary as enforcers of Union law. The Advocate General was even more explicit, opining that State liability for acts or omissions of courts adjudicating at last instance must be viewed as the corollary of the mission conferred on the courts of last instance to ensure the effective protection of individual rights stemming from Union law. ⁴²

3. State liability for acts of the judiciary in EEA law

A. Legal certainty, res judicata and the independence of the judiciary

In contrast to the ECJ, the EFTA Court has not explicitly set out its position on State liability for judicial breaches attributable to a national court. The EFTA Court has stated succinctly that the obligation to provide compensation arises ‘[i]n cases of violation of EEA law by a Contracting Party’. ⁴³ The application of the Köbler doctrine in an EEA context was touched upon in an obiter dictum in Kolbeinsson. ⁴⁴ The wording of the questions referred did not invite the EFTA Court to express itself unequivocally on the question of State liability for judicial breaches:

The Court notes that it must answer the second question based on the premise spelled out by the national court, namely that the infringement of EEA law, if indeed there is any, has been caused by incorrect implementation of EEA law, i.e., a breach on the part of the legislature. The issue of State liability for losses resulting from incorrect application of EEA law by national courts falls outside the scope of this question. The Court observes, however, that if States are to incur liability under EEA law for such an infringement as alleged by the Plaintiff, the infringement would in any case have to be manifest in character, see for comparison Köbler … paragraph 53. ⁴⁵

Since the EFTA Court has not yet adopted a clear position on the matter, there is a need to examine whether there are arguments that lend support to the restrictive stance advocated by the Norwegian and Icelandic Governments.

Well-known arguments against State liability for acts of the judiciary include concerns relating to legal certainty, res judicata and the independence of the judiciary. Such concerns are, however, not unique to EEA law. ⁴⁶ Arguments of this kind were raised by some of the governments which submitted observations in the Köbler case, but the ECJ rejected the notion that the principle of State liability for judicial decisions was precluded by such considerations. ⁴⁷ The doctrine of res judicata precludes subsequent proceedings on the same matter between the same parties, and the ECJ emphasized that the State liability proceedings ‘do not have the same purpose and do not necessarily involve the same parties as the proceedings resulting in the decision which has acquired the status of res judicata’. ⁴⁸ As regards the independence of the judiciary, the ECJ noted that the principle of liability ‘concerns not the personal liability of the judge, but that of the State’. ⁴⁹

Based on the homogeneity principle, those considerations should apply with equal force in the EEA. It is difficult to argue that greater weight should be afforded to legal certainty and judicial independence in the context of EEA law. The relevant question is, therefore, whether there are other compelling arguments, based on the specific features of the EEA Agreement, that could support the position that the liability of the Contracting States depends on the branch of the State from which the alleged infringement emanates.

B. The rationale underlying the EFTA court’s case-law on State liability

In Sveinbjörnsdottir, in establishing the principle of State liability under the EEA Agreement, the EFTA Court emphasized that the agreement grants rights to individuals and economic operators on which they must be able to rely. It emphasized that the EEA Agreement is of a sui generis nature, with a scope and objective going beyond what is usual for an agreement under public international law. The EFTA Court further observed that the strong expression of ‘the homogeneity objective and the objective of establishing the right of individuals and economic operators to equal treatment and equal opportunities’ meant that the EFTA States must be obliged to provide for compensation for loss and damage caused to an individual by infringements as a result of breaches of EEA law for which that State can be held responsible. ⁵⁰ The Court added that the duty of loyal cooperation constituted a ‘further basis’ for the principle of State liability.

