## Facts

- Factortame (No. 3) involved UK legislation (the Merchant Shipping Act 1988) that imposed discriminatory nationality requirements on fishing vessel registration, which the European Court of Justice (ECJ) found incompatible with EU law on freedom of establishment.
- In Brasserie de Pêcheur, a French brewery sought compensation from Germany for losses resulting from Germany's beer purity laws, which the ECJ previously ruled in violation of EU law.
- The ECJ joined the cases to address whether individuals could claim compensation from states for damages caused by breaches of EU law and to clarify the conditions for such liability.
- Prior ECJ cases, like Francovich and Bonifaci v Italy, had addressed State liability in the context of a failure to implement EU directives but did not consider breaches arising from legislative, administrative, or judicial action more generally.

## Issues

1. Whether and under what conditions a Member State is liable to compensate individuals for damages caused by breaches of EU law.
2. What criteria must be met for State liability to arise in situations involving legislative measures or actions by national authorities.
3. Whether the scope of State liability extends beyond failures to implement directives to include all forms of breach of EU law by Member States.

## Decision

- The ECJ held that Member States are liable to individuals for loss and damage caused by breaches of EU law for which the State can be held responsible.
- The Court articulated a three-pronged test: (1) the rule of law breached must confer rights on individuals; (2) the breach must be sufficiently serious; and (3) there must be a direct causal link between the breach and the damage sustained.
- 'Sufficiently serious' breach depends on factors such as the clarity and precision of the rule, the discretion left to the Member State, whether the infringement was intentional or excusable, and whether there were relevant ECJ decisions or positions of EU institutions.
- The judgment clarified that State liability applies broadly, covering legislative, administrative, and judicial actions contrary to EU law.
- The criteria established in Francovich and Bonifaci v Italy were confirmed and expanded as a general principle applicable to all forms of State breach of EU law.

## Legal Principles

- State liability arises when (i) a rule intended to confer rights on individuals is breached, (ii) the breach is sufficiently serious, and (iii) there is a direct causal link between the breach and the damage suffered.
- The seriousness of the breach is assessed considering the clarity of the breached rule, discretion left to national authorities, intent or excusability of the infringement, and prior relevant ECJ decisions.
- State liability applies to breaches of EU law by any organ of the State, including through legislation, administration, or courts, not solely failures to implement directives.
- The individuals affected must have recourse to courts for redress under these conditions, reinforcing the effectiveness and supremacy of EU law.

## Conclusion

Factortame (No. 3)/Brasserie de Pêcheur [1996] ECR I-1029 is a landmark ECJ decision that established a clear test for State liability in damages for breaches of EU law, ensuring Member States' accountability and the effective protection of individual rights within the EU legal order.


Brasserie du Pêcheur SA v Germany and R v Secretary of State for Transport, ex p Factortame Ltd (No 3) (Joined Cases C-46/93 and C-48/93) [1996] ECR I-1029