Although the EFTA Court’s reasoning was not a carbon copy of the ECJ’s reasoning, the basic principles underpinning the State liability doctrine were largely overlapping. Similarly to the ECJ, the EFTA Court placed emphasis on the protection of individual rights and the effective enforcement of EEA law, and stressed the role of the Contracting States in the application and enforcement of EEA law. The conditions for State liability were also the same as those laid down in the ECJ’s case-law. ⁵¹

Having regard to the sui generis nature of the EEA Agreement, the EFTA Court sought to align the legal effects of EEA law at national level to those of the EU legal order. This is a manifestation of the EFTA Court’s effects-based or functional conception of homogeneity. ⁵² The EFTA Court’s position on State liability seems to establish ‘a general presumption for judicial protection of EEA-based rights, which, in effect, equals the protection offered in EU law’. ⁵³

The rationale underlying the EFTA Court’s case-law on State liability highlights homogeneity as an element of connection between the EEA Agreement and EU law. The question in the following is whether there are elements of disconnection that may rebut the presumption of equal judicial protection in respect of State liability for infringements stemming from acts of the judiciary. Such elements may pertain to the lack of direct effect and primacy as well as differences in the judicial architecture of the EEA Agreement.

C. Limits to homogeneity – and their relevance for State liability

A central tenet of the EEA Agreement is the creation of a ‘homogeneous EEA’. ⁵⁴ The overall goal of homogeneity entails an ‘obligation to keep EEA law in line with EU law’. ⁵⁵ The application of the homogeneity principle is not restricted to the interpretation of provisions identical in substance to provisions of EU law; it also applies to the legal effect of EEA law in the legal orders of the EEA EFTA States. ⁵⁶ The principle of homogeneity is, however, not limitless, which leads to the question whether a homogenous interpretation of the State liability principle is precluded by relevant differences between the legal systems of the EU Member States and the EEA EFTA States. As pointed out in section 1, the effect of EEA law in the domestic legal orders of the EEA EFTA States does not mirror exactly the effect of EU law in the domestic legal orders of the Member States, and there are also differences in the judicial architecture put in place to apply and enforce EU and EEA law.

One key difference is that the EEA Agreement does not call for the direct effect or the primacy of EEA law within the domestic legal systems of the EEA EFTA States. ⁵⁷ Instead, the effectiveness of EEA law at domestic level is ensured by doctrines establishing a form of ‘quasi-direct effect’ and a ‘watered-down version’ of the primacy principle. ⁵⁸ Individuals may rely on a provision of EEA law in domestic proceedings once that provision has been made part of domestic law. ⁵⁹ Moreover, national courts are bound to interpret national law as far as possible in conformity with EEA law, and the EEA EFTA States are also bound to ensure that implemented EEA rules take precedence over conflicting national legislation. ⁶⁰

The lack of direct effect and primacy under the EEA Agreement cannot in itself justify differences in terms of judicial protection in the EEA. On the contrary, the lack of primacy and direct effect entails that the role of national courts takes on added importance in the EEA law context. Indeed, State liability may serve to remedy defective national implementation of secondary legislation, with the result that the role of national courts becomes even more important in the effective protection of individual rights in the EEA EFTA States.

In Karlsson, the EFTA Court rejected arguments to the effect that State liability reflected the ‘supranational’ elements of EU law, absent in the EEA Agreement. ⁶¹

The absence of recognition of direct effect for EEA rules does not preclude the existence of an obligation on the State to provide for compensation for loss and damage caused to individuals and economic operators… ⁶²

This begs the question of whether differences in the judicial architecture in EU and EEA law could justify a rejection of the Köbler doctrine in EEA law. The main argument of the Norwegian Government against State liability for judicial infringement is that, under EU law, State liability for decisions by national courts constitutes a sanction against national courts of last instance breaching their duty to request preliminary rulings on the interpretation of EU law pursuant to Article 267(3) TFEU. ⁶³ The Norwegian Government argues that, since there is no corresponding obligation under EEA law, the Contracting States cannot be held liable for incorrect applications of EEA law by national courts.

I find this argument unconvincing. The preliminary ruling procedure provided for in Article 267 TFEU aims to assist domestic courts in their function as Union courts and to ensure the full effect of Union law in the Member States. ⁶⁴ According to settled case-law, beginning with CILFIT, domestic courts adjudicating at last instance are obliged to make a reference when a relevant question on the interpretation of EU law arises, unless the ECJ has already provided an interpretation (acte éclairé) or the answer is ‘so obvious as to leave no scope for any reasonable doubt’ (acte clair). ⁶⁵ This reflects the authority of the ECJ as ‘the final arbiter of EU law’. ⁶⁶

Admittedly, under EEA law, there is no obligation on national courts of any instance to make a reference to the EFTA Court. Article 34 of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and Court of Justice (SCA) provides for an advisory opinion procedure, allowing the courts in the EEA EFTA States to refer questions on the interpretation of EEA law to the EFTA Court. Although domestic courts may turn to the EFTA Court and ask for guidance, the answers received are merely advisory, making the relationship between the EFTA Court and the courts in the EEA EFTA States more ‘partner-like’. ⁶⁷

Differences in the judicial dialogue in the EU and EEA law legal order cannot, however, be decisive with respect to the scope and extent of the State liability doctrine. The reference to the importance of the preliminary ruling procedure is based on the premise that the Köbler doctrine is limited to constituting a sanction for a court’s failure to refer questions of EU law to the ECJ. This is, it is submitted, not correct. As the ECJ has made clear, the purpose of State liability is not to sanction the State, but to compensate the individuals for damage suffered. ⁶⁸ Yet the preliminary reference procedure laid down in Article 267 ‘does not constitute a means of redress available to the parties’. ⁶⁹ A refusal to refer does not in itself constitute infringement of an individual Union right, entitling the individual to a legal remedy. A failure to refer, followed by an incorrect interpretation of EU law, may result in the infringement of an individual Union right. The question whether a court has breached its duty to refer questions to the ECJ in accordance with Article 267 TFEU is merely one of several elements that must be taken into consideration in determining whether a national court has committed a ‘manifest infringement’ of EU law. The ECJ has stated that all factors which characterize the situation put before the relevant court must be considered. Such factors include not only non-compliance with the duty to refer, but also other elements, such as the degree of clarity and precision of the rule infringed, whether the infringement was intentional, whether the error of law was excusable or inexcusable and the position taken, where applicable, by an EU institution. ⁷⁰

It must also be borne in mind that the obligation to refer is not relevant in all situations. In accordance with the CILFIT doctrine, the obligation to refer applies only in situations where the legal situation lacks clarity. A judicial breach is in any event sufficiently serious if a national court has manifestly disregarded the applicable EU law, including relevant case-law from the ECJ on the matter. ⁷¹ Consequently, a breach may also be manifest in situations where the obligation to refer is completely irrelevant because the relevant point of law is clear. The Köbler doctrine and the CILFIT doctrine must therefore be kept separate. As observed by Advocate General Bobek:

…the standard by which any such potential matter of State liability is to be assessed is that of the Köbler criteria … For that purpose, it is not the CILFIT standard, but simply ‘manifest breach of the case-law of the Court in the matter’ that will amount to a sufficiently serious infringement of EU law. ⁷²

Liability in accordance with the Köbler criteria may arise in various scenarios, such as where a national court fails to give an interpretation to national law that is consistent with EU law or continues to apply a national rule that is contrary to EU law. ⁷³ The duty of consistent interpretation of national law and the obligation to set aside conflicting national law are placed on national courts under EEA law as well. Domestic courts must, as far as possible, interpret their national law in accordance with EEA law and, where that is not possible, it must disapply national law contrary to implemented EEA law. A rejection of the State liability doctrine for judicial infringements would mean that the Contracting States can never be held accountable when their national courts fail to comply with those obligations, even in cases where they manifestly disregard existing case-law from the Luxembourg courts. Accepting such a stance would, it is submitted, require more ample justification than that provided thus far by the Icelandic and Norwegian Governments.

An extension of the Köbler doctrine ensures homogeneity between EU and EEA law, and there are few convincing arguments as to why the specific features of the EEA Agreement should deprive individuals and economic operators of this particular remedy when national courts disregard EEA law.

The conditions under which the States may incur liability for judicial breaches – as spelled out in Köbler – are vague enough to cater for the differences in the functions served by the courts in the EU and EEA system. The guidelines laid down by the ECJ for the application of those conditions may be adapted to suit the particular features of the judicial dialogue in the EEA legal system. This is, however, not an argument weighing against the EEA relevance of the Köbler doctrine.

It has been argued that elements of disconnection, pertaining to lack of direct effect and primacy and differences in the judicial architecture of the EEA Agreement, cannot rebut the presumption of equal judicial protection in respect of State liability for infringements stemming from acts of the judiciary. There are also other elements of connection that may serve to substantiate the claim that the State liability principle in EEA law mirrors the principle under EU law. In the following, I address two such elements of connection, namely the role of national courts under EEA law (section 3.D) and the duties placed on national courts as enforcers of EEA law (section 3.E).

D. The role of national courts under EEA law

A blanket exclusion for breaches attributable to acts of the judiciary is hard to reconcile with the central role played by the courts in EEA law. The role of national courts in EEA law is comparable to that of national courts in the EU legal order. Just as in the EU legal order, the judicial protection of individual EEA rights works in a decentralized system in which national courts effectively function as courts of European law. ⁷⁴ The EFTA Court has stated that EEA EFTA and EU nationals and economic operators must enjoy ‘relying upon EEA law, the same rights in both the EU and EFTA pillars of the EEA’, so that the objective of establishing a dynamic and homogeneous EEA is achieved. It has further stated that access to justice and effective judicial protection are essential elements in the EEA legal framework, which are contingent on EEA EFTA and EU nationals and economic operators enjoying ‘equal access to the courts in both the EU and EFTA pillars of the EEA to ensure their rights which they derive from the EEA Agreement’. ⁷⁵

National courts play a key role in applying EEA law and securing the rights of individuals and it has been held that effective judicial protection is a general principle of EEA law. ⁷⁶ In the absence of an explicit textual basis in the EEA Agreement, the principle of effective judicial protection has been constructed and developed on the basis of considerations of homogeneity and loyalty. The EFTA Court has repeatedly held that, in accordance with the principle of loyalty laid down in Article 3 EEA, ‘it is the responsibility of the national courts, in particular, to provide the legal protection individuals derive from the EEA Agreement and to ensure that those rules are fully effective’. ⁷⁷

Moreover, the reasoning underpinning the EFTA Court’s State liability case-law does not seem to allow for a differentiation depending on the branch of the State from which the alleged infringement emanates. The reasoning of the EFTA Court in Sveinbjörnsdottir is fully transferable to the case of a breach of EEA law by a supreme court. Just as for infringements attributable to the legislature and the executive branches of government, the full effectiveness of EEA law would be impaired and the protection of EEA rights would be weakened if individuals were unable to obtain monetary compensation when their rights are infringed by a breach of EEA law stemming from the judiciary. ⁷⁸

State liability is a means of ensuring effective judicial protection of individual EEA rights and the full effectiveness of EEA law at domestic level. It is stated in the preamble to the EEA Agreement that the homogeneous European Economic Area is to be achieved ‘on the basis of equality and reciprocity and of an overall balance of benefits, rights and obligations for the Contracting Parties’. ⁷⁹ In Koch, the EFTA Court made use of both homogeneity and reciprocity arguments to substantiate the point that the principle of effective judicial protection in the EFTA pillar of the Agreement equals that of the EU pillar. ⁸⁰ Effective judicial protection in both pillars of the EEA Agreement is needed to create a level playing field for citizens and economic operators. The ‘special relationship’ between the EU and the EEA EFTA states acknowledged by the ECJ in I.N. is based on the principle of mutual trust in the structure and functioning of the legal systems of the EEA EFTA States and is premised on the effective judicial protection of individual rights by national courts. ⁸¹

Leaving judicial errors unaddressed would compromise the effective judicial protection of EEA rights and, in turn, jeopardize the effectiveness of EEA law. This form of judicial immunity would also raise rule of law concerns. State liability is a means of redressing a legal wrong and hence a concrete expression of the maxim ibi ius ubi remedium.

E. State liability as an accountability mechanism

The State liability doctrine also ensures accountability for judicial acts infringing EEA law. Under EU law, the Member States cannot shield themselves from liability for infringements committed by their judiciary. In Köbler, the ECJ drew upon the ‘State unity’ theory in international law, under which a State is responsible for the actions of all branches of government, including the judiciary:

In international law a State which incurs liability for breach of an international commitment is viewed as a single entity, irrespective of whether the breach which gave rise to the damage is attributable to the legislature, the judiciary or the executive. That principle must apply a fortiori in the Community legal order since all State authorities, including the legislature, are bound in performing their tasks to comply with the rules laid down by Community law which directly govern the situation of individuals… ⁸²

State liability for judicial decisions ‘has its origin in the perception of the State as a single entity or unity’, both in international law and EU law, and ‘in both legal systems, the conduct of all State branches is therefore attributed to the State in an undifferentiated manner’. ⁸³

State liability for acts of the judiciary may be viewed as a direct consequence of the duties placed on national courts as enforcers of EEA law. As the Advocate General stated in his opinion in Köbler – in the context of EU law – allowing the Member States to escape all liability for the acts or omissions of its supreme courts, which are responsible for applying and ensuring compliance with Union law, ‘would amount to an insuperable paradox’. ⁸⁴

It is hardly conceivable that a formal acceptance of the Köbler doctrine in EEA law will result in a flood of cases before domestic courts. The conditions for liability are strict where the infringement of EU law stems from an act or omission from a domestic court of last instance. Liability may arise only under exceptional circumstances where the court has ‘manifestly infringed the applicable law.’ ⁸⁵ If the content and scope of an EEA norm were unclear at the time of the decision, the threshold for State liability will probably not be met.

As pointed out in legal scholarship, the most important function of the Köbler doctrine may be to give the courts of last instance a strong incentive to respect the duties stemming from the principle of sincere cooperation, and to ensure the effective legal protection of individual EU rights. ⁸⁶ This line of reasoning is readily transferrable to the EEA context. The very existence of State liability for judicial breaches may serve as a deterrent, providing an incentive for domestic judges to fulfil their European mandate. In Köbler, the ECJ rejected the argument that the principle of State liability would undermine the authority of national courts of last instance. On the contrary, it held that such liability would ‘enhance the quality of a legal system’ and ‘in the long run [its] authority’. The same can be said in the context of EEA law. State liability may serve as a preventive tool in deterring supreme courts from engaging in infringements. ⁸⁷

4. Implications of the Köbler doctrine for the EEA EFTA States

A. Provision of a procedural and remedial framework at domestic level

The EEA States need to offer effective protection to individuals claiming breach of their rights under EEA law. It has been argued above that it must be possible for individuals to hold a Contracting State liable for an infringement of their rights stemming from a decision of a court adjudicating at last instance, provided that the conditions laid down in Köbler are satisfied. To that end, the EEA EFTA States need to ensure that the necessary procedural and remedial framework is in place within their own legal system. What this entails in more detail is explored in section 4.B. In section 4.C I examine whether an extension of the Köbler doctrine to EEA law necessarily requires the EEA EFTA States to provide for actions in damages, or whether they may opt to provide for remedies other than State liability actions as a means of ensuring effective protection of individuals’ rights.

B. Enforcing claims for compensation before domestic courts

The right to damages follows directly from EU law. ⁸⁸ The ECJ has not only laid down the entitlement to compensation but has also required that this remedy be capable of being pursued in court. ⁸⁹ Consequently, Member States must provide a legal avenue for individuals seeking to assert their right to compensation. In Köbler, the ECJ stated that ‘it is for the Member States to enable those affected to rely on that principle [of State liability] by affording them an appropriate right of action’. ⁹⁰

It is left to national law to designate the courts competent to deal with State liability claims and to lay down the detailed procedural rules governing the legal proceedings. ⁹¹ The States’ liberty to designate the courts competent to handle cases involving Union law is a feature of their institutional autonomy. ⁹² The freedom to determine the procedural conditions governing actions involving EU law is a manifestation of their national procedural autonomy. ⁹³ That autonomy is not without limits, however. In Traghetti the ECJ was clear on the point that State liability claims cannot be excluded altogether:

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. ⁹⁴

The ECJ noted that such absolute procedural bars would be ‘tantamount to rendering meaningless the principle laid down by the Court in the Köbler judgment’. ⁹⁵ The total exclusion of such claims is therefore unacceptable. In the words of Engström:

… no absolute bars to the exercise of this remedial right are accepted. It must be possible to have access to court and have a judicial instance evaluate the reasonableness of depriving the individual of a right to damages in the circumstances of the case at hand. ⁹⁶

National law must make provision for individuals to obtain financial redress for infringements of EEA law in the national legal order. National procedural rules preventing such claims from being pursued or impeding the courts in the exercise of their jurisdiction must be set aside and disapplied. ⁹⁷ Moreover, the detailed procedural provisions governing claims for damages in State liability actions for infringements of EEA law must not be less favourable than those governing similar domestic situations (principle of equivalence) and nor must they make it excessively difficult or impossible in practice to exercise the rights conferred by EEA law (principle of effectiveness). ⁹⁸

Whether the principle of effectiveness has been complied with will depend on the particularities of each case. Procedural restrictions that might be justified in principle may yet infringe the effectiveness principle depending on the circumstances of the case. ⁹⁹

C. The possibility of providing alternative remedies instead of actions for damages

State liability is a remedy specific to EU/EEA law. The Contracting States are, in principle, required to provide for a legal avenue to individuals pursuing such claims for damages against the State. The question in the following is whether the States can fend off such a claim with reference to the availability of an alternative legal avenue. This requires an examination of the ECJ’s case-law pertaining to alternative forms of action. The procedural autonomy of the EEA EFTA States should reflect the autonomy of the EU Member States in this context.

As a starting point, the ECJ accepts differences in national remedial systems. It is generally left to the Member States to determine the form and the extent of the remedies awarded. The ECJ’s early statement in Rewe, ¹⁰⁰ to the effect that the Treaty did not intend to create new remedies which national courts would be bound to apply, has been considerably nuanced. ¹⁰¹ As the law currently stands, EU law does not require Member States to establish remedies other than those established by national law ‘unless it is apparent from the overall scheme of the national legal system in question that no legal remedy exists that would make it possible to ensure … respect for the rights that individuals derive from EU law’. ¹⁰² The duty to provide effective remedies is an obligation of result, leaving the Member States considerable leeway in so far as the remedies provided are effective, proportionate and dissuasive. ¹⁰³

Opinions are divided as to whether this remedial autonomy also applies in relation to State liability. ¹⁰⁴ The ECJ may not have created ‘a right specifically to damages against the Member States [but] instead introduced a general right to reparation in whatever form the Member States find it most convenient to provide.’ ¹⁰⁵ There is extensive case-law from the ECJ indicating that an action for damages must not necessarily be available where alternative remedies exist to protect individual rights and ensure the application of EU law. ¹⁰⁶ The ECJ was rather explicit in Tomášová. When asked whether an action for enrichment had to be given priority over reparation for damage, it responded that ‘the rules regarding…the relationship between a claim for [reparation for damage caused by a breach of EU law] and other remedies which could be available […] are determined by the national law of each Member State, in conformity with the principles of equivalence and effectiveness’. ¹⁰⁷ The State liability doctrine does not seem to constitute an exception from the remedial autonomy of Member States, meaning that the Member States are not prevented from offering alternative remedies in lieu of actions for damages. ¹⁰⁸

When the infringement of individual EEA rights stems from a judicial breach, there are few alternative forms of action that could remedy the alleged wrongdoing. The lack of an alternative legal avenue was underlined by the ECJ in extending liability for judicial breaches in Köbler. The remedy of State liability was meant for decisions which have become definitive after all rights of appeal have been exhausted. The need for a remedy in the form of State liability for decisions of courts of last instance, which cannot be otherwise corrected, has also been stressed in later case-law:

Given, inter alia, that an infringement, by [a decision of a national court adjudicating at final instance], of rights deriving from EU law cannot normally be corrected thereafter, individuals cannot be deprived of the possibility of holding the State liable in order to secure legal protection of their rights. ¹⁰⁹

Infringements stemming from decisions of courts of last instance cannot, in principle, be remedied. ¹¹⁰ Exceptionally, however, a judgment which has acquired the force of res judicata may be remedied by a retrial.

There is no general duty under EU law to reopen final judgments that have acquired the force of res judicata in order to achieve effective enforcement of EU law. The ECJ has generally respected the finality of national judicial decisions, and repeatedly stated that EU law does not require a national court to disapply domestic procedural rules conferring finality on a judgment. ¹¹¹ As a result, a State liability claim may be the only legal avenue available to obtain effective protection of EU/EEA rights. It is, however, left to the national legal order of the Member States to implement the principle of res judicata, subject to compliance with the principles of equivalence and effectiveness. Although EU law does not require the Member States to reopen a final judgment, some States provide for an opportunity to bring an action for revision of a final judicial decision handed down in breach of EU law. As the ECJ held in Călin:

…if the applicable domestic rules of procedure provide the possibility, under certain conditions, for a national court to go back on a decision having the authority of res judicata in order to render the situation compatible with national law, that possibility must prevail if those conditions are met, in accordance with the principles of equivalence and effectiveness, so that the situation at issue is brought back into line with EU law. ¹¹²

A State may, in principle, hold a damages claim to be inadmissible with reference to the possibility of seeking a reopening of the final decision. Since damages are a secondary remedy, emerging as a reaction to rights infringement, the ECJ has accepted that a Member State may first require the claimant to avail himself of possible primary remedies in order to safeguard and enforce the primary right, since the rationale behind a liability action is to compensate a victim for an infringement he could not prevent or be blamed for, and this does not cover situations in which the claimant could have avoided or mitigated the loss by availing himself of appropriate legal remedies. ¹¹³ The ECJ has held that an individual who has suffered damage due to a breach of EU law is bound to mitigate his or her loss, and that this may entail availing himself or herself of ‘all the legal remedies available’. ¹¹⁴ This naturally entails an obligation to exhaust all options of appeal, since State liability only arises where there has been an infringement committed by a court of last instance. The obligation presumably goes even further, requiring the claimant also to resort to the extraordinary remedy of seeking the revision of a final judgment in cases where infringements can still be rectified.

Whether this constitutes an effective and adequate means to challenge national judicial decisions incompatible with EU law, depends on the legal framework in the relevant State. Whereas most Member States allow for the reopening of cases having acquired the status of res judicata, the use of this remedy is restricted to a limited set of circumstances. ¹¹⁵ A claimant cannot be required to resort to an alternative legal avenue if it is clear from the outset that recourse to that avenue will not bring about any positive results. The decisive question is thus whether the relevant States allow for the possibility of reopening a final judgment by reason of its incompatibility with EU law. ¹¹⁶ As observed by Kornezov:

[V]irtually all contemporary legal systems allow, in limited circumstances, remedying a flawed judgment by reopening the case. The query here is simple: can a national judgment which has acquired the status of res judicata be set aside on the ground that it is inconsistent with EU law? ¹¹⁷

The grounds for revision must be formulated in a manner that captures manifest infringements of EU/EEA law stemming from decisions of courts of last instance. If the State allows for reopening of the case in such circumstances, allowing for a correction of mistakes in the national application of EU/EEA law, it must be examined whether the procedural rules governing such actions satisfy the exigencies of EU/EEA law. The national procedural regime must be such as to uphold the right to an effective remedy. The procedural rules governing such actions must be framed so as not to render the EU/EEA rights ‘impossible or excessively difficult’. ¹¹⁸ The ECJ has held that the right to effective judicial protection will not be guaranteed if an alternative legal avenue ‘may result in procedural disadvantages for the applicant, in terms, inter alia, of cost, duration and the rules of representation, such as to make it excessively difficult to exercise the rights conferred by EU law’. ¹¹⁹

A State which does not allow for the possibility of reversing a judgment contrary to EU/EEA law which has acquired the force of res judicata, or which lays down excessively restrictive procedural rules for exercising that remedy, must allow for a State liability action. If no other effective remedy exists, such an action is the only means available for the injured party to uphold his or her rights. A State liability action may also be warranted in other circumstances, where the possibility of reopening the case would not constitute an adequate legal recourse. In such circumstances, provisions of national law making the right to reparation conditional on the prior setting aside of the final decision cannot be upheld if it makes it excessively difficult to obtain reparation for the loss or damage caused by the infringement. ¹²⁰

What constitutes an ‘effective’ and ‘adequate’ remedy may vary depending on the circumstances. Consequently, the question whether the possibility of reopening the case constitutes an adequate alternative legal recourse will depend on the circumstances of the case. A Contracting State must nullify the unlawful consequences of an infringement and provide for adequate redress. A retrial will not necessarily rectify the infringement and provide the claimant with effective redress where the damage has already occurred. ¹²¹ If the possibility of retrial is not capable of providing adequate redress, the national court will be required to allow an action for damages to proceed. Thus State liability actions serve as a remedy of last resort where individuals do not have alternative means of ensuring that their EU/EEA rights are safeguarded where an infringement has taken place.

5. Conclusion

It is settled case-law that individuals must have the possibility of pursuing and effectively protecting their EEA rights. Homogeneity has been an important factor in the EFTA Court’s case-law on rights and remedies. The EFTA Court has held that EEA EFTA and EU nationals and economic operators must enjoy ‘relying upon EEA law, the same rights in both the EU and EFTA pillars of the EEA’, so that the objective of establishing a dynamic and homogeneous EEA is achieved. The proof lies, however, in the pudding, and it remains to be seen whether the EFTA Court will require the Contracting States to provide for State liability actions where the court adjudicating at last instance has failed to observe EEA law.

Despite the caveats expressed by the EFTA Court in Karlsson, there is thus far not much of a fundament in the EFTA Court’s case-law to support the establishment of an EEA-specific version of the State liability principle. The position that the liability of the EEA EFTA States is different is ‘a position that will be hard to justify if put to the test.’ ¹²² In this article it has been argued that effective remedies must be provided for individuals whose rights under EEA law have been infringed by a court of last instance. National courts in the EEA EFTA States are part of a shared legal order, and they are entrusted with a European mandate. That mandate requires them to establish a legal avenue through which effective implementation of EEA law and the right to effective judicial protection of individuals’ EEA rights are ensured. ¹²³ If individuals are left without a legal remedy where their EEA rights have been infringed by a national judgment having acquired the force of res judicata, the effective protection of their EEA rights will be undermined. Individuals cannot therefore, it is submitted, be prevented from obtaining reparation when their rights have been prejudiced by an infringement attributable to a court adjudicating at last instance.

Infringements of EEA rights by national courts of last instance may – and do, in fact – occur. As observed by Kornezov, ‘judges – like all human beings – are fallible creatures’ and ‘[b]ad judgments are part of our reality.’ ¹²⁴ What matters, however, is how judicial mistakes are redressed. State liability actions provide an effective safeguard for the applicant’s rights under EEA law. They serve as a guarantee that EEA law will be enforced loyally and that the rights recognized by that law will be respected and upheld. The courts of last instance are also, in the context of EEA law, the ultimate protectors and guardians of individual EEA rights. If they fail in their endeavours, the State should not escape legal accountability.

Whether the Contracting States should be held accountable for judicial wrongs of course raises the age-old question ‘who judges the judges’? ¹²⁵ The paradox with the Köbler doctrine is that the judges may in effect end up judging themselves. The same court that delivered the original decision may end up assessing whether an infringement of EEA law has taken place, which may involve re-examining the issue of compatibility with EEA rules considered previously when the decision in question was delivered. There is also an inherent tension in asking a lower court to review, in essence, a decision given by a court higher up in the judicial hierarchy. This Gordian knot is, however, difficult to cut, since neither the ECJ nor the EFTA Court have – and nor will they have in the foreseeable future – a power of appellate review over rulings of national courts. It is therefore left to the EU/EFTA States, making use of their institutional autonomy, to ensure that the remedy of State liability is offered within a legal framework tailored to meet basic requirements relating to the rule of law. Whether they succeed in their efforts will be a matter for the ECJ and the EFTA Court to address in the years to come.